housing policy under the coalition: glancing back, looking forward

Housing Policy under the Coalition:

glancing back, looking forward

Professor Ian ColeCentre for Regional Economic and Social Research

Sheffield Hallam University

CWAG Conference Leeds 28 September

2012

Sounds familiar? Two and a half years of a Conservative-led

government following a period of Labour dominance

Housing shortages grow as building rates fail to keep pace with household formation rates

Difficulties in gaining access to mortgage finance Increasing pressure on social housing Hopes placed in revival of PRS Market principles advocated when market at its

most fragile


2012

The challenge.....

So, what could be done...?

in 1954?


2012

National housing policy in 1954 maintained large scale council house building to

meet targets (224k completed in1954 cf 90k private) building programme geographically spread in GB reduction in standard of materials, design and

property diversity in LA sector to achieve quantity relaxation of rent controls in the PRS designed to

stimulate the sector reintroduction of slum clearance move away (in 1956) from property-based subsidy

to person-based subsidy: start of rebates


2012

The rationale for national policy in 1954 a pragmatic, and time limited, embrace of the state

as the only means of addressing a national emergency

but public housing would never attain the primacy of NHS or state education

always hedged with stigma as in the replacement of the 'spiv' by the 'Jaguar

owning council tenant'...


2012

Local Innovation 'hidden histories' not captured by national narrative eg Urmston Housebuilders Association in

Manchester Self-build association of 28 households 30 hours minimum a week commitment to build 2

schemes: 16 houses and 12 bungalows Council provided cheap land, guaranteed 5 per cent

fixed rate mortgages over 20 years (£2 per week) £30 down payment as deposit customised design of kitchens and bathrooms

The participants


2012


2012

The outcome price of new houses: £1,300 for 3 br semi-detached

properties average price of new houses in England in 1954

(Q1) was £2,100 priority determined not by a points scheme...but by

drawing lots strong community ethos prevailed an oasis of communitarian suburbia!


2012

The lessons of 1954? you cannot rely on private sector to meet policy targets in

poor market conditions the planned revival of the PRS may bring with it unanticipated

outcomes affordability is a question of land values and development

costs as well as household income the growth of home ownership presupposes a widespread

belief in (and some evidence of) sustained economic growth across the income spectrum

those in the public sector risk demonisation, even when they do not receive subsidies from others

the best 'solutions' are locally created, not nationally mandated....


2012

The Key Challenge for the Housing Strategy

WE NEED TO BUILD!the market-based response: relieve planning restrictions through s106 revisions and presumption in favour of developmentthe mixed economy response: targeted public investment to promote 'leverage'the state-based response: national emergencies require government action, if only for a limited time


2012

Putting Housing Policies to the Test

Questions are developers straining at the leash to build? is land supply the problem ? where are the 'new' home owners? can leverage fill the 'production gap'? is there any public, let alone government, support for a stronger state role? and can it be afforded anyway?


2012

A market- based approach remove s106 obligations on affordability and other planning restrictions adopt mantle of 'fairness' to deal with latter day Jaguar owners press ahead with dislodging poorer households from more affluent areas turn 'welfare dependents' into choice-making consumers: landlords and tenants! create a new cohort of home owners


2012

but......

'If we are to plan we must have plannable instruments and the speculative builder, by his very nature , is not a plannable instrument'

Aneurin Bevan 1947


2012

Recession? What Recession?

Barratts: profit increase of 159%: from £42.7m (2011) to £191.1m (2012) Revenue up 14.1 % and margins increased from 6.6 to 8.2%

Cala Group: increase in operating profit of 96% and revenue up 18%

Redrow: increase in operating profit of 55%: revenue up by 6%

Galliford Try: increase in profit before tax of 80%: 17% increase in revenue

LGA: 400,000 planning permissions currently outstanding


2012

A mixed economy approach ?

can target more effectively, but leverage assumptions often overblown (eg HMR)

will not address geographical imbalances, brinkmanship over planning constraints and risk aversion

but may risk insulating the development industry still further

infrastructure development must remain the domain of the public sector if it is not to be captured (Hildyard)

PAC report on £1.4billion RGF: only £60m so far to front-line projects: 2,442 jobs created; 2,762 protected

original RGF aim- to create 36,800 jobs


2012

A state-led approach?

Read Mariana Mazzacuto's The Entrepreneurial State or.. Tullet Prebon: Building a Road to Recovery? August 2012 State can invest in housebuilding without sucking in

imports. In the long-term, it will be self-financing (increase growth and revenue and reduce HB)

'We would stress that this investment should be undertaken by local authorities or housing associations, not through public-private gimmicks like PFI'

'The government and social sectors should act as owners and commissioners of new housing'.

'A national housebuilding programme should be a national economic imperative, not thwarted by sectoral self-interest or ideology'


2012

A few political obstacles to embracing the state ...

150 years of history....and.... how to deliver the 'age of aspiration' by reversing the potentially long-term decline in home ownership Previous means of achieving this :

The ‘newly affluent society’ (60/70s)....but now we have the 'stretched middle' The right to buy (80s/90s)...but limited impact of recent incentives The deregulation of financial markets and acceptance of high level of consumer debt (90s/00s)....but caution over lending to marginal income groups will prevail


2012

Second order challenges for the Housing Strategy mark 3

How to keep housing associations ‘market responsive’ but not ‘market damaged’

What to do with those lodged in the 'waiting room sector How to grow an institutional PRS through REITs etc - in a hurry! The future of student markets and 1 bed flats The uncertain housing impacts of benefit reform - 'stickiness' of claimants How to achieve substantive rather than just symbolic impacts through social housing reforms Whether NewBuy will herald more creative alliances between supply, loan finance and unrealised demand


2012

Hazards ahead? Markets do not obey strategies: caution will prevail Will developers deliver ? Homelessness and overcrowding are lagged indicators of

economic recession Spatial segmentation will increase : inter- and intra -regionally

The geographical locus of private sector-led growth Housing market sustainability ... in much of the North of

England, Scotland and Wales. Can places be 'written off'? Direct payments to tenants (and then UC) and response of

providers Risks to social cohesion ?


2012

The limits of national housing strategies

Housing strategies have an indirect relationship with housing outcomes at best

Macro-economic forces, demographic changes and socio-cultural attitudes interact to exert a stronger influence.

In other words.... 'Life is what happens to you when you're busy making other

plans'


2012

Is there an upside? Go local! local innovation can achieve positive gains rather than

centrally driven templates replete with unintended consequences

so over to you...ALMOs can be critical to new thinking about retaining core principles of a housing service.... despite everything

The creation of a mutual housing company from Rochdale Boroughwide Homes - an example of positive action, even if not a panacea or a template for others

Housing strategies have an indirect relationship with housing outcomes at best

......and remember Urmston!


2012

Housing Policy under the Coalition:

glancing back, looking forward

Professor Ian ColeCentre for Regional Economic and Social Research

Sheffield Hallam University

housing policy under the coalition: glancing back, looking forward

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