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SEVEN
Coalition housing policy in England
Peter Somerville
Introduction
ConservativeâLiberal Democrat coalition government housing policy in England from 2010 to 2015 was virtually indistinguishable from Conservative housing policy. As Tunstall (2015, p 13) points out:
The two Liberal Democrat manifesto pledges that were most distinctive and ideologically distant from those of the Conservatives, the pledge to investigate changing public sector borrowing requirement accounting rules to allow local authorities to borrow more, and the pledge to scale back the HomeBuy scheme, did not make it into the [coalition] Agreement.
The influence of the Liberal Democrats on coalition housing policy was, in fact, negligible â the housing ministers, for example, were all Conservative (Grant Shapps, Mark Prisk, Kris Hopkins and Brandon Lewis). For reasons of space, the chapter does not discuss housing policy in Scotland or Wales, nor has it been possible to devote as much attention as I would have liked to the geographical variation in housing-related problems and needs across England (eg much more serious shortages of housing in the South than in the north [Dorling, 2014]).
Background
The number of homes in England has risen over the years since the Second World War, but the rate of increase has varied roughly according to the trade cycle, slowing down from 300,000 per year in the 1950s and 1960s to 200,000 in the 1980s, to not much over 100,000 in the 1990s, recovering in the later 1990s and 2000s, falling to its lowest point (24,000) in the year after the financial crisis in 2008/09, and showing a fluctuating but rising trend since then (see Table 7.1). Table 7.1 shows that the numbers of owner-occupiers in England rose year on year, from 9.7 million (57%) in 1980 to 14.7 million (71%) in 2003, then remained at more or less the same level until 2007 (70%), after which they started to fall year on year, from 14.6 million (68%) in 2008/09 to 14.3 million (63%) in 2013/14. In contrast, the numbers of private renters fluctuated between 1.7 million and 2.1 million (9â12%) from 1980 to 2001 but then rose year on year to 4.4 million (19%) in 2013/14 (see also Figure 7.1). The proportion of households who are social renters (renting from a local authority or housing association) fell from 31% in 1980 to 17% in 2013/14 (see Figure 7.1); among social renters, those renting from a local authority has fallen year on year since 1980 (mainly due to Right to Buy but also due to the transfer of housing to housing associations and to the lack of additional council housing provision), while those renting from a housing association has increased year on year, but at a slower rate, at least up until very recently.
Table 7.1: Trends in tenure, 1980 to 2013/14, England
Figure 7.1: Trends in tenure, 1980 to 2013/14
Despite the increasing number of homes, housing shortages in England have continued and worsened, at least in the South of the country, over a period of decades (Barker, 2004; Stephens et al, 2005; Hills, 2007; Meek, 2014; Dorling, 2014, 2015; Lyons, 2014). The shortage of affordable housing impacts particularly on young people, with many forced to live with their parents because they cannot afford to rent or buy their own home (Shelter, 2014; see also Pennington et al, 2012). Currently, not much more than 100,000 homes a year are being built when more than 200,000 are required to meet existing and growing housing need (245,000 households, according to Holmans [2013], based on 2011 Census data).
Moreover, despite the Conservative Party (2015, p 51) claiming to be âthe party of home ownershipâ, the numbers of owner-occupiers declined year on year while the coalition was in power. This fall in owner-occupation more or less coincided with the rise in private renting associated with the boom in buying to rent out; it seems likely that the increased competition resulting from the entry of buy-to-letters into the market will have âcrowded outâ those who want to buy homes to live in (particularly first-time buyers), as well as exerting inflationary pressure on house prices, keeping them higher than would be expected. Housing markets are intimately related to mortgage markets â fewer people getting a mortgage means less demand to buy housing, and therefore lower house prices. With fewer owner-occupiers having a mortgage (down from 8.5 million in 2003 to 6.9 million in 2013/14), one would normally expect house prices to fall, but, of course, most buy-to-letters are also buying with a mortgage, so the overall demand to buy housing has remained more or less constant. Similarly, the âbank of mum and dadâ (Fearn, 2015) is also important in exerting upward pressure on house prices. The rents in the private sector are also relatively high, but many of the tenants will be in receipt of Housing Benefit and many will be sharing accommodation. For those newly forming households that cannot rely on the bank of mum and dad, and that are unable to access social rented accommodation, there may be no other option but to rent privately.
Similar trends of a decline in owner-occupation and a rise in private renting have been observed in other countries, such as the US, Japan and Australia (Forrest and Hirayama, 2015, pp 239â41), driven by falling real incomes, corporate investment in rented accommodation and the lack of renting alternatives, as well as buy-to-lets. It is likely, therefore, that this unprecedented change in tenure patterns reflects the wider impact of the global financial crisis, which has resulted in âausterityâ for lower-income households (Lowndes and Pratchett, 2012; OâHara, 2015; Perry et al, 2015) combined with new opportunities for higher-income households.
