Labour’s housing reforms could be limited by spending restraint

The scope of Labour’s housing plans may have to be narrowed in order to meet tight restrictions on spending, according to a review of the area commissioned by the Party.

The review is led by Sir Michael Lyons, the former head of the BBC Trust, and the findings will be published in September. Lyons says that despite receiving evidence from housing reform lobbyists, “we can make do with existing resources”, reports the FT (£).

Lyons has been tasked with planning out how Labour can meet their target of building 200,000 homes a year during the next parliament – which would mean roughly doubling the current number of houses built each year. However, his commission’s proposals will not be tied by targets set by the recent National Policy Forum (NPF) if they are not found to be feasible: “The NPF are important but they don’t dictate the exact details of policy.”

While the news that the review will stick to tight funding limits may disappoint those who had hoped restrictions on council borrowing for building would be abolished, we should take heart that there is joined up thinking in policy formulation. Lyons has acknowledged that there cannot be a “gap” between his proposals and those offered by the Shadow Treasury team, and the review will only recommend “flexibility” in borrowing for councils who are financially secure.

Lyons has also said that housebuilding faces bigger obstacles than simply funding. Labour’s plans to build a million homes over a five year period means that the focus will not be on new towns, which generally take much longer to develop, and so the release of land for building on currently presents a much bigger problem.

Expanding suburban areas of current towns and cities, via Urban Development Corporations, is thought to be the best way to construct the number of homes needed in a short space of time. The review is also looking into a system where private land is sold to property developers at a lower price, with the previous owner receiving more when a development is built. It is reported that an improved land registry and more shared ownership schemes are also likely to be in the recommendations.

Labour’s Shadow Housing Minister, Emma Reynolds MP, is expected to give a speech tomorrow outlining “The Choice” (Labour’s summer slogan) between the Tory and Labour housing plans. This follows on from an announcement on Monday that Labour plan to give small companies backing to build homes.