Memorandum by the Local Government Information
Unit (LGIU) (AH 02)
SUMMARY
The evidence from the LGIU focuses on the government's
case for promoting home ownership; whether home purchase tackles
inequalities; the balance between increasing the supply of private
housing and of subsidised housing; and how the planning system
should respond to market demand.
The LGIU supports the Barker Review's conclusions
on the need for a large overall increase in housing supply, largely
because of the scale of unmet need. However, we are not convinced
that extending home ownership is the correct housing priority;
that it may not be sustainable; and that public resources of land
and money should be targeted at those in the most housing need—through
building publicly rented homes and through concentrating support
for intermediate housing on those least able to buy.
We have serious concerns about the government's
proposals to change planning in order to bring forward land more
quickly to meet market demand. We do not believe that the planning
system has delayed the production of new homes. Using the market
as a critical issue for triggering permission could undermine
the role of local authorities and the status of the local plan.
Local authorities should have the key role in achieving the objectives
of sustainability and mixed communities. Responding to the market
will not be enough to meet the current and medium term supply
need for affordable housing.
EVIDENCE
1. The Local Government Information Unit
(LGIU) is an independent policy and research organisation, which
provides information, advice and training and lobbies government
for its 145 local authority and nine trade union affiliates.
2. The LGIU welcomes this inquiry: affordability
and the supply of housing is a topical and controversial issue
and the Committee's views should be influential in the wider debate
around the Barker Review into housing supply. We note that there
are going to be two further housing inquiries that are clearly
inter-related with this one, and trust that the Committee will,
at some stage, consider the evidence to all three as a whole.
3. Given the short consultation period we
have focused on four specific issues:
— the potential benefits of and scope
to promote greater homeownership;
— the extent to which home purchase
tackles social and economic inequalities and reduces poverty;
— the relative importance of increasing
the supply of private housing as opposed to subsidised housing;
and
— how the planning system should respond
to the demand for housing for sale.
The potential benefits of and scope to promote
greater homeownership and the extent to which home purchase tackles
social and economic inequalities and reduces poverty
4. David Miliband, speaking to a regeneration
conference in October 2005, said that social housing can blight
already deprived communities, and that there needs to be a reduction
in social housing and an increase in "attractive" owner
occupied housing in these areas. The clear implication is that
home ownership produces stronger communities and more stable neighbourhoods.
There is, however, no hard evidence to back up these claims. Good
quality, properly resourced and well managed council and housing
association housing can also deliver these benefits.
5. Claims such as these for home ownership
are reflected in the government's objective to boost home ownership,
as outlined in the Five Year Plan for Housing (January
2005), and stated in Labour's manifesto, to create more than one
million more home owners by the end of this Parliament. Ministers
also always point to the dubious "fact" that everyone
wants to own their own home. Shelter, produced research in January
2005 ("Home Truths: the reality behind our housing aspirations")
that challenged assumptions behind perceptions of home ownership.
The research showed that the clear priorities of those people
questioned (a cross section but particularly those on low incomes)
were: living in a safe neighbourhood and being able to afford
their housing costs. There are, of course, many people who when
asked specifically aspire to own—because they see housing
as a good investment or because they cannot get access to suitable
rented housing, but this should not be the determining factor
in deciding on housing policy.
6. Part of the government's case for ever
increasing home ownership is that it extends choice and promotes
greater wealth equality. However, it is clear that the unprecedented
rise in owner occupation has actually increased wealth inequality
and housing inequality over the last 20 to 30 years. The Barker
Review provided a profile of the changing nature of the social
housing sector; increasing numbers of households with the head
of the household being economically inactive; most leaving the
sector being in work; and a changing age profile as a result.
These conditions, along with massive cuts to housing investment,
have resulted in growing residualisation of the sector. The government's
emphasis on home ownership could actually create greater housing
and social inequality.
7. The government's objective of maximum
home ownership rather than sustainable home ownership is questionable
given the rise in house prices relative to earnings; increased
job flexibility and the increasing poverty in working age households
without dependent children; the numbers of owners without adequate
mortgage insurance; and people entering home ownership that can
only just afford to. An economic downturn could result in repossessions
and homelessness.
8. Currently there are very severe limits
on households' ability to become home owners in many parts of
the country. Enabling many of those who are currently unable to
enter home ownership to do so means that increasingly public money
will have to be put into subsidising home ownership, through low
cost ownership schemes. Public money and public land are being
used for home ownership at the expense of building more publicly
rented homes.
9. Although the LGIU believes there is a
case for changing the private and rented homes mix on some estates,
there is not a rational case for any wholesale reduction in affordable
rented housing, or for prioritising public resources to facilitate
home ownership, when there is such an acute shortage of affordable
housing.
