Memorandum by South East England Regional
Assembly (AFH 67)
1. INTRODUCTION
1.1 The Regional Assembly only became the
Regional Planning Body for the South East region of England in
April 2001. It quickly identified that affordable housing was
a priority issue for the region. Since that time, Assembly officers
and Assembly partners have been establishing monitoring systems,
undertaking research and identifying the actions the Assembly
and others need to take to move obstacles to an increased supply
of affordable housing in the region. A special Affordable Housing
Sub-Group of the Assembly's Housing Advisory Group, chaired by
the Director of one of the region's major Registered Social Landlords,
has been established in order to provide the focus and momentum
for this work.
1.2 The Sub-Group is currently preparing
a report to the Regional Assembly's next Planning Committee on
12 June, which will identify the key obstacles to improving supply
and recommend specific actions by the Assembly and others. To
test some of the ideas in this report and garner wider support,
the Affordable Housing Sub-Group has also arranged two conferences
on Affordable Housing within the region, which will take place
in the last week of May. The conferences will be focused on tools
of delivery for affordable housing.
1.3 In order to improve the information
base about affordable housing in the region, which had previously
been poor, the Assembly has also instituted new surveys of supply
and more effective monitoring arrangements. It has also encouraged
the Regional Development Agency to take forward initiatives to
provide more affordable housing on its own sites, and to initiate
an innovative new scheme to assist the provision of affordable
housing on small sites, the Brownfield Land Assembly Trust (BLAT).
The Assembly is also joining the Development Agency in commissioning
research to identify more precisely the impact on businesses in
the South East of a continuing shortage of affordable housing.
1.4 Affordable housing is, of course, an
issue which affects other regions, and particularly the South
East region's neighbours, quite severely. We have therefore joined
with London and the East of England region to share knowledge
and responses to these problems. Affordable housing is the subject
of regular debates at the Inter-Regional Forum of elected members
of the three regions. The three regions are shortly to meet Lord
Falconer to discuss the affordable housing crisis and to press
the case for additional Government resources and other measures
to help improve supply.
1.5 In responding to the specific questions
raised by the Urban Affairs Sub-Committee, the Assembly has concentrated
on those matters where it feels it can best contribute to the
Sub-Committee's analysis from its own knowledge and understanding.
2. DEFINITION
OF "AFFORDABLE"
2.1 The Government's definition of affordable
housing is set out in Circular 6/98. This states that:
"Planning policy should not be expressed
in favour of any particular form of tenure. Therefore, the terms
affordable housing or affordable homes ... encompass both low-cost
market and subsidised housing (irrespective of tenure, ownership—whether
exclusive or shared—or financial arrangements) that will
be available to people who cannot afford to rent or buy houses
generally available on the open market".
2.2 Such a definition poses two problems.
Firstly, it leaves ambiguous whether this includes market housing,
and, if so, the type of market housing which can be included within
the affordable supply contribution. How is "available"
to be defined and monitored, and at what point in the development
process can it be clearly identified and recorded? Secondly, and
as a consequence of this ambiguity, it makes effective monitoring
difficult.
2.3 Recent correspondence (October 2001)
with our Government Office (GOSE) has been helpful in clarifying
the position, at least in the context of regional monitoring.
The letter has been widely circulated (and is an Appendix to this
submission). The significant points it makes are that "low-cost
market housing is an element of affordable housing delivered at
an agreed discount below full market value and in response to
an identified need" and, that "this does not imply that
the provision of smaller dwellings by the private sector can be
claimed to be low-cost market housing merely because they are
cheaper than larger dwellings".
2.4 This being the case the Assembly's officers
are using the following definition:
"Housing provided with a subsidy to enable
the asking price or rent to be substantially lower than the prevailing
market prices or rent in the locality".
2.5 We believe that this is simpler and
clearer than the official definition. Certainly, there is an urgent
need to iron out ambiguities in the "official" definition
as soon as possible.
