Sometimes we need to rewrite the rule books

Despite the coronavirus crisis, looking ahead Carol Matthews is hoping a revised Treasury Green Book will help with levelling up the economy….

Budget Day seems like a long time ago. The events of the past fortnight have been extraordinary, forcing us to urgently rethink how we do things, both at home and at work.

Everywhere people have had to change their plans and activities at speed and at scale; hats off to everyone working and co-operating to look after each other and keep things going; we have seen first-hand examples from Riverside of how staff and customers are keeping the day-to-day going and looking after the needs of the elderly and vulnerable. We’ll continue to pull together to get through this over the coming weeks and months.

There’s already talk about whether the changes we’re having to make now will lead to deeper and longer term shifts in how we do things. Will we even decide we can get by without back-to-back meetings most days of the week? Perhaps we’ll rewrite the rulebooks about the best ways of working.

Despite the immediate challenge caused by coronavirus, we’re still looking ahead to the future, and on the back of some welcome housing announcements in the budget, that means looking forward to the Government’s Comprehensive Spending Review later in the year.

Of course the Spending Review will be dominated by how we manage and recover economically from coronavirus.

But even before this, the Government signalled it was in the mood for rewriting some of its own rulebooks around spending. In the Budget it was announced the Spending Review would be accompanied by a revised Treasury Green Book. The Green Book sets out government methodology to evaluate major infrastructure projects, but how its cost-benefit analysis is applied puts some areas of the country at a huge disadvantage due to the difficulty of demonstrating short-term economic benefits. This goes directly counter to the Government’s express ambition to level up the economy.

Homes for the North members have therefore commissioned research on how the Green Book could be revised to ensure that levelling up is fully considered and we’re also busy talking to others inside and outside the sector so we can feed into the Green Book review and Spending Review.

However it isn’t just the Green Book that needs a fresh look.

Homes for the North research into the distribution of housing and infrastructure funding has found that the preferred methodology, far from levelling up, is further disadvantaging the North. The Government introduced mechanisms in 2018 to target housing investment at local authority areas in England which have high affordability pressure and high rents. This was to be allocated on the so called 80:20 rule with 80% of funding made available to areas with affordability pressure. The problem for the North is that just four out of 72 Northern Local Authorities are in this category and able to qualify for Homes England housing infrastructure investment. Recent research has indicated that the 80:20 rule also means that the maximum the north could receive would be 10.3% of the total funds available and with the housing infrastructure schemes announced in the budget, allocations to the North will indeed be at 10% of the national total.

In other words, housing infrastructure investment in most areas of the North (and much of the Midlands and South West) is artificially capped at 20% of the total with the reality of allocations so far being even less than that.

This cannot go unchallenged. If funding formulas are to be reviewed then a new framework for the distribution of housing investment is almost certainly a prerequisite for a successful ‘levelling-up’ strategy.

This does not have to be a north south debate. It is proposed that housing is positioned as essential infrastructure, with investment aligned to wider economic goals. The UK 2070 Commission has quoted work undertaken by Homes for the North (and others) and makes the important point that a rebalanced approach to housing investment is as good for the South as it is for the North.

We need an approach based on collaboration not competition, not just at a northern level but a national level. Homes for the North’s aim is not to take away from thriving economic areas in London and the South East, but to create a more balanced economy which sees all parts of the country grow and realise their full potential.

So there is much to do. In the immediate term we will work our hardest to address the current coronavirus threat. But we must not lose sight of the future and the opportunities for levelling up and additional investment arising from the Government’s future spending plans.

As published in Inside Housing on 25 March 2020.