Theresa May's speech - the big announcements explained
Following Theresa May’s speech at the Conservative Party Conference, our head of policy Melanie Rees takes a closer look at the big announcements and what they mean for the sector.
It was widely reported that Theresa May would make a significant housing announcement in her speech at party conference and so it proved.
But what did she say and will it get us closer to building the homes we so desperately need? Here’s a detailed look at the main pledges.
Pledge 1 – 'we will provide £2 billion more funding for the affordable housing programme'
Clearly we need new money for affordable housing – we’ve been arguing for some time that the balance of spending on housing needed to be looked at urgently and we welcome this investment.
But is it enough? Though £2 billion is a good amount of money our recent analysis showed that there was £40 billion earmarked for housing until 2021 and of that just 21% was directed towards affordable housing. It’s clear straight away then that £2 billion will not exactly even that balance.
Pledge 2 – 'we will encourage housing associations and councils to bid for this money and provide certainty about future rent levels'
This we can certainly welcome. We have been saying for some time that if we are going to build the homes that we need then all organisations will need to play a part – that includes local authorities once again becoming major players in housebuilding. Certainty over the future of rent levels will also be important but we've already been promised this and the detail will be all-important.
Pledge 3 – 'in those areas of the country where rents are high we will allow bids for social rent, which are further below market rent'
This is crucial, and perhaps the most encouraging part of Theresa May’s speech. A previous commitment to build new social rents made by Gavin Barwell earlier this year turned out, very disappointingly, to be 'affordable rents delivered by social housing providers'. This time Theresa May acknowledged that she means social rents – those which are the only affordable option for many people in the UK. The number of social rents has collapsed from 36,000 in 2010/11 to just 1,000 in 2016/17 and as a result of right to buy and conversions to higher affordable rents, we forecast we could lose 250,000 of these homes between 2012 and 2020. As a result, we’ve been calling for further investment in social rents for some time and it is good to see this recognised.
However there is a big question mark over whether this will be enough. Following the speech a briefing said ‘with a typical subsidy of £80,000, a £2 billion investment can supply around 25,000 homes'. Even assuming this is the case, 25,000 over the course of this parliament will surely not be enough to make a significant impact. But Mrs May didn’t actually commit the £2 billion extra for affordable housing to social rents – so it may actually be much less than this - we'll have to wait and see.
There was plenty to welcome in the speech - the extra funding, the important shift on social rents and the recognition of the role of councils in particular. But we remain cautious about whether this will lead to the building of the new homes that we so desperately need. A crucial detail will be how much of the new funding translates into new homes for social rent and details of the funding arrangements and rent settlements will also be key.
Melanie Rees is head of policy at the Chartered Institute of Housing.