Select Committee on Communities and Local Government Committee Written Evidence


Memorandum by the Housing Corporation (SRH 45)

1.  INTRODUCTION

  1.1  The Housing Corporation is a non-departmental public body sponsored by the Department for Communities and Local Government (DCLG). The Corporation supports communities across England by investing in the supply and regulating the quality of affordable homes and associated services for people whose circumstances make it difficult for them to meet their housing needs in the open market. This includes the homeless, low income families, key workers and those in need of supported accommodation.

  1.2  During 2006-08, the Corporation is investing £3.9 billion of public subsidy into housing schemes. This investment will provide 84,000 additional affordable homes, as well as support the refurbishment of some existing stock and market renewal initiatives. The 84,000 new homes will include 49,000 new social rented properties and 35,000 low cost home ownership homes. The public investment will be boosted by significant additional private finance. Since the current funding regime began in 1989, over £30 billion of private funding has been invested alongside public subsidy—making the programme one of the most significant Public-Private-Partnerships in the UK.

  1.3  We welcome the opportunity to provide evidence to this inquiry. The scope of the inquiry is extensive. Whilst our response seeks to address each of the issues identified by the Committee in its call for evidence, we recognise that there may be issues that the Committee wishes to explore in more detail. The Corporation would be happy to provide further information to the Committee, where that proves helpful to the conduct of the inquiry.

2.  THE LEVEL OF PUBLIC FUNDING REQUIRED TO MEET SOCIAL HOUSING NEEDS

  2.1  The scale of unmet demand as set out in the updated work by Alan Holmans for the Barker Review of Housing Supply suggests that 40,000 new social rented homes are needed per year. The 40,000 figure is based on the following calculations:
Net increase in social sector households (based on demographic trends etc) 16,000
Additional vacant dwellings allowed for due to the net increase in social sector households

  (eg people moving between homes)

1,000
To replace lost re-lets due to right to buy 18,000
For growing reluctance of private landlords to let to housing benefit tenants 5,000
To replace net losses in stock (eg demolition, low demand areas) 5,000
Total46,000
Total (less 6,000 for overlap with LCHO) 40,000


  2.2  In the two-year period 2006-08, the Corporation and the affordable housing sector will deliver the equivalent of 24,500 social rent homes and 17,500 low cost home ownership homes each year. This is a real growth in the provision of affordable housing with 30% more homes provided than in 2004-06, and delivered for only a 15% increase in resource. Progress has been driven by three factors—increased Government funding, growing efficiency within the sector and greater access to private equity investment.

  2.3  However, the scale of unmet demand as outlined in the report of the Barker Review of Housing Supply, and the number of people still living in temporary accommodation, means that the need for over 40,000 new social rented homes per year remains over 10,000 more each year than the Corporation is planning for 2007-08.

  2.4  While government has indicated that affordable housing will be a priority for the comprehensive spending review; it is clear that the current fiscal environment will place limits on the ability of Government to increase resources for affordable housing. Looking forward, we are unlikely to see a spending review outcome that allows the delivery of the Barker targets at the current levels of funding per home.

  2.5  A key challenge is therefore to look at how further efficiencies can be achieved in the provision of affordable housing. In September 2006 the Corporation published "Future Investment Approaches".[120] This consultation paper sets out a range of measures that could be adopted to boost affordable housing supply. We believe there is significant scope for the sector to respond to this challenge.

Key issues:

    —  since we opened up social housing grant to non RSLs, the market for grant-funded affordable housing development has become more competitive, with major volume developers taking up the new opportunity for direct receipt of grant. As entrepreneurial organisations from other sectors come forward—ALMOs, commercial developers, perhaps local authorities—this trend will strengthen;

    —  our analysis of capacity within the RSL sector has identified that there remains within the sector the capacity to lever more private finance and drive further efficiency in terms of grant rates;

    —  our analysis of the work that RSLs are doing to manage their supply chains shows that there is scope to bear down on costs and achieve further savings; and

    —  our continuing dialogue with non-RSLs and RSLs has convinced us that there is scope for further efficiency if we more closely align our bidding timetable to fit with business models in the sector.

3.  THE ROLE AND EFFECTIVENESS OF THE PLANNING SYSTEM, INCLUDING SECTION 106 AGREEMENTS IN THE PROVISION OF RENTED HOUSING AND SECURING MIXED TENURE HOUSING DEVELOPMENTS

  3.1  As the wide ranging terms of this inquiry highlight, successful delivery of affordable housing is contingent on a number of overlapping factors. However, land supply and planning stand out as of particular importance.

