2nd opinion: Stealth fighters

Since the 1979 election of the Tory government, its key vote-winner – the right to buy council housing, as it was then known – has been a concept that dare not speak its name. Then-prime minister Margaret Thatcher quickly scaled down the rate of council housebuilding and refused to let local authorities use capital receipts from the sales to replace their stock.

But she did more than that. She made the very concept of council housing unacceptable to such an extent that the name was changed to social housing, only partly because housing associations were becoming the main providers. If she could have, she would have wiped all the stock off the map by simply giving it to tenants.

In a sense, she was right. The creation of estates on which to house the poor, to replace Victorian slum housing, was a misconceived strategy from the outset.

Of course, the policy did much to improve the physical housing conditions of millions of people, but many estates became a new form of slum: housing that was more modern but became equally shabby.

The chequered history of council housing means no government is ever going to sanction the construction of huge, wholly tenanted estates, even by housing associations. But the need is clearly still there. The most thorough estimate for the annual requirement for affordable homes is in the region of 80,000, but barely 30,000 are being built annually. The great idea of the 1990s was that this could be achieved virtually by stealth.

Instead of creating huge social housing ghettos, the idea was that planning gain could be harnessed in order to provide the affordable homes that were needed. There were two advantages to this cunning plan. Not only would some of the finance come from rapacious developers, but the result would be mixed-tenure developments where tenants would live happily cheek by jowl with owner-occupiers.

After a decade, the results of this policy are starting to come through. A study published last week by the Joseph Rowntree Foundation demonstrated that this policy will only provide a small number of the annual requirement for affordable homes. The study found around 12,000 affordable homes were being built annually through section 106 planning gain agreements and, moreover, that the bulk of these are concentrated in the South-east and London, the areas of highest need. In other words, as one of the study's authors said: "The main result of section 106 agreements has been to alter the geography of new social housing rather than the number of affordable homes being built." It is implied that, whereas section 106 agreements provide a healthy amount of additional affordable housing, they cannot be the main instrument of its provision. At some stage this will have to be recognised by ministers who have pointed to the growing number of section 106 agreements as a way of ducking the issue of providing enough affordable housing.

The question, of course, is: "How?". A return to the days of mass council housebuilding is unthinkable, especially as local authorities have shown a reluctance to spend their capital receipts on building homes now they have been given the freedom to do so. Housing associations, as they have grown, have begun to show some of the same problems as local authorities and therefore the prospect of the government further boosting the funding of the Housing Corporation is equally unlikely.

So here is a real challenge for John Prescott and Nick Raynsford: find a "third way" of providing desperately-needed affordable homes – and find it soon.

Call 01904 430 033 for a copy of Planning Gain and Affordable Housing: Making it Count