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Housing Policy under the
Coalition:
glancing back, looking forward
Professor Ian Cole
Centre for Regional Economic and Social Research
Sheffield Hallam University
Sounds familiar?
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Two and a half years of a Conservative-led
government following a period of Labour
dominance
Housing shortages grow as building rates fail to
keep pace with household formation rates
Difficulties in gaining access to mortgage finance
Increasing pressure on social housing
Hopes placed in revival of PRS
Market principles advocated when market at its
most fragile
CWAG Conference
Leeds 28 September 2012
The challenge.....
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So, what could be done...?
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in 1954?
CWAG Conference
Leeds 28 September 2012
National housing policy in 1954
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maintained large scale council house building to
meet targets (224k completed in1954 cf 90k private)
building programme geographically spread in GB
reduction in standard of materials, design and
property diversity in LA sector to achieve quantity
relaxation of rent controls in the PRS designed to
stimulate the sector
reintroduction of slum clearance
move away (in 1956) from property-based subsidy
to person-based subsidy: start of rebates
CWAG Conference
Leeds 28 September 2012
The rationale for national policy in 1954
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a pragmatic, and time limited, embrace of the state
as the only means of addressing a national
emergency
but public housing would never attain the primacy
of NHS or state education
always hedged with stigma
as in the replacement of the 'spiv' by the 'Jaguar
owning council tenant'...
CWAG Conference
Leeds 28 September 2012
Local Innovation
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'hidden histories' not captured by national narrative
eg Urmston Housebuilders Association in
Manchester
Self-build association of 28 households
30 hours minimum a week commitment to build 2
schemes: 16 houses and 12 bungalows
Council provided cheap land, guaranteed 5 per cent
fixed rate mortgages over 20 years (£2 per week)
£30 down payment as deposit
customised design of kitchens and bathrooms
CWAG Conference
Leeds 28 September 2012
The participants
CWAG Conference
Leeds 28 September 2012
The outcome
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price of new houses: £1,300 for 3 br semi-detached
properties
average price of new houses in England in 1954
(Q1) was £2,100
priority determined not by a points scheme...but by
drawing lots
strong community ethos prevailed
an oasis of communitarian suburbia!
CWAG Conference
Leeds 28 September 2012
The lessons of 1954?
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you cannot rely on private sector to meet policy targets in
poor market conditions
the planned revival of the PRS may bring with it unanticipated
outcomes
affordability is a question of land values and development
costs as well as household income
the growth of home ownership presupposes a widespread
belief in (and some evidence of) sustained economic growth
across the income spectrum
those in the public sector risk demonisation, even when they
do not receive subsidies from others
the best 'solutions' are locally created, not nationally
mandated....
CWAG Conference
Leeds 28 September 2012
The Key Challenge for the Housing Strategy
WE NEED TO BUILD!
the market-based response: relieve planning restrictions
through s106 revisions and presumption in favour of
development
the mixed economy response: targeted public investment to
promote 'leverage'
the state-based response: national emergencies require
government action, if only for a limited time
CWAG Conference
Leeds 28 September 2012
Putting Housing Policies to the Test
Questions
 are developers straining at the leash to build?
 is land supply the problem ?
 where are the 'new' home owners?
 can leverage fill the 'production gap'?
 is there any public, let alone government, support for a
stronger state role?
 and can it be afforded anyway?
CWAG Conference
Leeds 28 September 2012
A market- based approach
remove s106 obligations on affordability and
other planning restrictions
 adopt mantle of 'fairness' to deal with latter day
Jaguar owners
 press ahead with dislodging poorer households
from more affluent areas
 turn 'welfare dependents' into choice-making
consumers: landlords and tenants!
 create a new cohort of home owners
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CWAG Conference
Leeds 28 September 2012
but......
'If we are to plan we must have plannable instruments and the
speculative builder, by his very nature , is not a plannable
instrument'
Aneurin Bevan 1947
CWAG Conference
Leeds 28 September 2012
Recession? What Recession?