3. THE SCALE
AND LOCATION
OF THE
DEMAND FOR
AFFORDABLE HOUSING
3.1 On even a fleeting analysis, it is clear
that the South East region has substantial need for affordable
housing, running across the region. This need was recognised in
the latest Regional Planning Guidance for the South East (RPG9),
approved in March 2001. Affordable housing was specifically referred
to in the Guidance as an important issue and a "provisional"
affordable housing indicator for the whole of the South East was
put forward in the Guidance. The growth of employment in the region,
coupled with high house prices, means the need for more affordable
housing has been growing more acute, on our analysis, over the
last few years. This need runs right across the region, but is
particularly acute on the western side, where house prices are
highest and job growth is strongest. We comment further on the
scale of the estimated shortfall and its implications later in
the submission.
4. THE ADEQUACY
OF THE
EXISTING SUPPLY
AND THE
AMOUNT OF
RESOURCES AVAILABLE
4.1 Monitoring the supply of new affordable
housing is difficult. In part this is due to problems with the
definition. However, it also reflects the complexities surrounding
the funding of affordable housing and the negotiation of schemes
through the development process.
4.2 The Assembly is monitoring on the basis
of two sources of information. One is the Housing Corporation
data on completions funded through the Approved Development Programme
(ADP) or through Local Authorities' Social Housing Grant (LASHG).
This shows that completions were 5,800 in 1999-2000, 5,600 in
2000-01 and 6,900 in 2001-02. The Starter Homes initiative will
boost this in the current financial year, but completions are
not expected to exceed 8,000. This data is not ideal: it includes
refurbishment and obviously excludes any units provided without
either of these subsidies. The Regional Assembly is therefore
now collecting its own information based on local authority planning
records. Preliminary findings suggest a lower level of provision
than previously thought: around 15 per cent of total completions
in 1999-2000, ie only around 4,000 per annum.
4.3 It is alarming to compare these figures
with recent DTLR data on Right-to-Buy Sales: in 1999-2000, 6,000
dwellings were sold in the South East region, and in 2000-01 a
further 4,300. In other words, present supply is at best keeping
up with the erosion of stock for "Right to Buy". On
the basis of our latest survey, it may not even be doing that.
Resources
4.4 Although some affordable housing is
provided without recourse to public funds the majority is provided
through Social Housing Grant (SHG) to Registered Social Landlords
(RSLs), either through ADP or LASHG.
4.5 In relation to the identified need for
affordable housing in the South East, the level of available funding
is low. The average HC ADP allocation results in only a limited
number of properties for most local authorities and the ability
of local authorities to supplement this to any substantial effect
through use of LASHG is largely dependent upon them being debt-free.
There is a constant struggle to provide sufficient resources for
the development opportunities that occur on Section 106 sites.
4.6 In the South East the total amount of
SHG was approximately £230 million in 2001-02. This is set
to rise to some £250 million in 2002/2003 and £290 million
in 2003-04 primarily due to increases in the ADP and assuming
a constant £140 million LASHG programme (as per 2001-02).
Whilst these sums are an increase on funding from the years immediately
preceding, they are still lower than the levels of funding available
in the early to mid-1990s. In addition, there is a question mark
against the long-term sustainability of such a large LASHG programme
in the South East in the future. The programme in the South East
is significant due primarily to the large amount of LSVT activity
that has occurred in the last 10 years or so. However, the amount
of LASHG available from the receipts of such transfers is not
never-ending.
4.7 As well as the ADP and LASHG programmes,
the South East has benefited from the Starter Homes Initiative
(SHI) to the tune of £65.6 million over the three year period
to 2003-04. This is to provide housing to key, identified public
sector employees and is expected to provide 2,550 homes over this
three year period. At present there are no indications as to what
will happen post-2003-04 but it is assumed that this is a one-off
programme.
