Fiscal devolution key to meeting London’s housing needs, says Kerslake review

7 Mar 16
An independent commission led by Lord Kerslake has called for a major package of fiscal devolution to local authorities in London as part of an effort to double the supply of homes in the capital.

The London Housing Commission, convened by the Institute for Public Policy Research, today warned that without a major boost to powers, the Greater London Authority and boroughs would only be able to deliver 25,000 new homes a year. This is only around half what is needed to keep pace with London’s growing population, according to today’s Building a new deal for London report.

As part of a ‘city deal’ for housing, the commission recommended London local government retains a substantial portion of stamp duty revenue raised in the city to fund new homes. In addition, the limit on Housing Revenue Account borrowing should be lifted for London boroughs, while powers should also be given to allow authorities to set their own planning fees to quicken development approval.

In return for these powers, both the Mayor of London and boroughs would have to make a joint commitment to deliver significantly higher numbers of new homes, with ambition to reach 50,000 homes a year by 2020.

Kerslake, a former head of the civil service and permanent secretary at the Department for Communities and Local Government said that London faced “a chronic undersupply of new housing”.

He added: “We are confident that the package of measures we have set out in our report would go a long way to solving London’s problems. While the mayor and the boroughs can do more with the powers that they have now, the only route to building substantially more homes in London is to give the capital’s leaders more direct responsibility over the key levers such as land use, planning rules, housing standards, property taxes and investment and holding them accountable for delivery.”

If nothing is done, he said both scarcity and affordability of housing across London would continue to worsen.

“The next strategy for London housing requires two phases. First, there is a number of actions the mayor and the boroughs can take immediately to boost housing supply. Beyond that, there are a series of longer-term reforms, including devolving powers to the mayor and the boroughs, which would make further inroads into the housing crisis, and maintain the momentum behind the efforts of the mayor and boroughs.”

Among the immediate priorities for London local government should be action to speed up the release and development of unused public land, while every borough should publish an annual audit of the progress of local planning applications in their area. There should also be an annual review of progress against national and local targets for development.

The review recommended that the next mayor issue London-wide guidance on negotiating affordable housing with developers immediately after his or her election.

Working together, the mayor and boroughs should do a deal with housing associations to double their housebuilding in exchange for a pipeline of new sites.

Authorities should also work together to launch a London lettings hub to link tenants directly with accredited landlords.

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