Big Society - Big Risk?

New plans to give local people more power over the number of homes built in their area, are causing concern among housing experts. The news comes at a time when household formation outstrips house-building, increasing life expectancy, and people remaining single, are all causing demand for social and affordable properties to grow rapidly. Although some accept that action is required, there remain serious questions regarding the short term viability of the proposals.

Public funding for affordable and social housing severely cut.  

The Homes and Communities Agency (HCA), which is tasked with channelling government money into social and regeneration projects, plays a vital role in keeping the housing industry ticking over. For instance, last year, almost three-quarters of housing projects started (64,800), were partially funded by the HCA. Already, cuts have seen the HCA's National Affordable Housing Programme's budget chopped by £230m, while the agency fears that another £610m will be lost from its budget this year. Compounding the issue, is a "three year spending review" of the HCA which due to commence shortly.

In funding housing developers to build affordable housing, the HCA has effectively propped up the industry. Councils, housing associations and private builders will be hard pushed to meet the required levels without this assistance. For instance, The National Housing Federation has already warned Housing Minister Grant Shapps, that the cuts could well see building rates drop by as mush as 65% to 1990 levels.

In light of this, it seems unrealistic to expect housing levels to increase, however that is exactly what the coalition government is hoping the private sector will facilitate.

Housing targets have dropped nationally.

Another element of contention, is the scrapping of house completion targets. The targets, which have been used to assess progress since the late 1950s, are to be replaced by councils deciding for themselves the level of building required in their areas. In essence councils will assume responsibility for setting out localised planning regimes.

However, the government's insistence on placing the burden of delivering the levels of housing needed, on councils raises serious questions. Many councils have seen their budgets slashed, either as the result of failed investments (Iceland anyone?), or as a consequence of Osborne's razor sharp budget. Adding to the conundrum, many authorities have insufficient planning capacity and knowledge to meet the rapidly growing demand.

Perhaps most worrying, is the omittance of a transitionary period for councils to adapt to the changes. The government's desire to abdicate its responsibility, to an unproven planning system is clearly an example of it's Big Society strategy, but this high-risk strategy comes at a time when the industry is still suffering one of the deepest crises in memory.

In summary, with a staggering housing shortage already affecting house prices and builders heavily reliant on state assistance, a delay in increasing production will undoubtedly exacerbate the situation further.