Written evidence from the National Housing
Federation
The National Housing Federation represents 1,200
not-for-profit housing associations in England, and is the voice
of affordable housing. Our members provide two and a half million
homes for more than five million people. The Federation welcomes
the opportunity to provide evidence to the Business, Innovation
and Skills Select Committee's timely inquiry into the New Local
Enterprise Partnerships.
The Federation operates on a regional basis, enabling
us to work more closely with our members. Regional committees
oversee the Federation's work in each region. We facilitate the
representation of housing associations in regional structures.
In the past, this has included housing representation on Regional
Assemblies, and working closely with RDAs and more recently, Leaders'
Boards. We therefore feel well-placed to comment on the proposed
new Local Enterprise Partnerships.
SUMMARY OF
THE FEDERATION'S
EVIDENCE TO
THE COMMITTEE
— Housing and economic development are
interdependent and must be viewed together. — Local Enterprise
Partnerships should set out a housing and planning strategy for
the area they cover.
— There is a need for coordination at a
level between LEPs and national government.
— Civic society should be represented on
LEP boards, and this should include housing associations as successful
local social enterprises.
— LEPs must cover spatial areas large enough
that they can act strategically.
— New structures should ensure that the
needs of rural communities are not overlooked.
— Transitional arrangements are important
at a critical time for the economic recovery. This can best be
managed by establishing slimmed-down regional residual bodies
and a dedicated funding stream for LEP set-up.
RECOMMENDATIONS THE
COMMITTEE SHOULD
CONSIDER INCLUDING
IN ITS
REPORT
1. Local Enterprise Partnerships should be charged
with developing a planning strategy and housing strategy for the
area they cover. 2. Slimmed down regional residual bodies should
be encouraged where there is local support, and where they exist
should take on the overseeing of European Regional Development
Fund allocations.
3. Government should make clear that it expects
to see civic society and social enterprise representation on LEPs.
4. The Committee should request clarification
from government on the expected membership of LEPs, and ascertain
how LEPs which are conterminous with a single upper tier authority
would add value or be able to plan and act strategically.
5. The Committee should consider the case for
additional funding or support for LEPs in rural areas to ensure
the gap in productivity and housing provision between urban and
rural areas does not widen.
6. A time-limited funding stream should be established
to enable the transition from Regional Development Agencies to
LEPs, with the LEP partners taking responsibility for funding
their partnership in the longer term.
7. The Homes and Communities Agency should be
charged with managing and developing regionally significant sites
currently in RDA ownership.
DETAILED EVIDENCE
Housing and economic development
Housing and economic development are interdependent,
and must be viewed together. Investment in housing creates substantial
economic value. By contrast, failure to plan and invest in affordable
accommodation affects access to skilled workers, the mobility
of the workforce and undermines business and public services.
Investment in affordable housing creates value for
the rest of the economy. Modelling by Oxford Economics demonstrates
that due to the economic multiplier effect, for every £1
spent on house building, £1.40 in gross output will be generated
across the economy as a whole.[44]
Housing associations are also key employers. Housing
associations employ over 144,000 people and help create hundreds
of apprenticeship opportunities each year.
Demand for new housing is rising. Government
projections suggest nearly 258,000 new households will form every
year in England from 2006 to 2026.[45]
However, while demand for housing is growing, supply is falling,
with fewer than 60% of the new homes England needs being built
each year.[46]
Housing associations are doing their best to buck the trend, completing
and starting work on more homes each year. But if the Government's
vision of a private-sector led economic recovery is to take place,
we must plan and build more housing of all tenures, and this must
be closely linked to planning for economic growth.
Failure to plan and invest in affordable housing
affects the mobility of the workforce. Lack of supply means tenants
cannot move to secure employment or take up better work. The economic
cost of tenant immobility is estimated conservatively at £542
million per annum. By far the largest part of this estimate relates
to the £305 million cost of tenants being unable to act as
carers for relatives, but some £48 million relates to tenants
who wish to move to secure employment but are unable to do so,
and a further £18 million is lost to the economy based on
tenants who wish to move to take up better work but unable to
do so.[47]
The British economy cannot afford these figures to grow. Workforce
mobility will be a key component of private-sector led economic
growth, and with the current housing need, this means increasing
housing supply in the right places.
