Make a virtue of necessity

It was clear to me that two very different views of the world we now live in were in play among those attending the Chartered Institute of Housing conference in Harrogate two weeks ago.

The first, which dominated the early part of the week, was one of uncertainty. People were subdued, cautious and rather pessimistic about the future.

This outlook emerged as a result of the impact of the emergency Budget announced the same week, a still fragile housing market, potential major changes to the Homes and Communities Agency and Tenant Services Authority, as well as a new government whose views on the sector have still to be fully understood. In this view of the housing world, the right response would be to sit tight, see how things develop and, above all, avoid taking actions that increase risk.

Mixed feelings

The second view, which was increasingly evident as the week progressed, was more upbeat and optimistic, with the sense that now is the time for the sector to show leadership and demonstrate new ways of thinking. Despite the reductions in public funding, this outlook said it would still be possible to bring forward new ideas if there was more flexibility on the part of government. There was a feeling that this is a time for the sector to show what it is really capable of achieving.

Howard Farrand, outgoing president of the CIH, summed it up perfectly when he said, ‘the one thing we can still afford is better ideas’.

In reality, though, few people were absolutely polarised to one view or the other - and it is worth exploring what those reasons to be cautious and to be cheerful actually are.

Taking the cautious camp first, there is no doubt that after a significant recovery last year, in which liquidity, share prices, sales and prices all rose for the major house builders, the housing sector has plateaued in recent months. The HCA’s housing stimulus programme has made an impact and will continue to do so throughout the year. However, mortgage constraints are still significant and concerns over future employment are having an effect. There is a marked difference between the experience of London and the south, where recovery has been stronger, and other regions where few schemes are progressing without some form of public support.

Housing associations are better placed financially than house builders and are still able to access development funding relatively easily. However, there is an impact on section 106 opportunities, and the potential for cross-subsidy through home sales.

The impact of the emergency Budget will, of course, take a while to work through. The chancellor did emphasise the economic importance of capital investment but there is no doubt that there will still be a significant reduction over the next spending review period and housing will need to take its share. We will only know the full effect this autumn, once the spending review is complete.

Reasons to be optimistic

Second, the optimistic camp. In my view, the reasons to be cheerful are threefold.

First, I saw much more evidence of a willingness to collaborate between house builders, housing associations and local authorities than I have seen since taking up this job. In the early days, it was clear to me that some house builders (and housing associations) saw local authorities as part of the problem and not part of the solution. They still bore the scars of what had, for some, been a bruising experience. The house builders were convinced that the social housing model was dead and many housing associations were equally convinced of the opposite.

However, the government’s move towards localism, together with the reduction in funding, is forcing a re-think. It is early days, but I think we can look forward to new forms of collaborative partnerships in the future that truly break the old model. I have seen evidence that the more forward-looking local authorities have recognised the change in their role and are already responding to this challenge.

Second, there is a widespread recognition across the sector that we can, and indeed must, deliver more from less. This will require fresh thinking on how funding is used, how public land is brought forward, management of current assets and the approach to rents. Many ideas were put forward to me during Harrogate week which now need to be explored in more detail over the coming months. What is clear is that all parties - the government, the HCA, and housing associations are going to need to be open to change.

I am pretty confident that affordable housing will continue to be a priority, but making the case for continuing funding relies on delivering better value.

Third, there is a clear willingness on the part of the sector to face up to some of the most challenging issues such as reducing the housing benefit bill and driving a low carbon future. For me this was exemplified by CIH president Sarah Webb’s excellent presentation of the Housing Pact - a shared statement of our priorities for housing made up of contributions from everyone at the conference - to housing minister Grant Shapps, to which he responded openly and positively. Properly engaged, the sector has the ability to ensure that big changes are made well.

For the HCA, there was confirmation from the housing minister that we will continue to have a role as a smaller and more strategic ‘enabling and investment’ agency working at the request of local authorities. To my mind, this is a natural evolution of the kind of organisation we strive to be. ‘The agency you call to get things done’ was the description given by the housing minister - one which I am happy to sign up to.

Sir Bob Kerslake is chief executive of the Homes and Communities Agency