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

Memorandum by the Local Government Information Unit (LGIU) (AH 02)


  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.


  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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