Land supply

  3.2  The Housing Corporation is concerned at continuing constraints to the supply of land and the impact this has on delivery of increased numbers of affordable homes. The Barker Report identified this as a critical issue in increasing housing supply and tackling affordability. While funding for social housing has increased markedly, a significant part of this increase has been absorbed by escalating land prices. Efficiency gains have mitigated some of the impact, but the supply and cost of land remains a significant stumbling block.

  3.3  As we noted in our submission to this Committee's inquiry on affordability and supply, an examination of Housing Corporation total scheme costs by region reveals significant increases in the cost of the land element of total scheme costs. There are also strong regional variations in land acquisition costs.

  3.4  Housebuilding has increased in London in recent years and the number of planning permissions has also increased significantly; there are currently existing permissions for over 140,000 homes. [121]However, the planning pipeline is not necessarily leading to increased delivery, one reason being developers seeking to control the volume of building to avoid market saturation. In addition, not all permissions are capable of implementation, and some may not have section 106 agreements in place. Planning permissions may also be used to increase land values for speculative purposes, rather than with development as a primary purpose.

Key issues:

    —  There is the potential for a damaging ripple effect. As Kate Barker's report on Housing Supply highlights, the limited supply of land drives up costs. This in turn reduces the supply of affordable housing, whilst also increasing pressure on existing social housing stock from those no longer able to afford homes outside the affordable sector.

    —  If housing need is to be met, it is vitally important that the release of land for housing development is prioritised at a both a local and regional level.

    —  However, this must be matched by an increase in delivery performance on the part of developers, if levels of demand, in particular in London, are to be met.

Section 106 agreements

  3.5  The other key area for addressing supply issues is through section 106 agreements. Over 40% of the units within the Housing Corporation's 2006-08 new build allocations have come about as a result of planning gain. In the South East, East of England and the South West these are the majority of our new build programme. They also make up a significant part of our programme in other areas of the country.
Region NameTotal units Total units on s 106 sites% s 106
East Midlands4,9861,267 25.4
Eastern 9,2775,448 58.7
London23,8998,766 36.7
North East1,334200 15.0
North West4,1878 0.2
South East17,33910,437 60.2
South West7,8763,996 50.7
West Midlands4,210902 21.4
Yorkshire & Humberside2,893 29510.2
Total76,00131,319 41.2


  3.6  To make sure that Social Housing Grant is procuring housing that is additional to that which may have been obtained anyway without Corporation investment, there is a need to understand the economics of site development and in particular, its viability.

  3.7  The Corporation has developed an economic modelling tool that can be used to examine the viability of sites and the level of grant input necessary to deliver additional affordable homes. The model, which is known as the Housing Corporation Economic Assessment Tool, is more comprehensive than other models of its type and can handle complicated mixed use and commercial sites. Our aim is to encourage local authorities, developers, planners and housing associations to use the model to help them understand the potential of development sites and to speed up negotiations between the parties.

  3.8  Sometimes mechanisms may be needed in Section 106 Agreements to address the uncertainty of site economics, particularly for larger, phased schemes where funding cannot be assured over time. Cascade agreements are often used to plan ahead and describe the actions that various parties will take in particular circumstances. These agreements have sometimes worked well, but there have also been a number of occasions where they have failed to guarantee the expected outcomes. The Corporation and English Partnerships are working together to produce a good practice guide that will help planners and developers secure cascade agreements that deliver the outcomes originally intended.

Key issues:

    —  Developing consistent best practice in section 106 negotiation will help ensure that value for grant is maximised.

    —  The extent to which the delivery of new affordable homes is contributed to by s 106 sites means that adverse market movements have the potential to affect the build out rates on those sites and affect the delivery of the Corporation's programme.

4.  THE LEVEL OF FUNDING FOR SOCIAL RENTED HOUSING AS OPPOSED TO SHARED OWNERSHIP AND OTHER FORMS OF BELOW MARKET HOUSING

  4.1  For the year 2007-08 the balance of Housing Corporation expenditure on the supply of social rented housing is forecast to be 74% against 26% spent on low cost home ownership. We have agreed targets with Government for the number of homes to be completed over 2006-08. These are split between social rented housing, with a target of 49,000 homes, and low cost home ownership, with a target of 35,000 homes. This equates to a 58% to 42% split between the products. The reason for the funding disparity is that grant-per-home required by low cost home ownership properties is less than that for social rented housing, therefore its proportion of outputs is higher than its proportion of expenditure.

