Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Housing Corporation (AFH 43)


   The Housing Corporation (the Corporation) welcomes the opportunity to give evidence to the Committee's inquiry into Affordable Housing. Background to the Housing Corporation and Registered Social Landlords—commonly known as housing associations—is provided in Annex 1.


  The Corporation distributes funding to housing associations via its Approved Development Programme (ADP). Over the three years of Spending Review 2000 the ADP will rise from £770 million in 2001-02 to over £1.2 billion in 2003-04. Spending Review 2002, which should be announced in July 2002, will set the level of ADP resources for 2003-04 to 2005-06.

  The Corporation has three key investment objectives:

    (i)  providing new, affordable housing in areas of economic and demographic growth;

    (ii)  contributing to regeneration and neighbourhood renewal; and

    (iii)  meeting the needs of a wide range of vulnerable people.


(i)   Level of Provision

  The Corporation's target for the period covered by Spending Review 2000 (2001-02 to 2003-04) is to complete over 65,000 homes; last year we completed 22,875. The housing is provided across the ten regional investment areas in England. Table 1 at Annex 2 shows the number of homes completed each year by housing associations since 1996-97. Table 2 shows the number of homes completed in each region last year. Table 3 shows the number of homes provided by housing association using their own resources.

  The ADP funds both homes for rent and low cost home ownership. In terms of resources the rent/ownership balance is about 89 per cent/11 per cent of the ADP. In terms of numbers about 18 per cent of the homes produced are for low cost home ownership, given their lower grant rates.

  The rents in the homes for rent are subject to the Government's rent restructuring guidelines published last year. Housing associations were asked to produce rent plans by April 2002 which set out how they will move towards achieving restructured rents by March 2012.

  Broadly there are two types of low cost home ownership funded via the ADP: Homebuy where the recipient is given a grant to help them purchase an existing property (and the grant must be repaid when they sell the property); and shared ownership where the recipient buys part of a property provided by the housing association and pays rent on the part they do not own.

  The Corporation has recently carried out a review of low cost home ownership and is currently revising its low cost home ownership policy in the light of increasing demand for low cost home ownership and for affordable housing for key workers. We are also considering options for funding homes for rent at levels below market rent but above social rents. These would be targeted at key workers.

  Spending Review 2001 also provided funding for a Starter Home Initiative which provides low cost home ownership for key workers, primarily nurses, teachers and police officers. This programme is providing £250 million towards helping these key workers into home ownership and the Corporation is funding the housing association element of this Initiative. It is intended that around 10,000 homes will be provided.

  Within the Corporation's overall target for the ADP, there is a specific rural target aimed at villages with a population under 3000. This target is set to rise from 800 homes approved in rural villages in 2000-01 to 1,600 approved in 2003-04. We are also working with the Countryside Agency to explore the role of market towns in our strategy for providing homes for rural areas.

  In addition Spending Review 2000 provided resources for a Safer Communities Supported Housing Fund. Under this programme housing associations receive funding to provide both new homes and revenue support for particularly vulnerable groups: people fleeing domestic violence, ex-offenders, people with drug or alcohol problems, young people at risk and schemes for teenage mothers. Around 3,000 new units will be provided under this programme.

  In addition to the Corporation programmes, local authorities also provide social housing grant to housing associations; about £400 million annually providing around 8,000 homes for rent and sale.

(ii)   Distribution of the ADP

  Until recently the ADP was allocated at local authority level on the basis of an indicator, the Housing Needs Index (HNI). Following a consultation exercise in 1999 we started to move away from using the HNI at local authority level in 2000-2001 and base allocations on regional and subregional priorities. These regional and subregional priorities are derived as follows.

  Every year, generally, in each of the regions, a Regional Housing Statement is produced by the Government Office and the Housing Corporation. Local and regional stakeholders are closely involved in the development of these statements, mainly through housing forums or officer working groups set up in each area. Where they exist, regional assemblies also contribute to the development of the statements.

  Inevitably, the pattern and type of consultation vary depending on local and regional circumstances and organisational structures. In particular, however, closer contact has been sought with the Regional Development Agencies to ensure that the regional housing statements are compatible with, and facilitate, the delivery of their economic strategies. Links have also been developed with other bodies, such as health authorities, regional planning conferences, the Chartered Institute of Housing and the NHF.

