Government plans will make affordable housing crisis worse, warns top think-tank

Proposed planning reforms in the Government’s Levelling-Up Bill will worsen the affordable housing crisis in England, a top think-tank has warned.   

In a new analysis backed by recent Tory housing minister, Eddie Hughes MP, the Centre for Social Justice (CSJ) explains that the Bill – which has almost completed its Commons stages – risks widening regional inequalities, while leaving key workers priced out of the neighbourhoods they work in.  
 
In particular, the CSJ has serious questions about the Government’s proposed ‘Infrastructure Levy’ on developers. The think-tank warns that lower land values outside the South-East of England will mean the levy will fund fewer affordable homes and levelling-up improvements such as roads, schools and GP surgeries, while cementing the success of more prosperous areas.  

As the report explains: “The Infrastructure Levy will need lower charging rates, and deliver lower yields, in areas where there are low land—and therefore development—values. Our analysis shows that areas categorised by the Government as high priority for levelling-up have much lower land values than others. As a result, despite being in a ‘Levelling-Up’ Bill, it is far from clear how the Infrastructure Levy will be of any meaningful use to those areas."  

Separately, in a new analysis for the report, entitled Levying Up: Ensuring planning reform delivers affordable homes, the CSJ highlights how housing affordability is declining for keyworkers in all regions: increasing cost of living pressures for nurses and other public sector workers – ultimately risking staffing shortages.  
  
For example, the CSJ has found that nurses and primary teachers in London on a median salary, paying median rent, would have to pay as much as 45 per cent of their pre-tax income on rent.   
 
Relatedly, across the North-West, Yorkshire and the Midlands, the CSJ has found that housing affordability has declined for all keyworker professions in the past few years – a worrying development given the CSJ’s concerns that the Levelling-Up Bill in its current form does not go far enough to protect the supply of affordable housing in new-build developments.
 
In Morecambe Bay alone, recruitment challenges have meant that 1,405 hospital days have been lost because patients could not have at-home care arranged—with care worker staff recruitment cited as a key issue. A very recent estimate placed the national cost of this at a staggering £2bn per year.  
 
With 1.2 million on the waiting list for social housing, the CSJ also raises concerns about the Government’s definition of ‘Affordable Rent’ as 80 per cent of the market price. In 2021 the CSJ revealed in its report Exposing the hidden housing crisis how less than one in four people believe the Government’s definition of affordable housing is truly affordable for local people.  

The report argues that “truly affordable housing—which is related to locals’ incomes rather than local rental prices—gives people the reassurance to know they can reside in their area and put down roots in the long term."  

In this report the CSJ call for the Government to focus on delivering homes for social rent – rents set in relation to income. In 2020-21 only 6,051 of these homes were delivered in England: vastly smaller than the 90,000 needed.  
 
To address these concerns, the CSJ call for the Government to amend its Levelling-Up Bill. Top recommendations include:  

• Having statutory targets for affordable housing supply, including social and affordable rent.  
• A new legal definition for ‘affordable housing’ which relates to the income levels of local households.  
• To exempt affordable housing developments from the new Infrastructure Levy.  
• To ring-fence the spending of Infrastructure Levy funds on infrastructure. Liz Truss’s Government amended the Bill to widen its scope to other areas.  

Writing the foreword to the report, Eddie Hughes MP, former Housing Minister, said:  

“I know from experience that the current Secretary of State, Michael Gove, rightly recognises the importance of housing as a key issue of economic efficiency and social justice. I believe we can and should go further in this mission.  
 
“One of the areas that is central to this is in improving the system of ‘developer contributions’. We need to ensure the uplift in values from building development delivers more for the common good. The present system of ‘Section 106’ agreements creates too much uncertainty. That is why the Government has rightly sought to introduce an Infrastructure Levy to make this system more ambitious and sustainable.  
 
“However, with almost half of all new housing association homes funded through developer contributions, we have to get these reforms right. I welcome this report from the Centre for Social Justice, which makes a valuable contribution to the public discussion on this issue.” 
 
Dr Sam Bruce, Head of Housing & Communities at the CSJ, said: “A safe, secure, comfortable home environment is a vital foundation for everyone to flourish. A great home enables families to enjoy quality time together. It encourages children to develop and grow. It should be a springboard for workers and volunteers to serve their communities feeling refreshed. When life throws us its hardest and most challenging moments, a good home should be a place of consolation, comfort, and support.  

“With increasing pressures on keyworker households’ finances, 1.2 million people on waiting lists for social housing, and 120,000 children in temporary accommodation, it is crucial that we create a system which delivers truly affordable housing in our new-build developments.”