‘Good, but not perfect’ – What next for Homes England?

“Homes England is good, but it is not perfect.” You won’t find this line verbatim in the organisation public bodies review but, when report author Tony Poulter says it to Housing Today on the day of its publication this month, it is hard not to feel he has summed it up pretty neatly. 

The review was not launched after any crisis – every department is meant to review its arms-length bodies every five years – but it is Homes England’s first assessment since 2016 and comes nearly a year after it launched its five-year strategic plan, a major landmark in the 1,415 person-strong organisation’s slow pivot away from pure housing delivery and towards regeneration. 

Judging by the way it has been received by the organisation, you would have to say it is a fairly positive review. “It’s like a school report, isn’t it,” Homes England chief executive Peter Denton tells Housing Today. “There’s always things you need to improve upon, but I completely agree with where they have made recommendations for change and improvement.” 

But what do Poulter’s recommendations actually entail? And, in an election year, what do they mean for the future of Homes England as an organisation? 

The right body for the place-based job but agency still too remote 

Poulter’s report card began with a fairly ringing endorsement of the organisation as it currently exists, concluding that “England and the government need Homes England”. No other existing body, it said, is better placed to deliver the organisation’s new priorities. 

Before the levelling-up white paper, Homes England had been focused on increasing housing supply where market demand was not being met, with 80% of funding directed at the parts of the country where housing was least affordable – predominantly in London and the South-east. But, with the publication of the white paper, Homes England was redirected to reflect the shift towards levelling up, with more focus on regeneration of brownfield sites where current market demand is typically pronounced. 

According to the review, most stakeholders agreed that “the agency’s remit has, in recent years, been too narrowly focused on housing supply”, welcoming the change which was reflected in last year’s strategic plan. But, while the review found support for the new mission and determined that Homes England is the right body for the job, there were  criticisms from those interviewed. 

“Nobody said Homes England is perfect,” Poulter tells Housing Today. “Nearly everyone said ‘Homes England is great, but…’ and the ‘but’ is different for each of them […] I would say in the local authority sectors, people think that Homes England could be more responsive and should have more people locally”.

In one city council in the South-east cited as a case study in the review, there was “confusion about who undertakes which roles, where a case officer fits in, and who to engage with on conversations about local challenges”, while interviewees believed that the organisation was too focused on bigger sites. 

But Homes England chief executive Peter Denton tells Housing Today that shifting the balance of the agency towards the local level has been a large part of his job since taking charge. “The vast majority of my three years here has been changing the internal structure of the agency to cater for place-based work, which sounds seductively easy, but actually is not.”

He adds that the organisation has repositioned 125 staff to be focused entirely on engaging directly with local government. And anyway, he says, a pivot to place-based work will always leave lower priority areas disappointed – “some people are not happy with this because we have given them less focus”. 

It seems inevitable that the pivot towards place-based work will mean diminishing attention for those areas not selected as priorities. The review acknowledged that Homes England is already making changes to respond to this, implementing northern, Midlands and southern-oriented teams across its delivery directorates, introducing regional forums to improve how it engages locally, and establishing 24 multi-functional teams in priority places. 

Nevertheless, Poulter recommended that the government should work on agreed guidance to provide clarity about how Homes England should balance work across its three tiers of service. 

Change in mandate must be followed by reduction in scope

Some things are out of Denton’s hands. Many of the recommendations made in the review were directed at the Department for Levelling Up, Housing and Communities, and it is unclear how many reforms are likely to be made in an election year.

One of the most significant policy recommendations made in the review was the suggestion that Homes England offload its responsibilities for Help to Buy and cladding remediation.

In both cases, Poulter acknowledged that it made sense for Homes England to deliver these schemes initially, and in the latter case was “the only realistically available to support it”.

However, the review said building remediation “does not directly align to the agency’s mission”. Nor, for that matter, does Help to Buy, which, as a closed scheme, no longer contributes to increasing housing development.  

Homes England’s live loan book is valued at £18.9bn, which is 83% of the organisation’s overall assets. “I’m not saying it’s not important,” says Poulter. “Someone’s got to look after that mortgage book, but it’s for government to say, ‘do we want to stretch Homes England to do it? Or could we get a private sector entity or some other bit of government to do it?’ ” 

Denton says: “Tony’s argument is, if you have a housing and regeneration mandate […] do you have the management and bandwidth to continue managing Help to Buy and building safety?” He adds that he “absolutely get[s] his argument”, while stopping short of an endorsement.

“As long as they remain part of Homes England, they are not a sideshow, they remain important to us,” he insists, while playing down the likelihood of a change any time soon. “Ultimately it is a ministerial decision, but I can’t foresee this is something that will be looked at until such time as an election.” 

Given the likelihood of a Labour victory in the upcoming general election, the decision may very well be in different hands this time next year. Denton refuses to be baited into crystal ball-gazing (“it is for the next ministerial team” to determine what the organisation’s future looks like), but he does emphasise Homes England’s cross-party appeal.

“If I look at our mission-based strategic plan, which is about more homes, better quality homes, great places, jobs, growth and productivity, I think there’s a very high level of commonality across the political spectrum there,” he says.

Labour, for its part, is reportedly looking to “repurpose” the housing quango as part of its reforms – but given the lack of detail released so far, it’s difficult to see these rumours as much of a threat to the body.  

