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Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Cambridge City Council (AFH 41)

  The City Council has always sought to maximise what can be achieved through the planning system and through use of social housing grant and of its own capital resources.

  In the consultation on the Planning Green Paper we have asked for powers to seek a higher percentage of dividend for affordable/key worker housing (up from 30 per cent to 50 per cent); for the removal of the threshold concerning the number of houses or site area to be developed before we can negotiate for affordable housing; and for powers to require developers bringing new employment to Cambridge to make a contribution to help with the additional housing needs they generate.

  The Council will continue to take advantage of any investment opportunities which will increase the provision of affordable housing in the City. We have successfully supported an application for key worker funds under the Starter Homes Initiative which is beginning to provide some relief for 190 lower paid professional workers such as nurses, teachers and police officers. We are supporting a second round SHI bid for shared equity grants.

  The creation of the Major Repairs allowance has been welcomed as it allows more stable long-term planning of repair and maintenance of the City Council's own housing stock, however, it has been financed by ring fencing the council's basic credit approval. This has had the effect of radically reducing the element of basic credit approval available for use as social housing grant. If this continues without a significant increase in the amount of resource available we are at risk of not being able to fund affordable housing development on all the sites that are available. Given the current shortage of developable land this would be completely unacceptable.

  To date the 25 per cent spendable capital receipts from the sale of council housing under right-to-buy legislation are an extremely important element in supporting the city's housing investment programme. In the current housing market we are seeing a drop in the funding that is available form this source as current valuations take properties beyond the reach of would-be purchasers. The City Council has the prospect of becoming "debt free" in a year or so. The impetus to achieve this status comes from the revenue consequences for the General Fund, however the ability to apply 100 per cent of these right-to-buy capital receipts would have given some assurance to us being able to implement more affordable housing in Cambridge where it is needed to support strong economic growth. We view with dismay the proposal to pool capital receipts given the very significant affordable housing shortfalls and pressures in the Cambridge area.

David Roberts

Planning Policy Manager


  1.  The City Council is the planning and housing authority for Cambridge. The limited supply of building land and the high cost of housing in the City is influenced by many factors including rapid population and employment growth, long distance inward commuting from areas of cheaper housing, a lack of brownfield land and a tight Green Belt. The City Council generally endorses the submission made to the Select Committee by South Cambridgeshire District Council.


  2.  There are 44,657 dwellings in Cambridge of which 8,329 are Local Authority and 2,758 Registered Social Landlord (2000 HIP). So about 11,000 dwellings can be considered to be "affordable", or about 25 per cent of the total stock.

  3.  The Housing Need Survey (HNS 1998) showed that 66 per cent of Cambridge households could not afford to buy or rent a dwelling in Cambridge if they needed to move, and that there were 4,817 households in housing need or about 11 per cent of households. Of these 2,806 households were in need of rehousing. The HNS will be updated in 2002 in a joint study with South Cambridgeshire District Council.

  4.  The biggest supply of affordable housing comes from Local Authority and RSL re-lets at around 800 a year, but this must be balanced against the forecast rate of households falling into housing need of around 700-750 a year (HNS 1998), which may have subsequently increased given the rapid increase in house prices and private rents over the past few years.

  5.  In recent years around 95 per cent of new housing development in Cambridge has been on brownfield land. In 2001 the ratio of average house prices (£126,000), to average incomes (£21,000), in Cambridge, was 6:1, or twice what can be supported on a three times income mortgage.


  6.  The supply of new affordable housing since 1991 has primarily been achieved on Council or RSL owned land rather than through planning system negotiations with private developers. For example 286 affordable dwellings have been provided at Kings Meadow and 66 at the Nuffield Road site, both being Council owned sites that were previously in allotment use.

  7.  Regarding the contribution arising from planning gain negotiations, although only 84 affordable dwellings have so far been completed[24] as part of larger private housing schemes over this period, there is capacity for at least another 540 affordable dwellings on sites either with planning permission, or under active negotiation or awaiting a s106 agreement. Other "windfall" sites will also continue to appear on which Planning can negotiate for affordable housing. The City Council also has a 50 per cent share of the affordable housing to be provided at Cambourne which could amount to 400-450 dwellings on completion of the development in 2008-09. The development of the Cambridge Northern Fringe Arbury Camp site for up to 900 dwellings is likely to commence in the next year with the redevelopment of the Sewage Treatment Works/the eastern CNF for up to 1,900 dwellings taking place post 2005. Both of these developments will yield considerable numbers of affordable houses for Cambridge residents subject to any sharing agreement with South Cambridgeshire District Council.