  4.2  This pattern of expenditure has been set to meet the requirements of the Government's existing housing policy framework. It is important to note that other outputs such as local authority development through Housing PFI also contribute to numbers of affordable homes, but approximately 85% of development is delivered through Housing Corporation programmes. The national framework (set out, in particular, in Sustainable Communities: Homes for All[122]) does not give explicit relative weighting to social rented housing as against low cost home ownership, but sets output expectations for each product:

    —  For social rented homes: 75,000 homes completed in the three years from 2005-06 to 2007-08; and an additional supply of 10,000 homes in 2007-08 against the level of supply in 2005-06, taking total outputs for 2007-08 to over 30,000.

    —  For low cost home ownership homes: 100,000 households helped into home ownership by 2010.

  4.3  Within these targets, the balance of supply between grant funded rented and low cost home ownership housing at the regional level is set by Regional Housing Strategies, produced by Regional Housing Boards (Regional Housing and Planning Boards for future iterations.)

  4.4  For the delivery organisations we work with, the economics of site development will often require a mixture of private sale, low cost home ownership and social rented housing. There is therefore a degree of interdependence between products.

Key issues:

    —  The Corporation's current programme balance gives us the ability to ensure that developments give rise to genuinely mixed communities as we often fund rent and low cost home ownership provision on the same site. A shift in the balance of funding towards social rent will mean that different strategies may be required.

5.  THE GEOGRAPHICAL DISTRIBUTION OF SUBSIDIES FOR AFFORDABLE HOUSING

  5.1  Within the current system, the Single Housing Pot is disaggregated on a regional basis by the Department, in discussion with regional stakeholders. Regional Housing Bodies set the proportion of this pot available to the Housing Corporation as Social Housing Grant. The final allocations made by the Corporation are also dependent on the quality of bids received within a region.

  5.2  The sub-regional distribution of social housing grant is set within Regional Housing Strategies, with final allocations dependent on the quality and value of bids received. Distribution between local authorities is largely dependent on the quality and value of bids received. As such it may be influenced by, for example, site availability, or a local authorities willingness to sell land at a discount to affordable housing providers.

  5.3  The regional distribution of the Single Housing Pot has an influence on the total national output of affordable housing, as a result of significant variations in grant and cost-per-unit prices between regions (for bids to the NAHP 06-08 the range for rental housing was £39,563 (East of England) to £100,683 (London)).

  5.4  Cross boundary nomination agreements also allow rented homes provided in one area to help meet the housing needs of another; however our experience of the implementation of such agreements (for instance in Growth Areas) has been mixed.

Key issues:

    —  Distribution of housing capital funding is done using a formula which is primarily based on indicators of housing need. In delivering the programme the Corporation also needs to ensure that the deliverability of affordable housing is a significant influence. The successful implementation of cross-boundary nomination agreements will help ensure that we can align delivery at good value for grant with housing need.

6.  THE FUTURE ROLE FOR LOCAL AUTHORITIES AS BUILDERS AND MANAGERS OF SOCIAL HOUSING

  6.1  Under 27a of the 2004 Housing Act the Housing Corporation opened up the affordable housing market to a mixed economy of providers and is able to award social housing grant to both RSLs and non-RSLs. Non RSLs include not only private developers, but also ALMOs and local authorities.

  6.2  In our 2006-08 programme funding has been awarded to unregistered providers for the first time. In future, we see no reason, in principle, why funding could not be provided to ALMOs and local authorities. Indeed we have held discussions with ALMOs considering how they might take forward bids for resources in future funding rounds and a number of ALMOs have bid for funds through our current Northern Housing Challenge funding competition. Our overriding concern in making investment decisions is providing residents with high quality homes and ensuring best value for money for the tax payer.

  6.3  Similarly, the opening up of the market has also led to changes in our regulatory approach to housing management. In June 2006 Pinnacle PSG, a property management company, became the first ever non-registered body seeking to be accredited by the Housing Corporation.

