Regular readers will recall that the ConservativeHome Manifesto placed homes as one of its three priorities (the others were jobs and savings). Among the problems it identified was the Government’s focus on financially risky projects to drive demand (eg Help to Buy), rather than measures to increase the housing supply. We argued that Government funding should be switched from funding mortgage subsidies to helping councils, housing associations and social landlords to build – on the condition that the homes would be made available for people to own.

Well, the Government has sort of taken on part of the message today. The mortgage subsidies are still in place, sadly, but central Government has now apparently decided to allocate some funding to building houses for the public to buy. The big difference from our proposal is that instead of devolving the money to enable local authorities and others to do so, Whitehall is going to pick the sites, apply for the permission and commission the building itself.

In practice, that means they’re offering to take the delays and costs of applying for planning permission off the shoulders of developers and onto the taxpayer, and instead of selling public land in the hope of it being developed later they will be using it for guaranteed development themselves, then selling it once it has been built on. The initial trials won’t be for a vast number of houses – 13,000 across five sites. If the pilot is successful, then the Government intends to focus on relatively small sites in a large number of areas, in the hope of giving a boost to smaller construction firms who haven’t been able to get a slice of the pie from bigger projects. (Presumably a side-benefit of focusing on small sites is they could be easier to gain permission for, particularly if they are in areas of existing housing.)

Implicit to the decision is a frustration with the pace of house-building approved by councils and then delivered by the private sector. One can easily imagine how it appeals to ministers keen to see more houses (and particularly to hit their own Starter Homes target) for a policy to propose almost instant building, without those uncertain weeks and months spent waiting for others to get on with doing it.

It will certainly provide a fillip to the Government’s numbers fairly swiftly, but there are still some questions to consider:

Has Whitehall given up on localism, if their first choice is to pick sites and fund construction directly rather than give the money and the power to local government? What, if any, guarantees will there be that these houses will be bought by owner-occupiers rather than yet more landlords?

The focus on smaller sites will mean a larger number of planning applications – what cost does the Government intend to take on in terms of effectively becoming a property developer?

What else will be done to plan an exit strategy for Government, so that it doesn’t end up trapped into constant direct commissioning for fear of collapsing the smaller house-building industry?

Finally, how will this combine with the local plan policy – ie when the Government threatens to centrally impose a local plan on councils who haven’t produced one of their own, does this new policy mean it will effectively impose the responsibility to grant planning permission to its own projects?

It’s notable that a division is opening up in the Government’s approach to policy. For measures that require a change in legislation, ministers are increasingly cautious – a necessity forced on them by the small majority and the independent-minded Tory backbenches. Where a policy can be pursued under existing powers or through a Statutory Instrument, though, they are getting more radical. This certainly appears to be the case here; the last time these powers were used on such a scale was the Docklands regeneration. Whether Whitehall has the expertise to do it, and do it right, will be the next hurdle.

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