Letwin’s Let Down

Letwin's Let Down

So, last week, Oliver Letwin published five months worth of work which the industry could – and probably did – tell him over lunch. The news is that there is no evidence of land banking, only landholding which is required to maintain a sustainable industry. He could have saved a lot of time and money and just dusted off one of the previous reviews but apparently, in government, reinventing the wheel is the fashion.

Letwin’s entire review into why build out rates are slow pretty much boiled down to two points – that it is to do with the lack of diversification of the product by individual house builders and, linked to this, that smaller house builders are effectively excluded from the process. Disappointingly one suspects for the government, it did not point the finger at the industry as a whole for failing to deliver housing, leaving the government with little wriggle room for further punitive measures (or at least substantively evidenced measures).

Whilst highlighting the need for continued investment in the private rented sector and the ‘unlimited demand’ for social housing (as distinct from affordable housing) the report conveniently ignored the massive constraints and disincentives to the delivery of social housing which are intrinsic to the system.

With Letwin waxing lyrical, borrowing lines from Jane Austen’s ‘Emma’ (the whole potential of the report to simply be some form of irony is not lost on anyone) is this – along with the £1bn social housing funding, the blinkered commitment to Right to Buy and the ever elusive Social Housing Green Paper actually part of a serious attempt to look at the dynamics of the market and how government can work with it?

In a conclusion which comes as news to no-one, the report acknowledged that flooding the market with the same product will simply deflate prices, which will be negative to the industry and the economy as a whole and which, quite frankly, the industry just wouldn’t do anyway, I mean, why would it?? So maybe we can now try to move on from the bizarre assumption that private sector, profit-based housebuilders have some sort of moral duty to deliver social housing, rather than the government having a moral duty to ensure its citizens are housed in suitable accommodation.

There is still no sign of the long-promised Social Housing Green Paper – pre-recess we hear but who knows and will it focus on supply or solely on post-Grenfell building standards? And, above all, what is meant by social housing? Increasingly policy is divergent from politics and community feeling at the local level where the view is that social housing should be just that, not intermediate, not affordable rent, but genuine social rent. However, this is less of a vote winner amongst some demographics so perhaps the answer lies there, or perhaps I am being too cynical.

To avoid being too churlish, it is worth acknowledging that the Secretary of State has very recently ‘confirmed’ £1bn of funding for social housing – confirmed being the key word here, lest anyone think it was new money being announced. Of course the money is welcomed but it by no means goes far enough to address decades of under-funding and structural issues which prevent the delivery of social housing. It is, pretty much laughable in terms of the real difference it will make to delivering affordable housing over the long-term.

This is a bidding process which actually is for all tenures of affordable housing, which means that social rented is likely to still struggle to be delivered, not to mention the question of how deskilled and under-resourced Councils pull together the expertise needed to bid for and deliver homes. Many local authorities are now setting up their own housing delivery vehicles with varying degrees of success. Politically controversial, these housing cos effectively find themselves as private sector developers, delivering only the proportion of social housing which makes a scheme viable. And so we come full circle.

Amidst this, government continues with the skewed system of right to buy which literally strips social housing out of the supply chain and puts the lions share of the profits into the Treasury, diverting the fund from local government and with it any chance of replacing lost housing stock.

Government is fond of telling everyone that the housing market is broken but there is a paucity of radical ideas being driven forward to fix it, and little acknowledgement of the role of Central government within it. For example, where is the relaxing of finance rules to allow local authorities to borrow against future yield to develop their own housing, a solution which pretty much the whole industry knows is the key to facilitating the building programme that is really needed.

Let us hope that, as and when the Green Paper makes an appearance, it responds less to the issues government wants to resolve, more to the issues that actually exist and provides steps towards genuine restructuring of the market. I will gladly stand corrected.

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