ACTION IN RURAL SUSSEX WWW.RURALSUSSEX.ORG.UK BACKGROUND
Action in rural Sussex was established in 1931 as Sussex Rural Community Council. The role of Action in rural Sussex is to provide practical help and support to communities across both East and West Sussex. AirS has three operational aims:
2 To increase the capacity of rural communities to manage change for the benefit of all their members. 3 To inform and amplify the voice of rural communities to influence public policy. Currently AirS runs 9 services from its office in Lewes: the rural housing enabling service, the neighbourhood & community planning service, the Community Land Trust Umbrella Project, COPES Family Support Key Work Service, the health & wellbeing team, the research & policy service, the HR consultancy service, the village halls & community buildings advisory service and the young people’s service. LOCATION
Sussex House, 212 High Street, Lewes
CONVERSATION
This conversation was held at Action in Rural Sussex in January 2015 between Will Anderson, Jeremey Leggett (Chief Executive AirS) and Tom Warder (Team Leader – Housing and Community Engagement). Will Anderson: The Sussex Community Land Trust has been running for a year now. Please could you tell me how your thinking on financing a Community Land Trust development has developed in this time? Tom Warder: The two options for a CLT are either what’s called a partnership route, by working with a housing association, or the stand alone route where the CLT seeks to do as much of the work itself. In terms of financing, the latter option can mean not working with a registered provider, hence not applying HCA funds, which gives
Jeremy Leggett: If you were to extrapolate current public policy to its logical conclusion then we’re going to get to a situation where there is no cash subsidy for providing affordable housing for community benefit other than through CIL or 106 affordable housing obligations. In the end, the direction of travel for government policy is that there won’t be any money through the HCA of that type. It will be a case of on large scale developments then there is the affordable housing that is the obligation on the developer to provide, and on small scale sites in rural areas outside of protected landscapes there won’t be any on development of 10 or less. I think that the issue here is where does the resource come from for any degree of community benefit, be it affordable housing or elements of the design of an overall development that are there for the community benefit rather than to create profit for a developer? I think it’s extremely hard to see. You’re relying on the planning system to deliver it for you, but in rural areas, in developments of 10 or less you not going to get it anyway. Tom Warder: Well yes, unless you do a 100% affordable scheme with some market housing to cross-subsidise it. If money isn’t coming from the planning system and if it’s not coming from the government as actual subsidy I guess the only other place it may come from are local authorities disposing of assets and actually having the capital to put in, or Local Enterprise Partnerships using revolving loan funds in order to kick start things. If not, you’re back to Exception Site kind of subsidy which is the result of landowners releasing land cheaply and effectively subsidising housing through that, with the planning system allowing a proportion of the scheme to be market housing to help it all stack up. Jeremy Leggett: What you need is really tight coherence between the operation of the planning system and involvement of the landowners who actually release little bits of subsidy in order to create the social benefit. Otherwise there isn’t any social benefit. I suppose with the community as developer then what would have been a private sector developer profit is available to create the
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1 To reduce the incidence and impact of disadvantage and poverty on people living in rural areas.
you a great deal more freedom. It’s an interesting one, because the days of there being substantial amounts of grant for affordable housing are on the way out, however what I have picked up quite a lot over the past year is that actually if you play by the HCA rules, take the queens shilling and work with a registered provider then actually there are still reasonable HCA funds available for CLTs.
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community benefit. Is it too pessimistic if I say there doesn’t appear to be much political appetite for doing anything other than relying on cross-subsidy of affordable housing and only then or relatively large urban developments? A funding alternative to conventional housing association schemes might be the growing market of social-investors, almost venture philanthropists, who want some return on their money but not a huge amount if they can genuinely see that there is a community benefit coming from that. Here, there might be the scope for a community developer paired with a social investment model which gives some return to the investor. This requires that the profit which would have gone to developers shareholders actually being the finance that enables the community benefit to be generated. How much of our social housing in this country started with philanthropists who could see people badly housed? You do wonder if in the political climate we have at the moment whether that is the way you going to have to fund, combined with landowners taking a bit less than full market value, and bit of cross subsidy from the private sector, a development with an innovative degree of community benefit. The guarantee of this benefit would be that it’s developed by a community organisation in the first place. Will Anderson: Thinking about coherence between landowners and planners, how can you encourage the landowner with the best site to sell it for a community development? Jeremy Leggett: This came up in many of the discussions at the Affordable Rural Housing Commission. One of the bits of evidence that kept cropping up across the country was how divisive the process can become within a community if you have a landowner (A) who has got the perfect site but doesn’t want to develop it, a second landowner (B) who hasn’t got a site that the village want but does want to develop it and a third landowner (C) who has a site well out of the village who is quite happy to release it at zero costs for affordable housing but the planning system won’t have it. Balancing the personality politics of those landowners, especially as land might have been in those families for years, is key. The CLA [Central Land Association] suggested that there could be ways by which landowners are drawn together to diffuse that divisiveness, but nobody could think of how to do it. Nationalise the development potential or the hope value of land?!
