Memorandum by HM Treasury (PGS 48)
POLICY CONTEXT
1. Kate Barker's independent review of housing
supply, commissioned jointly by the Chancellor and Deputy Prime
Minister in April 2003, identified long-term structural weaknesses
in UK housing supply as threatening the UK's future economic and
social success. The Review identified rising demand for housing,
driven by prosperity and demographic change, and highlighted how
housing supply was failing to keep pace, leading to increasingly
unaffordable housing.
2. The Government's Response to the Barker
Review, published alongside the 2005 Pre-Budget Report, concluded
that improving affordability for future generations of homebuyers
required housing supply to become much more responsive to demand.
Drawing on the 2002-based household projections, the response
concluded that for Government to meet its aim of improved affordability,
new housing supply in England would need to increase over the
next decade to around 200,000 net additions per year. This compares
with a net additions figure of around 160,000 for 2005, up from
a post-war low of around 130,000 in 2001.
3. To address the demographic and wider
socio-economic challenges posed by housing under-supply, the Government's
Response to the Barker Review announced the following key measures:
— further reforms to the planning system
to ensure that local and regional plans prepare and release more
land, in the appropriate places, and at the appropriate time,
to meet our future housing requirements;
— a consultation on the Planning-gain
Supplement (PGS) to help local communities fund and deliver the
infrastructure necessary to support housing growth and share in
the benefits it will bring. The Government is now considering
responses to the consultation and further announcements on PGS
implementation will be made by the end of the year; and
— to inform the 2007 Comprehensive
Spending Review, a cross-cutting review to determine the social,
transport and environmental infrastructure implications of housing
growth in different spatial forms and locations, and to effectively
co-ordinate the strategic delivery of infrastructure investment
across departments necessary to enable the additional housing
required.
4. Progressing this reform programme will enable
the Government to set out at CSR07 its detailed plans for achieving
a significant and sustainable increase in housing supply over
the next decade, helping extend home ownership to another million
people in the next five years and taking the country towards the
Government's aspiration of 75 per cent home ownership.
SCOPE OF
THE REVIEW
5. Flourishing communities are not created
by new housing alone. Increased demand for housing, especially
in the areas most affected, comes with the need to provide public
services, such as schools, health centres, waste disposal, public
transport, green space and policing. There is likely to be increasing
water and energy demand, while flood defence and transport infrastructure
may well be needed. In addition, wider policy objectives require
that a proportion of overall housing growth be in the form of
affordable housing.
6. To address these issues, the Government's
Response to the Barker Review established a cross-cutting review
into supporting housing growth, as part of CSR07, with the following
terms of reference:
"To ensure that appropriate infrastructure
will be provided to support housing and population growth, the
Government is today announcing, to inform the 2007 Comprehensive
Spending Review, a cross-cutting review into supporting housing
growth to:
— determine the social, transport
and environmental infrastructure implications of housing growth
in different spatial forms and locations;
— establish a framework for sustainable
and cost-effective patterns of growth, including by examining
the use of targeted investment through the Community Infrastructure
Fund and Growth Areas funding to support the fastest-growing areas;
and
— ensure that departmental resources
across government are targeted appropriately for providing the
national, regional and local infrastructure necessary to support
future housing and population growth." (PBR paragraph 3.115)
7. The Review's scope covers all significant
social, transport and environmental infrastructure necessary to
support sustainable housing growth. Drawing on the above terms
of reference, specific objectives for the review are to:
— develop a firmer understanding of
the different infrastructure needs and costs of housing growth
in different spatial forms and locations;
— determine some of the wider economic,
social and environmental costs and benefits of different spatial
forms of growth;
— assess the broad availability and
potential housing capacity of different land types and locations,
as well as the existing infrastructure capacity of broad potential
areas of housing growth;
— determine the most efficient and
effective delivery mechanisms for housing growth-related infrastructure
provision, including by examining central government planning
and allocation processes, specific programme funding through the
Growth Areas and Community Infrastructure Fund, and the appropriate
role of developer contributions—taking into account ongoing
work on the Planning-gain Supplement and s106; and to
— develop a funding and policy framework
for delivering cost-effective and sustainable patterns of housing
growth over the next CSR period and beyond.
8. The review will not seek to determine
the detailed spatial distribution or location of housing growth.
This is an issue for the planning system.
TIMETABLE
9. The review will report to the Chief Secretary
to the Treasury ahead of the 2007 Comprehensive Spending Review.
It will engage over the coming months with a wide range of stakeholders
within government and externally as part of a comprehensive process
of evidence and information gathering.
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