John Newton: Labour’s plans for housing in London have been taking shape

John Newton: Labour’s plans for housing in London have been taking shape

The likely outline of Labour housing policy in government is discernible from the national policy forum final document submitted to the October party conference. It extends from aspirational platitudes and nice soundbites to specific indications of the direction a Starmer administration would take.

The composite themes that appear most relevant to London are the reprioritisation of the Affordable Housing Programme (AHP) and housing-related fiscal measures.

The case for adjusting the AHP in favour of London and tilting it towards social housing provision is close to overwhelming for two connected reasons.

First, most spending related to homelessness is increasingly concentrated and incurred in the capital. There were 10,100 of what are called main duty homelessness acceptances by the city’s local authorities in 2021-22 – roughly 1,600 more than the approximately 8,500 new council lettings for the same period.

The number of acceptances rose to 11,600 in 2022-23. Such acceptances have progressively outpaced councils’ letting capacity, resulting in the number of homeless households placed in temporary accommodation rising from about 36,000 in 2010-11 to 60,040 in early 2023.

Second, the existing regional distribution of AHP grant fails to reflect either the variations in need for investment in different parts of the country or the benefits that would flow from altering it. The 2022 Audit Commission report shown that such a shift would maximise the overall economic and social benefits of the programme.

It revealed, using government research, that in London future housing benefit savings over 30 years would cover the cost of 69 per cent of the grant cost of providing new homes for social rent, and that this would go up to 110 per cent over a 60 year period. And that is leaving aside savings in temporary accommodation and social care costs.

Moving to a ten-year rather than a five-year AHP, as proposed in a 2020 report by UCL’s Bartlett School of Construction and Project Management, would allow potential supply volumes and efficiency to be increased, as well as helping to smooth delivery over the duration of the programme, avoiding programme-end peaks.

Regarding fiscal measures, Labour’s policy document hints that stamp duty paid by foreign individuals, trusts and companies when they buy UK residential property could be increased. This would provide a potential tax source for more spending on housing while “possibly dampening the demand for expensive speculative housing”. However, although most of any such increase in tax receipts would be generated in London, the Treasury is unlikely to earmark such proceeds for housing in the capital.

A declared aim of reducing the number of social homes being sold through Right to Buy without like-for-like new social housing being built to replace them suggests tighter eligibility and lower discount arrangements. The average London discount is currently around £107,000 compared to an average grant of £60,000 towards building a new one.

Measures to encourage and, where appropriate, require all government departments and non-departmental public authorities to utilise unused assets to provide affordable housing should be put in hand with alacrity in high cost areas, with London a case in point.

The economic and social benefits of such provision – linked, say, to the London Plan requirement of 50 per cent affordable housing without public grant on public land – could be netted off departmental capital receipt targets. Certainly, avoiding prolonged no-win, lose-lose outcomes such as occurred at Pentonville Road is a no-brainer.

The ten-year London new supply record underscores how without strategic policy change, the 2021 London Plan borough targets will remain aspirational. Total net additions over the next decade compared to the last will need to be increased by least a third, and new affordable supply by two thirds, for them to be achieved.

The tables also report variance in the development record of London boroughs, with Newham and Tower Hamlets leading the way, while some outer London boroughs provide less housing per 1,000 dwellings over a ten-year period than either the London or England average.

New, large-scale schemes echoing the inter-war public-led developments at Dagenham and St.Helier are certainly required, albeit now necessarily bound by current land availability and institutional constraints and with public-private partnerships providing the delivery vehicle.

The recently-passed Levelling Up and Regeneration Act means compulsory purchase powers will already exist for current and new development corporations to purchase land at or close to their present value rather than their so-called “hope value”. This new power could be further streamlined and clarified.

But new development corporations will take time to set up, co-ordinate and be effective. The Barking Riverside project showed that for delivery to proceed at more than a snail’s pace, substantial, pump-priming public infrastructure investment is a pre-requisite.

Planning targets should also be quickly aligned more closely to local need, affordability and capacity circumstances, and reflect the reality that some of London’s housing requirement will need to be accommodated by neighbouring local planning authorities, as well on “grey” land currently designated as Green Belt within Greater London.

Keir Starmer’s commitment to use the planning system to build rather than block is likely to meet NIMBY opposition. His government will need to be bold and unwavering from the outset – a principle that is easier to prescribe than to apply when being buffeted by the cacophony of pressures that will greet any new government.

The other big elephant in the room, of course, is how fiscally “ironclad” Rachel Reeve would prove to be as Chancellor. The fiscal rules she has set out provide some space for increased borrowing for infrastructure investment, as did Gordon Brown’s “golden rule” about only borrowing money in order to invest.

The litmus test will be the new government’s first comprehensive planning review in 2025 and the extent to which it provides for “spend to save” and supply side-enhancing investments, such as enabling development corporations and increasing investment in affordable housing.

While some reconfiguration of the AHP in favour of London can be expected, it could well be that increased investment will, for the most part, be backloaded to the end of the new or even future parliaments when “wider economic conditions” allow, as occurred in 1997-2010. Such an approach, however, would torpedo at the outset the declared aspiration to build 1.5 million new homes, and leave London in the lurch.

Clearly, an evidence-bed investment case for anything approaching a transformational change to London’s current housing crisis will need to be clearly and robustly made, preferably by its MPs, its Mayor and its council leaders.

There has been a calamitous collpase in new social lettings across the capital in recent decades. In that light, the systematic routemap Leo Pollack, a former Southwark Council cabinet lead for housing, set out in a Smith Institute publication, appears pertinent.

Notwithstanding the institutional and organisational challenges entailed, London’s social landlords need to help themselves as well as receive better overarching central fiscal and policy support.

John Newton is currently convener of A Social Democratic Future and has previously worked in a variety of housing roles within London since the early 1980s.

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Categories: Analysis

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