Social value and London's housing

by Richard Blakeway

In the shadow of the Mile End road looms an ornate clock tower. The clock belongs to a mid-Victorian workhouse, whose high walls later gave way to a pre-war psychiatric unit, and finally to a more modern NHS children’s hospital. The last patients left, the clock stopped ticking, and the site sat dormant for more than a decade. Until this year, when work started to transform the fine listed buildings of the former St Clement’s hospital into the UK’s first urban community land trust and, perhaps, one of the clearest examples of ‘social value’ in public policy.

For many years, governments around the world have sought to codify ‘social value’, most recently in France following the Stiglitz Commission and, of course, the UK with the Public Service (Social Value) Act. Social value is one of those concepts that everybody supports but few can easily define. Broadly, as the Public Service Act suggests, it could be said to be the social, environmental and economic benefit (or cost) of a decision. The London Plan is the central expression of the GLA’s duty to consider these impacts in planning policy, and the current alterations to it set out the latest assessment of London’s increasing housing need.

These alterations suggest that London’s housing requirement needs to rise from the current target of 32,000 homes a year to 49,000. Given that actual housing output has only averaged around half of this increased total in the last thirty years, the challenge of this task is significant, not least because ensuring that the city’s population can access housing that is well designed, safe and, crucially, affordable, is possibly the greatest ‘social value’ that can be created.

Indeed, ensuring a supply of housing that is affordable to ordinary working Londoners is integral to keeping London a successful city. By this I mean not just a city where units are churned out and it is assumed that needs are therefore met, but one where people of all incomes can afford to live in reasonable proximity to each other and with a reasonable quality of life. It is a challenge that all successful global cities, from New York to Hong Kong, need to address.

Given London’s acute housing shortage, decisions in housing invariably raise questions about what we might call their relative ‘social value per pound’ benefit, with the continuous need to balance resources between relieving overcrowding or homelessness, supporting those who are lowest paid or those in greatest need.

There are some measures that have powerful social value multiplier effects. The release of surplus public land, for example, such St Clement’s hospital which was a GLA-owned site. It will now provide more than 200 homes through a unique public-private-community partnership, which will see some of the homes sold at prices based on local incomes and the freehold of the site transfer to the ownership of a community foundation.

Or the purpose-built rented homes to be built on GLA owned land in the London Borough of Newham, through an unusual legal covenant, supported by the planning system, which means around a third of the homes are held in the long-term for market rent, attracting more patient capital from pension funds as well as long-term stewardship, in an echo of the Great Estates.

Or the grant allocated to housing associations to support new house building, with the great strength of not-for-profit housing associations being that their surpluses are ring-fenced for reinvestment, although we need to get more of this reinvestment into new supply as quickly as possible.

Social value can also be created through providing specialist housing for older people in London. For example, the GLA runs the Seaside and Country Homes scheme, which helps older Londoners who want to downsize to move to suitable homes outside the capital and, in doing so, they free up larger properties that can then be re-let to those who need them. This is a low-cost but high-impact policy with enormous social value. And, while still a comparatively young city, the number of older people living within the capital is set to grow, with those over 64 projected to increase by almost two thirds to reach nearly 1.5 million by 2036, including almost 90,000 more who are over the age of 90.

For too long, public policy inadequately responded to the needs of an ageing population, not least (until the HAPPI report) in terms of housing and its design. The model of sheltered accommodation, with its proliferation of red emergency cords, is no longer adequate for a more active older population. Older households often aspire to live in more urban locations, where services and public transport are more accessible and communities arguably more vibrant and diverse. Further, the focus on homes to rent is not necessarily suitable for a generation familiar with the financial benefit that often comes with owning property.

This presents an opportunity for both policy makers and providers. London has two hundred town centres and an increase in modern, well-designed housing products for older Londoners should form an integral part of their ongoing regeneration. Built within mixed communities it can help to contribute to rapid and successful place-making, integrating the latest telehealth technology, improving the experience and sustainability of the homes for occupants as well as providing more cost-effective care for health services.

