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

5  Implementing the House Building Programme

128. The way in which the housing programme is implemented will determine its long-term success. Issues which need to be addressed include:

  • The provision of adequate, well-funded infrastructure to enable development on brownfield and other prioritised sites which is in place as the housing is completed;
  • The impact on the natural environment, and
  • That sustainable lifestyles are encouraged by ensuring that services and employment are provided at a local level so helping to create communities.


129. There are major concerns that in the rush to boost house-building issues around the provision of infrastructure will be overlooked, or that it will not be in place in time for when new housing is completed. For instance, the South East of England Regional Assembly said

"Work on the draft Regional Spatial Strategy for the South East has highlighted wide ranging concern about the inadequacy of existing physical and social infrastructure and its inability to respond to scales of growth proposed over the next 20 years. A particular concern is that there has been a serious time lag, with infrastructure provided several years after development has taken place. The timely and assured provision of infrastructure will determine the deliverability and sustainability of the Government's proposals for improving the supply of housing".[102]

130. With the new housing likely to be concentrated in the wider South East, the costs are likely to be very high, particularly as many of the existing facilities are already overstretched. A report for the South East County Leaders Group (SECL) by Roger Tym & Partners suggests that the costs of providing appropriate infrastructure across the wider South East to support the construction of about 40,000 homes per year up to 2026 would be in the region of £46 billion. The SECL, however, suggests that the final costs could be even higher:

"The costs of providing transport infrastructure in the South East can not be easily identified for the second half of the 20 year period. Nevertheless, these findings demonstrate the seriousness of the challenge facing the Greater South East and the increased pressure which would be created were house building on the scale advocated by Barker to be pursued".[103]

131. The major elements accounting for these costs are social housing, transport provision and education services. Some of the additional costs would have occurred anyway as they are a result of population expansion rather than an increase in households and house-building. Bill Brisbane from Roger Tym & Partners told us

"Fundamentally, most of the social services, health and education is driven by population increase, not household increase or housing increase, so you still have to provide for the additional population. It is the increase in households that drives the requirement for affordable housing but all the other community, socially based things are driven by population change".[104]

132. There are three kinds of infrastructure each of which requires a different funding mechanism:

  • those that require a high initial capital outlay and limited revenue costs - such as transport schemes;
  • schools and health provision which require limited amounts of capital funding upfront and long-term revenue contributions, and
  • environmentally dependent infrastructure such as water which have large initial capital costs and where availability could pose constraints on new development.

We believe that the Government must accept that, as development proposals are brought forward, an appropriate mix of revenue and capital funding mechanisms need to be identified to meet the requirements of different kinds of infrastructure.

133. The Government has started targeting funds towards the four growth areas -Thames Gateway, Milton Keynes/South Midlands, Ashford and London-Stansted-Cambridge -across the South East, where additional house-building is being encouraged. A special £200m transport fund has been set up for 2006/2007 and 2007/2008 while the Sustainable Communities Plan, published in February 2003, committed a further £446m for Thames Gateway and £164m for the other three Growth Areas over three years between 2004 and 2007. There is some evidence that these funds are heavily oversubscribed. Bids for the transport fund totalled £600m. The South East Council Leaders commented that "The sums so far committed by Government - such as the £200m Community Infrastructure Fund - do not give confidence that this challenge will be met".[105]

134. There have been some revisions in the funding formulae used by various central Government departments. The Department of Health has introduced a Growth Area Adjustment for distributing funds to Primary Care Trusts in the Growth Areas. The Department for Education and Skills has introduced a 'safety valve' mechanism whereby local authorities can apply for additional capital support to meet new school places not otherwise covered by its 'basic needs' or other funding systems. Similarly, the Department for Transport has a £3.5bn spending programme across the Growth Areas.

135. Even so, the Government has yet to make a full estimate of the infrastructure costs of increasing house-building. As part of its response to the Barker Report, it announced that the 2007 Comprehensive Spending Review would include a cross-cutting review which would:

  • "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 to provide the national, regional and local infrastructure necessary to support future housing and population growth".[106]

136. A number of innovative funding packages are being designed and tested to ensure that developers make an appropriate contribution towards the costs of infrastructure to support their developments. Any such mechanisms will need to allow for a degree of forward-funding, if development is not to be delayed or deterred through untimely or uncertain infrastructure provision. In December 2005, the Government published a consultation document on its proposals for a planning gain supplement, which is designed to capture for the public good a proportion of the land value uplift which can result from the granting of planning permission.[107] We recognise that the timely provision of infrastructure is essential for successful and sustainable development and acknowledge the Government's commitment to finding an appropriate funding mechanism. We are examining the Government's proposals for a planning gain supplement through a separate inquiry.