One little-noticed suggestion in the review is that building safety could form part of the remit of a separate long-term government body focused on retrofit of buildings, not just for safety, but also for energy and quality matter. “This would be a cross-government responsibility, across several departments,” it said, noting that the DLUHC could otherwise contract with the private sector directly to solve the issue.  

Drop off in AHP delivery not Homes England’s fault, but more flexible funding arrangements needed 

Housing associations have described a sharp contraction of development in the face of economic, financial and policy headwinds. Originally conceived to deliver up to 180,000 homes between 2021 and 2026, the AHP is now likely to deliver far fewer.

Homes England will not at this point say exactly how few, but it is expected to be lower even than the 157,000-figure predicted by the National Audit Office in September 2022. 

The review, however, had relatively little criticism for Homes England on under-delivery, putting it down to largely external factors out of the organisation’s control. “The first factor is the economy was going to pot and Homes England is a funder and facilitator,” Tony Poulter says.

“It cannot build houses unless developers want to spend money or housing associations want to promote schemes and invest alongside them. People stopped coming to them in the third quarter of 2022 when we were in Liz Truss-land, so they kind of lost a quarter of the year.”

Denton, for his part, says the organisation, alongside the Treasury and DLUHC, worked “at real pace to reset and support housing associations” in the autumn of 2022. 

>> Also read: ‘The figures on starts are terrifying’. What’s really happening to the Affordable Homes Programme 

He says that, while he cannot put a number on AHP delivery until the summer, when the organisation publishes its accounts, he is “comfortable” that the direction of travel is  positive. “I can give you comfort that the deployment of commitments and capital for the affordable programme over the last 12 months has been astonishingly good,” he says.

“That doesn’t mean there’s not headwinds and it doesn’t mean there’s not challenges. But I think, when you see our results in the summer, they will tell the story of actually how that reset has supported the industry moving ahead quite quickly and quite effectively.”

There were, however, some suggestions from Poulter for how the DLUHC could ensure the organisation is better prepared for future market fluctuations. According to the review author, some funding schemes are too rigidly defined, limiting the organisation’s ability to be nimble.

“I can give you comfort that the deployment of commitments and capital for the affordable programme over the last 12 months has been astonishingly good”

Peter Denton, chief executive, Homes England

“If you’ve got an organisation that’s trying to promote housing activity and regeneration, you need them to be able to respond to the market,” he says. As well as designing more flexibility into future funding arrangements, the review also urged DLUHC to make changes in the next spending review to allow it to commit to long-term schemes.

“[The private sector] are investing over five to 10-year time horizons; government needs to do the same,” says Poulter. ”If you have a government scheme which says, ‘here’s the brownfield infrastructure and land fund, but we only have an annual allocation and then we’ll think about it again in the next spending review’, that’s not the best way to get this work done in the public sector or attract private sector investment.”

DLUHC must unleash Homes England and allow it to be bolder

Another note Poulter sent to DLUHC was to give Homes England authorisation to be bolder, both in taking more risk – including by including by making programmes more easily accessible to SMEs – and in acting as master planner on larger schemes.  

The organisation finds itself in a slightly difficult position on the first of these points. Taking risky bets as a public sector body can often be seen as gambling with the public’s money, and Homes England has faced criticism for its doomed investments into modular firms.

The organisation lost 99.9% of its £69m loan to Ilke Homes, which went into liquidation last October. In the aftermath, Homes England was criticised by the House of Lords built environment committee as lacking a coherent strategy on MMC.  

But Denton is fairly cavalier on this point. He says: “Tony [Poulter] talks about us taking more risk. My view is, when the agency committed to supporting MMC, particularly category one, it recognised the risks it was taking. That was its job.

“It’s job was to take risks that other players wouldn’t take at that time. It was to help create an industry. We do that all the time and, yes, we have lost money. It’s public that we have lost money on Ilke Homes. And I don’t enjoy losing money. But, if you look at the overall loss of money of the agency relative to what it has done, it is not dramatic.”

He adds that much of the controversy around MMC has been without merit, noting that, while “category one has been the area of challenge”, category two is “incredibly buoyant”. 

On the master developer point, the review noted that only a small number of companies – it name-checked Urban & Civic, Lendlease and Peabody – were capable of developing sites of more than 5,000 homes and suggested Homes England be encouraged to “play the role of master developer” on more large regeneration schemes. “It is saying that the agency is kind of the only game in town with regards to large scale mass development work,” Denton says cheerfully.

Currently, Homes England has a master development role in 46 schemes that are developing more than 1,000 homes. 

The review’s endorsement did come with a splash of cold water, however, noting that the agency’s “current funding programmes are not large enough or designed to do this repeatedly” and its “resources to support activity in the early stages of major projects are limited”. 

Uncertain future for agency with election on horizon

Nearly a year into Homes England’s strategic plan, the verdict from the independent review of the organisation is broadly to “keep doing what you are doing”. The challenge it faces in the coming years is that many of the recommendations for improvement lie entirely out of its hands.

As Denton himself alluded to, few of the more substantive recommendations are likely to be carried out in an election year, while the Labour Party’s plans for the agency have yet to be made clear.

That the agency is crucial to the government’s housing plans seems to have been settled for now – but what those plans will be a year from now is far from clear.