Functions of the new Local Enterprise Partnerships
The letter sent by the Secretaries of State
for Business, Innovation and Skills and for Communities and Local
Government to local authority leaders on 29 June this year[48]
set out the role of Local Enterprise Partnerships (LEPs) as providing
strategic leadership in their areas to set out local economic
priorities. The letter went on to suggest that issues to be tackled
by LEPs would include:
— Employment and enterprise.
— Transition to the low carbon economy.
The Federation is pleased to see that the Secretaries
of State see planning and housing as an issue for LEPs to tackle.
Whilst we respect the Government's decision to act swiftly to
abolish Regional Spatial Strategies, as per manifesto commitments,
we remain convinced that there remains a need for a "larger
than local" planning function.
Such a function will be necessary to deliver
the Government's objectives in terms of economic development and
related housing provision, not to mention the Government's environmental,
infrastructure and sustainable development objectives.
RECOMMENDATION
The Federation believes that LEPs should
be charged with developing a planning strategy and housing strategy
for the area they cover.
This strategy should make an assessment of housing
need in the area covered by the LEP and set out how the partners
intend to meet it. Such strategies need not result in any loss
of local control—they could be agreed on a consensual basis
between LEP partners, but once agreed should be binding. The LEP
should have some powers to aid cooperation over implementation
once the plans are agreed.
We believe such a strategy is essential to ensure
that housing and other infrastructure provision is made to support
economic development. In a constrained fiscal climate, strategic
planning is of enhanced importance in order to ensure resources
are appropriately prioritised.
The Regional Growth Fund, and funding arrangements
under the LEP system
We understand Government has committed £1
billion, from within the existing spending envelope, to the Regional
Growth Fund (RGF) to support activity that has the greatest impact
on sub-national growth.
The RGF is currently subject to a joint consultation
run by the Treasury, BIS and CLG. The Federation is concerned
that RGF as currently envisaged is structured in a way that benefits
large well-established partnerships to the detriment of smaller
LEPs. We believe several issues need to be resolved as a result
of the consultation:
— How the RGF will integrate with existing
funding streams like the European Regional Development Fund (ERDF).
— How RGF will be allocated between LEPs,
in particular ensuring that need is taken into account and that
the bidding process is not dominated by stronger LEPs, thereby
reinforcing existing disparities.
— We understand the first bidding round
for RGF will commence this December. We are concerned that this
leaves very little time for LEPs to develop proposals and therefore
those with large pre-packaged bids.
The Federation welcomes the inclusion of social
enterprise in the funds aim to create additional sustainable private
sector growth. We believe this inclusive approach presents real
opportunities, and our members look forward to working with partners
on innovative and exciting bids to the fund.
The Federation believes the RGF could have an
important role to play in supporting the Government's proposal
for a "Green Deal". The Green Deal is likely to produce
a significant number of new jobs in the green construction and
refurbishment sectors, an area where housing associations have
a good deal of expertise. Our members are already working with
RDAs to ensure that ERDF funds are used to conduct energy efficient
refurbishment of existing social housing stock. RGF could augment
existing ERDF funding to expand this programme, or to ensure that
the materials required can be manufactured and sourced locally.
Government proposals for ensuring co-ordination
of roles between different LEPs and co-ordination of regional
economic strategy
We are not aware of any proposals from Government
for coordinating roles between different LEPs. However, in some
regions—notably the North West, Yorkshire and Humber, and
the North East—there appears to be enthusiasm for slimmed
down regional residual bodies to undertake high-level strategic
functions and make the case for investment in those regions.[49]
The Federation would support such bodies, which we
believe could fulfil a useful function, particularly around regional-level
support, coordination and distribution of funding. The Federation
believes that is neither practical nor desirable for coordination
of LEPs (at the scale they are proposed) to take place in Whitehall.
Coordination between LEPs is necessary as emerging
LEPs may not reflect functioning economic areas, travel to work
areas or strategic housing market areas. There will be regionally
significant strategic developments which are interdependent with
developments in neighbouring LEPs—for example, an industrial
estate development in one LEP which relies on infrastructure such
as access roads being developed in the LEP next door, or a new
housing development intended to house those who will work in the
neighbouring authority. Many of these strategic developments take
years to emerge and their interdependence should be supported.
We believe residual bodies could have an important
ongoing role in coordinating access to the European Regional Development
Fund. ERDF has been managed by the RDAs and overseen by programme
monitoring committee representing the key stakeholders in the
region. A residual regional body could incorporate this role with
minimal disruption or transition.
