Housing associations and housebuilding

Greg Clark's speech to Placeshapers, a network of more than 100 housing associations.

The Rt Hon Greg Clark MP

In 1939 the Ministry of Information printed over 2 million copies of a very famous poster. It wasn’t famous at the time though, because it was hardly used. In fact, the next year most of the print run was pulped.

Six decades later a few surviving copies were re-discovered. Despite the passage of time, the design had a powerful impact.

Before long it was cropping up everywhere – on mugs, t-shirts, key-rings. Just about any piece of merchandise imaginable – and not only in this country.

A poster designed for the Second World War had gone global in the first decade of the 21st Century. Indeed, it supplied the unofficial motto of the global financial crisis. Which was, of course, “keep calm and carry on.” More than a reminder not to panic, it was a rebuke to the recklessness that had caused the crisis. A condemnation of those who stoked up the boom and then ran away when the bubble burst.

This country owes a great deal to those who kept calm and carried on. To the workers who accepted the need for wage restraint. To the job creators who led the recovery. To the councils who made savings while protecting frontline services. And to you, the housing associations.

In 2007, the commercial developers started construction on 160,000 new homes. Within just 1 year that was down to 82,000. Workers were laid off, sites were mothballed and large parts of the sector teetered on the brink. However, you kept calm and carried on building – at over 20,000 new homes per year in England alone.

In 2009, housing associations were responsible for nearly 1 in 4 new housing starts. Up from 1 in 10 just a few years earlier. While others sat on their hands, you kept Britain building. You proved your value as a major part of the housing mix. A counter-cyclical force for the good of the housing supply and for the economy as a whole.

Overall house building figures are now up on 2010, but they’re still not high enough. Of course, there’s more to housing policy than new build alone, but the fundamental fact is that this country needs to build more homes. Specifically, more affordable homes – for purchase as well as for rent.

It’s no secret that the government sees the housing association movement as a key partner in achieving this objective. That’s something that I made clear at the National Housing Federation conference last month. And it’s something the Prime Minister made clear when he unveiled the agreement between the government and your sector on extending the Right to Buy.

The purpose of a partnership is to enable the partners to cooperate without either losing their individual identities. The details of implementing the agreement are therefore of great importance. Some of these may come up in questions later – and they’ll certainly come up as I sit down with your representatives to work through each detail in the weeks and months ahead.

But for now I’d like to turn to some higher-level issues. Those surrounding the very purpose of the housing association movement – and, in particular, the community-based associations represented by PlaceShapers.

The first of these is the issue of tenure. In negotiating with you to extend the Right to Buy and in seeking your help to build affordable homes for purchase, we have obviously placed the emphasis on home ownership. The reason for this is equally obvious. Which is that the decade-long decline in home ownership must be reversed.

The number of people in employment is at a record high. Yet the number of home owners has fallen. This is especially true for younger people. Over the last 20 years the proportion of under 40-year-olds who own their homes has decreased by a third.

I am not content to see the ownership gains of the 20th century wiped out in this century. That does not mean that we see falling home ownership as the whole of the problem. Or the Right to Buy as the whole of the solution. There will always be those who need rented or shared-ownership housing for at least part of their lives.

But we should also think through the consequences of not stopping the slide in ownership. If we fail to turn ‘generation rent’ into ‘generation buy’, where will they go? Some will rely on the hotel of mum and dad. Most will turn to the private rented sector – which will suit some people for some of the time, but we know that most people want to become home owners.

Generation rent won’t stay young for ever. By the time they retire they will need assets and an affordable place to live. Which is precisely what home ownership allows people to achieve for themselves over their working lives. That is why we must work together to build affordable homes for purchase as well as for rent, so that this generation can have the same opportunities as previous generations.

I’d also like to say something about the balance between your role as house builders and everything else that you do for your communities. We make no apology for recognising the need for new homes and acting upon it, but that doesn’t mean that we discount the value of the community services that you provide. As an MP I know just how important these can be.

The biggest housing association in my constituency is a proud PlaceShapers member. Town and Country at the heart of the biggest estate in Tunbridge Wells providing support to tenants and the wider community. At the same time, Town and Country is a vital investor in new housing. Responsible for 2 regeneration schemes in the town – one of £10 million the other of £34 million.

Of course not every housing association is the same. The PlaceShapers family is as diverse as the communities you individually serve. Not all of you could or should be big time developers. However, looking at the sector as a whole, the issue of house building versus community services is not a case of either/or, but both/and. In fact, as the government seeks new partners in the effort to build more homes, I believe that your focus on the community is positively advantageous.

