New homes: NAO details challenges ahead
One year after the Department for Communities and Local Government was rebranded to reflect prime minister Theresa May’s pledge to deliver 300,000 new homes a year by the mid-2020s, the National Audit Offices has warned of a litany of challenges ahead to meet the target.
A new report on the way England plans for new homes has flagged barriers including the methodology behind housing-need calculations, professional skills shortages, and securing adequate private-sector infrastructure funding as significant obstacles to meeting the government’s target.
The public spending watchdog said there were no detailed calculations behind the 300,000 figure, which represented a 69% hike in historic annual housing delivery from 2005-6 to 2017-18, when an average of 177,000 new homes were added to the national stock.
While the NAO did not say the government’s 300,000-new-homes-a-year target was unachievable, it suggested a step-change in cross-departmental coordination, leadership and recruitment would be required.
Planning for new homes is largely devolved to local authorities, but the recently-renamed Ministry for Housing, Communities and Local Government oversees the rules they work to. It also hosts the Planning Inspectorate, which runs appeals and examines councils’ strategic plans.
Part of councils’ planning for new homes involves assessing local need. But the NAO said MHCLG’s latest methodology – introduced in 2017 – could actually work against ramping up delivery in four subregional areas because it suggested there was lower need than had previously been assessed.
“While local authorities can support the delivery of more new homes than the standard method calculates, in some areas it may be difficult to get local support given the department’s method gives lower numbers,” it observed.
The report also highlighted skills shortages within local authority planning departments and at the Planning Inspectorate. At council level, the NAO said numbers of planning staff had fallen by around 15% between 2006 and 2016 and said MHCLG did “not understand the impact of skills shortages”.
It said that while official figures appeared to show that the proportion of planning applications determined within stipulated timescales at local level had risen from 47% in 2012-13 to 87% in the last financial year, the ability for applicants to agree bespoke timescales and time extensions might be creating an illusion of increased efficiency.
At the Planning Inspectorate, the NAO said the average amount of time taken to determine housing appeals had risen from 30 weeks in 2013-14 to 38 weeks in 2017-18, a situation it said the inspectorate recognised was “unacceptable”.
The report said the Planning Inspectorate was “failing to meet many of the department’s statutory targets” but it also noted that the measures were “flawed” and that the inspectorate wanted them to be revised.
It also said that the inspectorate, which is an executive agency of MHCLG and has around 700 staff and 100 contractors, had undergone a 13% reduction in headcount between 2010 and 2018.
“The Planning Inspectorate does not have detailed workforce plans to show how it will use existing and any newly recruited staff effectively, and deal with future workload pressures,” the report said.
Elsewhere, the NAO said there was also evidence that councils were failing to adequately use their powers to make developers pay for vital infrastructure to support developments they were profiting from.
Councils can use so-called Section 106 agreements or the Community Infrastructure Levy to extract payments from developers towards the cost of new school places, transport improvements and parks. But the NAO said developers were able to push down their previously agreed contributions by pointing to changes in the viability of their schemes, and that MHCLG accepted that some local authorities were “unable to negotiate effectively with developers”.
It added that MHCLG did not collate information on how frequently planning-obligation payments were renegotiated or what the resulting decrease in finance was. The report said that while the average infrastructure contribution from a new home had remained static at around £19,000 between 2011-12 and 2016-17, house prices had increased by 31% and average profit margins of the “top five” housing developers had increased from 12% to 21%.
The NAO said that MHCLG had to work with local authorities – and the Department for Education and the Department for Transport – to ensure that the necessary infrastructure for housing developments was adequately funded and delivered.
NAO head sir Amyas Morse said the range of challenges MHCLG faced in hitting the government’s housebuilding target meant it would need to up its game on a variety of levels – including keeping a close eye on the gap between the target and what was being planned for.
He added that it was also vital for the department to work with local authorities and other government departments to ensure that infrastructure was delivered more effectively, and to work with industry bodies to conduct research into the skills gaps in local authorities’ planning teams.
“For many years, the supply of new homes has failed to meet demand,” he said. “From the flawed method for assessing the number of homes required, to the failure to ensure developers contribute fairly for infrastructure, it is clear the planning system is not working well.
“The government needs to take this much more seriously and ensure its new planning policies bring about the change that is needed.”
Housing minister Kit Malthouse admitted that he recognised the challenges identified by the NAO, but insisted that the government was determined to deliver the level of new homes the country needed.
“We’re conducting independent reviews on build out rates and planning inquiries," he said. "And through multi-billion pound funding, planning reforms and giving councils the freedom to borrow more to build homes, we’re helping to make the housing market work for everyone.”
Malthouse said that the 222,000-plus additions to the housing stock in 2017-18 had been the second-highest level in the past 31 years.
MHCLG said it had already consulted on proposed changes to the standard method for calculating housing need that is used by local authorities and was currently analysing responses.