Housing and Planning Bill

Written evidence submitted by the CBI (HPB 33)

1. As a cross-sector lobbying organisation, the CBI represents the wider business community when it advocates for urgent action to address the national shortfall of housing. CBI members regard the lack of housing as a major threat to business competitiveness and the well-being of their employees, particularly in areas with large gaps in affordability. The 2015 CBI/CBRE London Business Survey found that 57% of firms reported that a lack of housing is constraining recruitment of entry-level staff, while 50% of respondents are paying wage premiums to attract and retain employees.

2. The CBI has advocated in its flagship report Housing Britain for policymakers to develop a national housing strategy to comprehensively address the housing crisis, with flexibility at local level to accommodate devolved approaches to housing delivery. This strategy should be underpinned by increasing the transparency of public sector landholdings to expedite land release for housing, including low quality green belt no longer fit for its intended purpose. Additionally, planning reform should continue to embed, with a focus on depoliticising the planning process.

3. These perspectives continue to inform CBI’s outlook on the housing debate. While firms have welcomed the government’s ambition on improving housing and planning, business is eager to see measures which boost the supply of all types and tenures. The Starter Homes programme, planning reform, and Right to Buy agreement can boost investment into housing if these measures are suitably strengthened, with a focus placed on protecting the affordability of new homes. Accordingly, CBI is calling for the enactment of the following amendments to the Housing and Planning Bill:

4. Starter Homes must remain affordable for the long term

· Ensure that local authorities have the ability to determine the Starter Homes allocation on sites in their area

· Develop robust covenants on Starter Home resale to maintain their affordability

· Create a statutory "duty to cooperate" among central government departments on land release

5. Planning reform must be sustained and embed

· Empower councils to trial innovative approaches to improving local planning capacity

· Strengthen the links between housing and infrastructure planning

6. On the extension of the Right to Buy

· Accelerate the pace of deregulation to help housing associations regain classification as independent bodies

· Provide clarity on the "terms and conditions" attached to Right to Buy grants

· Develop a national strategy for replacing lost social housing

Starter Homes must remain affordable for the long term

7. Starter Homes are a welcome supply-side policy intervention, and members are keen to work with policymakers to achieve the government’s ambitious target of 200,000 Starter Homes over this Parliament. However, the classification of Starter Homes as affordable housing in planning agreements carries a risk of reducing the viability of some developments. Many developers and councils would like to retain flexibility on the provision of Starter Homes on new sites to best reflect local conditions. Accordingly, CBI would be eager to see a clause in the legislation ensuring that local authorities can determine the Starter Homes allocation on sites in conjunction with developers and the community.

8. An additional concern arising from businesses is the potential for affordable housing "leakage", with Starter Homes sold on the open market at full value after only a short period of occupation. Although the Bill mentions covenants on resale to avoid such speculation, CBI would like to see robust covenants in place, such as maintaining the 20% discount in perpetuity or prolonged minimum terms of occupation.

9. A final hurdle to overcome to fulfil Starter Homes’ potential stems from achieving the 20% discount generated by planning obligation exemptions. Many developers believe that the savings from forgoing Community Infrastructure Levy or Section 106 requirements will not equate to the discount’s value. CBI believes that reducing other development costs – particularly land acquisition and remediation – could right this imbalance. With the government prioritising the disposal and development of public land, creating a statutory "duty to cooperate" among central government departments on land release would free up more land for Starter Homes in a timely and cost-effective fashion and spur an inflow of finance at favourable borrowing rates.

Planning reform must be sustained and embed

10. Firms have welcomed the bold action laid out by the government to streamline the planning system. The introduction of a "zonal" system of permission in principle on certain sites, more robust Local Plans, creation of a registry of all brownfield land, and inclusion of housing within the Nationally Significant Infrastructure Project (NSIP) regime will significantly reduce the red tape surrounding planning. The priority for business going forward will be to sustain and embed these reforms, enabling house-building to accelerate to meet rising demand.

11. However, these reforms aside, the planning system is under strain, with a lack of capacity and resources at local level to meet the high expectations of business and government. If local planning cannot sustain the reforms made at national level, the planning system will remain a barrier to delivery. Business recognises the scale of the challenge, and would like to see innovative measures to alleviate the burden on planners, such as allowing councils to act as "trailblazers" to trial the use of accredited planners in the private sector, pooling capacity across authority boundaries to generate efficiencies, and even increasing planning fees for more timely decisions, a prospect supported by 7 out of 10 firms polled in the 2015 CBI/AECOM Infrastructure Survey.

12. A second area for action is creating closer linkages between the creation of housing and infrastructure. At present developers believe that the insufficient link between infrastructure and housing imposes significant added costs and delays, particularly at a project’s early stages. Accordingly, a primary criterion for assessing Local Plans going forward should centre on whether these Local Plans adequately assess the infrastructure needs for new housing developments in their community. Land offers another opportunity for joining up housing and infrastructure delivery. The brownfield register should be broadened to include all publicly-owned land, giving a fuller picture of where infrastructure and housing could develop in tandem to support and sustain communities.

Extending the Right to Buy: Facilitating delivery of replacement stock

13. CBI fully supported the deal reached between the NHF and the government on extending the Right to Buy. Although the agreement did not affect the ONS’ decision to reclassify housing associations as public sector bodies, it lays the groundwork for future status reviews, and begins the process of deregulation needed to help associations become more agile and commercial to meet the need for affordable housing in the future. It is therefore imperative that implementation of the agreement fulfils its intended purpose of enabling associations to replace sold stock within two years.

14. In addition, the possible "terms and conditions" underpinning government grant payments of Right to Buy should be articulated at an early stage to provide clarity for housing associations, investors, and local authorities about what is expected during the sale and replacement process. At present the uncertainty surrounding these stipulations is a source of concern for stakeholders ready to chart out their approach for building new homes following Right to Buy sales. However, setting out what the terms and conditions may be would allow for improved scenario planning and flexibility from the business community.

15. One mechanism for ensuring the timely replacement of sold stock could be the creation of a national strategy by business and government (which could be referenced in the legislation but designed outside the bill process) to map out the location and volume of housing to be replenished. With distinct regional variations in the location of high value council homes sold to fund Right to Buy purchases as well as the uptake of Right to Buy itself, a national strategy would enable business and government to collaborate on addressing the complex challenge posed by replacing stock, and catalyse the development of more targeted local interventions.

November 2015

Prepared 17th November 2015