Housing the North

By Ann Pittard

The minister charged with planning, Nick Boles, this week joined the chorus of those looking for more English land to build upon with his claim that we should find 2-3% more land to build on. This chimes well with the Northern Economic Futures Commission’s call for a ‘Mapping the Futures’ programme to drive national spatial planning for the next 20 years.

But he need look no further. Rich in land, home to vast construction supply chain and boasting world-leading specialist expertise, the North presents the ideal location to restock the English housing market, to rebalance the economy, and to develop innovation in housing and neighbourhoods. It is time that these Northern assets were used to their full effect.

All too often, comment on the malaise of our national housing market centres on London and the South East. There is little doubt that the problems in the capital’s housing market are wide, and run deep, with rents extortionate and prices prohibitive. As valid as these comments are, often they ignore the persistent problems to the north of the M25.

In fact, housing in the north is in a state of crisis; a crisis stemming from two problems. The first we share with other parts of the UK – not enough good quality homes. The widening gap between supply and demand has left increasing numbers of Northern families dislocated from the housing market. Unlike comparable areas further South, many Northern towns and cities face continuing stagnation in new housing supply.  In London last year, net completions were only 8% short of the levels achieved at the height of the boom in 2006/07.  Southern unitary districts were not far behind.  In contrast, new housing delivery in Northern Mets lagged at less than half the 2006/07 level.  And in Greater Manchester, that powerhouse of the Northern economy, completions were 70% below 2006/07 levels (NHF 2012).

This growing shortfall in housing increases pressures on house prices, which despite recession have risen in the North more than in any other region outside of the capital.  Between 2001-2011, house prices rose by 106% across the North East, North West, and Yorkshire and Humber, but earnings rose by only 31%. (NHF, 2012). The lack of affordable homes and available mortgages increases pressure on the rented sector, which are set to rise in the North by 29% over the next six years (NHF, 2012), while earnings continue to stagnate.  The result of the combined pressures is that more people are forced onto the housing waiting lists (already disproportionately high in Northern England).

The second problem Northern England has is very large numbers on Housing Benefit. There are 1.35 million Housing Benefit claimants in the three Northern regions of England, costing the country around £100million pounds a week in rent subsidies, and the numbers continue to rise (DWP, 2012). In the current spending round, Housing Benefit expenditure is projected to be £94.5 billion up to 2015 for the UK, against only £4.5 billion in grants and capital expenditure to build new homes.(Cooke and Hull, 2012) This significant mismatch between capital and revenue expenditure is doing little to resolve chronic under-supply.

A revival of Northern, and national economic fortunes would play a significant part reducing undersupply, and reversing Housing Benefit expenditure; equally, a revival of house building would have significant positive effects on the state of the Northern economy and the size of the benefit bill. But Northern councils have legal responsibilities but little power to deliver meaningful change for the people of their area.

This is a why a fresh approach is needed. Building upon the work of the Together at Home review (Cooke and Hull, 2012), the Northern Economic Futures Commission has argued that the expenditure on Housing Benefit would be better invested in solving the housing supply problem.

We recommend a Sub-regional Housing Fund, radically devolving funding to groups of local authorities, channeling capital expenditure on house building with Housing Benefit expenditure into one local block grant. Based on current expenditure, Manchester would be allocated up to £681million over a three year period, and £663million in Leeds. This level of devolved financing would allow communities to plan and decide on their own housing arrangements, from the houses they build, to their own model for replacing Housing Benefit. For instance, the grant could be used to commission long-term deals with housing developers to build new affordable housing; to purchase existing properties not in residential use, or to release rented housing for those who need it most by facilitating mortgages for those who want to get a foot on the housing ladder. Such proposals are not without challenges but the case is too compelling to ignore, and we are confident that Northern cities will look seriously at the concept in the next iterations of City Deals.

Ann Pittard is Large Business Development Lead for Leeds City Region and a member of IPPR North’s Northern Economic Future Commission. The final report was launched in Leeds today