Why the Lyons Housing Report matters, by Chris Green

The Lyons Commission report on housing for the Labour Party, published today, is the first comprehensive look at the mess we are in with housing in the UK since Kate Barker's review in 2003.

New homes: Labour priority
New homes: Labour priority

It is very thorough, as suggested by its 170 pages, over 200 submissions of evidence received, and its detailed list of 39 recommendations.

It is an impressive attempt to tackle a problem that appears to have become intractable, and one which the current Government has tackled on a piecemeal basis. For that alone, Sir Michael Lyons and his team, and the Labour Party, deserve praise.

The key task the review sets itself is how to get the country back to building over 200,000 homes a year consistently. This requires a complex range of demand and supply side initiatives and has major implications for the roles of central and local government, the private sector and housing associations.

Some of it will definitely be controversial, because it suggests significant government intervention at central and local scales is necessary, including some new structures such as New Homes Corporations, a national investment vehicle for housing under the HCA, and reform of compulsory purchase powers and right to buy legislation.

It also proposes closer collaboration between local authorities to address housing issues (not just assess housing need) at the scale of the strategic housing market area. The heightened emphasis on housing is to be achieved without increasing public sector spending generally, but presumably would require an increase in the proportion of overall public spending devoted to housing investment.

The scale and complexity of the problem

The scale and complexity of the problem is illustrated by the proposal for a programme for new communities delivering up to 20,000 homes per year over a 20 year timescale. The intention is that the Government will identify ‘areas of search’ and invite proposals for specific sites from local authorities with priority given to these areas. Local authorities will be incentivised to bring forward proposals, including through retention of all business rates for 30 years.

The proposed new communities programme is roughly equivalent in scale and duration to the old New Towns programme, but will still contribute only 10% of the annual requirement for new homes. In contrast, the Locally-Led Garden Cities prospectus launched by the Coalition Government in April 2014 had an ambition for three new garden cities of about 15,000 homes, but over no fixed timescale (Planning newspaper reported on 12 September 2014 that CLG was ‘unable to confirm’ whether any EoIs had been received from LAs over the five months since the launch).

The role of local authorities working in collaboration

The report clearly wants to avoid the accusation of central, top down planning. It (rightly) puts a lot of emphasis on the role of local authorities, but with a strong emphasis on working in collaboration at sub regional level to produce strategic housing market assessments (produced using a standard methodology) and Strategic Housing Market Plans which would have statutory weight. The review proposes that local authorities are given new powers and incentives, in particular to designate Housing Growth Areas. It also recommends New Homes Corporations "to reinforce and drive strong local leadership of development, effective partnerships and sharper tools to scale up the delivery of new homes" (page 83).

The link between housing and economic development

The review clearly makes the link between housing and economic development. For example, the third paragraph of Chapter 1 states that "the housing shortage is also a real threat to our prospects for growth, placing a stranglehold on the economic potential of our towns and cities, reducing labour mobility and compromising our ability to attract businesses to locate".

There are also sections on why a stable housing market is crucial to macroeconomic stability and on the wider economic benefits of house building. The need for different housing solutions to suit different economic contexts in different areas is also recognised, and the skills shortage in the construction industry is considered to be a key challenge to be addressed to meet the target increase of house building. Recommendation 14 proposes that "a national spatial assessment should be produced to draw together the spatial implications of government infrastructure and growth and economic development policies" (page 59).

Although the review does not talk specifically about links with the strategic economic plans produced by the Local Enterprise Partnerships earlier this year, both the Housing Growth Areas and New Homes Corporations are likely to be based on Strategic Housing Market Plans and areas, so therefore relating to the same functional economic areas as many LEPs. This provides an opportunity for much better integration of housing, economic development and transport planning and delivery at the scale of functional economic areas.

In this context, the relationship between the housing review and the July 2014 report on "Mending the Fractured Economy" by Lord Adonis, also for the Labour Party, is important. Lord Adonis’ report states that "Local Enterprise Partnerships should operate across the same regional geography as Combined Authorities, working closely together, while maintaining an independent business voice", and recommends tripling the level of funding devolved to city and county regions to allow them to shape local provision of skills training, employment schemes, infrastructure and business support. On the basis of the Lyons review, one could add housing to that list, and increase the multiple of devolved funding accordingly.

Reading the two reports together, it seems likely that there will be a strong push for combined local authorities and LEPs operating across the same geographies, which are aligned as closely as possible to functional economic and housing market areas.

Chris Green is chief executive of SQW

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