The relative importance of increasing the supply
of private housing as opposed to subsidised housing
10. The related question to this is whether
the government has got the balance right between putting resources
into subsidised home ownership through low cost home ownership
schemes and publicly rented housing.
11. The LGIU supports specific initiatives
to boost low cost home ownership, for example in areas of market
decline, but not the current priority given to them. Many of the
proposed initiatives, such as equity shared schemes, do not actually
increase the supply of housing. There is, however, a clear need
and market for intermediate housing, but there should be a more
comprehensive, needs-based assessment of this market, "that
might inform better targeting of housing market policies and products"
(Limits to working households' ability to become home owners,
Steve Wilcox for Joseph Rowntree Foundation, 2005). Steve
Wilcox also expresses a note of caution that although there is
a large potential market for Intermediate Housing Market (IHM)
schemes, many households may prefer to move to less expensive
areas in order to become home-owners, rather than take up shared
ownership. We support his conclusion that IHM schemes should focus
more on the households that cannot afford to buy at the very lowest
end of the market, rather than those schemes which enable households
who could, in any event, afford to purchase at the lowest end
to move into more expensive areas.
12. The LGIU supports the Barker Review
and the government in calling for a large overall increase in
new house building. The numbers of households have increased by
more than 30% over the last 30 years, whilst the level of house
building has fallen by more than half (Survey of English Households
2004-05). While we believe that there should be further debate
on the Barker methodology which proposes targets for new housing
that will achieve a specific decrease in house inflation, we support
the case that current supply is inadequate to meet housing needs
over the short to medium term.
13. However, housing supply must reflect
changes in demand within and between regions, reflecting the numbers
and types of households and incomes. Much of the decline in the
number of housing completions over the past 30 years has resulted
from the fall in output of publicly funded, subsidised housing.
In 1970, 173,000 houses were built by local authorities. By 2001,
local authorities built only 487 homes while Registered Social
Landlords built 22,000 homes. Right-to-Buy has also reduced the
stock of social housing—with over 1.5 million homes transferred
to the private sector. The LGIU wants to see the majority of resources
targeted on those in most housing need through building publicly
rented housing.
How the planning system should respond to the
demand for housing for sale
14. There is a myth that planning has delayed
the construction of new homes. In 2003 in the South East, there
was land with planning permission for 90,000 homes and allocations
in local plans for a further 109,000 (Draft South-East Plan Part
1). In reality the market limits the release of land to maintain
price levels. We are therefore concerned about the government's
focus on the need to change planning to meet market demand and
on the proposals it has put forward in the consultation on "Planning
for Housing Provision". The market will always be looking
for sites which have low development costs and where house prices
are the highest. This will not generate low cost housing on brownfield
sites or more complex sites near transport nodes. The market must
be a consideration in planning for housing, but not the sole consideration:
meeting community needs must also be a priority. Responding to
the market will not be enough to meet the current and medium term
supply need for affordable housing.
15. There are inevitable tensions between
achieving faster development on a larger scale and delivering
sustainable, high quality housing. Market led planning decisions
could mean that there is less emphasis on the planning system
facilitating regeneration and creating demand in existing communities.
Using the market as a critical issue for triggering permission
could undermine the role of local authorities and the status of
the local plan. Local authorities should have the key role in
achieving the objectives of sustainability and mixed communities.
Planning for Housing Provision does not discuss how a mix
of housing will be achieved. Meeting market demand will not meet
the specific needs of people who cannot enter the market.
16. The government has made progress in
developing brownfield land for housing and in increasing densities.
The emphasis on the market could threaten greater urban sprawl.
The proposals in the government's recent consultation on the Green
Belt will not in themselves fully protect sensitive areas. The
consultation paper seems to imply some criticism of the "brownfield
first" approach: "in some places local authorities have
failed to deliver agreed housing numbers because they have rejected
applications for housing development as premature, until brownfield
sites had been developed first".
17. We are concerned that, in the absence
of a clear policy to create a better mix of housing policy, reducing
local authorities' powers will allow developers to build what
they want where they want. We would emphasise the need for local
planning to take the lead, directing the location of housing demand,
not just blindly following the market. We also need measures to
reduce the ability of developers to hold on to land with planning
permission while they wait for prices to rise.
18. The LGIU shares some of the concerns
expressed by the Environmental Audit Committee in January 2005
in their report on Housing: Building a Sustainable Future,
particularly the proposals in Barker that land should be brought
forward automatically for housing development based on pre-determined
market indicators. It is clear that the government's focus is
on using planning to respond to market demand rather than housing
need: we believe they have got the balance between the two wrong.
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