A Coherent Planning Strategy to Unitary Development Plans - Article Example

Running Head: Housing Housing of the of the Housing Introduction Since the abolition of the Greater London Council (GLC) in April 1986, London has been without an elected strategic planning authority. Individual London boroughs are now expected to prepare strategic policies for their own areas, incorporating them into their new Unitary Development Plans (UDPs). Strategic guidance is given by the Secretary of State for the Environment to which the strategic policies in the UDP are meant to conform. The aim ostensibly is to ensure that a coherent planning strategy is produced for London as a whole. Although the role and structure of the GLC were criticised, its abolition has left many problems unsolved. For example, the administrative political powers of the GLC are now covered by the City of London and the thirty-two boroughs, yet many have argued that such a definition of the boundaries of London is hopelessly outdated (Figure 1) and that London's sphere of influence in jobs and other area has expanded outwards to include a large part of South East England (Hall, 1989, page 1). At the same time, the difficulties of implementing regional policies in an areas which has a diverse range of local authorities of different political persuasions and interests have also become apparent (e.g. Hall, 1976, page 479). These types of problems have not been solved by the abolition of the GLC, as the area covered by UDPs is the same as that covered by the GLC. It seems to be clear that any strategic planning for London should be formulated in the context of London's functional importance for the whole of the South East. The aim of this article is to assess the importance of strategic planning in the provision of affordable housing. In its Strategic Planning Advice for London, the London Planning Committee (LPAC) stated its belief that strategic guidance should promote the need for low-cost housing rather than just meeting market demands (1988,page 11). They based this belief on a number of facts, such as the estimate that about one million households in London cannot house themselves within the private market because of insufficient income (page 12). This situation is likely to be exacerbated by the decline in council housing and rise in rents. LPAC concluded that the role of housing associations would have to be increased substantially and that large developments should only gain planning permission if at least 25% of the scheme was affordable housing for low or middle income households (page 14). This advice was not taken up by the Secretary of State until the publication of Circular 7/91 titled Planning and Affordable Housing (DoE, 1991a). This circular states that planners may reasonably negotiate with developers for an element of affordable housing in any scheme, but does not define affordability. Planners are also unable to stipulate that the houses should be for rent. In a paper titled Access to Affordable Housing, SERPLAN (1990) noted that the National Federation of Housing Associations insisted that affordable rents should not exceed 20% of net income or 33% in London (page 16). There are problems implementing these proposals, especially in London. For example, the London Borough of Islington included a policy in their UDP that new development should include 25% of affordable housing. This was rejected by the inspector at the inquiry who considered that most sites were unlikely to be big enough and that any large sites would consequently be overloaded in order to achieve the overall target. Furthermore, even housing associations are increasingly unlikely to be able to charge affordable rents. Fair rents increased by 20% in 1989 and the Housing Corporation's new funding regime brought about by the 1988 Housing Act is also likely to push up the rents charged by housing associations (see below). This essay will assess if policies developed as a result of Circular 7/91 are likely to be achieved in practice by examining the role of the Housing Corporation in meeting the needs of social housing in London and the South East, with a particular emphasis on the role of housing cooperatives. The Housing Corporation acts as an independent government agency (quango) distributing government funds to housing associations and cooperatives across the country to develop housing for those in need; unlike local authorities which, although they manage most social housing in the country, are restricted to providing housing in their area. The Corporation's policies are likely to be of increasing significance, since it is the Corporation rather than local authorities which will be the major providers of new social housing in the future. A key element of this paper will be to consider whether the Housing Corporation's policy on housing provision is simply to provide the greatest number of homes possible in response to the current crisis of homelessness (documented in all the policy statements of the Corporation's regional offices in London and the South East), or whether it consists of a planned strategy for the future of the region. The article is divided into three main parts: (a) the political background which has created the current patterns of housing tenure in South East England; (b) the policy and structure of the Housing Corporation; (c) a case study of the changing development portfolio of Solon, a secondary housing cooperative in East London, in order to look at some of the effects the new funding regime will in practice have on small housing associations and cooperatives. Current housing tenure patterns In London and the South East demand for all forms of housing exceeds supply. This is evidenced by the long waiting lists for local authority housing (Hall, 