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City deals could help placemakers tackle complex problems

The housing system in Britain is broken, but city deals could allow councils and government to design solutions, says Professor Ed Ferrari

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Devolution of powers away from Westminster through city deals is an opportunity (picture: Getty)
Devolution of powers away from Westminster through city deals is an opportunity (picture: Getty)
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City deals could help tackle broken housing system says Professor Ed Ferrari #ukhousing

How could city deals “strengthen place-making functions” of councils and combined authorities #ukhousing

There is no doubt that the housing system in Britain is in poor health.

Beyond a narrow set of stakeholders it is clearly not working in the long-term interests of households, society, or local economies in many parts of the country.

The government’s admission that the housing market is “broken” is long overdue, and representative of the depth of agreement about the parlous state of housing.

But the idea of a broken housing market is also unhelpful in that it actually serves to underplay two important points.


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The first point is that there is not a single housing market in Britain.

There is a complex set of markets operating at a range of geographic levels, from the global to the local.

These markets serve an extraordinary range of actors. The market may work better in some parts of the country, and for some groups, than in others.

The second point is a broader one. The market is only part of the story. It would be more accurate to paint a picture of a broken housing system.

“The problem with housing stretches far into other policy domains.”

While all the parts of the system are interdependent and affect (and are affected by) markets in some way, for many households, the housing issues they face exist outside the immediate housing market in their area.

The system of funding and regulating social and affordable housing is far from well functioning.

And the wider welfare benefits system is an important part of the housing system’s overall efficacy – including many of its market elements.

Click here for our full power list of council heavy hitters

In short, the problem with housing stretches far into other policy domains.

All this adds up to an incredibly complex picture, which varies from place to place. Policymakers and providers grapple with understanding the specific causes of housing issues in their areas and developing appropriate policy responses.

There is, at least, increasing recognition that understanding these sub-national differences is important, as is having a sufficiently flexible response to them.

Looming over every local housing system and its related housing markets is the leviathan of social policy.

Welfare reforms have progressively reduced entitlement to housing benefit, increasing the shortfall between benefits and rents for some, while incomes from other benefits and from wages have also faced downward pressure.

“Looming over every local housing system and its related housing markets is the leviathan of social policy.”

The rules and conditions in the benefits system are as far from ‘place based’ as it is to imagine any government policy.

The under-occupation charge – commonly known as the bedroom tax – has variable local impacts depending on a range of factors, not least the availability of smaller properties.

Local Housing Allowance (LHA) adopts such a crude understanding of the geography of housing markets that its reference rents and caps in effect create a postcode lottery for the most disadvantaged in society.

Any policy that treats a city of the size and complexity of Leeds as a single rental market is clearly missing the point for low-income households.

“Local Housing Allowance creates a postcode lottery for the most disadvantaged.”

The Shared Accommodation Rate for under-35s promises to create a gulf between market rents and LHA rates for younger households, and there is evidence that private landlords are increasingly refusing to let to those groups.

And the arbitrary effects of the LHA cap has been playing havoc with affordable housing providers’ development plans. There is now the welcome prospect of the cap being lifted, but what damage has been done?

Every year of missed housing targets adds to the backlog of housing need. In recognition of such a backlog in London alone, Sadiq Khan is now pushing an annual housing requirement of 66,000 dwellings in the capital – double the previous estimate.

Evidence suggests that in our core cities, while the welfare reforms have had a significant impact on household incomes, the austerity programme has reduced the resources within local government and other public bodies to meet a corresponding intensification of needs.

And yet, cities can be a realm for co-ordinated and systematic action to tackle the worst consequences of localised market failures.

Housing city deals may present an opportunity to strengthen the local place-making functions of city and combined authorities.

“These deals are an opportunity for local authorities/combined authorities to co-design solutions with central government.”

There are possible changes to powers, policy and funding which could make a real difference: granting funding flexibilities to better meet local challenges, strengthening powers to shape housing development and capture value, guiding infrastructure investment so as to shape the form and location of housing, and releasing restrictions on borrowing so local authorities can invest in affordable housing.

If rigidly applied, certain central government policies – for instance those relating to the welfare system – may limit what can be achieved in the housing city deals.

However, these deals are an opportunity for local authorities/combined authorities to co-design solutions with central government, and hence to develop interventions which are genuinely tailored to the subtleties of local housing challenges.

Whether national policy can be flexed sufficiently, and then matched with appropriate local powers, policy and funding, only time will tell.

Professor Ed Ferrari, director, Centre for Regional Economic and Social Research (CRESR), Sheffield Hallam University

This article was co-written by Tom Archer and Rich Crisp, both also of CRESR

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