COMMENT | How new homes can help level up the North

The 2020s will see the prosperity of the North transformed by availability of more and better homes, but only if the new Government takes action now to prepare pipelines of land and money, writes Rob Loughenbury of Lexington Communications.

Across the North, political and industry leaders believe the moment has arrived for them to secure long-held asks of the UK Government. It is widely hoped that the spending taps will twist on as the Government seeks to build a durable foundation across the once unthinkable ‘Blue Wall’ that stretches from Leigh to Blyth Valley.

Housing is in the queue, but the sector must jostle for attention behind the shiny shibboleth of new transport infrastructure. At heart, too many MPs see new housing as a localised political risk, rather than a regional opportunity. This is reflected in the Tory manifesto, which restated an ambition to deliver 300,000 homes a year from the mid-2020s but committed to delivering 200,000 a year in this Parliament, which is significantly lower than current delivery rates.

If we are to get to 300,000 new homes a year, two big reforms need to happen during this Parliament. One is about housing investment, the other is about land supply. Both are about how housing opportunity is shared across the English regions and how it can be grasped as a lever for levelling-up the North.

Replace the Homes England 80:20 rule with a new spatial strategy

Research by Homes for the North, a coalition of 17 developer housing associations, reveals that the Northern share of households, and of public funding for new homes, is shrinking. While the North has a 28% share of English households, ONS (Office for National Statistics) predictions see it contributing just 18% of future growth. In turn, the Northern share of national housing investment has dropped from 24% around 20 years ago to 18% today. Just 11% of the new £5.5bn Housing Infrastructure Fund is allocated to the North. It is difficult to reconcile these trends with the transformative vision of the Northern Powerhouse Independent Economic Review.

It is widely anticipated that the Spring Budget will seek to boost spending in the North, perhaps by including rebalancing the economy as a formal objective of Treasury spending decisions – something that Homes for the North, and the private sector alliance Housing the Powerhouse, have each campaigned for. But changing Treasury guidance will achieve nothing for housing in the North by itself. A crucial further step must be for updated guidance to be reflected in how Homes England distributes investment.

Following Treasury guidance, 80% of Homes England funding is set aside for five programmes targeted at “highest affordability pressure” areas, but just four of 72 Northern Local Authorities qualify. To level up spending on housing delivery in the North, the 80:20 rule should be scrapped and replaced with a spatial strategy for investing in new homes that supports the ambitions of the Northern Powerhouse.

Update the housing need assessment to boost Northern land supply

Delivering 300,000 homes a year by the mid-2020s will only be possible if councils identify enough land for new homes. But land supply in the North is being choked off by the Government’s Standardised Objectively Assessed Need (SOAN) methodology, which came into effect last year.

The need for a single methodology is broadly supported by the industry, but the method devised by the Government slashes assessments of housing need across the North by around 25%. The Government argues that the method establishes a minimum level of housebuilding that local authorities are encouraged to go beyond. But this ignores the obvious disadvantage the North has been put at, as well as growing evidence that councils are rewriting their plans to treat this lower assessment as a target.

Updating the SOAN method is a must if the Government is to encourage Northern councils to identify enough land for housing to support economic and social growth, and rebalance the economy.

Message for Government: Grasp housing as an economic lever   

Building new homes is often thought of as a product of economic growth, as a need that can be predicted using backwards looking trends. The new Government has an opportunity to change this by grasping housing as a lever for rebalancing the economy, planning new communities on the basis of an ambitious vision to level-up the North, and breaking free of historic inequalities.

Fixing the methodologies by which housing need and investment are distributed across the country are important and realistic steps that can be taken in 2020.

Rob Loughenbury is director at Lexington Communications, which provides public affairs advice to the Housing the Powerhouse Coalition and Homes for the North.