Government pledges £8bn for affordable housing

The housing green paper, published on Monday, will commit £8bn to affordable housing over the next three years.

In a show of Gordon Brown’s commitment to the housing agenda, the announcement comes three months ahead of the Comprehensive Spending Review, in which the rest of the government’s spending plans will be revealed.

The cash, which represents a £3bn increase on current three-year spending plans, will deliver 45,000 social and 25,000 shared ownership properties (see graphs).

In a further sign of how prime minister Gordon Brown has made solving the housing crisis a political priority, the green paper sets a long-term goal of 50,000 new social homes a year beyond 2011.

The increased provision is designed to help deliver Brown’s recently announced overall annual target of 240,000 homes by 2020. Ministers have also grown increasingly alarmed at the 223,000-a-year growth in new households, by (see graph).

Merron Simpson, acting policy director at the Chartered Institute of Housing, said: “This is the first time that the government has set such a long-term objective for social housing.”

Steve Douglas, acting chief executive of the Housing Corporation, said: “We are delighted. Everybody is anticipating a tough settlement, but this shows that ministers’ vision for housing is being backed by resources.”

He dismissed concerns expressed by David Orr, the National Housing Federation chief executive, that the sums on offer were too low to deliver the new target, and said the increased provision would be spurred by entrants into the affordable housing market, such as more developers and councils.

The corporation announced that a clutch of new developers qualified this week to receive social housing grants, including Berkeley Homes and Wates Living Space.

The green paper also gives councils greater incentives to set up special purpose vehicles, called local housing companies (LHCs), to build housing. It estimates that English authorities own about 2,600ha of surplus brownfield land with the potential to deliver 35,000 homes through LHCs.

This shows that ministers’ vision for housing is being backed by resources

Steve Douglas, Housing corporation

The green paper also ratchets up the pressure on planners and housebuilders to speed up the delivery of new housing. It says councils are “more likely” to lose appeals if they have not identified a stream of sites for housebuilding.

The green paper states: “If a local authority cannot demonstrate that it has an up-to-date five-year supply of desirable sites, planning applications by developers on other sites should be considered favourably.”

The secretary of state will take over handling housing applications refused by a council if it does not have a forward plan.

However, the green paper repeats allegations, currently being investigated by the Office of Fair Trading, of widespread landbanking by developers.

It says the government could allow shorter consents than the three-year minimum.

It also says ministers may set a more rigorous definition of when a scheme has commenced, such as requiring infrastructure development on the site by the time the consent runs out. This is intended to create a “clear incentive for developers to begin building in order to get a return on their investment”.

The paper also says that the government is working with the accountancy profession to develop a consistent approach to land holdings, including options to buy land, by housebuilders, developers and landowners.

John Slaughter, director of external affairs at the Home Builders Federation (HBF), welcomed the move to increase land supply. However, he said taking a tougher line on when sites are developed could be “counterproductive from the developer’s point of view because it would increase risks”.

He pointed to a survey of HBF members showing that 97% of development begins within three months of full planning permission being granted.

Stephen Stone, chief executive of Crest Nicholson, said: “We can increase production. The labour resources are there and the subcontractors are in place.”