  6.4  The Housing Corporation's aim is to ensure that the same high quality of service is guaranteed for tenants, irrespective of whether their home is built by a housing association or unregistered provider. Following a consultation in 2005, the Corporation developed an accreditation framework that will ensure that any non-RSLs taking on new grant-aided homes who gain accreditation will offer good quality services to residents. The framework sets out the processes and minimum standards for what bodies applying for accreditation hope to achieve. 2* and 3* local authorities and ALMOS receive automatic accreditation.

Key issue:

    —  The Housing Corporation has the ability to fund unregistered providers, including local authorities and ALMOs. Future funding of local authority or ALMO development programmes will be dependent on their bringing forward proposals that offer value for money to the tax-payer.

7.  THE EFFECTIVENESS OF DIFFERENT SOCIAL HOUSING MODELS INCLUDING TRADITIONAL LOCAL AUTHORITY HOUSING, ALMOS, HOUSING CO -OPERATIVES AND HOUSING ASSOCIATIONS

  7.1  As indicated in section 6 above, the Housing Corporation seeks to deliver high quality homes and landlord services to residents, irrespective of provider. However, prior to the most recent funding round, our regulatory ambit has only extended to registered social landlords.

  7.2  The Committee will appreciate that there are a number of different ways in which effectiveness can be measured, and the effectiveness of different models will depend on the objectives against which they are assessed. Factors to consider include supply, access and use, finance, subsidy arrangements and systems, governance, service provision and resident satisfaction. We have limited our consideration to three key areas—tenant satisfaction, financial performance and the contribution of landlords to wider neighbourhoods and communities.

Resident satisfaction

  7.3  The main indicator for resident satisfaction across all sectors is Best Value Key Performance Indicator 74a Satisfaction of Tenants with the Overall Service Provided by their Landlord. Landlords generally measure this indicator through the standardised STATUS survey which they are required to undertake every three years. Drawing conclusions across different sectors is challenging due to the relative irregularity of surveys and range of ways the data is interpreted. Having said this, there is little difference in satisfaction figures across sectors. Figures for 2004-05 show median satisfaction for the whole Housing Association[123] and Local Authority sectors at 79%.[124] Satisfaction was slightly higher for LSVTs[125] and slightly lower for a relatively small sample of ALMOs. [126]

  7.4  While using general satisfaction as an indicator of success has some value it should not be considered an absolute. The initial survey of the Housing Corporation's Resident Consultation Panel showed that demographics and neighbourhood satisfaction have an impact on satisfaction with the landlords' service. Further work may be needed to improve understanding of what the key drivers of satisfaction in landlord performance are. Pawson (2006) notes that satisfaction is not always consistent with on the ground performance, pointing to three occasions where inspectors' believed service had improved but satisfaction had fallen. Landlords have differing starting points and that ALMOs which have secured capital investment have already passed through a service quality test resident satisfaction alone is not currently a reliable test of landlord performance.

Key issues:

    —  Resident satisfaction is a useful indicator of general service quality however without better data on the drivers of satisfaction it is not on its own a reliable comparative test of landlord performance.

    —  The Housing Corporation is introducing Performance Indicators based on resident satisfaction levels as part of its regulatory and assessment framework for Housing Associations.

Financial performance

  7.5  As noted, a strength of the Housing Association sector is its ability to leverage significant levels of private finance to support new supply of affordable homes. The 2005 Global Accounts show that the gross valuation of housing properties in the RSL sector is £67.9 billion, with capital grant investment at £30.3 billion, whilst private finance drawn down is £26.9 billion. For the traditional association sector, average measures of interest cover are strong and together with measures of gearing suggest a financially robust sector with capacity for growth. Trends in profitability ratios similarly show the sector with a steady profile, responding well to the current financial demands of increasing investment in its asset base and rent restructuring. Furthermore, the confidence of the lending institutions in the stability of the housing association sector and the quality of regulatory oversight provided by the Housing Corporation, has lead to margins on debt up to 60 basis points better than equivalent borrowing by non-registered developers.

Key issue:

    —  The ability of housing associations to borrow private funding and keep it off the public balance sheet is likely to continue to prove attractive to government.

