Building more homes Contents

Chapter 4: Building more homes on public land

153.The Government has recently committed to releasing public land for housebuilding over the course of this Parliament. This chapter will examine the Government’s plans, explore how many homes could be built on public land and investigate mechanisms for doing so.

Releasing public land for development

How many homes could be built on public land?

154.At least 900,000 hectares in England and Wales, six per cent of all land, are thought to be in public ownership.194 The proportion of publicly owned land has been estimated to be higher in major urban areas at around 15 per cent of freehold property (this rises to over 20 per cent in London).195 Quoting the Office of Fair Trading 2008 investigation into the housebuilding industry, the Home Builders Federation said that between a quarter and a third of all potential residential land was controlled by the public sector, “so it has an enormous role to play”.196

155.The London Land Commission has published a register of public land which identifies 40,000 sites across the capital; they estimate that 130,000 new homes could be built on surplus public land in London.197

156.Savills have estimated that two million homes could be built on public land in England.198 They acknowledged however that a lack of transparency as to the extent of public land holdings is a “major drawback … limited public data currently makes it impossible to conduct a comprehensive analysis of all public land.” The Minister for Housing told the Committee that he did not recognise the Savills estimate.199

2011 to 2015 Government programme of public land release

157.In June 2011 the Minister for Housing announced that the Government planned to release enough public land to build as many as 100,000 new homes by 2015.200 By the end of March 2015, the Government had disposed of land with capacity for an estimated 109,950 homes across 942 sites.201 The biggest contributors were the Ministry of Defence (38,778 homes), the Homes and Communities Agency (20,930 homes) and the Department of Health (15,185 homes).202 The Minister for Housing indicated to the Committee that this programme had provided 100,000 homes.203

158.The programme was however criticised by the National Audit Office in a June 2015 report:204

159.In response to the criticism on monitoring, the DCLG provided the Public Accounts Committee with some analysis of progress to date in January 2016.206 A sample of 100 sites that were expected to have capacity for around 9,000 homes showed that only 200 homes had so far been completed (and work had started on a further 2,400). These are disappointing numbers.

2015 to 2020 Government programme of public land release

160.The 2015 Autumn Statement announced that departments had committed to selling further land for more than 160,000 homes, as described in Table 5.

Table 5: Sales of land for housing as part of spending review settlements

Government department

Number of homes

Ministry of Defence

55,000

Department for Transport

38,000

Department for Communities and Local Government

36,000

Department of Health

26,000

Ministry of Justice

5,000

Department for Business, Innovation and Skills

1,000

Total

161,000

Source: HM Treasury, Spending Review and Autumn Statement, Cm 9162, November 2015: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/479749/52229_Blue_Book_PU1865_Web_Accessible.pdf [accessed April 2016]

161.Giving evidence to the Public Accounts Committee in January 2016, Jon Thompson, Permanent Secretary at the Ministry of Defence, explained his Department’s methodology in selecting sites:

“The Ministry of Defence owns 1,338 sites in the United Kingdom, but 85% of the built estate is on only 318 sites. We have been through all 318 of those sites and conducted a value-for-money assessment of each one in order to be able to present to our own Ministers an assessment of the various factors that would play out in all those 318 sites. This is done with a view to recommending to them which sites we think we should keep and which we should dispose of over a fairly long period.”207

162.The 2016 Budget also announced that local authorities would release public land with the capacity for a further 160,000 homes.208 The Minister for Housing confirmed to the Committee that the Government was aiming for 320,000 homes on public land in this Parliament.209 This amounts to almost one third of the Government’s target for new homes.

163.For the 2015–2020 programme, the National Audit Office recommended that the DCLG and Homes and Communities Agency should decide:

“which organisations must take responsibility for monitoring what happens to land after disposal within the period that the target applies. This monitoring should include a record of the sales proceeds, the homes actually built, and any additional revenue generated up to 2020 at least. This information should be collated at the programme level to give a better indication of programme impact on homebuilding and enable an assessment of value for money.”210

164.The Department committed to take account of the report’s recommendations.211 Following up on those recommendations in a September 2015 report, the House of Commons Public Accounts Committee said they were “concerned by [the Department’s] caution when challenged on whether it would be collecting information on the number of homes actually built.” They emphasised that without that information, the Department will be unable to measure the success of the new programme.212

165.The Department told the Public Accounts Committee in January 2016 that it was still considering “how best to monitor build” for the new programme. It said it would publish programme documentation in spring 2016 that would include details of the governance, monitoring and assurance processes.213 This does not appear to have been published yet.

166.We welcome the Government’s wish to bring public land forward for housebuilding. It can make a useful long-term contribution towards the supply of housing but we note that these efforts have yielded very little to date.

