How the west was lost

On 17 september, a group of dorset housing association chief executives and council housing officers are to meet Keith Hill. They are members of a National Housing Federation campaign group and their mission is to remind the housing minister that the South-west – largely ignored in the Communities Plan and overrun with second homes – is desperately short of affordable housing.

Homelessness is on the rise in the region, with almost 8000 households joining council waiting lists between 1998 and 2002. Young people, even when they are earning, find it harder to get on the property ladder in the South-west than other region outside London, according to a recent Joseph Rowntree Foundation report (HT 23 May, page 10). The same report also revealed that Purbeck in Dorset is second only to Westminster, central London, in the proportion of households unable to afford a home – 89% couldn't even afford one in the lowest price bracket.

"The analysis challenges any assumption that the crisis is confined to London and the South-east," says Professor Steve Wilcox of the University of York, the report's author. "When local incomes are part of the calculation, and we focus on the price of starter homes, it is clear that young working people in many districts from Cornwall to Dorset face severe difficulties finding a home they can afford.

"Policymakers would be foolish to ignore the way that affordability problems are spread across the South-west."

House price problems
The South-west's problems are the same as those faced by many other areas of the country; what is peculiar to the South-west, however, is that it is not getting anything like the funding needed to plug the gap.

House prices have rocketed while incomes lag behind the national average, a problem exacerbated by people moving into the region – the South-west's population is set to rise half a million by 2021.

Affordable homes are disappearing, many of them bought as second homes for the wealthy: the region has more second homes than anywhere else in the country and second homes tend to be at the cheaper end of the market, so every home bought for a wealthy family's holidays is a home lost to a family on a low income. Meanwhile, the region loses an average of 6000 homes through the right to buy every year, but only builds around 2500 – well below its planning target of 6000 to 10,000 affordable homes. "It's not rocket science: we have a significant mismatch between demand and supply," says Wayne Morris, head of the NHF campaign group and chief executive of Western Challenge Housing Association, which has homes across the region.

Money worries
The South-west's funding problems were exacerbated by the Communities Plan. In the deputy prime minister's vision, the South-west got no increase in funding above inflation for 2004/5, and £136.8m for 2005/6 – that's a 2.5% increase on the previous year, even though inflation is currently running at 2.9%.

None of the four housing growth areas or nine market renewal pathfinders, which are all to get extra funding, are in the South-west. Morris says: "The bulk of the extra funding is going to the growth areas in the South-east and the pathfinders in the North. Elsewhere, very little has changed."

The loss of local authority social housing grant has also taken away an important source of cash for the South-west. The grant, which used to be given by councils to housing associations to build homes, funded one-third of the region's new affordable housing last year, but was phased out from 31 March under measures introduced in the Communities Plan. Chris Elton, director of policy and strategy at the South-west Regional Assembly, says: "We have had a lot of authorities who have complained bitterly about their ability to meet housing needs now this grant has been abolished."

The Communities Plan also introduced regional housing boards which are drawing up funding priorities for their regions, and there are fears about how this new funding regime will work. The South-west's board proposes to increase investment in small rural villages, which are prevalent in the region, from 21% of the region's funding pot to 33%. However, it also suggested halving funding for coastal and market towns – of which there are many in the South-west – from about 24% to 12% of the total pot.

The proposed drop in funding for coastal and market towns is a major worry for housing associations in the South-west. Morris says: "This will be a problem. There are small rural places that rely on the economic support of larger coastal and market towns so we need to balance spending arrangements between these areas." Chris Elton of the regional assembly, who is working on the strategy, says: "We've got pinched between two priorities of focusing on urban areas and meeting the ODPM's target of 3000 homes in rural areas. It's an issue we will have to consider as we roll forward the strategy. We need to understand what contribution market towns could make to meeting housing demand from rural areas."

The region also lost out on Challenge Fund money for housing key workers, which was only open to registered social landlords in the South-east. The regional housing board suggests that the South-west could start its own Challenge Fund worth £10m from 2004 to 2006, using money set aside from the region's housing pot and with a definition of key workers to include "groups of workers essential to maintain local public services". But Stephen Teagle, director of business and community initiatives at Devon & Cornwall Housing Association, is keen that this definition should include lifeboat crews and coastguards – groups crucial to Cornwall. "We have examples where the people providing the lifeboat service cannot afford to live in the call-out area," he says.

