Lords urge government to spell out clear funding plan for new towns

The report published over the weekend noted comments from the housing minister suggesting that the contribution new towns make to housing demand should be “over and above” local housing need, and, by extension, “should not be seen as contributing directly to the 1.5 million homes target”.

Lord Gascoigne, the BEC’s chair, told Inside Housing that the government has not yet provided the “necessary clarity” around funding and how to “invigorate and give confidence to the private sector”. 

While the report did not cover the affordable housing target in detail, Lord Gascoigne said new towns will “need more” than current social housing funding. 

The committee advised the government to “establish a clear legal framework for patient investment by the private and public sectors”, which will be the “primary source of finance for the programme”.

While the original post-war new towns received “very significant public funding in the shape of long-term loans”, the committee warned that in the current fiscal context, the ability of the government to provide this level of funding is “significantly reduced” and “alternative” models will be needed.

The committee said: “One clear route to encouraging and supporting the provision of this kind of funding from the private and alternative sectors is by delivering the infrastructure first – for example, building the public transport links, schools and hospitals – before breaking ground on new housing.

“In the course of the inquiry, the committee saw clear examples of how this approach was able to support the delivery of thriving and innovative communities and could, in time, provide a source of ongoing funding for development.”

The New Towns Taskforce has said that in most instances delivering affordable housing will require access to government grants, and it therefore welcomed the £39bn Social and Affordable Homes Programme (SAHP). 

On the SAHP, Lord Gascoigne said: “Certainly from my personal point of view, I think the £39bn towards social housing, affordable housing, is good and welcome – but new towns need something in addition to that.”

He also said the upcoming Autumn Budget will be the “big test” where the government will need to show its “commitment to this process”. 

The BEC report said the Budget “should set out in explicit terms the precise mechanism through which it will provide public funding to the new towns programme and the individual new towns”.

Another recommendation in the report was for the establishment of a new agency to run and oversee delivery of the programme in order to “maintain a consistent strategic vision”. 

The committee also reiterated its call for mandated design standards which are overseen by the government, and concluded that almost all new towns should be delivered via development corporations. 

These findings mirrored the New Towns Taskforce’s own report, and in its response the government agreed with the “preference” for delivery through the development corporation model. 

However, the Lords inquiry heard in July that appointing mayoral development corporations to deliver new towns would be worrying due to a lack of central government responsibility.

Previously, housing secretary Steve Reed said: “I am launching the next generation of new towns taking the lessons from the post-war Labour government housing boom... mobilising the full power of the state to build a new generation of new towns and restore the dream of homeownership to thousands of families across the country.”