Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Third Report


The Government's plans for a major house-building programme are based on the widespread belief that increasing the volume of housing stock is the most important way to tackle the crisis of unaffordable housing in the UK. There have been long discussions about the scale of the house-building programme required for the growing numbers of households, with different organisations offering a range of projections. During our inquiry, the Government published new housing projections which suggested that the number of households was growing at about 209,000 per year; about 20,000 higher than the previous estimate. Any house-building target has to be sufficient to match household growth. The Government has set a target of 200,000 additional homes per year by 2016, about 40,000 more than is currently built. Bearing in mind the new household growth projections, this target may be inadequate. Several assumptions are however built into the projections which may prove false. As housing policy is increasingly based on household growth projections, it is important that these projections are kept under review as firmer information becomes available.

Promoting homeownership is an underlying objective of the Government's programme. Homeownership offers unparalleled opportunities for households to accumulate wealth, but for many, it is not an option, and the provision of social housing for rent should be given equal priority.

In recent years, there has been an increase in the development of affordable housing funded through the Housing Corporation but the increase has mainly been in shared ownership and equity share schemes. There are about 100,000 households in temporary housing. The balance given to different forms of tenure will vary, according to the needs of different areas. It is important that in the 2007 Comprehensive Spending Review, there is a major increase in funding for social rented housing. Many witnesses pointed to the complexity of the housing market. There are many factors, other than supply, which affect affordability of housing. It is important for the Government to avoid an over-simplistic reliance on one policy and to examine a range of strategies which might influence demand. In addition, it is important that the new house-building programme caters for a wide range of needs. The recent increase in two bedroom flats in town and city centres needs to be balanced by an increase in family housing which ensures mixed sustainable communities. The needs for older people and the disabled should also not be overlooked in the pressure to promote an increase in private housing.

The particular nature of the housing market means a simple supply and demand model cannot be applied to the housing market. With the multitude of factors affecting house prices it is very difficult to support an increase in housing supply simply on the basis of improving affordability. The recent increase in homeownership and growing levels of consumer debt have made many households vulnerable to losing their homes. The Government should look at how it can tackle this situation.

The Government's stated commitment to a major house-building programme offers a one-off opportunity that should provide model housing developments that reinforce the role of our towns and cities by fostering sustainable communities, which are well provided with the necessary services at the outset, and which achieve very high levels of environment efficiency.

We were struck by the concerns in much of the evidence about the relaxation in planning controls proposed in the new draft PPS3, which could result in urban sprawl and undermine regeneration efforts in established urban centres. There is an argument for responding to market pressures, in particular in areas with more jobs than homes. The opportunity, however, must be grasped, wherever possible, to revitalise areas suffering from low housing demand, where giving in to market pressure to build in high demand areas on the edge of cities would further hollow out those inner city areas. Local authority powers to prioritise developments on brown field sites in urban areas should not be eroded.

Too often in the past housing has been built with the necessary infrastructure being put in place afterwards. Progress is being made to identify funds for the new transport links, health services and schools to serve the new housing developments. To allay local community concerns that the new house-building will put extra strain on existing services, a more structured approach is required with forward funding mechanisms in place to demonstrate that the facilities will be in place as the first residents move in, and that revenue funds are available to support them in the long term. The 2007 Comprehensive Spending Review will be an opportunity for the Government to demonstrate its commitment.

With much of the development being planned in the wider South East, an area with major water shortages and significant flood plains, the house-building programme will have to be carefully managed. Such facilities as reservoirs and sewage works will have to be planned into the programme at the outset as many could take up to 20 years to be developed.

A major house-building programme could have a significant impact on climate change. The Government must have regard to the environmental impact of its plans and not allow its commitment to house building to have undue impact. However, the environmental impacts can be reduced, if the new housing incorporates water and energy saving devices. The Government published the draft Code for Sustainable Homes, which aims to improve the environmental performance of new homes. It is important that the code is sufficiently aspirational and that the Government sets a timetable for incorporating it into the Building Regulations leading the way to even higher environmental standards. Incentives are also required so that the environmental performance of existing homes is improved.

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