Our regular policy and practice update

01/07/10

Our regular policy and practice update South East policy in new times
Linking housing and the macro-economic environment

Michelle Chivunga, South East Policy and Practice Officer, gives an overview of the key policy issues emerging as a result of a new government and new policy environment, setting out work of the CIH South East policy team in supporting the economic recovery agenda.

Michelle states, 'The sector needs to continue to be innovative, working in partnership and building up its leadership roles to deliver on goals in the new environment. It's critical that there's greater recognition of the bigger role housing has to play in driving forward the economic recovery.'

The agenda has changed and we want to hear your views

Within the new economic and political context and environment, what are the top three priorities in your area?

What areas of policy or practice do you want to know more about?

Where should the focus be?

The housing sector finds itself in interesting and challenging times, as we welcome the Conservative-Liberal Democrat coalition government and the new policy environment that looks set to change the focus and way in which the sector operates.

The coalition government has begun to establish its foundations based on the localism agenda - devolving power and promoting greater empowerment, responsibility and control to local councils, communities, neighbourhoods and individuals. There is a shift from the previous government's top-down approach to allow for increased local decision making, accountability and creating a society that is based on freedom, fairness and responsibility. The coalition partners have clearly indicated that reducing the deficit and ensuring economic recovery will take precedent.

A full programme of policies of the Conservative-Liberal Democrat coalition government is outlined in the document The Coalition: our programme for government (pdf - 487kb).

The Queen's speech outlined a number of Bills in the legislative programme. Some will have regulatory implications for housing - devolved power, infrastructure changes, housing delivery requirements. Through the Decentralisation and Localism Bill, local councils and communities will have a bigger influence on housing and planning issues. New local housing trusts are to be set up to boost affordable housing and reforms made to the local authority Housing Revenue Account (HRA). A number of other key reforms proposed include welfare reform that will impact on benefits and the worklessness agenda, review into rents, tenure and planning.

The Financial Services Regulation Bill was the basis for the emergency budget. The finance sector will see a shift in the regulatory provider with most powers moving away from the Financial Services Authority to the Bank of England. It has been suggested that Hector Sants, Chief Executive of the Financial Services Authority, will be made a deputy governor at the central bank. These changes are significant for housing moving forward as detailed decisions on cuts in public spending and tax changes are further outlined in the emergency budget and the Comprehensive Spending Review.

Social housing regulation has come under scrutiny as plans to abolish the Tenant Services Authority are underway, with hints that its powers will be moved to the Homes and Communities Agency (HCA).

New housing policy priorities
The government has provided an emphasis on greater access to home ownership, planning reform, abolishing regional infrastructures, new housing supply under local control and better promotion of energy efficiency measures. Through the localism agenda, local authorities and communities with greater powers around housing and planning will play a bigger role in increasing housing supply and driving sustainable economic development through local enterprise partnerships. Raising the stamp duty threshold for first-time buyers and making better use of existing stock are some of the initiatives proposed.

Radical change to the planning system will see the removal of Regional Spatial Strategies and the Infrastructure Planning Commission. The new arrangements will allow a national planning framework to be set up that will outline economic and environmental priorities. Recently, home information packs were axed - a move aimed at increasing and speeding up house sales without the packs' financial burden. The move has been welcomed by sellers. However, concerns remain over the cost to first-time buyers and the loss of jobs.

Housing cuts
Initial announcements around savings indicate that the government aims to make £6.2 billion savings in the coming year, £500m to be directed to improving the UK's 'growth potential'. It's clear that funding and financing for many sectors will be significantly constrained. The Communities and Local Government budget will be slashed by £780 million presenting further shortages in funding but it's encouraging that £170 million of savings will be reinvested back to generate 4,000 social rented homes.

A number of HCA housing programmes will see drops including the National Affordable Housing Programme and Kickstart Round 2, which will see budget reductions of £100 and £50 million respectively. The HCA has played a huge role in delivering affordable housing in the South East, exceeding its targets for 2009-10. New developments delivered through the National Affordable Housing Programme in the South East rose by over 11% to 10,177 and the other programmess performed well.

Challenges and opportunities - shaping policy
The South East continues to be challenged by shortfalls in affordable housing, widening gaps in affordability, high overcrowding levels, a number of housing delivery barriers and an ever-growing waiting list. 70% of children in the South East are priced out of their communities, according to a recent YouGov survey.

Everyone agrees that there's a desperate need for more affordable housing delivered at a faster rate than previously. But it's critical that there's greater recognition of the bigger role housing has to play in driving forward economic recovery.

This key message needs to be increasingly articulated to government and the sector as we tackle the deficit and promote economic recovery. The upcoming proposals around the Housing Revenue Account, rents and benefits will be key for the South East which has significant affordability pressures. Proposals might enable communities better access to jobs, have less reliance on benefits and possibly encourage efficiency and productivity as a result of greater flexibility within the structures.

A new government and policy presents opportunities to exploit new ways of delivering housing that is better linked to local people's needs. Devolving power to local authorities and communities presents real opportunity for focusing on local priorities. But concerns still remain about local authorities' capacity, skills and resource base to undertake this increased responsibility. The leadership of authorities will be a key challenge moving forward.

Spending cuts, structural changes and the economic environment present real challenges for service provision that will impact on tenants as well. Limited finances will mean that now, more than ever before, we need to work harder and smarter. We need to be innovative, working in partnership to deliver on our goals.

CIH South East work
CIH South East will continue to work within this context. This is reflected in our established priorities.

Supporting the needs of ageing and other vulnerable people.

Linking housing and the economy - driving the economy into recovery.

Supporting the delivery of the right type, quality and quantity of affordable homes.

Forging strong partnerships - building sustainable and cohesive communities.

Housing and the economy event
Recently CIH South East and its coalition members organised a housing and economy event that provided an overview of the links between housing and the economy. The event had a mix of speakers and included a follow-up by Oliver Kamm from The Times who provided delegates with an insight into the importance of the macro-economic linkages with the housing sector.

Some of his key messages.

There is a fundamental weakness in the UK economy which has very high debt levels.

It can be challenging to manage the future outlook - the UK went into recession in a very weak position and will, therefore, find it difficult to reach full recovery. But it is possible.

Housing will have a very central role to play in the recovery.

Fiscal and monetary policy will impact on and, in some cases, pose a serious constraint to the UK economy.

The Retail Price Index has a huge macro-economic implication - it's significant to take into account the cost of housing and measure house prices in monetary decisions.

Housing has been in a self-sustaining bubble - it's people's main leverage.

Credit is critical in keeping activity moving but credit will continue to be scarce.

It's important that there is a healthy rented sector to allow for the mobile workforce needed to sustain growth. Which means that it's important to explore how to encourage a healthy rented sector.

Michelle will continue to look further at this agenda. She will follow the event with a report highlighting the linkages between housing and the economy.

As well as next year's South East annual conference, we have a number of other events planned within the region including those on home ownership and leasehold management, older people's housing and support, training and career development, procurement, homelessness and tackling worklessness.

Michelle Chivunga, South East Policy and Practice Officer
Chartered Institute of Housing, 9 White Lion Street, London, N1 9JX
t: 020 7520 3389
e: michelle.chivunga@cih.org