Hill is, according to a spokesman for the Office of the Deputy Prime Minister, "very sympathetic" to the region's funding problems. "He is aware of these issues," says the spokesman, "and it's something he's keeping in mind."

Resources are wholly inadequate to do anything other than scratch the surface of the housing crisis 

John Earley, East Dorset Housing Association

Lobby groups
He is unlikely to forget. For a start, there is next month's meeting with the NHF campaign group that was set up to raise awareness of the crisis among politicians, employers, the regional housing board, the Housing Corporation and the ODPM. The campaigners know they are unlikely to get any more cash in the next two years because spending plans are already set, but they hope to influence the next comprehensive spending review, expected in 2004.

Campaign member John Earley, chief executive of East Dorset Housing Association, says: "We will draw attention to the work which has gone on in Dorset and the fact that resources are wholly inadequate to do anything other than scratch the surface of the housing crisis." They already have the ear of the region's Liberal Democrat MPs, who tabled an early-day motion in May calling on the government to provide adequate affordable housing for the region.

The group recently took its case to the Housing Corporation. Earley met with the corporation's assistant chief executive, Neil Hadden, last week to make the case for more money. "We wanted to know what suggestions he could make to help us put forward a better case for funding priorities in the South-west," says Earley. "Part of the campaign is to meet and influence all sorts of strategic players and he is certainly one of those."

Meanwhile, a second consortium of campaigners is highlighting the problems faced by Cornwall. The Sustainable Cornish Community Housing Group, a band of housing associations, MPs, mortgage lenders, housing charities, local developers and councils, is led by Tim Smit, the charismatic head of the Eden Project, but was originally started in April by Ian Shepherd, business editor of a local paper, the Cornish Guardian.

"We published articles on this and decided to go beyond reporting and get involved," Shepherd says. "People can't afford to buy homes in the area where they grew up. Salaries in Cornwall are below the national average but over the last couple of years Cornwall has seen house price increases very much above the national average."

The group does not want cash, says Shepherd. Rather, it is demanding changes to planning law to reduce the number of second homes, which almost outnumber social housing in North Cornwall.

"If someone wants to turn a cottage into a holiday home we believe they should be made to apply for planning permission to change the use," Shepherd says. "If the planners took the view that there were enough holiday homes, then they would reject the application. These are small changes that cost no money."

Paul Tyler, MP for North Cornwall, pressed for these changes to planning rules during a parliamentary debate on affordable housing in the South-west on 19 June. He says some villages in his constituency are in danger of becoming "ghost villages" in the winter because so many of the properties are second homes. "Schools, post offices and shops are at risk of disappearing in these places because there is not enough custom in winter," he says.

Building on a budget
As well as campaigning for more cash, associations in the South-west are finding ways to build homes with little or no grant from the government.

Gloucestershire Housing Association is just one of the local RSLs using existing private sector housing for affordable rent. It manages homes owned by local private landlords and rents them to people on the council's waiting list. The association gets about £5000 from the ODPM to improve each home; a small grant from the council topped up by income from rent pays for management costs and the remaining rent goes to the landlords. The association has 81 of these properties with another 19 to come into use next month.

Elsewhere, RSLs are turning to the planning system for help. Some small rural sites, known as exception sites, can only get planning permission for affordable housing for local people. Housing associations can negotiate a discount with the landowner when they buy exception sites. West Devon Homes is working on a four-home development on an exception site in the small village of Sprayton. It paid about a quarter of the price the land would have fetched from a private housebuilder.

Meanwhile, South Somerset Homes is using homes sold at market prices to balance out social rented and shared-ownership homes. The association is knocking down four old concrete houses in the village of Ansford and replacing them with 13 new homes. Three will be for social rent, two for shared ownership and the remainder will be a mix of sale and shared ownership, with the balance yet to be decided. Chief executive Geoff Atkinson would prefer to be building more homes for rent, rather than selling homes on the open market, but he is pragmatic about the need to raise funds to cover the grant shortfall.