Housing should take centre stage in the country’s economic recovery, says Pat Ritchie
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The ongoing coverage of the eurozone difficulties and the recent election results across Europe have reminded us of the utmost importance of economic growth. It is good jobs, financial security and stable homes that people want, and this is particularly true in times of economic uncertainty.
There are plenty of statistics that demonstrate housing and construction’s place at the heart of the growth agenda - construction accounted for 7 per cent of total gross value added and employed 2 million people in 2010 according to the Office for National Statistics - while housing is also intrinsically linked to wider labour markets across the country, helping local firms to hire and retain workers.
So I am pleased that statistics published this week show the Homes and Communities Agency exceeded its target for housing completions. That’s a strong performance in the current market. The profile of starts onsite is as expected as we move from the national affordable housing programme to the new affordable homes programme and, while they still provide a strong foundation for future completions, we will need to see steady progress on numbers, particularly towards the end of the 2011/15 programme. We moved quickly to implement programmes such as Get Britain Building and the recent launch of the Custom Build funding, and we now need to work with local partners to turn programmes into real homes on the ground.
Yet as a sector we are still falling short of the numbers necessary to keep pace with population growth; and that means, too, that housing’s impact on growth has room for improvement.
It’s fair to reflect on the scale and pace of change in the sector in the past one to two years alone - affordable rent, welfare reform, a move towards investment on commercial terms, and a leaner HCA with more responsibility are just a few. And while the sector has responded well to these changes, if we are serious about delivering the aspiration of 250,000 homes a year - something that hasn’t been done for a generation - we still need to address a number of key challenges head on.
Top priority for me is to make sure we get the most from public assets and private investment. Developers, lenders, pensions funds and other private investors need to show an increasing appetite for risk - because well-managed risk brings rewards - to match public sector assets and planning powers with private finance, while keeping their eye on the wider picture of planning communities.
The HCA is committed to bringing forward enough land for 16,000 new homes [by 2015] and we can support government departments in their own disposal strategies. After that, planning reforms will certainly help, as will incentives such as the new homes bonus, but we also need the financial sector to make sure partners can access finance of the sort and scale needed to match schemes. We are seeing it in places - new models such as pension fund investment in the private rental sector in Manchester, or as yet untapped potential following Treasury reforms of real estate investment trusts.
We also need to attract new entrants to the sector, including private rented investors, custom build, co-operative and community-led models. And we will need to rely heavily on registered providers to make the most of their assets, funding and connections with the community to take forward genuinely innovative new ideas. Housing associations are delivering the bulk of the affordable homes programme, but clearly the work doesn’t stop once contracts are signed. By working together we will need to make sure contractual delivery commitments are met.
There has been some scepticism that the affordable homes programme, and our approach to contract management, has the flexibility to incorporate change, but I am confident that it does. There are clear differences in the four-year approach of the programme that gives providers certainty over funding with the flexibility to develop a pipeline of sites over time, as opposed to the scheme by scheme approach under the NAHP. We are already using our quarterly review meetings with providers to talk through how we will consider flexing to make sure contracts are fulfilled. But it won’t be change for change’s sake - any digression from the original contract will need to fit within strategic and financial parameters, as well as include an assessment of local authority priorities.
Finally, it will also be interesting to see what the new ‘for-profit’ providers can bring to the table in terms of innovation and delivery without grant; and what lessons the wider sector might learn from this. But wherever the new ideas for growth come from, the eight core cities will be in the spotlight as the engines that drive it. Through bespoke city deals - where our track record of local working provided a firm platform for supporting cities in shaping their propositions to government - I am already seeing a real appetite for collaboration and joint endeavour on these issues.
Cities lead the way
Now it is incumbent on the cities to deliver. As the deals move to implementation the challenge will be for cities, working closely with partners such as the HCA, to demonstrate the impact they can achieve with their new freedoms and flexibilities. Government - and local residents - will be looking to see extra jobs created, skills improved and of course, houses built. And if the cities can achieve that they’ll be in a strong position to argue for even greater powers in the future.
There’s no doubt that this agenda is challenging, particularly in the current economic climate. We will need strong partnerships across local, national, private and public sectors, and a willingness to challenge ourselves and innovate to achieve maximum impact and value for money. But there are plenty of positive signs. I’m determined that the HCA and others should ensure that the themes we discuss during the Chartered Institute of Housing conference this week are taken forward by our sector as we plan for the future.
Pat Ritchie is chief executive of the Homes and Communities Agency