Contribution to neighbourhoods and communities

  7.6  Many proactive affordable housing providers play an active role in delivering more than just homes and landlord services. As the largest non-profit social businesses in England, Housing Associations play an important role, above and beyond their core housing functions. In measuring their effectiveness, it is therefore important to take into account their wider contribution to neighbourhoods and communities. In many cases they are now starting to adopt strategic approaches with local authorities and LSPs in the management of their assets, using them to both provide further affordable homes and to invest in community facilities and services to protect and enhance previous public and private investment, including the delivery of added-value services such as neighbourhood management, childcare provision, work around financial inclusion and tackling Respect.

  7.7  This "added value" work by social landlords can contribute effectively to the provision and maintenance of mixed and cohesive communities and the wider roles also addresses issues around social inclusion and helping residents into employment. By taking the wider view of housing within successful communities, they can help enhance the environment and the wellbeing of communities while building social capital and empowered, dynamic communities. These themes are central to the Housing Corporation's recent Neighbourhoods and Communities Strategy. [127]Similar initiatives are taken forward by many ALMOs, and high performing local authorities will ensure that their housing services are linked to other social objectives.

Key issue:

    —  In assessing differing models of housing provision, and taking a view on the performance of social landlords, it is important to consider their wider impact on neighbourhoods and communities.

8.  THE ROLE AND EFFECTIVENESS OF PRIVATE RENTED HOUSING IN MEETING HOUSING NEEDS

  8.1  A healthy private rented sector is an important part of an effective housing market. The private rented sector plays an important role as a tenure of choice for groups such as students, the economically mobile and young professionals who require the flexibility that private lettings can provide. It also provides a valuable housing resource for helping those in acute housing need.

  8.2  At present almost 2.5 million homes or 11% of total housing in England is privately rented. Of these homes, some 19% (2005) are let to recipients of housing benefit—compared to 65% of the social housing sector. Supply has grown in recent years as deregulation has opened up mortgages to individuals wanting to buy rental properties. This has seen this market expand from 47% of private rented stock in 1994 to 67% in 2003. It has also seen the median number of properties owned by landlords fall by about a third—from nine in 1994, to three today. About one in three landlords let just a single property.

  8.3  The Housing Act 2004 has recognised that this can provide some particular challenges and contains measures aimed at improving building and management standards, most notably licensing for larger HMOs. The Housing Corporation strongly supports accreditation, recognising that the high standards for building and management set in the social housing sector are not always replicated in the private sector.

  8.4  The introduction of HMO licensing has been a positive step forward, and the Corporation is pleased that local authorities can seek ministerial approval for schemes that extend HMO licensing to smaller HMOs, or selectively licence the private rented sector in areas of low demand or anti-social behaviour. We also welcome the ability of local authorities to use management orders and empty dwelling management orders to be proactive in addressing concerns about poor management in the private sector.

Key issues:

    —  The ability of the smaller landlords to maintain and repair their properties in the longer term;

    —  The impact of buy to let (and subsequent private lettings back to local authorities) on developments that are specifically trying to promote and maintain mixed communities;

    —  The activities, or lack of activities, of some private landlords (eg: in tackling anti-social tenants, contributing to neighbourhood management);

    —  The amount of housing benefit going into the private sector through temporary accommodation and the potential of this as a source of funding for new social provision.

Tackling homelessness—the Settled Homes Initiative

  8.5  The private sector also plays a critical role in enabling local authorities and RSLs to tackle homelessness. Around half of households in temporary accommodation occupy accommodation leased from the private rented sector by a local authority or RSL. The government has a target to reduce the number of people in temporary accommodation by 50% by 2010 (from around 100,000 in 1994). Initiatives to realise this target include discretionary housing payments, rent deposit schemes and the "Settled Homes Initiative".

  8.6  The Settled Homes Initiative in London has funding of £30 million to look at innovative and cost effective ways of providing good quality accommodation, initially at rents higher than target rents, but lower than current temporary accommodation rents, for an agreed period, after which rents will convert to target rents.

  8.7  The pilot is seeking to find ways of providing settled accommodation from day one (ie the homelessness duty will be discharged), and to maximise the amount of permanent accommodation which is provided in the longer term. Alongside innovative funding proposals, key selection criteria will include the extent to which providers can demonstrate that they will work with other agencies to maximise training and employment opportunities for tenants and overcome poverty trap issues for those who are able to access employment.

  8.8  Following the recent announcement of the changes to the Mayor's housing powers, recommendations and proposals for funding will be overseen by the Mayor. The recommendations will be made by a panel including the Housing Corporation, GLA, London Councils, as well as DCLG. The proposed timetable is to launch the bids round in October, with bids submitted by December, and selection in the New Year. Funding will be available from April 2007. Those eligible to bid include housing associations, local authorities, ALMOs and private sector providers.

