As the country slowly gets back into gear for 2013, Lord Whitty writes on the housing crisis and whether or not 2013 represents the year for much-needed action.
For those with an interest in the political response to the housing crisis these are interesting times. Compared with previous periods, housing has gone up the political agenda. Scarcely a month passes without publication of a new report seeking to address some aspect or another of our failing housing system and politicians from all parties talk about the need for a change of gear.
Labour made a big splash at their conference in September, promising to use the proceeds from the 4G network auction to build 100,000 new homes.
And Vince Cable has continued to make the case for more investment, highlighting the positive impact this would have on the economy.
For their part, the government are clearly hoping that, despite the lack of evidence so far, the range of planning changes, guarantees and other measures they have introduced will begin to bear fruit by the next election.
For Housing Voice, the campaign alliance for affordable homes, this is very welcome.
When we set up our inquiry into the affordable homes shortage earlier this year, supported by Citizens Advice, UNISON, the National Housing Federation, the Child Poverty Action Group, and others, we did so with an acute awareness one of the big challenges was to make the delivery of new housing a political priority.
So, now housing is higher up the agenda, a key goal for all of us moving into 2013 and beyond must be to build upon this momentum.
We need to lay very clearly at the government’s door the responsibility for ensuring supply keeps up with projected household formation and that, one way or another, at least 250,000 homes are delivered every year for the next 20 years. At the current time the number of new homes being completed is less than half of this total.
To build momentum we must identify solutions as well as problems. In the current context that means finding resources. As such, a number of recommendations from the Housing Voice report, that we hope to develop and promote further in the year ahead, could be combined to produce a significant boost to the resources needed to address housing needs.
One recommendation is that local authorities should be enabled to borrow to invest in new homes. This would be very much with the grain of other recent changes. The Localism Act 2011, for example, has begun to put local authorities in the driving seat on meeting housing needs in their area. However, in order for them to succeed, they and/or their partners in delivering those homes need long-term access to resources.
This could be achieved by changing the Treasury rules on local authority borrowing and adopting a ‘general government financial deficit’ model. This would bring the UK into line with other European countries and, more importantly, allow greater freedom to borrow for investment in genuinely affordable housing.
A second is to mobilise pension funds behind housing investment. The recent RIBA (Royal Institute of British Architects) Future Homes Commission report suggests 15 per cent of local government pensions scheme assets should be invested in providing funds for housing. I have just retired as chair of a local government pension scheme member fund and I think 15% may be a bit ambitious in terms of the attitudes of the advisers, trustees and members of the funds. Nevertheless, significant funds could be raised not only from local authority funds, but also from a wider range of pension funds.
A third is to shift the balance of government spending on housing from revenue to investment. Between 2011/12 and 2014/15, investment in new homes via the government’s affordable housing programme will cost £4.5bn. Over the same period £93bn will be spent not on building new homes, but on housing benefit. It is almost the reverse situation from that of the Macmillan government and other governments in the 1950s and 1960s.
It is a very difficult process to switch subsidy away from individuals and welfare and back into providing housing and affordable housing. But if we do not start on that process now, it will be not only the present generation of house seekers and new family formations that find themselves in dire distress, but future generations as well.
The politics of all of this are difficult, but as is becoming clearer all the time, this is an issue people are rightfully looking to government to address; the momentum is building – lets keep it that way in 2013.
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Lord Whitty: Time to make the housing recovery a political priority – March 22nd, 2012