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Barratts: profit increase of 159%: from £42.7m (2011) to
£191.1m (2012) Revenue up 14.1 % and margins increased
from 6.6 to 8.2%
Cala Group: increase in operating profit of 96% and
revenue up 18%
Redrow: increase in operating profit of 55%: revenue up
by 6%
Galliford Try: increase in profit before tax of 80%: 17%
increase in revenue
LGA: 400,000 planning permissions currently outstanding
CWAG Conference
Leeds 28 September 2012
A mixed economy approach ?
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can target more effectively, but leverage assumptions
often overblown (eg HMR)
will not address geographical imbalances, brinkmanship
over planning constraints and risk aversion
but may risk insulating the development industry still
further
infrastructure development must remain the domain of
the public sector if it is not to be captured (Hildyard)
PAC report on £1.4billion RGF: only £60m so far to frontline projects: 2,442 jobs created; 2,762 protected
original RGF aim- to create 36,800 jobs
CWAG Conference
Leeds 28 September 2012
A state-led approach?
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Read Mariana Mazzacuto's The Entrepreneurial State or..
Tullet Prebon: Building a Road to Recovery? August 2012
State can invest in housebuilding without sucking in
imports. In the long-term, it will be self-financing
(increase growth and revenue and reduce HB)
'We would stress that this investment should be
undertaken by local authorities or housing associations,
not through public-private gimmicks like PFI'
'The government and social sectors should act as owners
and commissioners of new housing'.
'A national housebuilding programme should be a
national economic imperative, not thwarted by sectoral
self-interest or ideology'
CWAG Conference
Leeds 28 September 2012
A few political obstacles to embracing the
state ...
150 years of history....and....
 how to deliver the 'age of aspiration' by
reversing the potentially long-term decline in home
ownership
 Previous means of achieving this :
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The ‘newly affluent society’ (60/70s)....but now we have the
'stretched middle'
 The right to buy (80s/90s)...but limited impact of recent
incentives
 The deregulation of financial markets and acceptance of high
level of consumer debt (90s/00s)....but caution over lending to
marginal income groups will prevail
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CWAG Conference
Leeds 28 September 2012
Second order challenges for the Housing
Strategy mark 3
 How to keep housing associations ‘market responsive’ but
not ‘market damaged’
 What to do with those lodged in the 'waiting room sector
 How to grow an institutional PRS through REITs etc - in a
hurry!
 The future of student markets and 1 bed flats
 The uncertain housing impacts of benefit reform 'stickiness' of claimants
 How to achieve substantive rather than just symbolic
impacts through social housing reforms
 Whether NewBuy will herald more creative alliances
between supply, loan finance and unrealised demand
CWAG Conference
Leeds 28 September 2012
Hazards ahead?
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Markets do not obey strategies: caution will prevail
Will developers deliver ?
Homelessness and overcrowding are lagged indicators of
economic recession
Spatial segmentation will increase : inter- and intra -regionally
The geographical locus of private sector-led growth
Housing market sustainability ... in much of the North of
England, Scotland and Wales. Can places be 'written off'?
Direct payments to tenants (and then UC) and response of
providers
Risks to social cohesion ?
CWAG Conference
Leeds 28 September 2012
The limits of national housing strategies
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Housing strategies have an indirect relationship with housing
outcomes at best
Macro-economic forces, demographic changes and sociocultural attitudes interact to exert a stronger influence.
In other words....
'Life is what happens to you when you're busy making other
plans'
CWAG Conference
Leeds 28 September 2012
Is there an upside? Go local!
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local innovation can achieve positive gains rather than
centrally driven templates replete with unintended
consequences
so over to you...ALMOs can be critical to new thinking about
retaining core principles of a housing service.... despite
everything
The creation of a mutual housing company from Rochdale
Boroughwide Homes - an example of positive action, even if
not a panacea or a template for others
Housing strategies have an indirect relationship with housing
outcomes at best
......and remember Urmston!
CWAG Conference
Leeds 28 September 2012
CWAG Conference
Leeds 28 September 2012
Housing Policy under the
Coalition:
glancing back, looking forward
Professor Ian Cole
Centre for Regional Economic and Social Research
Sheffield Hallam University