Key issue:

    —  The success of the Settled Homes Initiative may provide a valuable model for tackling numbers of households in temporary accommodation in areas of housing need, in particular London. The Housing Corporation looks forward to the outcome of the pilot, and any lessons or approaches that can be applied more widely.

9.  THE PRIORITIES AND EFFECTIVENESS OF THE HOUSING CORPORATION, ENGLISH PARTNERSHIPS AND THE REGIONAL HOUSING BOARDS IN RESPONDING TO HOUSING NEEDS

  9.1  The Housing Corporation delivers approximately 85% of the new supply of social rented housing. However, in doing so, we are reliant on effective partnership working with English Partnerships, Regional Housing Boards and local government.

Improving homes and communities

  9.2  The leverage our investment gives us has allowed us to make radical improvements to the quality of homes delivered. The new homes we fund must meet the EcoHomes Very Good standard and must meet minimum Housing Quality Indicator standards (for instance on size). We are also delivering larger homes where needed (35% of our rental programme in London) and working so that proposed developments are assessed to ensure communities will be sustainable.

  9.3  The Corporation's investment programme also delivers on a range of social policy goals. We are, for example, ensuring the supply of affordable housing for:

    —  vulnerable people, including supported housing—more than doubling our support for affordable homes for vulnerable groups between 2004-06 and 2006-08;

    —  people in rural areas—whilst recognising continuing demand for homes in rural communities, we have succeeded in meeting targets for delivery of rural homes in recent investment rounds;

    —  new communities—working with and through the BME Housing Association sector and ensuring delivery of more larger homes, particularly in London;

    —  supporting regeneration—working closely with wider regeneration initiatives; in the North East, for example, 60% of our current funding is earmarked for regeneration areas.

Efficient and effective delivery

  9.4  Since the 2004 comprehensive spending review settlement, we have generated significant savings in our programme. This has particularly been possible through our new approach to working with a small pool of development partners and most recently the equity deal with the Council of Mortgage Lenders. Comparison of pre and post partnering grant show significant efficiency gains in the delivery of both low cost home ownership and homes for social rent. While we acknowledge it is difficult to attribute savings to particular interventions, work for the National Audit Office indicates that in 2006-07 grant saving of some £300 million has been achieved compared with 2003-04. They concluded that:

    —  the bulk of these savings arose from the competitive grant regime, the new partnering arrangements, the competitive spur from the private developers and through better procurement practice;

    —  use of a value for grant comparator when assessing bids has given a saving of £30 million; and

    —  £23 million has been saved (compared to 2004-05) though use of Modern Methods of Construction.

  9.5  We recently agreed a deal with the Council of Mortgage Lenders and now almost all open market Homebuy equity loans will be funded 50% by the Housing Corporation and 50% by private lenders. We estimate that the savings arising from this arrangement will be significant (these have been recycled into higher outputs across the Corporation's programmes—both social rent and low cost home ownership).
2006-072007-08
Savings achieved through CML deal£62.5 million £125 million


  9.6  Together this will ensure the Corporation meets or exceeds the Gershon efficiency targets as follows:
2005-062006-07 2007-08
Gershon savings Spending Review 2004 target £130 million£140 million £160 million


Regional Housing Boards

  9.7  Regional Housing Boards set the context within which the Housing Corporation delivers its investment programme. They determine the proportion of the single housing pot available and set geographic, tenure and other priorities through Regional Housing Strategies. Regional Housing Strategies have improved considerably in specificity and in their underlying evidence base. However, we consider there is room for further improvement. The Housing Corporation has sat on existing Regional Housing Boards, and is in discussion in each region on our representation on new, merged bodies. We are currently in the process of reviewing and renewing protocol agreements with regional assemblies and the Greater London Assembly.

Local Government

  9.8  Effective local authority leadership is fundamental to the success of local communities. The Housing Corporation works on a day to day basis with local authorities across the country to ensure the successful delivery of its programme. Local authority input has been key to its decision making underpinning the 2006-08 National Affordable Housing Programme, and the Housing Corporation and local authorities regularly engage to discuss local housing market issues and the role and delivery plans of Registered Social Landlords. The Corporation is also a crucial partner in delivering estate renewal and other neighbourhood regeneration projects.