Of course, part of the challenge is to align the costs and savings across the public sector at a local level, illustrating the wider challenge of strengthening the link between housing and health, and ensuring opportunities to make this connection, such as the redevelopment of surplus NHS land, are not missed. It also requires new providers to enter the market with innovative products and, potentially, changes to taxation to help move from need to demand from consumers.

In London, the Mayor has announced £30m of funding, in partnership with the Department of Health, to increase the supply of purpose-built quality homes for older and disabled people. The first phase of this programme has allocated funding to 35 supported housing developments to deliver almost 700 specialist, high quality homes. The development of specially designed housing of this kind will give older and disabled Londoners homes that are better suited to their individual needs, improving quality of life as well as reducing costs on other budgets. Again, the social value multiplier effect ripples out from housing investment decisions like this.

Looking to the future, new and innovative policies in the recent London Housing Strategy suggest more ways in which the GLA could deliver its housing targets, but with even greater emphasis over broader, socially valuable objectives. Housing Zones, which focus resources in a flexible and bespoke way in a specified area, offer an opportunity, if bidding boroughs want, to look at new ways to deliver housing in London. One option that Housing Zones could explore would be ‘End to End project management’. This is an approach that mirrors the successful approach taken in the development of New Towns such as Milton Keynes and the Olympic Park in Stratford, and builds on a widely used model of housing development in Europe.

In this model, the public sector assembles large sites for new development and works with local communities to masterplan them according to local needs. The public sector could either be a sole landowner through the acquisition of sites itself, or be part of a joint venture with other partners. Housing sites within this masterplan would then be parcelled up for a range of developers – including smaller developers and groups of custom builders – to build out at the same time, broadening access to housing for groups often excluded from building and buying in the market.

The multiplicity of developers can help to accelerate development, complementing the work of volume builders elsewhere, with the potential for the public sector capturing the increase in value created by this process. The public sector can take a longer term approach to community development, control through the planning system, land ownership and developing the masterplan, which lends itself to greater incorporation of social value objectives.

This approach is necessarily large-scale and long term. However, one only needs to look at the new communities rising from once contaminated industrial ground in Stratford to see how it can deliver homes for a range of housing needs as well as ensuring that social value can be added throughout the whole process. The Olympic Park model of land assembly and master planning is one that could be replicated across Housing Zones in London.

While social value may often be hard to define, it is tangible, and embedding it into housing investment and policy helps create homes in genuinely sustainable and empathetic communities, not just housing units. The GLA has a range of planning and housing policy levers that it can pull to achieve it, and London has the opportunities in land and capacity to deliver it, as the clock being re-started at St Clement’s demonstrates.

 

 Richard Blakeway is London’s Deputy Mayor for Housing, Land and Property

 

 

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Social value is not just about affordability

by Paul Teverson

Oscar Wilde referred to those who know the price of everything and the value of nothing, and it often seems this way in the world of housing and planning, where affordability is king.

The social value of housing has been defined too narrowly to date, and the Public Services (Social Value) Act and Chris White’s essay are important because they seek to change the prevalent view that the value of new housing is simply about affordability.

Our current planning system, insofar as housing development is concerned, is orientated around the need for more affordable housing, with its various forms dominating the pages of Local Plans and Housing Needs Assessments, from social rented housing, to shared equity, shared ownership and low-cost starter homes.

Working with the Homes and Communities Agency (HCA) earlier this year, we identified that just 16 per cent of local authorities in England had a Local Plan policy that looked at the housing needs of older people, such as retirement housing, in the private sector, but all of them had policies for affordable housing.

This is despite the fact that 60 per cent of all household growth over the next 20 years will be by older people and already approximately 80 per cent of our older population are homeowners. I’d suggest that there is something not quite right if 84 per cent of councils are not planning for such a large group of people.

Older people are not the only group being overlooked by the focus on affordability; specialist housing across different tenures for the disabled, the homeless, ethnic minorities, those with certain health-related issues such as HIV, and the frail and vulnerable of all ages, all have social value but are rarely considered by local authorities. In the same piece of work with the HCA, we found that 79 per cent of local authorities did not have a Local Plan policy for people with learning disabilities and 84 per cent did not have a policy for young people leaving care, regardless of tenure.

