2 The changing role of the Housing Corporation
4. The Housing Corporation was established under
the 1964 Housing Act. Since the 1974 Housing Act it has the remit
to fund and regulate registered housing associations. There are
2,232 housing associations on the Corporation's register. Most
associations are small and own fewer than 250 homes. The largest
7% of housing associations with more than 2,500 homes own 78%
of all the homes. The Housing Corporation's investment budget
is increasing from £900m in 2002-2003 to £1.7bn in 2005-2006.
In the two years between 2004 and 2006, the Corporation is expecting
to fund the building of about 67,000 homes.
5. Until the 1988 Housing Act, responsibility for
the provision of social housing rested with local authorities.
Housing association developments funded by the Housing Corporation
complemented that. The 1988 Act removed local authorities' remit
to develop housing and made the Housing Corporation the main provider
of public subsidies for new social housing. The 1988 Act also
changed the form of subsidy. 'Gap' funding was provided to make
social housing viable for housing associations, with the balance
of funding coming from private borrowing by housing associations.
6. The Government is now seeking to increase the
overall supply of housing spurred on by Kate Barker's report for
the Treasury and ODPM[1]
which argued that the national shortage of housing was affecting
the economy. The desperate shortage of affordable housing has
increased the pressure on the Housing Corporation to maximise
the number of homes built through its investment programme.
7. The Housing Corporation's main relationships outside
central Government have until recently been with the housing associations
which it regulates and funds. The Housing Corporation now has
to work with a far wider range of organisations and initiatives.
These include:
National Level
- The Government is promoting
major house-building programmes to address the shortages in the
South East, mainly in four growth areas in Ashford, the Thames
Gateway, the corridor between Stansted and Cambridge and around
Milton Keynes. The Government is funding Low Demand Pathfinder
Initiatives in nine areas in the North and the Midlands, to tackle
the low demand for housing and to regenerate the areas.
Regional Level
- Regional Housing Boards are developing strategies
which are designed to promote more accountable housing policies.
Local Level
- Most local authorities are developing planning
policies to secure affordable housing through planning agreements
with developers of mixed tenure housing estates. The Housing Corporation
provides some of the funds for the resulting social housing.
Housing Association level
- As Housing Associations have taken on a central
role in the provision and management of social housing owning
assets worth more than £60bn, so the Corporation has come
under pressure from the Government to improve the regulation of
the stock and the services provided. The Audit Commission is also
now responsible for inspecting the quality of housing associations.
8. With the scale of changes which are occurring
in the development and management of housing, there is widespread
confusion about which agency is responsible for the provision
and funding of social housing, and about the role of the Housing
Corporation. The Council of Mortgage Lenders said:
"While partnership is important, there is a
risk that efficient co-ordinated delivery will be impeded by a
dispersal of aspects of the investment role amongst different
bodies."[2]
9. There is now considerable confusion about which
agency is responsible for the provision of social housing. There
is a clear need to clarify the Housing Corporation's relationships
with all the agencies engaged in the provision of affordable housing.
We consider how these relationships can be clarified in the rest
of this report.
The end to end review
10. The ODPM has recognised the need to reform the
way the Housing Corporation works. It is carrying out an 'end
to end' review of the Housing Corporation. These reviews are carried
out periodically on all Government agencies to assist them to
improve their performance and better achieve targets. The review
was announced on 16 September 2003 and is being managed by a Project
Board. It is chaired by the ODPM and includes representatives
from the Housing Corporation, the construction industry, housing
associations, local government, the Audit Commission and practitioners.
Initial work was carried out by internal consultants. An action
plan identifying action arising from the review is expected to
be published at the end of June 2004.
11. The ODPM's supplementary submission set out the
key themes of the review which are:
- How the Housing Corporation
relates to other agencies;
- Efficiency at a local delivery level - in terms
of the management of housing associations and their investment
funds.[3]
12. The significant changes taking place in the provision
of affordable and social housing require a fundamental review
of the way social housing programmes and funding are managed.
The results of the end-to-end review which were presented to the
Committee in the ODPM's supplementary evidence[4]
suggest that it has not taken 'a root and branch' approach to
the review of the future role of the Housing Corporation at a
time when radical changes are being implemented at all levels
of housing policy.
13. The End to End Review should consider how
decisions on housing investment should be taken and then determine
the Housing Corporation's role in that framework at a national,
regional and local level. This report considers the Housing
Corporation's role in developing national housing policy and achieving
the Government's sustainable communities plan, its relationships
with the regional housing boards, local authorities and housing
associations and new approaches to regulation and inspection.
1 Delivering stability: Securing our future housing
needs Kate Barker, HM Treasury 2004 Back
2
THC10 Back
3
THC 1(a) Back
4
THC 1(a) Back
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