Budget 2018 – a look behind the headlines

Tracy Harrison, Deputy Chief Executive, Northern Housing Consortium

Last month’s Budget delivered some welcome certainties and a shift in sentiment from government towards working with the social housing sector as part of the solution. The one clear certainty was the commitment to the national supply target of 300,000 new builds a year, this was despite the latest ONS household projections which threatened to derail house-building targets. Less certain was any commitment to public sector investment with the tantalising possibility of austerity ‘coming to an end’.

The Budget confirmed that the Housing Revenue Account cap was to be abolished on 29 October

The abolition of the Housing Revenue Account cap was the signal that councils can get back into the house-building business. For the first time in many years, councils will be able to prepare longer-term HRA business plans.  Also, longer term funding for housing associations gives providers certainty in their business planning. In the previous few years the absence of a rent settlement and the LHA cap had contributed towards preventing this longer-term planning.

This marks a new and welcome partnership between government and the social housing sector to build social housing.

But it also sets a challenge to councils to bring forward home-building plans. Councils may have lost dedicated housing functions and have fewer specialist staff with housing services being absorbed into place-based directorates. For many, skills and capacity shortage could be a principal barrier to growth in direct local authority delivery.

Investment to deliver more homes, including an extra £500m for the Housing Infrastructure Fund

Everyone can agree that it is imperative that more homes are built in the right places. It was therefore welcome that the Budget announced an extra £500m to pay for housing infrastructure. But behind the headlines, is the detail that 80% of funding across all Government schemes for house building will be going to areas of “high affordability.” This will not deliver the vision of a housing market that works for everyone.

Support for Homeownership

The Budget confirmed a new Help to Buy Equity Loan Scheme and extended Stamp Duty Land Tax relief to all qualifying shared ownership properties (with a launch of a Call for Evidence on Private Shared Ownership).  It also launched a consultation on new permitted development rights to allow upwards extensions above commercial premises and to allow commercial buildings to be demolished and replaced with homes (Planning reform: supporting the high street and increasing the delivery of new homes).

There is a concern that policies continue to underline the prevailing view that social housing is a stepping stone to home ownership, rather than recognising that it is the right choice for some, and this doesn’t help with stigmatising social housing tenants.

There are estates in the North which almost certainly meet the definition of affordable but fall so far below modern standards there is, not just a stigmatising of residents, but a loss of hope.  Residents either put up with this, or move to the far less stable private rented sector.  There they find tenancies that could be less stable and quality which is in many cases below decent standards with 354,000 private rented sector properties being unfit in the North – see The Hidden costs of Poor Quality Housing in the North.

A combination of new council house building and investment in quality of existing stock will, over time, create capacity to deliver as much as 20-30,000 social rented homes a year. Sir Oliver Letwin’s review of build out rates (published on the day of Budget) has also confirmed that delivering a wider range of tenures on sites improves the rate at which new homes are built – another reason to justify increased public investment on social rented housing.