  8.  Over the longer term, subject to the outcome of the Structure Plan and Local Plan reviews, in the post 2005 period parts of the Green Belt may be released for housing development for 8,000 dwellings. 50 per cent of this total could contribute another 4,000 dwellings (See paragraph 15 for derivation of this percentage).


  9.  The current practice in Cambridge concerning private housing developments is to negotiate a scheme whereby the developer makes over either 30 per cent of the developable area of a site or 30 per cent of the approved dwellings for the affordable housing element. The land normally being transferred to the RSL for a maximum price of £8,000 per plot (to ensure that the schemes represent good value to the Housing Corporation, and that the rents are affordable)—and involves a considerable subsidy on the part of the landowner/developer compared to open market value.

  10.  All affordable housing schemes provided through planning gain are the result of negotiation. Usually the City has negotiated for RSL units for rent as the best way of meeting priority housing need. But even with cheap land the build costs of the affordable housing element cannot be paid for on the basis of the mortgage which could be raised by the RSL based on the rental stream expected from future tenants. Hence the need for further financial support from Social Housing Grant (SHG) provided by the City Council using funds bid for from the Housing Corporation. The exact level of funding cannot be guaranteed from year to year and long term commitments are not possible. Cambridge has been successful in this process in the past, but there is no prospect of funding the number of units currently in the development pipeline on past methods.

  11.  Cambridge is therefore considering what alternatives exist to current practice such as:

    —  Shared Ownership/Shared Equity/Discounted Ownership—where the occupier buys a percentage share in the property either directly or by way of a lease from an RSL freeholder. The occupiers mortgage reduces or removes the need for SHG but even a 50 per cent share is beyond the means of many households in housing need. There has been one recent example in Cambridge, with further examples likely in the near future.

    —  Payment of a Commuted Sum—where the developer pays a sum of money to the City Council in lieu of discounted land so no SHG is needed for that site which is developed for 100 per cent housing for sale. The commuted sum can then be used to enable the provision of affordable housing on other sites without the involvement of the Housing Corporation or an annual bidding round. There has been one recent example in Cambridge, though this option is not generally favoured locally.

    —  Sale of Completed Units—normally from the developer to the RSL at a value equivalent to the RSL's ability to fund a private mortgage without any SHG assistance. The value of the discount will depend upon whether the aim is housing for rent or for intermediate or key worker housing via shared ownership/shared equity/a discounted price where the prospective occupiers can afford to pay more.

    —  Land Banking—where the developer sells or gives land on or off site to an RSL to be land banked until SHG becomes available. Timing is uncertain and the land will lie vacant until SHG arrives. This may detract from the value of adjoining land and or lead to unsatisfactory designs and layouts to enable development in stages.


  12.  The current trend is towards higher densities, more flatted schemes and terraces. This is often good in urban design terms and to avoid the waste of land but is potentially problematic for the provision of affordable housing as such schemes are often difficult to build incrementally. The result being that if SHG is delayed for a year the affordable housing cannot be funded and the whole scheme can be delayed. The effect of this can be intensified by the wish to avoid putting all of the affordable housing together and instead to have it in either a number of areas or at the extreme as individual properties within the private housing. This can make the practical timing issues of development even harder to address. RSL housing managers are also concerned to avoid too much dispersal of the affordable housing as this makes it more difficult for them to manage and can lead to neighbour conflict.

  13.  A trend in city centre developments towards the inclusion of such expensive items as underground car parking, 24 hour concierge systems, and health and fitness clubs. Such items require a heavy service charge to maintain them. The view is that RSL cannot absorb these costs, that affordable housing occupiers cannot afford to pay them and that it would be unreasonable for the developer/the private occupiers to take on such an open ended financial commitment.

  14.  The current Local Plan is up for review. So far public consultation provides support for the continued provision of affordable housing through the planning system. In addition the plan now has to consider the housing needs of key workers. A study into key worker housing has recently been completed and demonstrated a need with 80 per cent of employers facing recruitment difficulties linked to house prices. Addenbrooke's NHS Trust and Cambridge University are keen to provide key worker housing for their staff. This type of housing is unlikely to require SHG assistance as it only has to be affordable to the target group of key workers who will be able and willing to pay more to enter owner occupation than the rents typically charged by the City Council or RSL social housing. The study finds that key workers are overwhelmingly seeking to become owner occupiers rather than seeking social rented housing

  15.  The new Housing Need Study will prove the existence of need but not say how much we should be asking for on each site. Currently the Local Plan sets a 30 per cent standard. The draft Structure Plan specifies a range from 30-50 per cent. The figure chosen will affect the viability of sites for housing development, especially brownfield ones. One option will be to set a lower percentage on brownfield sites and a higher one on greenfield sites released from the Green Belt. It may also make alternative uses other than residential more attractive and so perversely reduce the numbers of houses built in Cambridge (through land being developed for non housing uses or left undeveloped). There are also issues to do with creating successful new housing areas in which people will want to live, community safety and avoiding the creation of new areas of social exclusion.


