Affordable Housing (Hansard, 21 October 2003)

§ The Minister of State, Office of the Deputy Prime Minister (Lord Rooker)

I am pleased to be announcing today the allocation of nearly £5 billion over the next two years to drive forward the Government's commitment to affordable housing. This includes the balance of the £1 billion for key worker housing promised in the Communities Plan and funding to help ensure that all people living in social housing have a decent home by 2010.

Key worker housing programme

Using housing initiatives to support recruitment and retention in key public services is a government priority. Over the summer the Government have worked to develop a successor programme to the Starter Homes Initiative. This will target resources on the key workers who can make the biggest possible contribution to improving frontline public services.

The proposals I am announcing today represent the main features of the key worker housing programme to be run in 2004–05 and 2005–06.

The majority of support will continue to be directed towards our priority categories such as teachers and health workers. However, we also propose that the programme should be widened to apply to other public sector workers, such as social workers, where there is clear evidence of recruitment and retention problems. This is in response to the needs identified by the regional housing boards in their housing strategies.

Support will be provided to key workers through one of four simple options. Emphasis will be more on family homes rather than on starter homes as the evidence base compiled in recent months suggest that 166WA this is what the workers who are critical to service delivery need and want.

The options are: Homebuy, "Homebuy plus", shared ownership or intermediate renting. Homebuy will provide key workers with an interest-free equity loan equal to 25 per cent or more of the value of the property on the basis that the key worker pays back the same proportion of value of the property when he or she sells it. Homebuy plus will offer assistance on the same basis but with larger equity loans for a very small number of critically important key workers—for example, teachers who will become middle managers in key London schools. Shared ownership will allow a key worker to buy part of a property—at least 25 per cent—and pay rent on the remainder. Key workers will be able to increase their stake in the property when they can afford to do so. Intermediate renting offers the chance to rent a property at a rate between social rents and open market values.

The Starter Homes Initiative has concentrated on helping key workers buy homes on the open market. The new scheme will shift the balance progressively towards new build schemes.

Through this programme we will ensure that support for key workers is better targeted and better tailored to meet both the recruitment and retention needs of our frontline public services and the needs of the employees crucial to delivering those services.

Local Authority Social Housing Grant

I am pleased to announce increased funding for transitional arrangements following the abolition of local authority social housing grant. An additional £75 million has been made available for debt-free authorities.

Local authorities social housing grant (LASHG) was abolished from 1 April 2003. It was a mechanism which local authorities used to fund new or improved social housing through registered social landlords (RSLs). The authority made a loan from its own capital resources to the RSL. The loan was then repaid to the authority by the Housing Corporation. With-debt authorities were then required to set-aside the reimbursement to meet debt and credit liabilities. Debt-free authorities, on the other hand, were allowed to use the reimbursement for any purpose they wished—not necessarily housing. This meant debt-free authorities effectively obtained additional affordable housing at no cost to themselves.

As anticipated, the transitional funding was oversubscribed. Many of the bids submitted did not meet the bidding criteria. The Housing Corporation prioritised the bids in consultation with the government offices and I am today announcing approval for transitional local authority social housing grant schemes (LASHG). The transitional arrangements will lead to £680 million spend on schemes and will provide 14,000 homes over the next three years.

The Housing Corporation will be notifying local authorities of the outcome of the bids.

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I should like to emphasise that local authorities remain able to support new social and key worker housing by housing associations. They will, however, no longer be reimbursed by the Housing Corporation—and, in particular, debt-free authorities will no longer be able to spend the money twice. I would encourage local authorities to continue to support the acquisition of new affordable housing wherever this is the best way to achieve the objectives set out in their housing strategies.

Regional Housing Boards

The Communities Plan set out a range of measures to deliver a step change in tackling the serious imbalances between the supply of and demand for housing in many parts of England. A key element of this was to ensure better integration between investment in housing, the planning system and economic development strategies.

In order to help to achieve this, the framework for determining the allocation of funds for housing investment is being substantially changed to focus resources on strategic housing priorities. Regional housing boards have been established to make recommendations to me on how the funds available to each region should be distributed between local authorities and housing associations and where they should be targeted. These recommendations reflect priorities set out in their regional housing strategies, which build on the existing housing statements.

I have given careful consideration to their funding recommendations, regional housing strategies and other supporting information and I can now announce my conclusions.

The task the boards faced—balancing the competing demands within the region while at the same time supporting delivery of a small number of key national priorities and targets—was a difficult one.

I am pleased to say that I am accepting the broad thrust of the boards’ recommendations for 2004–05 and 2005–06 and their regional spending priorities. In most regions the recommendations will be accepted in their entirety. There have been further discussions with the boards for the London, East and South-East regions. These have taken into account the increased resources now available for transitional local authority social housing grant and the additional homes we expect English Partnerships to provide via innovative new schemes, neither of which the regional boards were aware of at the time they made their recommendations. As a result the Office of the Deputy Prime Minister has been able to increase the funding made available for key worker housing.

A table giving details of each region's allocation will be placed in the Library. Details of the housing allocations for individual local authorities will be announced in four to six weeks’ time.

A competitive bidding round for the funds available for new affordable housing schemes is being launched by the Housing Corporation; the results will be announced by March.

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I have been impressed by what the boards, local authorities and other stakeholders have achieved in a short space of time. There is clearly a real appetite for a strengthened regional role on housing and for finding new ways of working to improve effectiveness of delivery.

It is important to build on this—both to increase and strengthen partnership working and innovation and to develop regional and, where appropriate sub-regional, housing strategies. Sub-regional housing strategies require a stronger analysis of current and future housing needs. The Office of the Deputy Prime Minister always recognised that the short time available would limit the analysis this year.

Central government will play its part. Work is already under way to evaluate the first round of the new arrangements and will include feedback from the regional housing boards. The Office of the Deputy Prime Minister will consider carefully what changes