The HCA must survive

Budgets are being cut, developments are on hold and the Homes and Communities Agency (HCA) has committed £610m that it now finds that it doesn’t have (see page 11) - although the chancellor may yet, by some miracle, find something in next month’s Budget. As it is, it looks like any housing association thinking of submitting a grant application this financial year can more or less forget it. George Osborne did announce a surprise £170m to build 4,000 affordable homes - which most people assumed was a sop to the Lib Dems’ social conscience. In fact, the aim was to reduce the HCA funding gap to “only” £610m. The reality is that there is no cash in this year’s budget that hasn’t been earmarked. All the money’s gone and the future of the HCA itself is in question.

As well as doing nothing to reduce council waiting lists, the impact of this funding shortage, and the uncertainty that goes with it, is bound to be felt in the private sector. One of the givens of the past two decades of housing policy is that the development of social housing has been firmly tied to the private sector. Grants are given to subsidise affordable housing development on mixed-use schemes, and much development is the result of section 106 agreements. It’s vital now that councils do not demand planning deals that can’t be met. With HCA schemes being put on hold, the budget being cut for Kickstart (the initiative aimed at restarting work on stalled sites), and the emergence of the £610m funding gap, this is the time for realism.

“Ministers are talking about eventually passing some of the HCa’s responsibilities to mayors. Why? Well the £4.8m it spends on wages each month is seen as disproportionate to the budget it controls”

But what about the survival prospects of the HCA itself? The Tory wing of the coalition has made its disdain for quangos perfectly clear. And although the HCA is unlikely to be the first on the bonfire, ministers are talking about eventually passing some of its responsibilities to locally elected mayors, including the London mayor. Why? Well, the £4.3m a month it spends on wages is seen as disproportionate to the budget it controls.

The industry would certainly mourn the passing of the agency. The two years since its formation from the Housing Corporation and English Partnerships (EP), have been the worst market conditions on record. Under the leadership of Sir Bob Kerslake, initiatives such as Kickstart have virtually saved the UK housebuilding industry. It’s also brought new ideas to the table: there was the proposal to spread its grant to contractors that wanted to try their hands at housing development, and its use of cash as an investment rather than grant.

So the HCA has played the role of Housing Corporation well. It has not performed as well when it has carried out the kind of operations that EP used to undertake - trading in land and its development programme, for example. But that’s been a function of the market more than fumbling by the HCA. And besides, the political will was focused on frantically trying to hit housing targets.

The HCA can expect to suffer a great deal of pruning - and if there’s no cash to dish out, then you certainly don’t need hundreds of people to process applications and make sure that the money is being well spent. But a leaner, more centralised body could still be an efficient procurer of social housing at a price that the country can afford - and it would be a damn sight easier for housebuilders to comply with one set of regulations, rather than having to meet umpteen sets of them across the country. Now that the market is responding to resuscitation (touch wood), let’s hope the HCA gets the opportunity to reinvent itself and demonstrate its ability to leverage value for the state by leveraging value from its landbanks - not just handing out its money.

Denise Chevin, editor