167.We endorse the conclusions and recommendations of the National Audit Office and Public Accounts Committee. Since the number of new homes the Government expects to be built on public land by 2020 amounts to nearly one third of their housebuilding target, it is essential that the Government should oversee the number of homes that are actually built. Such a role should be included within the National Infrastructure Commission’s remit.

Type of homes that could be built on public land

168.Lord Best said there was no question about the availability of public land, but the issue was “what kind of intervention we need with that land that will capture it for the good of wider society.”214 Public land provides an opportunity to build homes that the market is not necessarily willing to provide and to support the return of smaller builders.

Direct commissioning

169.One option is to directly commission the building of homes on public land. In January 2016, the Prime Minister announced that the Government would directly commission the building of ‘affordable homes’ on five sites.215 The Government’s announcement of the schemes said that as well as providing low cost housing, the direct commissioning approach would also “support smaller builders and new entrants who are ready to build but lack the resources and access to land.”216

170.Brian Berry from the Federation of Master Builders told us the principle was right but it is “very limited in scope at the moment” and would need to be on a much bigger scale to have any effect on his sector.

171.The direct commissioning of low cost homes with an explicit focus on using smaller builders is a welcome experiment. If successful, this is an approach that could be replicated on other publicly owned sites.

172.We welcome the trial of direct commissioning but it should be a much bigger part of the housebuilding programme. The implementation of our recommendations on the financing of local authority building would help with this. Direct commissioning would also provide opportunities for smaller builders.

Requirement to get full market value when selling public land

173.A number of witnesses questioned the requirement to get the best market value from the sale of public land. Stephen Noakes from Lloyds Banking Group said that to address affordability,

“you need to find a way to put subsidy in the system. Clearly, in the current economic period that is challenging, but public sector land, which is more of a balance sheet item, would be a good solution if there was a view to change that policy.”217

174.Some witnesses highlighted how relaxing the requirement to get best value would help the provision of affordable homes and smaller builders. Oxford Brookes University said that “affordable housing” provision should be included in the criteria for disposing of public land.218 Pocket Living said that local authorities could release land to smaller developers and if this was done quickly, it would “attract the smaller developers back into the market and get supply flowing again.”219

Partnering with developers to provide homes for rent

175.Developers who build to rent were keen to partner with local authorities. The British Property Federation explained that institutions interested in investing in building homes for rent struggled to compete with house builders in bidding for private land, “therefore having access to public land is important.”220 They explained how some London boroughs were leasing their land to build to rent developers, retaining ownership and deriving an income from it. Grainger plc explained how they had developed a number of sites for the Royal Borough of Kensington and Chelsea.221

176.The Orbit Group, a national housing association, called for central government to identify and release government owned land for building homes for rent:

“a development lease could be granted for developers, with the land cost deferred over (say) 30 years making the rent levels affordable compared to full market rate which is the case when buying private land.”222

177.The release of public land provides a good opportunity to support the building of low cost homes and help smaller builders return to the market. The requirement to achieve best market value when releasing public land should be relaxed. This is only going to work however if there is a central scheme that approves and compensates public bodies who sell land below market value.

Coordinating the release of central Government owned land

178.The Government Property Unit, Homes and Communities Agency and the National Infrastructure Commission have recently been assigned roles in the release of public land for housing. The responsibilities of each body, set out below, are not especially clear.

Government Property Unit

179.The Government Property Unit was established in 2010 as part of the Cabinet Office. It has central oversight over all government land and property. Its objectives include to “dispose of surplus property in a way that maximises financial return” and to “boost growth and create new homes”.223

180.The 2015 Autumn Statement said that all relevant central Government land and property would be transferred to the Government Property Unit by the end of the Parliament. Departments would be charged market-level rents for freehold assets they currently own.224

181.The Housing and Planning Act 2016 requires public authorities to declare if and why they are holding surplus land.225 When public bodies are developing proposals to sell land, the Act requires them to engage with the local authority and other appropriate public authorities to ensure local policy considerations are taken into account. The Minister for Housing told the Committee that this was where the Government Property Unit came in: “in identifying this land and parts of the public estate where we can bring things together”.226

Homes and Communities Agency

182.The 2016 Budget said that the Homes and Communities Agency would work in partnership with Network Rail and local authorities to provide land around stations for housing, commercial development and regeneration..227

183.When asked whether the Cabinet Office is responsible for surplus government land disposal, the Minister for Housing told us “No. Surplus land disposal will come generally through the Homes and Communities Agency.”228 The DCLG have described the Homes and Communities Agency as “the government’s preferred organisation for the disposal of surplus central government land.”229

National Infrastructure Commission

184.The 2016 Budget announced that the National Infrastructure Commission would investigate proposals for “unlocking growth, housing and jobs in the Cambridge—Milton Keynes—Oxford corridor”. The Commission was asking to prioritise infrastructure that would help “develop new sites (including public sector land) to meet existing and expected housing need”.230