4.8 Despite the increase in SHG funding
in the South East up to 2003-04 this will not translate into a
corresponding increase in the number of affordable homes to be
provided. This is due to the increasing costs of land, property
and works in the South East in combination with the increase in
grant rates for RSL development of affordable housing. The latter
is to enable RSLs to meet the Government's requirements in terms
of rent restructuring. It is therefore unlikely that additional
units will arise from the increased ADP in 2002-03, with only
a small increase in 2003-04. An assumed constant £140 million
LASHG will result in fewer units being provided which is likely
to negate any increase in units provided through the ADP.
5. THE EXTENT
TO WHICH
PLANNING GAIN
CAN FUND
THE LEVEL
OF AFFORDABLE
HOUSING REQUIRED
5.1 We have commented on the results of
our provisional monitoring in respect of affordable housing supply
in the previous section. That survey confirms that the contribution
of planning gain to the current provision of affordable housing
supply is certainly not adequate to meet the scale of demand in
the South East region. The present system is clumsy and too slow.
The Assembly therefore supported, in its comments on the Planning
Green Paper, the Minister's proposals for a new tariff system
of planning gain, which could provide more support for affordable
housing. We did so, however, on the basis that the new system
should be kept as simple as possible, to avoid confusion among
both developers and the public, and to ensure that the problems
of the existing system were not replicated. It also seems likely
that the new system will take some time to bring into play, and
to build momentum.
5.2 In the interim, the best possible use
should be made of the existing system, and the Assembly is encouraging
local planning authorities in the region to adopt clear and streamlined
negotiation procedures, together with a clear set of targets and
approximate percentages of affordable housing contribution, in
their Development Plans. The authorities are being further encouraged
to ensure that those targets and percentages are robustly pursued
in development negotiations.
5.3 Nevertheless, even with a more effective
system of planning gain, that alone will not provide for sufficient
resources to meet the affordable housing problem in the region.
In part, this is because of the scale of the potential shortfall,
and because provision through the present planning gain system
is uneven and uncertain. More especially, however, it is because,
even when Section 106 agreements have been reached, RSLs still
need a degree of financial support to actually provide the necessary
accommodation and manage and maintain it. This aspect of the funding
problem is inadequately understood, but is of crucial importance
if overall supply is to be improved. Additional resources therefore
need to be channelled to the Housing Corporation and RSLs, in
order to ensure that effective housing provision is actually achieved
as a result of all planning obligation/new tariff site agreements.
Additional public funds are therefore a necessary part of the
affordable housing solution, not an alternative to the planning
gain system.
6. WHETHER TARGETS
IN REGIONAL
PLANNING GUIDANCE
ARE APPROPRIATE
6.1 In regions such as the South East, for
which affordable housing provision is an issue of such clear regional
significance, the answer to this question must be in the affirmative.
This need has indeed already been partly recognised in the current
Regional Planning Guidance (RPG9). This refers on pages 50-52
to the importance of affordable housing provision and puts forward
a "provisional" indicator of affordable housing need
of some 18,000-19,000 homes a year in the whole ROSE area. No
equivalent figure for the present South East region is put forward
in RPG, but we estimate that its equivalence for our region is
11,500-12,000 dwellings per annum.
6.2 The tentative nature of this "target",
and the fact that it relates to the former ROSE area, rather than
the current region, are unhelpful. We have, nevertheless, already
found the statements in RPG very useful in supporting our work
on affordable housing. Perhaps most valuably, they have provided
a response to those who (still) sometimes argue that affordable
housing provision should not be an issue for regional engagement.
6.3 We consider that targets are needed
at the regional level for four principle reasons. Firstly, they
provide a benchmark of the scale of provision, in the same way
as the overall housing provision target for the region. This framework
provides the context for resource allocations by Government, reflected
at the regional level by the Government Office and the Housing
Corporation, which assists provision. It also fulfils the same
function of providing a framework for Development Plan allocations
by local authorities.
6.4 Secondly, it reinforces the importance
of the issue and the commitment required of local authorities
and other players, to actively pursue the issue of provision.
Despite the evident need for more affordable housing in the region,
we are still finding current examples where local authorities
are making scant reference to this topic in their draft Development
Plans. Using the policy references to target in RPG9, we have
been able to press them to do more.
