Devo Mancs

There probably aren’t many roles for which the retired football manager Sir Alex Ferguson, former Happy Mondays dancer Bez, Manchester City Council leader Sir Richard Leese and film director Danny Boyle would be considered possible competing candidates. But when chancellor George Osborne announced earlier this month that Greater Manchester was to get a directly-elected mayor, bookies were quick to suggest some of the area’s notable characters for the job, alongside more traditional political candidates such as Labour parliamentarian Hazel Blears.

Under the agreement between the Treasury and the Greater Manchester Combined Authority (GMCA), a new city-wide mayor will receive powers over transport, policing, housing and planning. The first elections could take place in early 2017, once necessary legislation has been passed.

The GMCA, which was established in 2011 to co-ordinate some transport, economic development and regeneration functions, will gain further powers over business support, skills, complex dependency, and health and social care. There are no proposals to take existing powers from local authorities.

The devolution of powers to the new mayor and the GMCA – made up of Trafford, Bury, Stockport, Rochdale, Oldham, Salford, Bolton, Tameside, Wigan and Manchester City councils – is part of the chancellor’s plan to create a ‘northern powerhouse’ to maximise the north of England’s economic potential. But what will it mean in practice and what are the implications for social housing in Greater Manchester?

Let’s start with the housing powers. The ‘Devo Manc’ deal hands control to the mayor of a housing investment fund, valued at £300m over 10 years, to support the construction of between 10,000 and 15,000 homes. It will be funded from the budgets of existing financial transaction programmes – the government did not respond to Inside Housing’s requests to clarify which these will be – and provided to the private sector in the form of recoverable loans and longer-term equity.

The agreement says devolution of the scheme will be conditional on Greater Manchester ‘demonstrating its balance sheet can stand behind the agreed repayment schedule’. If this is not possible, the Homes and Communities Agency (HCA) will administer the loans with Greater Manchester playing a ‘strong role’ in designing the fund, agreeing the spend profile, shortlisting sites and marketing. In this case, the HCA would stand behind the financial risk and final investment decisions would rest with the regulator.

Balancing act

While the scheme is aimed at the private sector (without specifying tender), Sir Richard Leese, Labour leader of Manchester City council and GMCA vice-chair, says it will provide the opportunity for section 106 agreements (a planning obligation on developers to provide some affordable housing) or other ‘side routes into more social housing’. ‘Also, there will be the opportunity to put together, I think, innovative funding packages so that we are able to put different pools together in order to be able to lever investment across housing types,’ he adds. ‘You can put that money [from the Housing Investment Fund] together with investment from other sources in order to be able to generate more social housing.’

Matthew Harrison, chief executive of 17,000-home association Great Places Housing Group, which has stock in most GMCA council areas, says housing associations building for the private sector could also benefit from the £300m pot. The social landlord is developing 100 homes for the private rented sector and outright sale this financial year through its subsidiary company Cube. ‘If the mayor’s office takes responsibility for this new fund, you might imagine they might then ask for control over what the HCA does,’ says Mr Harrison. 

Could the private sector fund could pave the way for Greater Manchester to gain powers over social housing in the future, such as the HCA’s Affordable Homes Programme? Sir Richard says this is something that could – and should – happen.

He stresses the GMCA enjoys a good relationship with the HCA and already shares strategic oversight with the regulator within Greater Manchester. ‘Why are we doing that?,’ asks Sir Richard, who Ladbrokes has as the 3-1 favourite to be Manchester’s first directly-elected mayor, although he ‘hasn’t decided’ whether to run. ‘It’s the same reason really: we are the best people to assess housing investment needs within the Greater Manchester area.’

In June, the think-tank Institute for Public Policy Research proposed local areas should control both investment and housing benefits to help increase housing supply and reduce the welfare bill. ‘Personally, I think there’s a lot of logic for passing housing benefit over to local authorities,’ says Lord Peter Smith, Labour leader of Wigan council and GMCA chair. ‘I think they’d probably run it more effectively, more sympathetically, and so on. We aren’t at that position yet, but maybe in a couple of years’ time we could show how well we’ve done with this stage of devolution that we’ll be knocking on the door again and saying, “What about extending it to some other areas?”.’

Are there any downsides at all? Could a limited local pot of money pose problems for meeting all the need for assistance in the Manchester area? Lord Smith thinks not. ‘It would be simpler as local authorities already make assessments of individual needs. I would expect the system to be fully funded by central government so no worries about finance,’ he says.

Greater Manchester, which politicians say needs more housing of every tenure, has a legacy of 19th-century and pre-1919 terrace housing, which needs updating and, in some cases, replacing.

Mr Harrison suggests there may be tensions to resolve with housing strategy because of the different requirements of the 10 authorities, each with different demographic and social make-ups, inside Greater Manchester’s ‘complicated’ housing market. For example, he says, affordability is more of an issue in affluent Trafford than Oldham or Rochdale.

‘In Oldham and Manchester, they [the local authorities] are less inclined to be supportive of new affordable housing provision than some of the more affluent boroughs where there is an acute affordability issue and shortage of affordable housing,’ he says. ‘In Manchester, there’s a general theme of no addition of affordable housing for rent.’ Instead, Mr Harrison adds, the focus is on promoting products aimed at working households such as shared ownership, owner-occupied and market rent.

The new mayor – the first metro-wide elected mayor outside of London – will have planning powers to create a statutory spatial framework, which will include identifying housing requirements. It should be approved by a unanimous vote by the GMCA cabinet. (With other mayoral strategies, the cabinet will be able to reject them if two-thirds of members agree).

’The spatial strategy is good and it’s interesting that the government appears through this to concede that regional spatial strategies had their value, at least in Manchester, even though they were abolished elsewhere,’ says John Perry, policy advisor for the Chartered Institute of Housing. But he notes the loan scheme ‘falls a long way short of the “single housing pot”’ recommended for housing growth areas in the Lyons Housing Review.

Engaging people

It is not just devolved housing and planning powers that may affect the sector, however. The deal gives the GMCA the opportunity to be a joint commissioner with the Department for Work and Pensions for the next phase of the Work Programme.

Helen McHale, chief executive of the 12,000-home arm’s-length management organisation (ALMO) Stockport Homes, says this creates opportunities for social landlords, given their particular ability to ‘engage people who are hard to reach’, to argue they are better placed to run schemes than those currently doing so.

Since December 2011, the ALMO has been subcontracted by G4S to help out-of-work people, with a family history of unemployment, as part of a European Social Fund programme. It has helped 423 people to date under the project, the contract for which expires in June 2015. ‘The vast majority of the landlords in Greater Manchester see ourselves as doing a lot more than providing houses,’ says Ms McHale.

She feels Greater Manchester is suited for devolution because the local authorities have shown their ability to work together – across political divides – for a long period of time, but she can understand other areas asking for similar powers (see box).

Paul Lees, chief executive of 13,000-home association Adactus Housing Group, says one of the issues facing Greater Manchester is keeping the ‘influx’ of people who come to the area for higher education who, if they stayed, would benefit the economy. Housing is one reason they don’t stay, he says, because there are not the properties young people want in the right areas. ‘I hope we link up with Merseyside sooner rather than later,’ adds Mr Lees. ‘I think Merseyside and Manchester working together could be an economic powerhouse.’

That is something for the future, perhaps. For now, attention will turn to the appointment of an interim mayor to kickstart the devolution agreement. And, no doubt, the bookies will keep on guessing whether Sir Richard or Sir Alex will win at the ballot box in 2017.