  16.   The definition of "affordable":

In the past this has normally been considered to mean housing for rent for those most in housing need, but increasingly also it is being widened to encompass those who do not qualify for or want social rented housing and who cannot afford to buy within a reasonable travel time of their work. In regard to key workers, the housing must be affordable to the specified group of workers. In widening the definition to include key workers and what has been termed "intermediate housing", the danger is that the numbers of those in need will also expand beyond the possibility of assistance through the planning system.

  17.   The scale and location of the demand for affordable housing:

The Roger Tym Infrastructure Study[25] notes that in the Cambridgeshire portion of the Cambridge Sub-Region total housing completions have averaged just over 2,000 per annum (2,023) whereas the RPG6 requirement is 2,800 per annum. To achieve the RPG requirement would represent a 40 per cent increase in annual completions. They continue: "The challenge is even starker in relation to affordable housing. Although it is difficult to pinpoint accurately, data supplied by the County Council suggest that the minimum average output of affordable homes within the Sub-Region in the period 1991-99 has been 255 per year. If a broad affordable housing target of 30 per cent of total provision is adopted, then it will be necessary to increase the output of this type of housing more than threefold to some 840 annually." In and around Cambridge future economic growth will be hampered if enough housing is not provided and if that housing is not affordable. The Deposit Draft Cambridgeshire Structure Plan forecasts a growth of 38,000 jobs close to Cambridge between 1999 and 2016, a growth rate of 1.3 per cent per year[26].

  18.   The adequacy of the existing supply and the amount of resources available:

The planning system has had limited success in bringing forward completed affordable housing schemes in Cambridge. This has not been because of a lack of will on the part of the City Council which does require 30 per cent affordable housing on qualifying sites. In comparing this level of supply with the existing backlog of need (see paragraph 3), it can be seen that it has not yet made a serious reduction in it, even without considering the need for intermediate or key worker housing. Housing Corporation funding has so far been available to support this limited level of supply but is expected to be inadequate in the future given the scale of planned provision. Recent proposed changes to the spending rules governing debt free councils will further limit the level of its own resources that Cambridge can apply to solving its need for affordable housing. The main input into the provision of affordable housing is land. The marketplace is helping to find land and intensify development in the private sector. However there is no equivalent or similar mechanism for the public sector despite the extensive housing areas owned by Councils and Housing Associations which are often built to a low density. With land being so scare and valuable in areas of housing stress more emphasis should be given to making the best use of existing land holdings in these areas.

  19.   The extent to which planning gain can fund the level of affordable housing required:

In expensive areas such as Cambridge the provision of social rented housing is impossible without either publicly owned land or the use of planning gain and often SHG. However the provision of rented housing requires more subsidy than the provision of intermediate or key worker housing as these occupiers can afford to pay more for their housing. Providing more of this housing will therefore allow more affordable housing to be provided in total. But the question remains about how far it is wise to push the percentage of affordable housing on each housing development site beyond the 30 per cent currently sought in Cambridge. Clearly there is no benefit in pushing to far if land does not come forward for development. There will also be other calls on the planning gain obtainable from a site to fund other infrastructure requirements. Looking to the future, the main issue is how best to provide for the middle ground between those who can afford appropriate market housing and those who qualify for social rented housing—and specifically for key workers. At the moment the degree of subsidy provided to enable social rented housing is around 60-70 per cent of the overall cost, but nothing has been available to the middle ground even though the degree of needed subsidy would be much reduced.

  20.  The City Council has supported the proposals in the Planning Green Paper that affordable housing could be secured from appropriate commercial developments and that the site area threshold at which the affordable housing requirement kicks in should be greatly reduced.