  9.9  The Housing Corporation and the Local Government Association are seeking to further consolidate that relationship and are agreeing a national protocol setting out how the respective roles of the Corporation and local government complement one another. Alongside this, the Corporation is agreeing local protocols with key local authority partners. The Housing Corporation appreciates that local authorities have crucial knowledge on housing association's performance in delivering good housing management standards, tackling homelessness and contributing to a wider range of community issues, and is seeking to build local authority views on association performance into its assessment framework for housing associations.

  9.10  The Housing Corporation will be publishing later this autumn a Homelessness Strategy which will focus on consolidating links between housing associations and local authorities to tackle homelessness and provide support to those families at risk of losing their homes.

English Partnerships

  9.11  English Partnerships and the Housing Corporation collaborate extensively both at a national and regional level, with a particular focus on delivering more affordable homes. The Housing Partnership—a joint initiative between the two agencies—is a key factor in facilitating and developing that joint working.

  9.12  We currently have 12 Joint Strategic Projects that bring together English Partnerships expertise in land and development with the Housing Corporation's affordable housing investment and regulatory expertise.

  9.13  They demonstrate how delivery methods, design standards, sustainability and long-term stewardship can be improved by bringing together our joint resources and being prepared to develop creative and shared ways of working. We expect them to maximise the impact of our investment programmes, achieve economies of scale and produce a more effective use of public investment, including the delivery of more social rented homes. These are some of the most complex projects both organisations work on and demonstrate the benefits that can be realised by bringing together the collective skills within both organisations.

Housing Corporation/English Partnership Joint Strategic Projects

  Aldershot Urban Extension—4,500 new homes, schools and community facilities on MoD site. Still at early stage.

  Brunwick Road, Gloucester—gateway for regeneration with Gloucester URC. EP and HC shortlisting to invite tenders. Want to ensure high quality lon.

  Challenge Fund 2—combining EP land with HC grant to produce 1,300 new homes across the Greater South East. Over 90% MMC.

  Devonport—500 high quality homes, a healthcare centre, new shops, offices and managed workspace.

  Millbay—a mixed development that will reconnect the area of the city centre and have access to the waterfront.

  Ferrier Estate, Kidbrooke—regeneration scheme involving demolition of mono tenure estate and creation of mixed tenure sustainable community.

  Hanley South, Stoke—bringing forward and helping to shape a number of housing led schemes to address changing and low demand in the Hanley South area.

  London Wide Initiative—the initiative will increase the supply of affordable homes in Greater London for key workers and first time buyers over the next five years.

  New Islington, Manchester—regeneration of a neglected and rundown estate in Ancoats, East Manchester. Facilities will include scenic canal-side walks, cafes, shops, moorings for narrow boats, gardens and 1,400 new homes. Development underway.

  Northstowe, Cambridgeshire—urban extension will be built on a former MoD airfield site and adjacent private land northwest of Cambridge.

  Park Hill, Sheffield—largest Grade II* listed building in Britain and is located in the South Yorkshire pathfinder. The proposed development will result in a high quality scheme for the whole of Park Hill.

  Upton—sustainable urban extension to Northampton, which was identified as an area capable of accommodating 30,000 new homes by 2021.

Housing and Regeneration Delivery Review

  9.14  In February 2006, the Deputy Prime Minister announced a review of institutional structures for housing and regeneration delivery. DCLG officials have been looking closely at the roles of the Housing Corporation, English Partnerships and delivery functions from within the department with the aim of looking at options for modernisation and structural reform.

10.  THE EFFECTIVENESS OF HOUSING BENEFIT AS A MEANS OF PROVIDING ACCESS TO RENTED HOUSING TO THOSE IN NEED

  10.1  It is estimated that 65% of existing social tenants are on housing benefit and 67% of households taking up a new tenancy with a housing association are in the same position. As rent levels for social housing are in most areas significantly below those in the private sector, for social tenants, the constraints on entry to housing relate more to the supply of homes, rather than issues relating to housing benefit. However, there is one issue relating to social homes and housing benefit that the Corporation would like to bring to the attention of the Committee.