1989, page 93) and by the existence of large numbers of homeless people in every borough and county documented, by the three regional offices of the Housing Corporation which cover London and the South East. Even in the owner-occupied market, demand is higher than the number of houses available (although this market has suffered a great deal in the current recession). Currently the most widely held form of housing tenure is owner-occupancy which accounted for 54.5% of all households in 1977 (Minford, 1987, page 93), rising to 67% in 1990 (DoE, 1991b, page 101) partly as the present government is committed to increasing owner-occupancy by such policies as the retention of tax relief on mortgage interest, the exemption from capital gains tax on the realisation of an increase in the market value of a property, and the sale of council houses. It is a widely held belief that the high level of owner-occupancy in this country is the result of the desire by most people to own their homes, but it may also be explained by a lack of any satisfactory alternatives and the relatively high level of subsidy. Council housing forms the second largest group of housing (28% of all households nationally in 1983) and is particularly high in London: for example, in Islington, 56% of households rented from the council in 1981 (London Research Centre, 1990, page 5), but this is likely to continue to fall through the Right to Buy Scheme and other government incentives. It is estimated that some inner London boroughs could lose half of their housing stock (mainly those homes in good condition) through Right to Buy (Edwards and Leopold, 1988, page 16). Local authorities are only able to invest 10% of the proceeds of Right to Buy in capital spending and are under further pressure to transfer some or all of their remaining stock to housing action trusts, ownership cooperatives, and tenant management cooperatives in accordance with the government's desire to reduce housing stock in local authority control. In contrast, social housing through housing associations and housing cooperatives funded by the Housing Corporation currently forms a relatively small group, but is set to rise through increased government funding and public-private partnerships. The Chairman of the Housing Corporation claimed in the summary of the Corporate Plan; "housing associations are now the main providers of new social housing" (Homes for the 90s, page 1). The policy of the government is to transfer social housing provision from local authorities to housing associations, so that housing policy becomes centralised through the Housing Corporation, and to continue to encourage owner-occupation. National housing tenure patterns are not simply a statement of the availability and price of different forms of housing. They have other implications, such as access to employment. It has been argued that some housing tenure forms constrain the mobility of labour more than others. This issue has been taken up particularly by those on the political right. Minford, for example, has argued that renting from private landlords produced greatest mobility of labour since people could easily move to which ever part of the country they could command the highest wage (1987,page 5). Successive rent acts, which controlled rent increases and gave security of tenure, resulted, he argued, in a dramatic decline of the sector (page 51). Council housing, which became the only alternative to private renting, greatly restricted mobility since if a tenant wants to move s/he will have to give up their existing tenancy and will gain no rights to a new council house tenancy in another area (page 5). Commentators on the political left have argued that it is not council housing per se that restricts mobility, rather it is the management of it and the lack of supply. In London tenant mobility worsened after the abolition of the GLC since the boroughs ceased to run its popular transfer scheme. Hague (1990) has highlighted how the tenant-landlord relationship of the private sector was perpetuated by local authorities in their own lettings policies. In 1982, Roberts, a Labour MP, unsuccessfully moved a Tenants (Consultation) Bill. He argued that Labour could not justify its support for council house building and opposition to sales "unless it was prepared in partnership with tenants to give them the same rights and freedoms as those enjoyed by owner occupiers" (quoted in Hague 1990, page 252). Other studies have noted the exceptionally high unemployment rates on some council estates in inner London (Buck et al, 1986, page 99) and have considered how the existence of such areas of high unemployment create a self-perpetuating cycle of inner-city decline, since business and owner-occupiers are unwilling to invest in the area (page 111) and residents are stereotyped in the labour market as problem workers or as pools of cheap labour. The loss of mobility of labour through the demise of the private rented sector is an issue which has particularly concerned successive Conservative governments. In fact, the Housing Corporation was originally set up by a Conservative government, not to provide social housing, but as an attempt to stimulate the private rented sector (see below). Owner-occupancy is seen as the next best alternative, imposing the least restrictions on labour mobility after private renting (Minford, 1987, page 21). Owner-occupancy is increasingly however, becoming a restriction on mobility. The large differences in house prices between London and the South East and other parts of the country mean that people from the North of England are unable to afford property in South East England and people already working in the South East are unwilling to take jobs in the North since they will have considerable