Devolution and housing in England – where are we now?

What obstacles lie ahead?

As more deals are agreed, building up internal resources and knowledge was flagged as a challenge. However, funding is the major sticking point, with different rules, criteria and timelines attached to funding pots making some of the money earmarked for combined authorities unviable or unobtainable.

Richard Parker, mayor of the West Midlands Combined Authority (WMCA), says that the group currently has £148m in its housing funds that it is unable to use.

The funds in question are ringfenced, have pre-agreed housing targets and were originally devolved for the purpose of unlocking additional housing supply by bringing under-utilised brownfield land back into use. These funds were intended to tackle genuine viability gaps associated with site remediation, infrastructure deficits, repurposing existing buildings, site assembly and other enabling requirements.

This is where the challenge lies for the WMCA, which now has a target to deliver 20,000 new social homes. Social rent properties require a significant level of public sector subsidy to deliver. To date, this subsidy has been provided through the national Affordable Homes Programme, administered by Homes England, which was designed to address the cost of delivering affordable homes.

The delivery targets on the WMCA’s existing funds create a ceiling on the level of subsidy it can provide per home, which is reflective of the typical grant requirement to bring brownfield sites back into use at the time each fund was agreed. This level is substantially below the grant required to deliver a social rent home.

Mr Parker says: “The WMCA has been able to secure vital funding to invest in housing, focusing on regenerating old industrial sites that have long been eyesores and barriers for communities. This funding has been used to clean up these sites and help developers build homes, with a commitment that at least 20 per cent of them will be affordable for local people. So far, we’ve built more than 7,000 homes, with over a quarter of them affordable.

“But with the rising cost of construction and high interest rates, it’s been challenging to keep up with the demand for homes, especially for families who need social housing the most.

“Housebuilding in the West Midlands has doubled over the past decade, but we know it’s still not enough. Too many people are waiting too long for a safe, affordable place to call home. That’s why I’ve set a target to deliver 20,000 new social homes over the next decade. We have £148m sitting in our housing funds, but restrictions are stopping us from using that money to give families the homes they need.

“I’ve written to the deputy prime minister, because this issue is urgent. People are waiting, and we have the means to help them now.”

In the South, Eastbourne Borough Council is a two-tier authority with responsibility over housing that has not entered a devolution deal. Peter Diplock, the council’s cabinet member for housing and homelessness, says that central government funding previously came with “too many strings attached”.

“We’ve had a few examples where government has made funding pots available, but they’ve come with so many strings attached that it’s almost like there’s no point,” he says.

“Whereas [they should have] just made that money available and said, ‘Eastbourne Borough Council, you know your town better than we do in central Westminster, Whitehall. You know what this money could be best used for to solve your homelessness problem.’ But the theme of the last government was really tightly managed, discrete pots of money that you [either] had to compete for in the first place, or came with such stringent criteria that it was almost impossible to meet them.”

This issue around funding was echoed by the NHC’s Mr Murray. He says that the upcoming multi-year Spending Review in March was one to watch. “The proof of the pudding will be in the money. Money is tight and I wouldn’t expect a lot of budget, but this Spending Review will essentially set the envelope for the next parliament. And how that money works is going to be really critical, because what we’ve seen in the past is, even when there is money, the rules around it mean it doesn’t really tackle some of the challenges we’ve got, [particularly] in the North.”

One example of this can be found in the Brownfield Housing Fund, says Mr Murray, to which all combined authorities have access. The NHC published a report in August laying out the opportunities for greater devolved funding for brownfield development, which it said is hindered by Treasury value-for-money rules.

Mr Murray says: “The Treasury value-for-money rules mean you have to meet a certain threshold, and it’s all based on the land value uplift. If you’re based in the South East, the land value is so high that anything you do on it will generate enough money.

“Whereas if you’re in Bradford, where the land values are lower and the investment needed is higher because you’re having to deal with land with contamination [for example], it doesn’t stack up so you can fund it under the government rules.”