Affordable Housing Review a “once in a generation opportunity”
Good morning everyone, and a warm welcome to our Annual Conference.
This time last year, I spoke from this stage about the extraordinary year that was 2017. A year of unique political turmoil, intensity and drama. We approached 2018 still reeling from the tragedy at Grenfell Tower, uncertain of our future relationship with Europe, and surrounded by global political instability.
I don’t know about you but the last 12 months have not left me feeling any more optimistic that we’re any nearer to solving the many big questions facing us as a nation.
So with multiple cabinet resignations at Westminster, political machinations around Brexit resembling a peculiar form of torture, and here in Wales, the appointment of a new First Minister just weeks away, it seems the only thing we can be certain of in 2018 is uncertainty.
But there is at least one thing I remain endlessly optimistic about: the ability and the desire of housing associations to deliver for the people of Wales.
Early findings from our research conducted by Beaufort, which we will publish later this year, show that housing associations have contributed more than £2bn to the Welsh economy over the last year, spent more than £440m on regenerating communities, and support more than 23,000 jobs across Wales.
We have continued to deliver on our pact with Welsh Government, and while there have been challenges which mean we have seen a small drop in the number of homes we’ve built this year, we are on target to achieve our shared ambition of 20,000 homes in this Assembly term. I have absolutely no doubt we will deliver.
However, I know that everyone in this room has ambitions far beyond this.
A year ago, we launched our Housing Horizons. A vision of a Wales where good housing is a basic right for all. A Wales where good housing leads to better health, increased prosperity and more connected communities.
It was a bold statement of intent about our future ambitions to build 75,000 homes over the next twenty years, with sustained action on carbon reduction, and investment in the foundations of the Welsh economy.
The vision set down a challenge not just to housing associations, but to our partners in Government and beyond to raise our sights and ambitions. We were delighted that Welsh Government responded positively to our calls for an independent review of housing policy in Wales.
I’m delighted we have the Chair of the Review, Lynn Pamment, and many of her colleagues on the review panel with us at conference, and we are looking forward to hearing lots more from them over the next two days.
The Review has presented us with a once in a generation opportunity to take a holistic look at housing policy in Wales. That opportunity has to be grasped.
The panel has brought independent challenge and asked tough questions of us all on issues like rents, grant and standards. And you have risen to that challenge as a sector.
More than 200 of you joined us over the summer, at events and webinars, to shape our response to the Review’s Call for Evidence. Three themes emerged in our response. Flexibility, Collaboration and certainty.
I want to talk about each of those themes. And I want to start with flexibility and it’s importance for rent policy and capital investment.
Housing associations in Wales will always put fairness and social justice at the heart of their rent policy. So it is vital that we have a policy which enables housing associations to balance the challenges of affordability, flexibility and investment in new homes and community services.
The challenge for Welsh Government to set a rent policy which is fit for the whole of Wales, every year, is enormous. The housing crisis manifests itself in very different ways across the country and across different housing markets. It is time to give housing associations the freedom to respond to the particular circumstances of the communities they work in. That would give not just certainty for business, but for tenants too.
As Welsh Government considers its decision over the transitional rent settlement, it is important that long term impacts of short-term decisions is not underestimated. Impacts on capacity, on the willingness of lenders and investors to channel huge sums of money through housing associations into some of the most deprived parts of Wales. And impacts on the mindset of housing association boards, who with the confidence that Wales gets and understands the importance of a stable policy environment have shown willingness to grow their businesses and do more.
In the longer term, a flexible rent policy with strong oversight from the regulator would encourage a genuine conversation about affordability with tenants at a local level. It would enable housing associations to set their strategy for the long-term showing how they would invest resources and act as anchor institutions in their community.
And of course, we know that flexibility would bring challenges too. It would make boards more accountable for their decisions, it would require greater transparency, and it would ensure that we are continuing to have those vital discussions about efficiency and the value for money we offer tenants. Make no mistake, we are up for that challenge and I think the rigour that regime would bring would be healthy for the sector and the people we exist to serve.
And it’s not just rent policy where you told us that greater flexibility was required.
Welsh Government’s record on investment in housing is second to none across the UK. With more than £1.5bn going into housing in this Assembly term, it is recognition of your ability to deliver, and the consensus we have reached and built together about the need to invest in good housing.
But you told us that the current system of fixed grant rates is restrictive.
In areas like Blaenau Gwent and Merthyr, we heard that the viability of schemes is threatened by a fixed grant rate approach, and areas in desperate needs of investment miss out. In a booming market like Monmouthshire, we heard that the rush of demand and increasing land prices that come with the lifting of the Severn Tolls is pricing housing associations out of some schemes, meaning communities where the housing crisis is worsening by the day will miss out on social housing.
We also heard a clear desire to stretch public investment further, delivering solutions right across the housing market, meeting your core purpose as housing associations as builders of social housing but also delivering great places and communities, and recycling that money to deliver more homes than you otherwise would have.
The Review has also presented an opportunity to reflect on how affordable housing is being delivered elsewhere. In particular, the role of Homes England in delivering long-term strategic partnerships, delivering certainty of funding and a mix of schemes across the market is one model which has piqued the interest of many.
I am on record numerous times saying that Wales has led the way on housing policy in the UK, but this does not mean that we should be closed to ideas from elsewhere, which will of course need to be refined and made to work for Wales.
We know that we cannot tackle the housing crisis on our own, and as well as learning lessons from elsewhere, we must continue to collaborate, with our partners in health and local government, with the private sector, and with each other. And collaboration was the second clear theme which emerged in our work on the review.
