Conclusions and recommendations
The Government's housing targets
1. We
concluded in our previous report that the credit crunch does not
reduce levels of need for new housing, nor does it obviate the
necessity of addressing years of undersupply of new housing stock.
The results of the National Housing and Planning Advice Unit's
most recent research show that that conclusion remains valid.
We therefore continue strongly to support the Government's house
building targets.
The latest figures confirm, however, that the previous steady
progress towards achieving the target of 240,000 new homes per
year has been dramatically reversed. There seems to be a general
acceptance that the Government has done a lot to try to arrest
and ameliorate the fall-off in housebuilding, but the availability
of public funding is simply not enough to overcome the impact
of the credit crunch on the industry. The severe downturn in
private housebuilding has in turn had a major impact on the provision
of affordable homes due to the loss of cross-subsidy. We are
impressed by the flexible approach being taken by the Government
and the HCA to work with the industry to unblock frozen sites
and bring forward as many schemes as possible in the short term,
but this is simply not enough to fill the gap created by the recession.
(Paragraph 18)
2. There
are two further imperatives for Government action. First, it must
take all steps possible to retain capacity in the housebuilding
sector, to avoid storing up problems for the future. The Government
should monitor the situation closely and assess whether the steps
it has already taken are sufficient to maintain that capacity.
Second, and most crucially, steps must be taken to enable house
builders to sell the homes they build
and to allow housing need
to be expressed as economic demand. (Paragraph
19)
3. We welcome
the announcement in the Building Britain's Future package
of further public funding for the housing sector. This new
funding may go a considerable way towards addressing the concerns
about the provision of affordable homes and about retaining capacity
in the house building sector which have arisen from our oral evidence.
The Government will, however, need to go further. We support the
Government's decision not to abandon its long term targets for
new housebuilding—because these targets reflect known demands
and needs—but the longer the recession goes on, and the
deeper it is, the harder it will be to get back on track. Following
the announcement of new funding, the Government needs to plan
a new trajectory for housebuilding which aims to get provision
back on track as the recession eases, and to consider the range
of policies that might be needed to achieve the targets. This
plan should consider both the needs of the private housebuilding
industry and the measures needed to deliver the targets for social
rented and other affordable homes.
(Paragraph 20)
The flow of mortgage finance
4. All
our witnesses were agreed that the flow of mortgage funding was
a prerequisite for the revival of the housing market, which in
turn is a prerequisite for the achievement of the Government's
housing targets. According to the evidence we have received, the
Asset-backed Securities Guarantee Scheme, one of the most important
of the weapons in the Government's armoury for tackling the effects
of the credit crunch on its housing policy, is not working. The
design and operation of this scheme is the responsibility of the
Treasury, rather than CLG: we have not, therefore, considered
it in detail. Its successful operation, however—and indeed
the availability of mortgage funding generally—are crucial
to the achievement of CLG's policy goals. CLG—at both official
and Ministerial level—must continue to work closely with
the Treasury and keep up the pressure to ensure that mortgage
funding flows more easily and to more mortgage providers.
(Paragraph 28)
The balance of housing tenure
5. As
we reported a year ago, for thirty years Government policy has
been focussed on promoting home ownership, with insufficient attention
given to the rented sectors. Current economic circumstances,
however, demonstrate that there is no immutable law that owner
occupation should increase. The tenure is not appropriate for
a significant proportion of the population who need homes, and
much more attention needs to be paid to developing the roles of
both the private and social rented sectors. We therefore add our
voice to those arguing that the Government needs to debate and
decide on its medium- to long-term policy with regard to the balance
of tenure. (Paragraph
33)
Conclusion
6. While
we recognise the need for changes to Ministerial posts, it is
vital that CLG has continuity in its housing policy: regular changes
in the responsible Minister do not further that aim.
(Paragraph 34)
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