The Government's stated aim of reducing bureaucracy
is laudable, but the replacement of one RDA with several LEPs
carries an inherent risk of duplication of staffing and back office
functions. We believe the retention of a slimmed-down residual
regional body could allow for effective sharing of resources between
LEPs and avoid such duplication. At a time when local authorities
are increasingly looking to share key staff and services, whilst
retaining their individual arrangements for governance and accountability,
it would be perverse if existing cross-boundary services were
broken up and duplicated, especially in light of current funding
constraints.
RECOMMENDATION
Slimmed down regional residual bodies should
be encouraged where there is local support, and where they exist
should take on the overseeing of ERDF allocations.
Structure and accountability of LEPs
The Government's consultation on the Regional Growth
Fund states that it will be crucial for partnerships to achieve
strong business engagement, operating on the basis of "equal
partnership" between local authorities and business, with
a private sector chair in most instances.
Whilst the Federation agrees that strong business
support for partnerships is essential, we also believe that civic
society and social enterprise should be represented on LEPs. It
would be inconsistent with the Government's stated aim of building
a "big society" if such organisations, which include
housing associations, were not included in these partnerships.
It would also be inconsistent with the stated aims of the Regional
Growth Fund, which includes the social enterprise within its definition
of private sector growth. The Government sees an important role
for civic society in the delivery of public services, large numbers
of people are employed by social enterprises and they have a key
role in the provision of apprenticeship and back-to-work opportunities.
RECOMMENDATION
Government should make clear that it expects
to see civic society and social enterprise representation on LEPs.
The letter sent by the Secretaries of State to local
authorities on 29 June states that "To be sufficiently strategic,
we would expect that partnerships would include groups of upper
tier authorities".[50]
The Federation agrees that LEPs must be strategic bodies, covering
a large enough spatial area that they can plan and act strategically.
However, since that letter was published, authorities have been
advised that LEPs could cover just one upper-tier local authority,
and indeed several authorities are preparing proposals along these
lines.[51]
The Federation believes it is unlikely that partnerships covering
such small areas can be sufficiently strategic.
RECOMMENDATION
The Committee should request clarification
from government on the expected membership of LEPs, and ascertain
how LEPs which are conterminous with a single upper tier authority
would add value or be able to plan and act strategically.
It is natural that areas with strong existing partnerships
will be well placed to develop effective LEPs at an early stage.
Intelligence from the Federation's members and regional managers
suggests this is the case, with existing sub-regional partnerships
such as the Tees Valley MAA authorities, the Leeds City Region
and the Association of Greater Manchester Authorities already
advancing LEP proposals.
City Regions have demonstrated the value of
cross-boundary cooperation between local authorities, based on
an agreed governance framework. For example, the Birmingham, Black
Country and Coventry City Region has agreed a Multi Area Agreement
around jobs and skills[52]—exactly
the sort of economic development activity the Government wishes
to see LEPs advancing.
However, it is important to recognise that areas
with strong existing sub-regional partnership arrangements tend
to be large conurbations.[53]
The Federation is concerned that partnerships in rural areas are
generally far less advanced, and that LEPs in these areas may
prove slower to develop and lack capacity, at least in the short
term. This is unfortunate, given that rural areas already have
lower productivity per capita than urban communities[54]
and house price to salary ratios are wider.[55]
There may therefore be a case for additional funding or support
for LEPs in these areas to ensure that this gap does not widen.
RECOMMENDATION
The Committee should consider the case for
additional funding or support for LEPs in rural areas to ensure
the gap in productivity and housing provision between urban and
rural areas does not widen.
The legislative framework and timetable for converting
RDAs to LEPs, the transitional arrangements, and the arrangements
for residual spending and liability of RDAs
We know that the Government intends to introduce
legislation as part of the Decentralisation and Localism Bill.
Details of the framework and timetable are expected to emerge
in the forthcoming White Paper on LEPs. The Federation believes
a swift transition with maximum continuity is desirable, hence
our support for slimmed-down regional residual bodies.
We are not aware of any funding to support the
development of LEPs, and therefore assume that government expects
their running costs to be funded by their sponsor organisations,
principally local authorities. Whilst this will reinforce the
strong relationship between local authorities and LEPs which the
government wishes to see, in a period of fiscal restraint it also
makes LEPs reliant on diminishing local authority budgets. The
Federation is concerned that this may result in LEPs which lack
the capacity and profile to attract outside funding and deliver
local economic renewal.