  21.   How resources should be balanced between social housing and options for owner occupation for those who cannot afford to buy (including shared ownership) and whether any additional mechanisms are required to bring forward shared ownership-type schemes:

Issues of social exclusion are important in replying to this question. In Cambridge the public, house buyers and developers have accepted a 30 per cent affordable rented housing element. In seeking to push this element up a balance will exist at some point where the development will no longer be attractive and there is clearly no point creating more unpopular or failing housing areas. Any provision of affordable housing above 30 per cent therefore should be for subsidised owner occupation. New and improved mechanisms are needed and some ideas for these have been flagged up in a recent report on the future of low cost home ownership (LCHO)[27]. Housing Associations should be encouraged to enter the intermediate/LCHO sector as facilitators to ensure that the benefit provided originally by the landowner is not appropriated by the first occupier of the subsidised housing. Land owning public bodies should be enabled/encouraged to make provision for LCHO for key workers in their employ.

  22.   Whether current policies and practices are leading to the creation of mixed communities:

The City Council has adopted planning guidance requiring affordable housing to be provided in groups across a housing site rather than in one location to address this issue. However the city centre trend towards the provision of underground car parking for private occupiers who can afford a service charge to pay for it against surface parking for social tenants who cannot leads to a clear marking out of differences of tenure which is difficult to address given the funding restrictions of the Housing Corporation. However the real problem is not with new developments but rather with the pattern of single tenure provision made in the past. This raises the issue about whether the future development or redevelopment of publicly owned sites should also have a mixture of tenure types rather than a monoculture of rented housing. Clearly such provision is still required but it should be made across a number of mixed sites rather than in one place.

  23.   Whether more greenfield development is needed to meet housing need:

In the Cambridge area housing need cannot be met without the development of extensive areas of greenfield land. The Draft Structure Plan for Cambridgeshire expects that only 55 per cent of housing provision between 1999 and 2016 will be on brownfield land. Around Cambridge greenfield development means releasing land from the Green Belt. The last urban capacity study undertaken by the City in 1998 found a capacity of 3,400 dwellings total against a housing need of 2,806 dwellings (see paragraph 3). A significant amount of this capacity will be on small sites below the threshold for the provision of affordable housing and some of it will never come forward. Realistically only around 600-800 affordable housing dwellings could be achieved from this scale of development subject to funding and market and site conditions. If the Green Belt around Cambridge is not in the end released for development the displaced development will move to other greenfield sites beyond the outer edge of the Green Belt around villages and market towns.

  24.   The cost to individuals, businesses and the economy resulting from any shortfall in the provision of decent, affordable housing:

A failure to provide enough decent affordable housing would be likely to have the following effects in the Cambridge area:

    —  an increase in the time spent commuting and increasing traffic congestion;

    —  a spreading problem of house price increases elsewhere away from Cambridge fuelled by commuters (already seen in East Cambridgeshire towns such as Ely)[28];

    —  problems with the provision of public services caused by staffing difficulties for key workers including health workers at Addenbrooke's NHS trust, at Cambridge University and elsewhere[29];

    —  Housing Associations cannot afford to develop in the Cambridge area without the assistance of planning gain. Hence they can only develop on sites where land can be secured on the basis of a Housing Need Survey. Such provision is made to satisfy local need and so there is no facility for people to move to the area who cannot afford to buy on the open market. This is clearly a barrier to labour mobility and leaves many employers locally struggling to recruit staff for low paid occupations such as bus drivers; and

    —  if basic public services and private services cannot be provided in the Cambridge area its rapid economic growth in the high tech sectors will be hampered to the national detriment.

  25.  The public sector cannot increase income levels to compensate for high house prices due to fixed national salary levels. Just raising incomes locally gives an incentive to move or stay but it also unjustly rewards those already well housed in such areas of housing stress. If assistance with housing costs is offered too widely there is a danger of reducing the incentives for companies to relocate in UK to areas of cheaper housing. The effect would be to ossify the economy. Landowners would justly be concerned at the prospect of them providing such wide ranging assistance. Hence in Cambridge we want to concentrate assistance on those most in need and to key workers, most of whom will be in the public sector ( whose services have to be provided locally), and to those parts of the economy which have a special need to be close to Cambridge such as higher education and science based research and development.

24   At November 2001, over the last 10 years. Back

25   Implementing the Cambridge Sub-Regional Strategy, Roger Tym & Partners, 2001. Back

26   Cambridge & Peterborough Joint Structure Plan Review, Deposit Draft Plan, March 2002. Back

27   Swamps & Alligators, the Future of Low Cost Home Ownership, JRF, 2001. Back

28   Research into Key Worker and Affordable Housing in the Cambridge Area, 2002. Back

29   As 5. For Addenbrooke's, the study finds a shortage of staff causing empty beds. It links this to high house prices making recruitment and retention difficult, to fewer staff living locally and to more long distance commuting. Back

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