difficulties in re-entering the property market, should they decide to return to the South East (Forrest and Murie, 1988, page 83). Increasingly, employers are paying employees relocation costs, demonstrating one of the economic costs of allowing the predominance of a single housing tenure. Relocation costs are, however, usually only paid to key workers (page 90). It is owner-occupancy then, rather than council housing, which is becoming an increasingly subsidised housing tenure and the subsidies are not targeted at those in greatest need. The structure and policies of the Housing Corporation The Housing Corporation was set up by the Conservative government in 1964 to channel funds to co-ownership housing societies to provide housing at economic rents; the aim was to stimulate the private rented sector by encouraging the concept of rented housing rather than to provide housing for those in need. The Labour Party was originally hostile to the idea of publicly funded housing associations, for, although they were non profit-making, they were controlled by unelected management committees. Once in power, however, Labour realised that with some legislative changes, housing associations could be used to further their own objectives (Back and Hamnet, 1985, page 402) and these changes were effected in 1974. The main focus of housing association work was switched away from new build to rehabilitating older properties in inner urban areas with the aim of acquiring properties from private sector landlords who were likely to be charging high rents. Housing associations were given grants for refurbishment and fair rents were set which did not have to cover the complete cost of refurbishment. These changes were reversed by the Conservative government in the late 1980s and social housing is again becoming more commercialised. The main focus of housing association work is now to provide housing for those in need, that is, excluded from other forms of housing, the definition of 'need' becoming more and more narrowly defined. The structure of the Housing Corporation consists of a central office in London and nine regional offices in England. London and the South is covered by three regional offices on a geographical rather than economic or social basis. For example, the regional office for London and the Home Counties (South) covers Kent, Surrey, East Sussex and the London boroughs south of the Thames. The North East regional office covers the north east segment of London and outlying Home Counties, and the North West regional office covers the north west segment of London and outlying Home Counties. The head office of the Housing Corporation publishes a corporate plan; the current plan (Homes for the 90s) outlines the main aims and strategies of the Corporation for the next five years. Each regional office then issues a policy statement, outlining how these strategies will be put into effect in their region. The Corporate Plan assumes that housing associations will have an increasingly important role to play in providing social housing and outlines the types of housing that associations need to provide. It notes that, although the overall growth in population is likely to be small at around 3%, there is likely to be a rise in the total number of households (around 8%) though a decrease in household size, because of increasing divorce. There is also likely to be a rise in single households and single parent households and a need for more housing for the 'frail elderly' (people of 80 and over) (Homes for the 90s, page 8). Demand for social housing is particularly acute in London and the South perhaps because of house price inflation which some have argued is caused by planning restraint policies (see Ambrose, 1986, page 192) and the Corporation sees one of its main roles as deciding which geographical areas and which types of housing should be given priority. This is currently achieved through Housing Need Indicators. The amount of funds allocated to (but not necessarily actually spent by) each borough or district will be determined by this score. The Department of the Environment is, however, considering abolishing Housing Need Indicators in 1994/95. The Housing Investment Programmes run by local authorities will be linked to the Corporation's Approved Development Programme. Although part of the proposal involves the strengthening of the strategic and enabling role of local authorities, the proposals are likely to increase the importance of the Housing Corporation and centralise power in the hands of the Secretary of State for the Environment, since funding will be allocated at his or her discretion (Ashley, 1992, page 12). The Corporation has additional policies which were devised to maximise the effect of the funds available. It is concerned that funds should only to the 'efficient' associations who can demonstrate "excellence of performance and ability to deliver against specified housing targets" (page 16). The Corporation has produced a manual of "Performance Expectations" which outlines good practice which associations are expected to conform to in all aspects of their work. Associations and cooperatives are regularly monitored, particularly those bidding for funding, to ensure that all their practices conform to those set out in the Expectations manual. This policy is likely to benefit larger housing associations who can produce business plans and effect economies through the scale of their operations rather than smaller organisations who may be more effective in adapting quickly to the particular needs of their area (Cooper, 1990, page 40). The Corporation also believes it can stretch its resources by encouraging housing associations to work in partnership with local authorities or developers. Councils can obtain more