Gove is back: the key questions facing the returning housing secretary

Which planning reforms will we get now?

Planning was probably the issue that most dominated Michael Gove’s first stint as housing secretary last year. It is hard to believe that it was only in September 2021 that he was drafted in to replace Robert Jenrick.

His predecessor’s downfall came about due to controversies over his ambitious plans to reform the planning system through local housing targets and a zonal system to classify land for development. The reforms, which were seen by many as reducing local communities’ control over development, were blamed for the Conservative party’s  unexpected defeat in the Chesham and Amersham by-election last summer.

Gove went straight back to the drawing board, wrapped himself in the mantle of levelling up and spreading opportunity and eventually published slimmed-down proposals as part of the Levelling-up and Regeneration Bill. The bill, currently before parliament, is more localist in focus, unlike Jenrick’s broader vision.

It would bring street votes into local areas, strengthen neighbourhood planning, remove the duty to cooperate and bring in a new infrastructure levy to partially replace Section 106 affordable housing contributions and the community infrastructure levy.

The Department for Levelling-Up, Housing and Communities (DLUHC) told Housing Today last month that the bill was not going to be scrapped but it was notably absent from government statements in Liz Truss’ short-lived tenure and was not mentioned at all in the disastrous “growth plan” documents.

Truss announced her own, deregulatory planning measures, including a new planning and infrastructure bill aimed at accelerating priority infrastructure projects through reduced environmental assessments and regulation. Last month the government also opened bidding for investment zones – areas where planning rules will be relaxed to promote growth for development.

Gove will have to work out which bits of the Truss plan for planning – if any – are worth keeping and the extent to which the deregulatory, pro-growth agenda she proposed is compatible with his levelling-up vision and the legislation making its way through parliament.

Meanwhile many in the housing sector, including respondents to Building’s sister title Housing Today’s A Fair Deal for Housing campaign, would take a better funded planning system over further reform. Gove has promised to increase planning application fees – by 25% and 35% respectively for minor and major applications – to boost planning departments, but there is scepticism that this will be enough to make up for under-investment in the system.

Where will Gove go next on building safety?

Arguably the area where Gove made the most progress in his first stint at DLUHC was with regard to building safety. Not only did he successfully steer his mammoth Building Safety Act through parliament, he also used quite aggressive tactics to persuade the largest housebuilders to pay to fix “life-critical” defects on their own buildings going back 30 years. These included amending the act to give government the power to stop firms trading if they failed to comply.

Many of the largest housebuilders signed what became known as the “developer pledge” to remediate their blocks. However, when the full text of the contract was revealed in the summer, the Home Builders Federation (HBF) said its members would not sign it due to concerns over liabilities.

Over the past few weeks, lawyers for the government and housebuilders have been going back and forth, tightening the language in the contract in a bid to ensure both parties agree that it reflects the text of the pledge.

Housebuilders want assurances that they will not become liable for work that is not necessary to fix ’life-critical’ defects and that government cannot change the contract at a future date.

An insider told Housing Today that agreement on the final wording was not “far off”. However, all this means the contract looks substantially different to how it looked when Gove last saw it in the summer. If he feels the contracts are drawn too tightly, and that housebuilders will pay less than he thinks is right, the deal may yet unravel again.

Will we see real action on nutrient neutrality?

According to the HBF, around 100,000 homes are on hold due to new rules requiring developments to be “nutrient neutral”. The problem has widened, with 42 new areas – on top of the 34 originally affected – now facing the same problem due to revised guidance in March.

In the dying days of the Johnson government, DLUHC, along with the Department for the Environment, Food and Rural Affairs (Defra) published measures intended to ease the logjam.

However, the government’s package disappointed housing developers hoping for a quick resolution to the problem. The plans give water companies eight years to upgrade their water treatment works, while a mitigation scheme, which would allow housebuilders to pay to offset nutrient pollution, will not launch this year as originally suggested by Defra.

The HBF’s chair, Stewart Baseley, dismissed the package as not matching the “scale or urgency of the issue” and said it “would take years to implement”.

If, as expected, the housing development market starts to slow, many in the sector will be looking to Gove to lead a fresh push to solve the nutrient logjam.

How will Gove ensure inflation does not derail the £11.5bn affordable homes programme?

The DLUHC admitted in August that rampant inflation risked derailing the government’s flagship affordable homes programme (AHP), which is expected to deliver 162,000 homes over five years. Rising costs of labour and materials mean that the affordable housing grant does not go as far as it did previously when housing associations and other bidders were putting their AHP plans together.

The DLUHC report warned that increases in inflation and interest rates were “sudden and unforeseen” and “not reflected in initial bids and grant rate”. Bear in mind that this was before last month’s disastrous mini-Budget, or growth plan, which has increased borrowing costs further.

In addition to rising borrowing costs, housing associations are also facing a proposed cap to their rent increases for 2023/24 while at the same time dealing with fire safety remediation and the need to invest in decarbonisation methods.

If the AHP looks to be in peril, Gove may need to look at ways of ensuring that affordable homes can be built, particularly if the development of homes by private housebuilders for open market sale slows as is typically the case in a recession.

Ultimately an increase in grant would do the trick, but in the current economic environment it may be tricky to persuade prime minister Rishi Sunak and new chancellor Jeremy Hunt to do this.