Before I expand on this point, let me explain why the need for new partnerships is so pressing.

Last year, in the year to June, planning permission was granted for approximately a quarter of a million new homes across the country. Which is around the projected level of household formation. But new homes have to be built not just planned. And currently we’re building them at barely more than half the level at which we’re permitting them.

Quite clearly, the planning system is not the only constraint on house building. All the more so since the National Planning Policy Framework – which is clearly delivering the permissions we need. Now, with the big builders back in the black and the lenders lending again, we must move from rescuing the industry to reforming it.

The last 40 years have seen a huge loss of diversity in house building. The history shows that when we had a wider range of developers we built more houses. In the post-war years, social house building by public sector developers pushed the number of new homes to record levels. But crucially this was as well as, not instead of, the commercial sector – which built more houses in the 1960s than it has in any decade since.

We’ve also seen a major loss of diversity within the commercial sector. The number of small and medium sized firms has dwindled – from more than 12,000 in the late 1980s to less than 3,000 today. This helps to explain why, compared to other countries, Britain has so few self-build homes.

As for the larger companies, consolidation has thinned out the field. They also face next to no international competition. All of which might not matter if the big developers were sufficient to deliver the homes we need. But quite clearly they’re not.

Of course, the one part of the industry that went in other direction was yours. You kept Britain building through the recession. And, now, you have a vital part to play in re-diversifying the industry. And, therefore, getting more houses built.

Let me quote something from the PlaceShapers website:

Good housing is the bedrock for a decent life and we are conscious of our pivotal role as change agents.

I agree. Agents of change is exactly what you are. Here are 3 reasons why:

Firstly, you represent by far the biggest and most prepared alternative to the status quo. A standing army with the energy, expertise and capacity to build the affordable homes that we desperately need. Of course, for a fully diverse and competitive industry we need new market entrants. New building technologies. Investment in skills. The expansion of the self-build sector. And a continued revival of building by councils. But you guys are already here. Already making a difference.

Secondly, the Right to Buy provides an immediate path to growth. A means to increase ownership, but also a new source of capital to increase supply.

And, thirdly, you have the advantage of local knowledge. You are literally in the right place to build where others would fail.

If we’re serious about building more homes, then we need to build where it’s hard not just where its easy. For instance, in many rural areas, affordable housing has long been in short supply. Yet the countryside is also where environmental concerns over development are at their most acute.

It takes a deep understanding of the land and its people to provide new homes while respecting the rural character of the location.

The regeneration of our cities provides another, very different, example. In particular, estate regeneration has enormous potential to improve living conditions and making better use of precious urban land.

In partnership with councils, housing associations not only have the expertise, but also the necessary sense of mission to look after the interests of existing tenants while providing homes for new tenants and owner-occupiers.

For all of these reasons and more, it is clear to me that the contribution you can make to house building is not despite your rootedness in the community, but because of it.

Which brings me to the decision of the Office of National Statistics (ONS) to reclassify housing associations as ‘non-financial public corporations.’ This stems from an interpretation of a 2008 Act of Parliament.

This government is committed to a package of deregulatory measures intended to restore your classification outside of the public sector – so that your formal status matches the facts on the ground.

In the meantime the ONS decision does not change the fact that housing associations have always been accountable for the use of public resources. Nor does it change the respect that all governments must have for your expertise in social housing, your local knowledge and, therefore, your freedom of judgment and action. It is precisely because of your independence from both government and the private sector that you have the trust of your communities and the confidence to pursue your mission.

The ONS decision is a technical matter – and we will not allow it to be over-interpreted.

In partnering with you to deliver the homes we need, our purpose is not to erase what makes you special. But to make the most of it. Compromising your identity wouldn’t just be wrong, but also pointless. Your value within the mix of housing providers comes from who you are. To make you a part of government, or merely more like government, would defeat the purpose of partnership.

When I last addressed this conference, I was a junior minister setting off on the path of devolving power and resources to local communities. The City Deals that we agreed then were only the start of the devolution process. In the years since, subsequent deals have taken things much further – with the initiative as much on the part of local government as central government.

My aim is that the agreement reached between the government and housing associations should also be a start and not an ending. The first step in a productive and respectful partnership in which you become more, not less, like yourselves.

Published 6 November 2015