It's time for affordable housing to play catch-up

The Lord Chancellor's Department is rolling out a programme of court buildings using a mix of the private finance initiative and public–private partnerships. In the schools sector, we will this year have joint-venture provision based on exemplar designs by international-class architects. The social housing sector needs to play catch-up, and fast.

Housing associations still have to operate within a development finance system that is based strictly on capital cost – total cost indices and a 110% limit – linked to notional desired rental levels. Registered social landlords can jump through all the trendy hoops they like – partnering, off-site manufacture, post-occupancy evaluation – but unless they can do it for the same or less money as before, they're stuffed. Never mind that because of reduced defects and superior energy performance the home will last twice as long and cost half as much to maintain; if it's 111% of the TCI it's out the window. But at the same time there's little incentive for an RSL to find efficiencies to come in much under 110%.

So here's my somewhat radical alternative. First of all, the Treasury needs to recognise that the public interest lies in the whole-life cost of new homes, not just the capital cost, and allow the Office of the Deputy Prime Minister to move away from a control system based only on rigid financial and output targets for the corporation. One way of doing this would be to provide output ranges for different housing types. If the corporation then decided to aim for the lower end of the range, it would need to justify this by the quality of provision and overall efficiencies expressed on a whole-life basis across its programme. At the same time, why not have an annual qualitative assessment of what the corporation has funded? I'm sure that the single housing inspectorate and Commission for Architecture and the Built Environment, in concert, could take a sample of schemes and see what is being provided on the ground.

Second, in the same way that freedoms have been extended to the highest performing local authorities, they should be extended to the most consistent housing associations. They should be allowed to set their own rental policy and be released from the TCI formula. The corporation would be able to consider schemes from these RSLs on a programme basis, using benchmark cost parameters as a guide, not an absolute rule, making judgements based on the overall quality of the proposed scheme.

RSLs can jump through all the trendy construction procurement hoops they like, but unless they can do it for the same or less money as before, they’re stuffed

Next the corporation, freed from its inspection responsibilities and taking its lead from the Procure 21 system in the NHS, should move swiftly in its laudable desire to enter into long-term partnering agreements with a small number of high-performing RSLs to create a large programme of development, making use of the additional certainty and oversight to create generous economies of scale and scope that will allow for maximum use of standardised production methods and experiential learning.

Of course, if we really want to open up the game the regulatory regime must be tackled at the same time as the investment regime. RSLs are hamstrung in their abilities to use cross-subsidy arrangements to combine for sale and social rented housing. Again, one wonders whether there is an opportunity to relax some of the constraints for high-performing housing associations.