The English Housing Survey provides a useful overview of the housing situation, but there can be many reasons why the numbers of housed households change (including household dissolution, new builds, demolitions, conversions of houses into flats, changes of living arrangements, changes of tenure, etc). Unfortunately, the way in which government statistics are presented does not make it easy to determine the effects of government policies in this area. For example, statistics on housing starts and completions show only the numbers of new homes provided by different sectors (private, housing association and local authority), not for what tenure they are provided (for renting or owner-occupation). The number of homes started by the private sector in England, after falling from 84,710 in 2010/11 to 82,630 in 2012/13, rose sharply to 116,290 in 2014/15 (the period of coalition government), an increase of 41% over the last two years, and the number completed rose from 83,180 to 96,740 over the same period (DCLG, 2015a, 2015e). It is likely that the vast majority of these were for owner-occupation, although it is not possible to be certain about the exact number.
Separately from the English Housing Survey, the government publishes statistics on what it calls âaffordable housing supplyâ. These figures show that the numbers of new social rented homes in England built through funding from the Homes and Communities Agency (HCA) and Greater London Authority (GLA) (which basically means those provided by housing associations) declined from 30,830 in 2010/11 (the highest since 1995/96) to 6,370 in 2013/14 (the lowest since the 1970s) (DCLG, 2015i). However, the numbers of newly built affordable rented homes (basically, social rented homes let at higher rents â up to 80% of market rents) increased from 5,500 in 2012/13 (the first full year of the programme) to 13,890 in 2013/14 (DCLG, 2015i). Figures from the HCA for 2014/15 indicate further decline in its new-build social rented provision (from 4,477 in 2013/14 to 3,139 in 2014/15) and a substantial rise in its new-build affordable rented provision (from 17,694 in 2013/14 to 31,053 in 2014/15); interestingly, however, the HCA reported a fall in affordable renting starts from 25,486 in 2013/14 to 21,879 in 2014/15 (HCA, 2015). Meanwhile, after an initial sharp rise to 2,540 in 2010/11 (the highest since 1992), new social rented homes provided by local authorities fell back down again to 590 in 2013/14, although new affordable rented provision rose from 160 in 2012/13 to 760 in 2013/14 (DCLG, 2015i).
Coalition housing policies
The main coalition housing policies were set out in the coalition agreement (Cabinet Office, 2010), the Localism Act 2011, Laying the foundations (HM Government, 2011) and the Welfare Reform Act 2012. The policy aims were to: increase the number of available homes; help people to buy their home; transform social renting; improve the energy efficiency of homes; increase options for local housing authorities; and reduce the cost of Housing Benefit (see Table 7.2). More punitive policies later emerged for squatters and Gypsies/Travellers. Overall, however, with one or two notable exceptions, the emphasis was on âgovernment getting out of the wayâ to allow others (local authorities, developers and communities) to meet these aims.
Table 7.2: Coalition housing policies 2010â15
Increasing the number of available homes and helping people to buy their home
The New Homes Bonus, introduced in 2010, ârewardedâ local authorities for new homes made available in their area by providing funding equivalent to the council tax raised on those homes for a period of six years. This policy looks successful because the total amount of funding provided so far is ÂŁ3.4 billion, associated with the delivery of 700,000 new homes and conversions, and with bringing over 100,000 empty homes back into use (Inside Housing, 2015). However, as noted by Somerville (2011, p 123; see also Wilson, 2014), this funding continues to be top-sliced from the annual grant to local authorities, which has been cut by about 40% between 2010/11 and 2015/16. The main result of the New Homes Bonus has therefore been a substantial general redistribution of government funding from lower-council tax, lower-build council areas (especially Northern England and Yorkshire and Humberside) to higher-council tax, higher-build areas (mainly in London and South-East England), where arguably more homes need to be built (DCLG, 2014, p 3). Also, a few commentators have noted that the Bonus does not directly contribute to the actual cost of providing new homes, but is simply an incentive to local authorities to be favourably disposed towards such provision. It is impossible to say how many of these new homes and conversions would have been provided in the absence of the Bonus. Local authorities have mainly spent the bonuses they have received to support their general fund (to offset the cuts they have had to make to their services). Some of the receipts have been used to support housing growth, but not specifically to fund additional affordable homes (DCLG, 2014, p 4).
The general presumption in favour of sustainable development is enshrined in the National planning policy framework (NPPF) (DCLG, 2012). Every local planning authority must have a local plan that sets out the strategic development priorities for its area. If it does not have a plan, it must grant permission for development unless it can show that the net impact of the development goes against the NPPF. The coalition governmentâs intention was that the planning system would become a facilitator of new housing development rather than the obstacle that it was perceived to be (see, eg, Cheshire, 2014). Currently, however, 76% of local planning authorities outside London and national parks still do not have a local plan in place (Youde, 2015). At the same time, government ministers continue to preach one thing and do another, advocating new housing development in principle but often opposing it in practice, especially in their own constituencies. In the run-up to the 2015 general election, Eric Pickles, the then Secretary of State for Communities and Local Government, blocked the development of 9,200 homes by rejecting a total of 18 applications, six of which had already been recommended for approval by independent planning inspectors. In spite of the policy that applications should be refused only on the material planning considerations set out in the NPPF (DCLG, 2012), nine of Picklesâ refusals were based on âlandscapeâ.
The Community Right to Build, introduced in the Localism Act 2011 and in force since April 2012, allows local communities to give themselves permission to develop small, single sites for new housing on the basis of a local referendum. This flagship policy, championed by Grant Shapps (Housing Minister from 2010 to 2012), and encouraged by ÂŁ17 million of funding...
