Carol Matthews is Chair of Homes for the North
During the general election campaign, housing had a walk-on role as a temporary diversion from the Brexit debate. The Conservatives and Labour both played it safe by speaking to their instinctive supporters about home ownership and council housing, respectively. More difficult questions about how to prepare the pipelines of land and money to deliver more homes were largely avoided.
With the election now concluded the new Government, armed with a large majority, is set to grapple with the question of how to deliver improvements for voters across the ‘Blue Wall’ of seats it secured in December, including many in the North, stretching from Leigh to Blyth Valley.
Homes for the North (H4N) perceives two big challenges standing in the way of the Conservative Manifesto aspiration to deliver 300,000 homes a year from the mid-2020s. One of these is about housing investment, the other is about housing land supply. Both are about how housing opportunity is shared across the English regions.
Levelling up housing investment in the North
The North needs more homes – many more. Research by CEBR/Quod, commissioned by H4N, found that two million new homes are needed in the North by 2050 to support the delivery of the transformative ambitions of the Northern Powerhouse Independent Economic Review, almost double long-term rates of housing delivery.
The North currently has a 28 per cent share of English households, but ONS predictions only have it contributing 18 per cent of future growth based on historic trends. In short, the North’s share of working age households is falling, and this trend must be reversed if we are to deliver a Northern Powerhouse economy based on attracting and retaining a wide variety of skilled workers.
Further research commissioned by H4N, in this case by ARC4, shows that the Northern share of national housing investment is dropping dramatically as an unintended consequence of the last Government’s funding rules. Without a change in policy, soon, economic and social growth in the North could be further behind other regions, especially if it lacks the right homes to attract and retain skilled workers and their families.
Looking at Treasury data over 20 years, the share of UK public expenditure on housing targeted at the North has reduced from 24 per cent to 18 per cent, much lower than the North’s share of the UK population at 23 per cent. Indeed, the Northern slice of initial allocations from the new £5.5 billion Housing Infrastructure Fund is even lower, at less than 11 per cent. This is being driven by two linked policy problems.
First, the Treasury Green Book, used across Government to determine spending decisions, drives investment to areas that are able to demonstrate that the taxpayer will get a good return.
Second, encouraged by Green Book guidance, Homes England channels investment streams to areas where affordability pressures are the highest, which also happen to be areas where it is most certain to get a good return on investment. Public money is thereby pushed towards overheated housing markets in the South East and away from areas in the North (and elsewhere), thereby entrenching regional disparities.
Following what is called the ’80:20 rule’, 80 per cent of Homes England funding is set aside for five funding programmes targeted at ‘highest affordability pressure’ areas, which are identified using median house price to median income ratios. The problem for the North is that just four out of 72 Northern Local Authorities are in this category and able to qualify for funding.
An unspoken national spatial strategy for housing investment has therefore come into force almost by accident. Driving public investment in housing away from the North, and towards the South East, surely is not sustainable for a Government that is committed to rebalancing the economy by levelling up in the North.
Recent coverage has suggested that the Green Book is to be updated to support decisions to invest more money in the North. This would be hugely welcome. If the Spring budget follows through on this idea, then it is crucial that the new guidance be reflected, immediately, in funding decisions being made by Homes England. Specifically, the 80:20 rule should be scrapped and replaced with an overt housing investment strategy that matches economic rebalancing targets.
Levelling up housing land supply in the North
Delivering 300,000 homes a year by the mid-2020s will only be possible if sufficient land for new homes is identified by local councils. In 2018, Government put in place a new method for assessing how many homes are needed in local areas in England. The (very sensible) intention was to end technical arguments at Local Plan examinations about which of a number of methods should be used in any one case.
However, an unintended consequence of the new housing need assessment method was to slash, overnight, apparent housing need across the North, which fell in Yorkshire and the Humber by 25 per cent, in the North East by 20 per cent and in the North West by 24 per cent. By comparison, housing need assessments in the South East went through the roof. Much like decisions about the distribution of housing investment, the new assessment of housing need relies upon affordability ratios, which inherently disadvantage the North.
Government rightly points out that the national method for assessing housing need provides a minimum level of housebuilding that local authorities are encouraged to go beyond. But this fails to address the obvious disadvantage that the North has been put at, as well as the abundant and growing evidence that councils are mostly rewriting their local plans to reflect the lower, minimum assessment and treat it as a target.
The housing need assessment method is scheduled to be reviewed in 2020. This is a golden opportunity for the Government to encourage Northern councils to boost the supply of housing land to support economic and social growth in the North and deliver a rebalanced economy.
We know that housing really matters to people and have always believed that it impacts how they vote. Now we know that it does, because during the general election, we commissioned opinion research by Survation of 5,265 adults across the North of England. The poll found that a majority of voters in constituencies in the North see housing as a key issue and are more likely to vote for parties that take action to deliver quality affordable homes in their local area.
Across the North, 19 per cent of voters planned to vote for a different party than in the 2017 General Election. Of those moving voters, 56 per cent agreed that they are more likely to vote for a political party that takes action to improve the number of good quality and affordable homes in their local area.
In marginal seats, 71 per cent supported the building of more good quality and affordable homes in their local area, and 59 per cent agreed that improving access to good quality and affordable homes is as important as improving the NHS, policing and the economy.
Looking ahead, our research confirms that the North needs more quality homes, and what is more Northerners will support politicians that deliver them in their local area. The new Government should respond by putting the delivery of more homes in the North at the heart of its programme from 2020 onwards. Concrete steps can be taken in the months ahead, by aligning policy on housing investment and housing need assessment with the political ambition to level-up the North and rebalance the UK economy