Passporting housing benefit claims

  10.2  Local authorities and Housing Associations have been very active in forming CBL partnerships, to promote choice, improve access and ease letting arrangements, including enhanced mobility between landlords and across authority boundaries. While local authorities have been proactive in managing their statutory duties in relation to lettings, within the streamlined approach to CBL, we are not aware of any comparable large-scale development around housing benefit processing. Residents might be able to get a new home fairly easily through CBL but, if they change authority district, they will need to make a fresh housing benefit claim. Moves between landlords within an authority are now treated as a change of circumstances (rather than a new claim) but, still, the system is not as agile as it might be. In some areas, housing benefit processing for several local authorities is undertaken at a central location.

Key issues:

    —  Passporting of claims between authorities is possible, and offers significant benefits, in particular greater choice and mobility for tenants. We would encourage CBL partnerships to factor-in streamlined housing benefit processing into scheme design.

11.  THE IMPACT OF THE OPERATION OF COUNCIL TAX BENEFIT ON THE AFFORDABILITY OF RENTED HOUSING

  11.1  The Corporation does not have a formal locus in the council tax regime. But in practical terms council tax is inextricably tied to rent, and very many social housing tenants are either in receipt of Council Tax Benefit or among the number who are entitled but not claiming. We would tend to agree with local government colleagues that Council Tax Benefit can impair the affordability of rented housing, by placing a tax liability on poor and low income households below the threshold of income tax.

  11.2  Our concerns are with positive outcomes for residents and fair and stable systems for landlords. In this Council Tax Benefit can be problematic, especially in its disincentives to work, to save, and its failure to assist low income households. Council Tax Benefit claims are most usually bound with housing benefit, and processing and structural delays create problems for residents and landlords.

  11.3  Withdrawal of Council Tax Benefit can negate the value of tax credits and create severe financial problems for those starting work. This is certain to have a knock-on effect to rent arrears. We look forward to the publication of the Lyons Inquiry and would support a system with clearer incentives for employment and financial stability.

12.  OTHER ISSUES

  12.1  In December John Hills will report on the future of social housing. We look forward to his findings. Key issues he may wish to explore include:

    —  The growing distance in terms of asset wealth between those in rented accommodation (and in particular social rented accommodation) and home owners.

    —  The increasing gap between market rents and social rents, in particular in London. There is an increasing case for looking at ways to reduce the divisions between social and market housing by further expanding the intermediate market, both through shared ownership and intermediate rent.

    —  The need to continue to address the optimum balance between social rented homes and homes for low cost home ownership. The National Audit Office (NAO) report A Foot on the Ladder noted that low cost home ownership (LCHO) assistance can cost the taxpayer less than half the grant needed to house people in social rented accommodation. The NAO recommended better targeting of LCHO products at those in, or likely to move into, social rented homes. This might include looking at innovative ways to deliver LCHO, to support present and prospective social renters into home ownership.

    —  Issues around tenure and targeting—it is possible that significant numbers of households are benefiting from social rented housing when they could afford to move into the market sector, or pay a market rent, at the same time as many households continue to live in temporary accommodation or overcrowded conditions. There may be a case at considering whether approaches might be explored which helped better target a limited resource at those most in need, whilst remaining consistent with the principles of mixed communities and the avoidance of residualisation.

    —  The need to ensure that social rented accommodation continues to offer appropriate support to those most in need. As many as 40% of new lettings by housing associations are to tenants have some sort of support need that means they are very likely be unable to sustain any other form of tenancy in the long term.


120   "Future Investment Approaches"-Discussion Paper HC 2006 http://www.housingcorp.gov.uk/upload/pdf/future_ investment_60922112850.pdf Back

121   Pre-publication data supplied by Greater London Authority. Back

122   "Sustainable Communities: Homes for All" ODPM/DCLG 2005 http://www.communities.gov.uk/index.asp?id=1122851 Back

123   BMG Research, Survey of Existing Housing Association Tenants (prepared for Housing Corporation), 2004. Back

124   Pawson H, Analysis of Local Authority Housing Performance 2004-05, (Housing Quality Network, 2005) (p 10). Back

125   Housing Corporation Regulatory Statistical Return. Back

126   Housemark ALMO Performance Improvement Club: Quarterly Performance Indicator Tracking 2005-05 Year End Returns, (Housemark, 2005) (p 9). Back

127   "Housing Corporation Neighbourhoods and Communities Strategy" HC 2006 http://www.housingcorp.gov.uk/upload/pdf/Neighbourhoods_20061013162421.pdf


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