housing association units if they provide cheap or free land for housing development. New funding arrangements also require associations to seek private sector finance (Homes for the 90s, page 16), as the Corporation will now only give grants for a specified sum, a certain percentage of the costs of development will have to be found from other sources as will the costs of any over-runs. Cooper claims that it will also be very difficult for smaller associations and housing coops to attract private sector funding and they are likely to come under pressure to merge with larger associations (1990,page 40). In fact, cooperatives and smaller housing associations can obtain deferred interest loans through the Housing Corporation but on the Corporation's terms, with no possibility of restructuring the terms of the loan if for example interest rates should fall significantly. Larger housing associations will have the advantage since they will be able to obtain loans from a wider variety of sources which will give them some bargaining power over the conditions of the loan and enable them to have a mixed loan portfolio. The terms of the loan are important since rent levels have to be high enough to cover the cost of the loan repayments. Restricting the grant element of schemes to a certain percentage is likely to result in fewer projects rehabilitating housing in urban areas, as costs are high and unpredictable; developing new build in low-cost areas will be favoured. This will be discussed in more detail below. Associations are also likely to be in competition with the private sector who feel they can provide low-cost housing in such areas. Finance companies are also nervous about investing in housing because of the property slump and even large housing associations are having to give a high degree of security against loans they wish to raise and are likely soon to run out of assets (that is, property) to use in this way (Chope, 1992, page 10). As a government agency, it might be expected that the Housing Corporation would liaise with a wide variety of government departments and formulate policies which would take account, where necessary, of strategies developed by other departments. It appears from the Corporate Plan that little direct liaison does take place. The Corporation has liaised with the Departments of Health and Social Security in order to respond to the Care in the Community programme (Homes for the 90s, page 12), but seems to see no need to relate its housing programme to other problems, for example to regional employment opportunities by liaising with the Department of the Environment or Department of Employment, or to consider its role within the strategic planning policies and objectives of the Department of the Environment, SERPLAN, or LPAC. The policy statements of the regional offices set out the cash allocations for each borough and county in their area, and associations are invited to bid for funds within these allocations. The statements also detail the types of housing which are most likely to attract funding, such as housing for the single homeless, black and ethnic minority housing, and housing for people with AIDS. The statement also gives a profile of the particular housing needs in each borough and details the types of housing, and in some cases specifies particular housing associations which are most likely to attract funding. Housing associations therefore have to compete against each other for funds, which may ensure that the most cost-effective associations receive funding. On the other hand, it could be said that time spent by associations on unsuccessful tenders is a waste of public money and that the procedure works against smaller housing associations and cooperatives. Conclusion The Housing Corporation appears to have no coordinated strategy for London and the South East. The existence of three separate regional offices in the area implies a lack of recognition of the importance of defining London and the South East as a single social and economic region. Furthermore, funding is allocated to individual boroughs and districts within each region, so the effect that funding in one borough might have in another is not considered important. For example, housing for special needs groups, such as the frail elderly or people with AIDS, is not confined to individual boroughs. There appears to be no inherent logic in the policies of the Corporation, other than to facilitate the provision of the highest possible number of housing units for the lowest possible price. Restricting the grant element of individual developments is likely to lead to fewer rehabilitation projects, which could have severe consequences for inner London where sites for new-build schemes are scarce and expensive and most housing stock is old and in need of repair. All forms of housing in the South East are relatively expensive compared with other areas of the country and, although this is to some extent recognised by the Corporation in its funding arrangements for London, the requirement that some of the costs of development are met through loans is likely to lead to higher rents. Perhaps a consequence of this will be to push up the costs of other forms of housing tenure. As we have seen, SERPLAN has expressed a concern that housing association rents are becoming less affordable. This implies that local authorities cannot rely on associations to produce affordable housing without clearly defining what they consider to be affordable rents for their area. They also need to consider if the dominant types of housing stock and land availability will encourage or discourage associations from working in the boroughs. These points will be considered in the case study below. 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