A new National Housing Federation report shows that a 10-year funding cycle could boost housebuilding. Here, one of its authors, Mark Farmer, argues the case for long-term thinking
I am really pleased that Cast Consultancy could support the National Housing Federation in delivering the important and very timely research we published today. Our findings demonstrate the links between the historic short-term nature of funding for the affordable housing sector and the persistent inability to overcome some of the wider structural challenges that exist in construction and homebuilding in the UK.
In 2016, I argued the construction sector faced a fundamental challenge: modernise or die. My review of the sector found it was typified by structural failures that acted as a drag on productivity and innovation. I described a culture of short-termism, with market players unable or unwilling to support sector-wide collaboration and investment in R&D.
I also pointed out that the housing association sector can be used by government to ‘smooth’ demand in the event of a private sales market downturn. With JLL forecasting that there could be as few as 80,000 housing starts this year and that it could take four years just to get back to 2019’s levels, this is now more relevant than ever.
Housing associations are playing their part in the shift to modern methods of construction (MMC) and new models of delivery. R&D projects have been pioneered by the likes of Home Group at Gateshead Innovation Village. Others, such as Swan, Accord, Magna and Places for People, are either vertically integrating MMC capability or working with manufacturers through innovative strategic partnerships. True sector-wide collaborations supporting innovation are also happening, typified by the Homes for the North consortium and the Building Better collaboration platform. These groups are promoting early engagement with the MMC market, intelligent procurement and the aggregation of demand, while also better aligning their ask of manufacturers.
However, our research with NHF shows that short-termism in funding is still constraining the full potential of the sector to increase innovative delivery at scale. Quality and efficiency savings alone could be worth up to £12bn annually, with follow-on benefits including reduced cost and impact of defects. We shouldn’t forget that every £1 invested in social housing returns £1.40 to the economy.
The next Affordable Housing Programme is a great opportunity to improve resiliency in new home delivery and to use public money to achieve wider outcomes. Through careful incentivisation, it can reform future skills, improve productivity, decarbonise delivery and enable a broader levelling up spanning off-site manufacturing and site-based work.
“The next Affordable Housing Programme is a great opportunity to improve resiliency in new home delivery and to use public money to achieve wider outcomes”
This week, the government published its National Infrastructure and Construction Pipeline. Housing associations could in turn be much more transparent and strategic with their future plans if they could benefit from a well thought through, sufficiently ambitious, stable funding settlement with the clear purpose of building longer term construction demand confidence, to underpin investment and innovation.
As we emerge from the COVID-19 crisis, we will need a range of solutions to the challenge. Our research shows how critical the government is in enabling change, and that when it comes to investment in social and affordable housebuilding, it is about how that is done, not just how much investment there is.
Mark Farmer, founding director and CEO, Cast Consultancy