  The main purpose of RHSs is to highlight key housing issues in each region and to help to identify regional priorities. These statements are evolving documents that provide valuable information, helping local authorities and housing associations to develop housing strategies. It is intended that, over the next few years, these statements will become more strategic documents that only need to be revised every three to five years.

  In addition the Corporation's offices issue Regional Investment Strategies each year containing priorities for the ADP derived from the RHSs. The priorities vary depending on the region. Thus, for example, in the South East key worker accommodation is a growing priority and in the East Midlands one of the priorities is tackling the regeneration of former coalfield areas.

  It is the Corporation's intention to base all allocations on regional and subregional priorities by 2003-04. This has implications for where we provide funding. For example, in the South, funding might be concentrated in particular growth areas such as Thames Gateway, to provide some of the new homes needed for London.

  The HNI is still used to allocate ADP resources at regional level to the 10 regions. However the former Housing Minister has asked the Corporation to work with his officials to develop a more forward looking and responsive mechanism for the distribution of resources between regions. ODPM will be consulting on options shortly.

(iii)   Planning

  In some areas, particularly London and the South, social housing grant contributes towards schemes which are part of Section 106 planning agreements. The social housing grant is provided either by the Corporation via the ADP or by the local authority to ensure that provision of social housing on the site is viable and/or to increase the level of provision.

  There is a considerable variation in the provision of affordable housing through the planning system. The Government has recently published proposals aimed at improving the operation of the planning system. The Corporation considers that it is very important that the planning system operates efficiently to prevent delays in providing housing. And generally, we consider that it is preferable for housing provided via section 106 agreements to be provided on site thus contributing to mixed developments and communities. However we recognise that this is not always practicable; and thus in some cases section 106 funding is better used to provide housing on another site.


  The Corporation defines as sustainable homes that people want to and are able to live in now and in the future. Housing Associations are required to certify that the homes that they are bidding for will be sustainable; a sustainability toolkit produced by the Corporation provides guidance on assessing sustainability.

  Mixed communities contribute to sustainability, which is one of the reasons why we would generally prefer to see housing provided through section 106 agreements provided on the site of the development. Low cost home ownership can also be used to ensure mixed tenure and mixed income communities. The Corporation monitors the extent of mixed tenure in all ADP funded schemes of more than 25 units, and encourages inclusion of full or shared ownership where appropriate.

  All the schemes funded by social housing grant must meet our scheme development standards. These standards, which include essential and recommended items, aim to ensure that homes provided by housing associations are of a high quality.

  Since 1996, the Corporation and the DTLR have been developing a system of Housing Quality Indicators (HQIs) which involve an assessment of the quality of key features of a housing project in three main categories: location, design and performance. HQIs have to be used on all new developments receiving Social Housing Grant from April 2001. Housing associations must submit HQI data to a national database and within two years, we believe we will have enough HQI data to prepare quality profiles of the full range of housing produced. At this point, the quality aspects of schemes could be determined by prescribed ranges of HQI, rather than detailed quality criteria within SDS. The HQI system is expected to become an important tool in measurement, benchmarking, assessment and continuous improvement in value for money.

  The Corporation is working with the Government to help meet the target of bringing all social housing to a decent standard by 2010. The Corporation has issued a circular to housing associations about the decent home target and is working with the National Housing Federation to help housing associations achieve the target. Each year around £50 million of the ADP is used to fund works to existing housing association stock. The amount available is limited by other targets that the Minister has set for the ADP. However we are considering how best to use this funding to contribute to meeting the decent home target.

  The Corporation would like to see greater use of more innovative design and construction. One of the Corporation's initiatives is the Kickstart programme which aims to promote the use of offsite manufacture by housing associations to provide homes. To date around £56 million has been allocated under this scheme as part of the ADP and we aim to allocate £80 million over the period from 2001-02 to 2004-05. Given labour shortages in the construction industry and the potential reduction in time of development, this type of development needs to be encouraged.

  The Corporation is also funding a number of projects concerning design issues which are aimed at improving the quality of housing provided by housing associations. We work closely with CABE, the Commission for Architecture and the Built Environment on these projects. We also fund projects concerned with wider sustainability issues.

  In line with the Government's policy, the Housing Corporation aims to develop as much as possible on brownfield sites. Around 60 per cent of new development takes place on brownfield sites and a significant proportion of the remainder of our ADP involves regeneration of existing properties. Thus only about 10 to 15 per cent of the development funded by the Housing Corporation is on green field sites.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 1 July 2002