Housing Industry Set For Regional Control

Barkewr Report reciommends that house-building industry targets are set and achievements should be regulated by super-authorities at regional level.

As Kate Barker observed in her final report on Housing Supply, the United Kingdom has experienced a long-term upward trend in real house prices.

That is economics-speak to cover the fact that over the past 40 years or so house prices in general have risen much faster than the rate of inflation applying to the cost of goods and services.

It is that kind of inflation that has created the barrier of affordability.

It is quite independent of the efficiency and productivity of the house-building industry.

Ms.Barker puts the argument like this: "Rising demand for housing implies higher rates of house-building are necessary.

A more responsive housing market would: help to reduce volatility in house prices thereby improving macroeconomic stability and supporting growth improve flexibility and performance of the UK economy via greater labour mobility bring greater access to housing for many households.

Taking his lead from the Barker Report, the Chancellor of the Exchequer said in his Budget speech that the rate of house-building in Britain must rise substantially above the current 175,000 per year rate if price inflation is to be reduced and the number of affordable homes for sale or rent is to be increased.

The measures to achieve these aims include the endorsement of Ms.

Barker's vision of a house-building industry whose targets are set and achievements are regulated by super-authorities at regional level.

The picture comes across as a major step in the direction of the planned economy.

Part 2 of the final report, 'Planning for development', presents a number of recommendations for reform.

One of these, creation in each region of a single body responsible for housing and planning, has already been accepted by the Government.

Ms.

Barker's proposals for the regionalisation of housing need to be read against the background of the Government's bid to create what are called unitary authorities in the North East, North West and Yorkshire and Humber Regions.

Each proposal is subject to referendum, but where they are accepted, the existing machinery for planning decisions at county and district level will be wiped out.

All the powers of local authorities to administer housing and planning policies will then be vested in an elected regional authority.

This development is close at hand, for the Boundary Committee's final report and recommendations on the local government reviews are due to be submitted to the Secretary of State, alias the Deputy Prime Minister, by the end of May this year.

The Housing Review would have the regions establish what are described as market affordability targets, which presumably would inform the house-building industry of the prices at which they should build to meet housing demand.

As Gordon Brown has confirmed, the Government will promote formation of American-style Real Estate Investment Trusts in Britain to improve the supply of rented property, which could prove an effective way of raising the supply of affordable housing.

But useful as they may be, the new investment trusts will not touch the problem of the inflated price of land.

Housing targets as the benchmark for delivery.

The Regional Planning Bodies are to determine regional housing targets, but Ms.

Barker made it clear that this will be under the direction of the Secretary of State who "ultimately owns these targets and can change them - as has previously happened in most regions.

"The importance of these numbers should not be under-estimated," she added.

"Housing targets determine the amount of land that local planning authorities make available for development through their local plans.

These housing targets also become an important benchmark for local authority performance in housing delivery." Moreover, it is the Government which would establish the central market affordability targets.

If Mr Prescott has his way, for 'local planning authorities' read 'regional authorities' which in matters of housing policy will come under the direct supervision of the Secretary of State.

At this point Ms.Barker enters a warning that "determining housing targets with little regard to demand is unlikely to be inherently responsive." Quite right: she foresees that at this level the adjustment of targets could well be an infrequent and lengthy process, with rigidities built in to a system where the targets are annualised and become the objective against which performance is measured.

But there is more regionalisation on the way: the whole concept is set out on the assumption it will be implemented at regional level.

Each region is to set its own target to improve market affordability, in plainer language to regulate the cost of housing.

Due to the existence of considerable differentials in affordability within regions (so the report says), regional targets would need to encompass both 'floors and ceilings' in order to reduce differentials and to ensure that targets would be relevant to regions characterised by both high and low demand.

That operation will no doubt require further guidance from the Secretary of State.

Regional allocation of housing provision.

So there is to be a new institutional framework for housing: currently, as the report puts it, there is no overall ownership of the regional housing market at regional level.

That deficiency however will soon be remedied, as the Chancellor of the Exchequer has apparently already decided.

"Regional Planning Bodies determine the scale and allocation of regional housing provision over a 15-year period in the Regional Spatial Strategy.

The Regional Housing Boards advise on the allocation of funding for social and other sub-market housing for a 2-3 year period, private sector renewal and how to tackle low demand in a Regional Housing Strategy.

The Regional Economic Strategies produced by the Regional Development Agencies have implications for housing demand and spatial planning to meet the needs of the regional economy." These of course will need better integration, but Ms.

Barker has an answer for this question ready-made: "The establishment of elected regional assemblies will allow various functions and strategies to be brought together.

However, even in the absence of elected regional assemblies, a streamlined institutional framework is possible and desirable.

"The Regional Planning Bodies and Regional Housing Boards should be merged to create single Regional Planning and Housing Bodies, responsible for all aspects of managing the regional housing market.

They should be supported by the establishment of Regional Planning Executives which would be responsible for providing evidence to inform the provision of market housing and investment in social housing in the region." The Regional Planning Executives, each having a chief executive and appropriate levels of staff, would advise the new Regional Planning and Housing Bodies on the number of additional houses required to achieve the region's market affordability target and the distribution of this housing within the region.

This appears to dispense with the market and remove the local authorities which currently administer the planning system.

Meanwhile underneath it all remains the problem of rising land prices and 'market affordability'.

None of that is solved by regionalisation.

This prospect of close regulation by reference to economic theories and government remote from the scenes of action is not one that will appeal to the house-building industry.

Planning to regulate land use is one thing; planning to regulate an entire industry is quite another.

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