137. There has been progress in identifying additional funds for infrastructure in areas where there are major house-building programmes. However, the current funding for infrastructure to support the house-building programme is insufficient. The formula-based funding mechanisms for revenue services are inadequate. Some Government Departments have made revisions to cope with the increased number of households in some areas. Nevertheless, we recommend that the Government conduct a comprehensive review to identify how it can better ensure the provision of adequate infrastructure to support its ambitious house-building programme both in the South East and nationally. The Cross-Cutting Review, which is part of the 2007 Comprehensive Spending Review, offers an important opportunity to make a clear assessment of the costs and to identify funds. It is vital that all Government Departments are committed to it.

138. Much of the scepticism towards the Government's house-building programme arises from concerns about the provision of essential services. We recommend that the Government demonstrate that services in existing housing areas will not suffer because funding and local services are diverted to the new developments or additional demands are to be placed on existing services. This may require a reassessment of local government finance formulae and a revision of funding formulae used by central government departments when distributing funds to local service providers.

139. Some witnesses argued that the provision of infrastructure should be used to facilitate development and act as a stimulant to demand, rather than just simply following agreed developments. The Royal Town Planning Institute, for instance, suggested that

"The planning system has a duty to help stimulate demand in existing communities through upgrading social infrastructure, creating better environments and improving the perception and appearance of an area".[108]

Similarly, the Environment Agency argued that

"spatial planning should direct homes to places where the necessary environmental resources are already in place. It should flag up where new facilities - like waste handling facilities and sewage treatment works are needed and signal where these types of infrastructure are a precondition of housing growth".[109]

The West Midlands Regional Assembly pointed out that it was encouraging housing development in inner urban areas because some of the infrastructure was already in place and it was easier to provide what was missing rather than start afresh in a new location.

140. The Government has started to consider how it might support increased housing supply beyond the main growth areas. It has allocated £40m to support a number of 'growth points' in 2007-2008. According to the ODPM

"These additional growth projects may be located not only within the wider South East, but wherever pressures are greatest. Much of the growth is likely to be delivered through town centre redevelopment or densification, reusing previously developed land, and through sustainable urban extensions. Such 'growth points', although generally smaller than the Government's existing four Growth Areas, will build on experience to date of housing and infrastructure delivery in these areas. Concentrating some of the additional growth within designated growth points will help protect the environment from inappropriate development and reduce the pressure on greenfield land".[110]

Yvette Cooper MP, Minister for Housing and Planning, told us that

"We have areas, towns and cities, that are saying they think it is important and in their local interest for them to expand, it will improve the town centres, it will better sustain their local economies as well and the £40 million is just initial funding to get those areas developing. Clearly, there will be much more infrastructure needs for those areas in future".[111]

141. The Government needs to adopt a more strategic approach to the provision of infrastructure; one which takes full account of differing local circumstances, requirement and aspirations. The existing availability of services should be a factor in determining the location of new house-building. By encouraging new house-building in existing urban areas, the need for new infrastructure is reduced, and, where it is required, it can be provided more easily. The provision of infrastructure should be used to open up areas which have surplus housing or potential sites and thus disperse demand to a range of urban areas.

142. The Government's new programme to fund 'growth points', with its emphasis on improving infrastructure provision in smaller urban areas, although initially very small, is welcome. The programme needs to be expanded to encompass not only areas with excessive housing demand but also those areas where new housing can be more easily accommodated but demand needs to be stimulated.

102   Ev 303 Back

103   Ev 200 Back

104   Q 298 Back

105   Ev 200 Back

106   Government response to the Barker Review, p.25. Back

107   ODPM and HM Customs & Excise , Planning Gain Supplement: A Consultation, December 2005.


108   Ev 349 Back

109   Ev 385 Back

110   Government Response to the Barker Review, p.45. Back

111   Q 526 Back

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