We now have a “bloody difficult woman” as Prime Minister who has promised a tough approach to tackling the housing shortage and restoring the public finances to health. A huge opportunity to achieve both objectives would be to accelerate the sale of surplus public sector land.
Yet a report from the National Audit Office suggests that the Government are not even on course to meet their current target for this Parliament to “release surplus public sector land in England with capacity for at least 160,000 new homes” by April 2020.
The earlier target for the previous parliament was to sell 7,000 acres for 100,000 new homes, raising £10 billion. That target was broadly met – between 2011 and 2015 the Government “disposed of land with enough capacity to build 109,590 new homes over 942 sites.” So the figure is above 100,000 – on the other hand some developers might opt for lower densities on the land they have bought rather than the maximum that could be achieved.
Last year there was a new target for this parliament. It was bumped up to 160,000 homes so a bit more ambitious over a five year term. There was the welcome plan to sell off some of the old Victorian prisons in London to help meet it.
But the Government should be aiming far higher still. The Ministry of Defence alone still owns 600,000 acres – equivalent to the size of Surrey.
Even in squashed London there is great potential. There are 5,700 acres owned by Transport for London – equivalent to the size of Camden. It is a great pity that Zac Goldsmith was not elected Mayor as he would have been serious about using this resource to provides tens of thousands of beautiful new homes.
Anyway the report suggests that so far even the Government’s modest current objective is not on course to be delivered on schedule:
“By the end of March 2016, government had disposed of land with capacity for an estimated 8,580 homes, across 77 sites, which represents 5% of the programme. DCLG told us the amount of money raised from these sales is £72 million, with future estimated receipts expected to be a further £197 million, subject to sale conditions being met.”
In terms of what is planned:
“Departments have identified further surplus, and potentially surplus, sites with capacity to support an estimated 104,461 homes, representing a further 65% of the programme. However, over 50% of the estimated housing capacity identified is on sites considered ‘high risk’. DCLG defines high-risk sites as sites with “one or more issues preventing exchange of contracts before 31 March 2020 which are very unlikely to be resolved, meaning the site could slip out of the programme”. For example, departments’ delivery plans include land that could have residential potential but is currently in use and not yet declared surplus.”
The difficulty would seem to be that government departments that keep hold of land are not thoroughly challenged but when they sell it they are:
“Each department must be able to demonstrate that they have taken robust decisions on value for money for each site disposed of, and that their delivery plans outline how they will assure their accounting officers of this. Individual accounting officers confirm to DCLG that a sale represents value for money.”
Fair enough. But what about a requirement that each piece of land that has been retained represents a “robust decision”? Keeping surplus land empty is also a decision. It should also be challenged as to its justification on value for money grounds.
Government departments should be treated in the same way as local authorities over high value social housing stock. Funding from the Treasury should assume that substantial revenue will be achieved from asset sales. Each department should be informed of how many billion it is assumed it will raise in that way each year. Those departments with substantial unused or underused property assets that through mismanagement failed to achieve disposals would face a very substantial shortfall in their budget. Any cabinet minister presiding over such a blunder should be sacked. Each department is already required to produce a “Delivery Plan” – but what are the penalties for failing to deliver? There doesn’t even seem to be full data being supplied.
At present the Ministry of Defence is on course to release land with a housing capacity for 55,000 between last year and 2020. That sounds like a lot. But it is pathetic when set against 600,000 acres. It works out as 11 acres for each house. In London there are typically 20 homes per acre. So it sounds as though the MOD are currently only planning to sell a couple of thousand of its 600,000 acres. Of course much of that would not be suitable for housing. Salisbury Plain is used for rifle practice and anyway includes archeological sites. But that is a mere 100,000 acres. Let us assume it would all be impossible to make available for housing. What about the other half million?
The potential of land sales is massive. I haven’t even got on to mentioning the boost to economic growth and of job creation. One can hardly describe the current effort as trivial. Hundreds of thousands of homes and tens of billions of pounds towards reducing state borrowing is significant. But it should be millions of homes being built and hundreds of billions going to reduce the National Debt. Ed Miliband used to grumble about private firms “land banking” rather than getting on with development. But the real culprit when it comes to land banking is the state.