Vistry’s CEO of Partnerships & Regeneration, Stephen Teagle, looks at what needs to be done to deliver more affordable housing.
Optimism is the word. In their pre-election campaign, Labour promised to address the housing crisis and do it quickly. In Government, they are already living up to that promise and making early changes focussed on planning reform and devolution of funding and powers. The level of expectation – and optimism – around Labour’s plans and what they will do next is the highest I’ve seen in my 40-year career, especially after Angela Rayner’s promise to ‘unleash the biggest wave of affordable and social housing in a generation’.
The Government’s first steps have been big bold and very welcome, but it is the changes made over the coming months that will lay the foundations for solving the housing crisis over the long term.
The rising cost of inaction
In December last year, the Tony Blair Institute published a report on the benefits of preventative healthcare. The report stated: ‘We are treating disease too late and, as a result of pent-up demand, our NHS cannot cope… Economic growth and productivity are both being severely damaged by chronic ill health, not to mention the levels of individual suffering created by this problem.’
This same argument can be made around housing. We take too long to treat the cause, which leads to pent up demand, and our housing system cannot cope, leading to spiralling costs for the government and its people. Economic growth and productivity are both greatly improved when more people have their own homes, and individuals without homes suffer both mentally and physically.
Over the next five years, the potential term of this Government, the UK could easily spend £10bn on temporary accommodation and see its costs overtake our annual capital funding on housing. We’re spending billions on sticking-plasters when we should be trying to heal.
The Government shows signs of moving towards a more preventative approach and increasing grant funding. Without a significant increase in investment, housing targets will not be achieved. According to JLL, over £200bn will be needed to build enough homes for everyone on the social housing waiting list. Whatever the level of investment the Government can deploy, the investment will pay for itself in the long term, as according to a recent Hyde report, every £1 of grant in social housing is paid back to the economy within four years.
Investing in the development of new homes and communities now will prevent increased costs, economic harm and individual suffering on a massive scale later. We can’t have a situation where the government is spending more each year on poor quality temporary accommodation rather than on funding new affordable housing which provides safe and secure homes for people.
This is a generational crisis that requires a generational fix
Coming back to the next few months, the policies put in place now will shape housebuilding for at least the next five years and potentially for decades ahead.
Today, the private sector builds around 150,000 homes every year – half of the Government’s build target. Even if that number were to increase significantly both registered providers and Local Authorities will have a key role to play in filling the gap. To build at this scale will take significant long-term investment across the sector. It will require a long-term financial settlement, for at least 10 years. It may also be beneficial to see a something-for-something promise, with long term rent settlements linked to a commitment to deliver new homes.
There are people collecting keys today for a new home that was planned over 20 years ago. Builders need to plan decades into the future. Registered providers and local authorities are no different.
Whatever your views on HS2, it would not have got off the ground if it wasn’t treated as a project of national significance that was planned over the long term. To make something similar work for housing we need to address skills shortages, find solutions to land availability and guarantee funding over the long term. All three are required and all three need funding if the Government’s targets are going to be met.
A King’s ransom
The Chancellor is right to take this on and the King’s speech showed us the Government will make unpopular decisions where necessary. Their plans to fix the planning system and stop the building blockers will shift the power away from those who already own homes toward helping people who need them. Inevitably, building new towns and releasing grey belt land will not always be popular.
But the payoff will be significant. It is a fight well worth having.
