5 minute read
Using data to meet growing housing demands
Ken Lee, chair of the CIPFA Housing Panel, explains how Housing 360 can support local authorities in addressing and meeting local housing needs and better understanding their housing resilience
Housing professionals have been pointing to a growing housing crisis for a number of years. With over one million households on council waiting lists, the government has been striving to find an answer that reduces this pressure, but also increases the availability of homes that people can own and recognises the role of renting in the private and social sectors. It has set itself an ambitious target for the number of homes that need to be built annually. Although more new homes are being built, numbers are still well short of what is needed.
Unfortunately, the Covid-19 pandemic has exacerbated this crisis. Around 40,000 homeless people are now in hotels and hostels looking for homes that are within their financial means. With local authorities’ annual spending on homelessness fast approaching the £1 billion mark, the need for social rented housing has grown ever more acute. Furthermore, with Housing Associations concentrating on so-called affordable housing, it falls to councils to step up to the plate and deliver.
The removal of the borrowing cap on local authority housing expenditure has meant that many councils have started to plan how they could re-enter the house building market. We could see activity that parallels the drive spearheaded by Conservative minister Rab Butler in the years following the Second World War. A thorough understanding of the Housing Revenue Account, which records all the transactions of a local authority’s tenants, is a prerequisite to releasing resources to invest in the provision of these much-needed long-term assets.
Housing statistics
For many years, CIPFA produced a steady stream of housing statistics that were relied on to inform and shape housing services at a local, regional and national level. However, the introduction of Direct Labour Organisations (DLO) in the 1980s meant that much of the detail about the Housing Revenue Account was lost in commercially sensitive DLO trading accounts. Over time, this lack of detail reduced the credibility and usability of the statistics.
Following on from this, and our work on the Financial Resilience Index for local authorities, CIPFA recognised that more needed to be done to provide information about Housing Revenue Accounts. The result, developed over the last 18 months with the input of local authority housing finance specialists and CIPFA’s skilled statisticians, is Housing 360. This innovative model allows authorities to understand the resilience of their HRAs, provides them with a benchmarking model and a view of historic performance trends, alongside a future resources model to support the detailed planning vital to the ongoing provision of a service that is so badly needed at the present time.
Housing 360
CIPFA’s Housing 360 draws its information from statutory data and statistical returns, thus relieving authorities of the need to provide the extra information that many other comparison tools require. Many of these data sets have been refined and honed over the years to remove inaccuracies and biases, with the resulting information providing a sound basis for judgements and planning. Reliable comparative information enables better informed decisions to be made at both councillor and officer level.
Relying on nationally collected data overcomes the hurdles of the past, with statistics now available that show not just the individual authority, but also local authority groups (London boroughs, metropolitan authorities, unitary authorities and non-metropolitan authorities), as well as the regional and national picture. This allows government, commentators and housing professionals the opportunity to reflect on the impact of policy over time and project the impact into the future
For example, through Housing 360, CIPFA has been able to predict that people in the North West will face an average wait for council accommodation of nearly 40 years, compared to those in the Midlands who are facing waits of 10 years. The current national average sits at about 17 years.
This extra demand pressure contrasts with the four per cent drop in HRA income since the 2014/15 financial year. Understanding the likely projections for expenditure and income will allow authorities to determine how they can invest in new stock to meet the needs highlighted by the data.
CIPFA’s Housing 360 is a vital tool in the armoury of those local authorities that are charged with meeting the growing housing demands of the nation. It enables them to plan a way forward that will secure sustainable housing for the citizens they serve.
FURTHER INFORMATION: www.cipfa.org/services/cipfastats/ housing-data-products
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Report into devastating impact of the housing crisis
The Centre for Policy Studies has warned that the coronavirus crisis is likely to make it impossible for the government to hit its housebuilding targets and exacerbate the already devastating impact of the housing crisis.
Construction sites have returned to work after the initial impact of coronavirus, but the think tank has warned that most are simply finishing off existing projects. Cautious estimates suggest housebuilding could fall by around 38 per cent over the next year, leading to 76,000 fewer homes being built. The impact could be far worse if the economy fails to bounce back, leading to a near collapse of the sector.
In the wake of the 2008-9 crisis, it took six years for supply to return to previous levels. The CPS says that a repeat would deal a devastating blow to the government’s plan to fix the housing crisis and encourage mass home ownership.
The centre-right think tank has developed an emergency plan to support the sector, suggesting that ‘Help to Build’ would help all developers to weather the storm, ensure continuing housing supply while saving smaller and medium sized developers from ruin and having to make hardworking employees redundant.
Under the scheme, house builders would be allowed to access grants up to a maximum of £25,000 for each new-build property (capped at a percentage of the home’s value). Given property prices we expect the grants to average around £20,000 – if capped at £3 billion, as the report suggests, this would ensure the construction of around 150,000 homes next year.
In return for using this scheme to support sales, housebuilders would be required to continue building at similar levels to their existing pipeline, ensuring that both the housing supply and construction employment are maintained through the crisis and its aftermath at a relatively low price.