It would be interesting to know how local authorities made the decision that affordability is more important than the social value of these forms of housing. Is the provision of low-cost housing more important than housing for vulnerable adults, for frail adults, for the lonely, for those with learning difficulties, for those who need more care and support, regardless of affordability?

If it isn’t, then local authorities should place the same emphasis on these groups as they do on those who require affordable housing, with the same resource and policy support. Without it, we will not deliver the housing society as a whole needs. There is social value in many forms of housing regardless of tenure, which is equal to, or possibly greater than a simple affordability metric.

As well as a lack of policies, very few, if any, local authorities have officers who are there to aid the delivery of new stock for these groups across different tenures. Yet councils have strict Section 106 taxes on developers to pay for more affordable housing, which can total up to 40 per cent of all the new units in a development. Planning committees will often focus only on the size of the cheque for new affordable housing in the district, not the wider benefits of housing proposals.

The lack of focus on social value has halted delivery of specialist forms of housing. Taking housing for older people as the example, the UK has built only approximately 110,000 specialist retirement properties for homeowners, despite the fact that there are 11.4 million people aged 65 and over, rising to 17.2 million in 2033.

In 2013, just 2,465 private retirement units were built compared to a total of 125,460 new housing completions of all types.[2] Older homeowners, particularly those in advanced old age, will require more suitable housing at some point in retirement. According to Demos, one in four older people want to move to retirement housing, so in our view, the under-supply of specialist retirement housing is equally, if not more so, an important policy issue than the under-supply of affordable housing given the numbers of people involved.

As Chris White states, local authorities could address this by encouraging this form of housing in their Local Plans and Housing Needs Assessments and employing officers to support the development of retirement housing across different tenures. Professor Michael Ball at the University of Reading has estimated that the private retirement sector has potential to reach 16,000 units a year with the right policy environment.

One of the main challenges with a social value metric is finding a way to measure value. Retirement housing has four main forms of value, which we suggest could be used as a starting point. First, it provides significant health and well-being improvements for older people, with 64 per cent of our residents stating that their sense of wellbeing improved since moving. Second, it is typically built on brownfield (previously developed) land as older homeowners wish to live in well-connected locations, so it is a sustainable form of housing.

Third is the ability of retirement housing to free-up ‘under-occupied’ larger homes, supporting the wider housing market and helping families and younger people to get on the housing ladder. And fourth, retirement housing has the capacity to deliver significant savings to NHS and adult social care budgets; for every year someone stays out of residential care because they are living in more suitable housing for older age, the government saves on average £30,000 a year in care bills.

Specialist housing for older people is just one form of accommodation with high social value, and we would like to see these factors captured by the definition of social value used by local authorities. And it is important to state that this is not about housebuilders avoiding paying affordable housing contributions. We fully recognise the importance of this form of housing, and in the last 12 months, we have provided more than £7 million towards affordable housing, in addition to the 1,660 apartments we have built for older people. This is not an either/or; we need more affordable housing, but we also need policies that provide equal support to other important forms of housing.

There are many measures of value, with just four are noted above. What’s important is that local authorities realise that housing’s value goes beyond affordability. Cultural change is needed in local authorities to ensure we deliver the right type of housing for the right people, when and where it is needed, and to do this we need a broader set of metrics by which planning applications can be determined. While not perfect, the Public Services (Social Value) Act could and should help start the debate about meeting the housing requirements of those most in need.

 

 Paul Teverson is Director of Communications for McCarthy & Stone.

 

 

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Social value already exists in planning

by Michael Voges

The housing crisis, in particular for older people, in the UK is first and foremost a result of a failure to properly enforce rules that already exist within the planning and housing system.

Introducing a stronger emphasis on social value (as suggested by Chris White MP) would go some way to improve implementation, but this will have little effect unless more drastic steps are taken to improve the manifest failures of current planning and housing strategies.

