19 March 2004
More than £1bn a year needs to be invested in the social housing sector to meet future demand and secure a long-term improvement in the housing market, the Treasury-commissioned review of UK housing supply concluded.
As expected, banker Kate Barker's report, published to coincide with the Budget, found that housing supply has failed to keep pace with demand. It set out a series of recommendations the government could adopt if it is to curb the rising trend in real house prices, increase the number of affordable homes and make housing more responsive to need.
'I believe that continuing at the current rate of housebuilding is not a realistic option, unless we are prepared to accept increasing problems of homelessness, declining affordability and social division, decline in standards of public service delivery and increasing costs of doing business in the UK,' Barker said.
The review suggested 17,000 more rented social homes be built in England, at a cost of £1.2bn, in order to reduce the long-term upward trend in house prices. She added that this additional investment did not have to be met exclusively by government, as both registered social landlords and private suppliers were able to contribute.
But Jim Coulter, the National Housing Federation's chief executive, said Barker's social housing recommendations were too conservative. 'Her recommendation of an extra 17,000 new affordable homes each year is lower than our recommendation of an extra 30,000 if the housing crisis is to be tackled effectively,' he said.
One of the review's central recommendations is the inclusion of a housing affordability goal in the Public Service Agreement framework to reflect housing as a national priority. Others include the establishment of regional planning executives to provide independent advice on the scale and allocation of housing and the creation of incentives for councils to support development and provide infrastructure.
Barker suggested that local authorities be allowed to keep the council tax revenues generated by new housing for up to three years – an idea that the Local Government Association agreed should be explored further.
In his Budget statement, Chancellor Gordon Brown accepted Barker's main recommendations and said Deputy Prime Minister John Prescott would consult on how the proposals can best be implemented.
He said: 'I hope that over the next year all parties will study the Barker proposals. It must be in the interests of the whole country to see whether we can forge a shared approach that would safeguard our environment, lead to more affordable housing, and at the same time keep interest rates as low as possible.'
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