The housing industry was on tenterhooks before the Budget, hoping for a solution to all its woes. Well, we didn’t quite get that, say Toby Lloyd and Anthony Brand, but it’s a start …
Let’s not downplay this – we had high hopes. The Budget was supposed to put housing at the heart of plans to revive the economy. With housing targets in tatters, developers facing bankruptcy, schemes mothballed and thousands out of work, who could blame us. Housing was one of the few areas where a good old-fashioned Keynesian stimulus could make a real difference.
So where have we ended up? It’s still hard to decide. The £1bn for housing (depending on what you include) seems small beer compared to the numbers blazoned across newspapers, but housing still did better than most sectors. In particular, the £400m to kickstart stalled schemes (see opposite) makes sense, though commentators suggest it could benefit as few as 10 sites nationally.
The important thing is for the initiative to deliver results, and this will need a stronger relationship between the communities department and the Homes and Communities Agency (HCA). An effective response to a rapidly changing market requires a quick and decisive agency. The bureaucratic and budgetary silos of the HCA’s predecessors served a purpose, but do not work in the current market.
Perhaps more significant than the £400m kickstart fund is the £100m – a mixture of grant and borrowing – that local authorities will get to spend on housebuilding by 2011. This figure may be little more than symbolic, but it is a powerful symbol and one that could shift mindsets. With fewer than 300 council homes a year being built, this policy has huge long-term potential.
Work is now needed to clarify funding allocations, but if local authorities have to go down the investment partner route, they may find it to be an arduous and time-consuming process. Such delays must be avoided.
The lack of a coherent strategy could mean another decade of the failed business models and short-termism that helped create the current crisis
Other bits and pieces of housing investment – community infrastructure, armed forces accommodation, decent homes funding – all sound suspiciously like existing projects re-announced, but they reinforce a positive direction for the industry.
We might have asked the government to take the opportunity to fund land investment deals rather than purchase affordable housing from marginal schemes. Instead, the small print suggests a huge government asset sale might be on the cards to help plug the huge hole in public finances. One might question the wisdom of this move in a falling market, not only in value terms, but because it is likely to attract speculative investors who will mothball rather than develop sites and undermine the public sector’s ability to influence what gets built.
If the sales are treated as more than fire sales, they could create opportunities for immediate development. However, the lack of a coherent strategy could mean another decade of the failed housebuilder business model and short-termism that helped create the current crisis.
All in, this is a mixed bag rather than a housebuilders’ Budget, but it is a good starting point. We now need a clear long-term strategy for building on these good ideas, to reform and revitalise a struggling industry and help turn around a flailing economy.
Toby Lloyd is managing consultant and Anthony Brand senior consultant at Navigant Consulting