RECOMMENDATION
We therefore recommend that a time-limited
funding stream is established to enable the transition from RDAs
to LEPs, with the LEP partners taking responsibility for funding
their partnership in the longer term.
We recognise that in areas that do not retain a residual
body, the assets, liabilities and on-going spending commitments
of existing RDAs will need to be apportioned. The Federation believes
there may be a role for the Homes and Communities Agency to play
here, particularly around the use and development of regionally-significant
sites currently in RDA ownership. The value of unused land owned
by RDAs was estimated at 31 March last year at £268 million.[56]
These sites could make a significant contribution to economic
growth and housing supply, and it would be unfortunate if their
development was delayed in a protracted period of negotiation
and reorganisation (it has been suggested that LEPs may not start
operation until March 2012[57]).
We believe the HCA is an agency with the track record, skills
and existing partnerships necessary to manage the development
of complex strategic sites like those in RDA ownership.
RECOMMENDATION
The Homes and Communities Agency should be
charged with managing and developing regionally significant sites
currently in RDA ownership.
Means of procuring funding from outside bodies
(including EU funding) under the new arrangements
RDAs have managed the allocation of several streams
of funding, not least European Regional Development Funds. These
funds will continue to be allocated by Europe at existing spatial
levels—eg the nine English regions. The Commission will
also continue to expect match-funding for ERDF allocations.
The Federation believes it would be desirable for
the existing Programme Monitoring Committees to continue to function
at regional level—preferably as part of a regional residual
body, or at the very least as a joint committee of the LEPs in
each region. This would ensure that bids are coordinated within
regions and that prioritisation can occur at a local rather than
national or European level.
Given the complexity of the funding streams
concerned, it is unlikely to be possible, or cost-effective, for
every LEP to have a dedicated resource to manage these programmes.
It would therefore be preferable, and consistent with the localism
agenda, for this function to be performed regionally rather than
funding bids being considered in Whitehall or Brussels.
13 August 2010
44 Oxford Economics, Economic Impact of Social Housing
Cuts-Report for the National Housing Federation, July 2010. Back
45
National Housing and Planning Advice Unit, May 2009. Back
46
Home Truths England, National Housing Federation, October
2009. Back
47
HumanCity, Counting Costs-The Economic and Social Impact of
Reduced Mobility in Social Housing. Back
48
Letter to local authority leaders from Rt Hon Vince Cable MP
and Rt Hon Eric Pickles MP, 29 June, 2010http://www.bis.gov.uk/assets/biscore/regional/docs/10-1026-final-letter-local-enterprise-partnerships.pdf Back
49
See, for example, article in the Local Government Chronicle,
30/7/10:http://www.lgcplus.com/briefings/services/economic-development/leps-a-swots-guide/5017743.blog Back
50
Letter to local authority leaders from Rt Hon Vince Cable MP
and Rt Hon Eric Pickles MP, 29 June, 2010 http://www.bis.gov.uk/assets/biscore/regional/docs/10-1026-final-letter-local-enterprise-partnerships.pdf Back
51
See for example, article in the Local Government Chronicle,
30/7/10: http://www.lgcplus.com/briefings/services/economic-development/leps-a-swots-guide/5017743.blog
and comments from the Decentralisation Minister in the same article. Back
52
See http://www.cityregion.org/CRmainsite/Key-Publicatoins-and-Documents/MAA_Document_-_2nd_September_(LATEST)[1].doc Back
53
City Regions by their very nature centre on large conurbations,
but the MAAs approved to date are also almost exclusively in urban
areas-see MAA Forum: http://www.nlgn.org.uk/maaforum/about/ Back
54
ONS Statistics on GVA per head by urban and rural classifications,
quoted in "The State of The Countryside 2010" (p
104), Commission for Rural Communities, 2010. Back
55
"The State of The Countryside 2010" (p 49),
Commission for Rural Communities, 2010. Back
56
Answer to Parliamentary question, 3 June 2009 http://www.publications.parliament.uk/pa/cm200809/cmhansrd/cm090909/text/90909w0041.htm£0909106000060 Back
57
FT, "Business fears rise as RDA is axed", 29
June, 2010. Back
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