Currently, the planning system does already include a mechanism for recognising social value beyond affordability – housing policy today already stipulates that the needs of some groups within society need to be given special consideration over others, mainly on the grounds of vulnerability. For example, this applies to people with disabilities, and older people. It could be argued that these groups receive this special attention because as a society we have, rightly, chosen to attach greater social value to their needs than those of other sub-groups.

Most local plans today will state quite clearly that more housing is needed for older people (and people with disabilities, as well as family housing etc) – they also note that future increases in the number of older people are likely to exacerbate the problem.

However, there is a worrying lack of consistency between the intentions laid down in local strategies (and Strategic Housing Market Assessments) and the reality of what is being delivered. There is very little purpose-built housing for older people, for example, only 0.5 per cent of older people live in a retirement community in the UK (schemes combining specialist housing with extensive care and support services such as dining options and communal facilities on one site). This figure should be much higher if it were to reflect the housing and care needs of our ageing population.

In other countries such as the US, New Zealand and Australia, around 5 per cent of the over-65s live in these kinds of communities. As Paul Teverson points out in his contribution, older people in retirement housing lead less lonely and more active lives. The added emphasis on extensive services in housing-with-care developments also addresses a fundamental issue of how to provide care services for those who need them – adding yet more social value.

Yet identified needs do not seem to have sufficient impact on the number of homes actually delivered. Effectively, this means that many local authorities are adopting a ‘head in the sand’ approach and are ignoring their own needs assessments in their local plans – and they are getting away with it.

In fairness, many local authorities have recognised the value of retirement communities for older people who cannot afford to buy at full market value or rent privately: around 66 per cent of the housing-with-care sector is provided by housing associations at affordable rents. Many of ARCO’s members provide these ‘extra care’ schemes, and they are excellent examples of the housing-with-care model. We need more of these developments, and we should rightly be proud of the fact that the needs of less wealthy older people are increasingly being met.

But this fails to address the issues of those ineligible for state funded extra care. Local authorities are almost systematically ignoring the need for market housing for older people, especially for the ‘middle market’ of older people who own a ‘typical’ family home.

To illustrate the point: we have been repeatedly contacted by groups of older people who have expressed opposition to local housing developments. Interestingly, they were not NIMBYs opposing development at all cost. Rather, they are objecting because they want to see retirement housing and communities built near them, which would enable them to stay close to their networks and friends. In most cases, their campaigns are unsuccessful as their needs are not considered to be pressing enough – even though the need for older people is clearly documented in housing market assessments.

Chris White MP suggests that local plans could be shaped to include locally defined notions of social value. However, local plans are not worth the paper they are written on without a crystal clear focus on the delivery of those plans.

The current stagnation could be improved by making local authorities more accountable. This should probably include a system of local targets setting out the timeframes in which the needs of identified groups should be met – or significant progress evidenced. The Mayor of London recently introduced targets for retirement housing in London, and it will be interesting to see how this develops.

If a local authority were found to be neglecting the identified housing needs of older people (or other ‘socially valuable’ groups), caps could be imposed on its borrowing capacity for its own home-building programme. Alternatively, it could mean that planning applications for groups whose needs are underserved could only be rejected in exceptional circumstances. These penalties may incentivise planners to make available public land or persuade other public bodies (like the NHS) to provide land.

This would fundamentally change the way planning works. Local authorities would be forced to actively encourage and attract housing for older people, rather than to, at best, ignore it or, worse, resist it. Overall, this should have a very limited impact on public finances, as a large number of older people would be able to use equity from downsizing to buy their own home, without public subsidy.

Housing-with-care schemes would benefit tremendously from the extension of the Social Value Act to the planning system: few other housing options fulfil as many ‘socially valuable’ functions as retirement communities providing less lonely and more active lifestyles for older people. The Act could also aim to fine-tune exactly what a local community defines as ‘social value’.

However, first and foremost, we need a change of focus on delivery. Many local authorities are neglecting the needs of groups the existing planning system already attaches ‘social value’ to. This needs to change, and accountability restored to the system. Without this, extending the Social Value Act into the planning system will have little effect.

 

Michael Voges is Executive Director of ARCO (the Associated Retirement Community Operators).

 

 

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