Often, it is just as much a problem working with a single landowner who with control of every potential site in a village. Now, you may have a single person to talk to, but in practice that could take away the process of community planning because the single landowner could make all development decisions over the heads of the community. I wonder if there would be a way to deal with multiple landowners: If you had three sites which were developable at some time but the community only wanted X number of houses which was less than you could build on all three, then would there be scope for the landowners to sell the three sites for the same amount of money to a CLT. The CLT would then develop one of them and sell the properties at market value. This profit could then pay for having brought the three bits of land. The second field could be used for an affordable community development while the third might be landscaped to have a recreational amenity value to the community. All three landowners do get a proportion of market value. I just wonder if there would be a theoretical model that you could construct which said that you could invite all of the landowners who wanted their sites developed to sell at some form of half market value. I think you can just about see the scope for a village CLT to act as the broker to set up this arrangement based on community value and financial compromise. Will Anderson: You mentioned Local Enterprise Partnerships kick starting community developments, how would this work? Jeremy Leggett: The LEP’s effectively inherited the mantle of the Regional Development Agencies from government in 2010. RDAs were wound up by the current government as they looked like a Quango. Subsequently RDAs were gradually reinvented through the LEP, but without anything like the staffing and infrastructure so they don’t have the capacity to do very much other than channel money via Local Authorities. The original theory was that they would raise money from the private sector to invest in the economic infrastructure of their areas, in practice that hasn’t happened. They have increasingly been given money as revolving loan funds from government and their objectives are jobs, houses and workspace. They have a control over a degree of government money, not so much directly for housing development, because that comes through the HCA, if
that continues at all, but more for the infrastructure to unlock development. Most LEP money comes from the Department of Transport, unlocking and enabling site development. Our experience of the Coast to Capital LEP is unusual, most of the LEPs take the view that in order to increase economic activity in their area they will invest in a small number of very large schemes particularly aimed at high growth businesses or at blocked up transport infrastructure issues for their area. Coast to Capital is one of the very few who have been willing to play with this kind of pre-development / affordable housing kind of stuff.
All local authorities are sitting on bits of land that could be used for community development and West Sussex is no exception to that. The trouble is you have to be a really hardened dyed in the wool public sector finance wonk to really understand how the public sector deals with capital. This distinction between real money and permission to borrow sounds like a big thing as private individuals. I think that if there is a strategic point here then probably the view amongst people in the LEPs and working in Local Authorities is that the most damaging thing for getting any of these developments to work is the stop go philosophy that they dealt with from government over the last 10 or 15 years, because the one thing you need is a degree of consistency of approach. If you suddenly get government saying were going to give you some money but we want you to have ‘shovel ready’ schemes which have got planning, then if there has been no consistent funding these scheme are unlikely to exist. It’s actually the constant turning on and off of the tap from government over things that have a community benefit that is actually the biggest problem. If you left the tap on a constant predictable trickle then everybody would be able work around it and schedule around it.
Those people are out there: we have, living within 50 miles of London, an awful lot of high net individuals who are targeted by the charity sector. Its why we have extremely well furnished cats homes in Sussex, might be quite nice if we got it for housing people as well.
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In practice Coast to Capital LEP went to government and said ‘could we have £3 million grant which we can give to the Sussex CLT Umbrella to provide pre development investment, the government said no but we will give you £3 million loan sanction’. In otherwise you have got permission to borrow it but were not going to give it to you as a grant. What we’re talking to West Sussex County Council about is whether within their vast mass of capital programme they could swap our bit of loan sanction for some real cash, which they may or may not find a way of doing.
I sense that there is a lot that could be done to unpack the connection between pure philanthropy at the one end and social investment at the other. At the moment there is certainly a fashion in the voluntary sector nationally to talk about social investment, social investment bonds and ways in which city institutions can get involved in social investment. My impression is that the people seeking philanthropy are trying to get it out of people who would be much more comfortable at the other end but might be persuaded to be somewhere in the middle. So, I’ll give a large amount of money, I would like it back but it’s not quite the end of the world if I don’t get it or I don’t get for quite a long time. For CLTs you want someone who thinks ‘I don’t want my capital sum to be at risk’ but ill happily let you use it for X years or so and I do want it back in the end.