6.5 Thirdly, the presence of the target
helps active and creative local authorities in their negotiations
with developers and other providers. They can point to Regional
Guidance as a requirement and therefore a reinforcement.
6.6 The regional target provides a potential
basis for targets at a sub-regional level. The scale and nature
of affordable housing need do vary across the region. Some parts
of the region have particularly acute affordable housing needs.
It is helpful, therefore, for the regional target to be broken
down to focus on these priority sub-regions, giving further guidance
and support to targeted effort and the case for further financial
resources. Although this sub-regional dimension has not yet been
adequately developed in the South East, it is a dimension we wish
to pursue, once the Government has decided how to proceed with
the Planning Green Paper proposals. We believe better sub-regional
guidance would help heighten priorities and assist affordable
housing provision, but it cannot happen if we do not have a regional
target to work from.
6.7 We therefore do need regional targets,
and we need them to be less provisional than in the current Regional
Planning Guidance for the South East.
7. WHETHER TARGETS
ON DECENT
AND AFFORDABLE
HOUSING WILL
BE MET
BY CENTRAL
AND LOCAL
GOVERNMENT
7.1 On the basis of current performance
and the analysis referred to earlier in this submission, it is
clear that that the "provisional" target for affordable
housing in the South East region will not be met. At best, we
are currently achieving little more than half that target, and
our latest survey returns suggest even this may be an exaggeration.
7.2 As previously indicated, the target
on which we are currently working in the South East region is,
itself, somewhat provisional, and is a derivation from a larger
figure covering the whole of the remainder of the South East (ROSE).
A more precise target is needed and needs to be justified by further
study. The Assembly has already begun to undertake surveys and
other work which will lead to this end, working with the Government
Office, RSLs and local authorities through its Affordable Housing
Sub-Group.
7.3 Even allowing for adjustments in the
eventual target, however, a substantial increase in the rate of
supply is likely to be necessary. Although the planning gain system
and other factors could contribute to such an increase, in our
view the principal requirement is a substantial increase in the
public resources made available for affordable housing provision.
8. THE COST
OF INADEQUATE
PROVISION
8.1 An inadequate supply of affordable housing
has both social and economic costs. In social terms, the Regional
Planning Guidance for the South East and the region's new Social
Inclusion Statement, shortly to be published, both place a strong
emphasis on improved affordable housing provision to meet social
needs. Registered Social Landlords and Housing Associations in
the region regularly draw attention to the social costs of inadequate
provision, as does RAISE, the regional voluntary sector grouping.
Previous research has shown that inadequate housing with resulting
overcrowding and other tensions, exacerbates the problems of health,
transport and sometimes crime problems.
8.2 Of equal concern are the economic consequences.
A lack of affordable housing means that employers face recruitment
difficulties and are obliged to draw their labour force from further
afield. This leads to increased costs and inefficiencies for them.
For their workforce, there are also social and economic costs,
with many workers being obliged to commute substantial distances
to work, with the resultant direct and indirect costs to their
lifestyle, and increased pressures on an already-congested transport
system.
8.3 These problems are often cited and individual
examples quoted, but the Assembly believes that the evidence to
date has been too anecdotal. It has therefore asked the Regional
Development Agency, SEEDA, to undertake joint research so as to
establish more precisely the cost to business and the economy
resulting from the shortfall in the provision of affordable housing
in the region. This research is expected to be available in the
autumn.
9. CONCLUSION
9.1 The Regional Assembly is acutely aware
of the problem of affordable housing in the South East region
and the need for further action to improve the provision of such
accommodation. It has only recently taken on the role of Regional
Planning Body, but has focused on this issue as a priority topic
for action. It is working with the Government Office, the Development
Agency, local authorities and RSLs to identify the key obstacles
to change, and to promote action and remedy. It will be considering
further reports on this topic over the next two months, and we
intend to be in a position to advise the Committee further on
the precise issues and actions which the Assembly believes should
be taken.
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