Collaboration is essential to deliver the scale required to unlock innovative methods of construction including factories located in Wales producing homes off-site. We know there is huge potential for housing associations to collaborate on development and construction skills to overcome the challenges coming down the road.
This doesn’t mean diluting individual organisations’ culture, mission and social purpose but sharing resources and developing new ideas together in a focused way that produce concrete results.
But for me, the most important collaboration we must unlock is with our colleagues in local government. The Prime Minister’s announcement at the Conservative Party Conference earlier this year that the UK Government would abolish the Housing Revenue Account borrowing cap on local authorities is one of the most significant announcements in housing policy in a long time, and one that Community Housing Cymru warmly welcomed.
The withdrawal of the state from building new homes is the primary reason we face the housing crisis that we do today. If we have genuine aspirations of solving this crisis, the borrowing capacity of local authorities will be vital. We need all hands on deck in. As a sector, we have the skills, capacity and desire to help end the housing crisis, and housing associations stand ready to work with colleagues in local government across Wales in this shared endeavour.
Working together, housing associations and local authorities have the ability to make the lives of thousands of people who need good housing better.
The Review has rightly challenged us on why collaboration isn’t already happening to its full potential. In the coming weeks we will launch a joint publication with Savills which helps us to understand some of the constraints, It will look at how we can learn from housing associations collaborating elsewhere and how we can make collaboration happen.
But there are already excellent examples we can build on and learn from here in Wales. The excellent work that’s currently being done in North Wales involving all the housing associations operating in that part of the country focussed around the growth deal, and projects such as the Welsh Housing Partnership.
The final theme of our response I want to talk about is certainty.
I opened my speech by talking about the uncertainty we all face, in politics, in the economy and in the wider world. As businesses, one of the most important roles government can play is in eliminating and mitigating external uncertainty.
To my mind the large-scale transfer of stock from local authorities to housing associations has been the most successful example of public-private partnership in public policy. In each of the eleven stock transfer organisations in Wales there is significant appetite and capacity to do more. They are key to our Housing Horizon ambitions to build more social housing. Long-term certainty over the gap funding on which their business plans were built would significantly increase their capacity, could lead to thousands more extra homes being built across Wales.
And of course, in this week of all weeks I do need to mention the ‘B’ word. Brexit looms large over all of us with a potential EU summit and Parliamentary vote on the horizon to perhaps finally give us some clarity.
In the months and years ahead housing associations could face significant challenges in skills and construction. In the event of a deal the implementation period is welcome but, Governments at both ends of the M4 have a crucial role to play in offering certainty over future trade and immigration policy.
The event of a ‘No Deal’ would bring far graver challenges. Housing association tenants are often some of the most vulnerable in our communities, and it is vital that, like our colleagues in health and social care, we are planning for how we will meet the needs of the most vulnerable. If all the threats of a no-deal materialise, housing associations will have a key role as anchor institutions in communities right across Wales to support those in the greatest need.
In the event of any economic shock that comes with as we leave the European Union, housing associations stand ready to work with government to help stimulate the economy. Housing Associations are perfectly set up to operate in a counter-cyclical way.
As we showed in response to the economic crash in 2008, we are a sector that can provide economic stimulus, protect jobs and continue to build the homes that Wales needs. As we set out in our vision last year, good housing is vital to the economic prosperity of the nation, and deal or no deal, housing associations are ready to work with Government to deliver prosperity for all.
It is not just economic success that good housing can play a vital role in. We know that good housing is vital to the health of the people of Wales, and this is central to our vision. That is why, alongside our ongoing partnership with Public Health Wales, we have entered into a Memorandum of Understanding with the Welsh NHS Confederation to explore closer partnership working directly with local health boards.
We have seen great progress on health and housing over the last twelve months, including £50m of additional investment in the Integrated Care Fund, and proposals to add housing association representation to Regional Partnership Boards. These are welcome and significant moves from Welsh Government, and our new partnership with the Welsh NHS Confederation will be vital in sharing good practice and building on this momentum to deliver lasting change.
So as the Review panel consider its findings, it must consider the impact of good housing in its widest context. The decisions that are ultimately taken on areas such as rent, grant and land will have knock on impact on the economy of Wales, the health of Wales, and communities throughout Wales.
Before presenting its recommendations to the Minister in April, the panel has a big job on its hands. There will be lots of opportunities to hear about the direction of travel over the next two days, but for me there are three tests we should use to measure the success of the Review’s recommendations:
- Do they deliver more homes?
- Are those homes good quality and fit for the future?
- And are those homes genuinely affordable to those in most need?
In Wales, our policy environment has offered us stability and ten years on from the last Review of housing policy, housing associations can rightly boast of a proud track record of delivery. Welsh Government has rightly prioritised housing in its over-arching strategy ‘Prosperity for All’, and backed up their commitments with funding in this government term, but we must now look to the future.
This is a review that is being carried out from a position of strength, but we must not let that constrain our ambition. The Review must be bold, be brave, and think long term.
Housing associations exist to provide social housing and affordable homes. Their ambition is provide 75,000 more of them over the next twenty years. To do this, we need a policy environment which is flexible, which drives collaboration, but which offers long term certainty to organisations who are long-term investors and not in this for short-term profit.
Working in tandem with government and other partners, we can always achieve more. This Review provides a huge opportunity to deliver a framework where housing associations and government both local and national, work side-by-side to deliver a Wales where good housing is a basic right for all.
Let’s take that opportunity.