185.Given the possibly overlapping interests of the organisations above, we asked the Minister for Housing whether central Government was sufficiently joined up in its approach to releasing public land. He replied:

“I think we are more joined-up than I can imagine we have seen for a very long time in the sense that there is an absolute join-up between the Prime Minister and the Chancellor and generally, right across No. 10, No. 11, the Treasury and DCLG, on housebuilding and releasing public land. To be fair, all landholding departments are playing their part in that. That is reported back on regularly. We have a cross-government task force … and at every meeting one of the standing items on the agenda, having worked up and identified that public sector land, is now reporting back on the progress on it … I would argue that we have an immensely joined-up approach to this and a very cross-government approach and determination to deliver it.”231

186.Lord Kerslake was concerned that the release of public land was not the priority for any individual government department:

“you have to persuade, cajole and threaten them to release this land and get on with it … you could drive transparency of surplus land and centralise the process of taking that land and moving it out for development.”232

187.A senior Cabinet minister must be given overall responsibility for identifying and coordinating the release of public land for housing, with a particular focus on providing low cost homes.


195 Ibid.

196 Written evidence from the Home Builders Federation (EHM0131)

197 London Land Commission, Register: https://maps.london.gov.uk/webmaps/LLC/ [accessed April 2016]

198 Savills, Public Land, unearthing potential, Autumn 2014: http://pdf.euro.savills.co.uk/residential---other/spotlight-public-land.pdf [accessed June 2016]. Savills said the estimate was based on analysis of public records of the central Government estate, the land holdings of the Greater London Authority and “market knowledge of the potential for development on NHS and local authority land.”

200 DCLG, ‘Announcement: Government plans release of public land to build 100,000 homes’, June 2011: https://www.gov.uk/government/news/government-plans-release-of-public-land-to-build-100-000-homes [accessed June 2016]

201 National Audit Office, Disposal of public land for new homes, (24 June 2015, Session 2015–16, HC 87)

202 Ibid.

203 Q 243. The Minister for Housing told the Committee the Government “had built 100,000 homes in the last Parliament.”

204 National Audit Office, Disposal of public land for new homes, op. cit.

205 In evidence to the Public Accounts Committee, the Department defended the inclusion of these figures on the basis that one of the objectives of the programme was to release sites that had stalled since the earlier sale. Oral evidence taken before the Public Accounts Committee, 16 July 2015 (Session 2015–16), QQ 44–45 (Peter Schofield).

206 Written evidence from DCLG to the Public Accounts Committee (DPL0001)

207 Oral evidence taken before the Public Accounts Committee, 25 January 2016 (Session 2015–16), Q 57 (Jon Thompson)

208 HM Treasury, Budget 2016, op. cit.

209 Q 243. These homes are not in addition to the one million homes anticipated by the Government over the course of this Parliament.

210 National Audit Office, Disposal of public land for new homes, op. cit.

211 HM Treasury, Government responses on the First to the Third reports from the Committee of Public Accounts: Session 2015–16, Cm 9170, December 2015 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/486482/52958_CM_9170_Treasury_Minutes_Accessible.pdf [accessed June 2016]

212 Public Accounts Committee, Disposal of public land for new homes, (2nd Report, Session 2015–16, HC 289)

213 Oral evidence taken before the Public Accounts Committee, 25 January 2016 (Session 2015–16), Q 38 (Melanie Dawes)

215 See Box 2 for the Government’s definition of an ‘affordable home’.

216 Prime Minister’s Office and DCLG, ‘PM: the government will directly build affordable homes’, 4 January 2016: https://www.gov.uk/government/news/pm-the-government-will-directly-build-affordable-homes [accessed June 2016]

217 180. The London Federation of Housing Cooperatives supported taking the “benefit to the community…rather than simply seeking the highest capital receipt.” Written evidence from the London Federation of Housing Co-Operatives (EHM0134).

218 Written evidence from Oxford Brookes University (EHM0111)

219 Written evidence from Pocket Living (EHM0109)

220 Written evidence from the British Property Federation (EHM0133)

221 Written evidence from Grainger PLC (EHM0083)

222 Written evidence from Orbit Group Ltd (EHM0091)

223 Government Property Unit (GPU): https://www.gov.uk/government/groups/government-property-unit-gpu [accessed June 2016]

224 HM Treasury, Spending Review and Autumn Statement, Cm 9162, November 2015: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/479749/52229_Blue_Book_PU1865_Web_Accessible.pdf [accessed April 2016]

225 Housing and Planning Act 2016, section 208

227 HM Treasury, Budget 2016, op. cit.

229 DCLG, Local Authority Assets, disposal guidance, March 2016: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508307/160316_Land_disposal_guidance.pdf [accessed June 2016]

230 HM Treasury, Budget 2016, op. cit.




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