A think-tank report said that a new municipal investment corporation, linked to a proposed British investment bank to be jointly owned by central and local government, could increase house building and support sustainable urban extension. Drawing on case studies from across Europe, it argued that the new model would have the potential to facilitate a longer-term perspective, de-risk complex projects, target investment, cross geographical boundaries (such as in joining up public investments in local transport with related developments, or encouraging collaboration between adjoining local authorities and utilities), avoid political swings, and raise levels of growth and well-being to those of comparable European cities.
Source: Nicholas Falk, Funding Housing and Local Growth: How a British investment bank can help, Smith Institute
A think-tank report said that it was necessary to rebalance housing subsidies in order to increase housing supply and reduce the housing benefit bill, and that this would require institutional reforms to connect housing supply, local housing markets, and the drivers of benefit spending in particular parts of the country. The report outlined a phased plan to provide powers and incentives to make the shift from 'benefits to bricks', including: the sharing between local authorities and the Treasury of the proceeds of local action to reduce housing benefit spending relative to forecasted costs; to allow local authorities to redraw their broad rental market areas and revert to direct payment of landlords, retaining a share of any savings locally; to devolve housing capital budgets to combined authorities, and give them greater control over setting levels of social rent; and for a multiyear Affordable Housing Fund, to fund building and rent subsidy.
Source: Graeme Cooke and Bill Davies, Benefits to Bricks: Mobilising local leadership to build homes and control the benefits bill, Institute for Public Policy Research
A report by a committee of MPs said that although the Department for Communities and Local Government introduced the Help to Buy Scheme in an efficient and timely manner, the department did not assess whether there were alternative, more effective options that would have delivered the scheme's policy objectives (increasing demand for new homes, making mortgage finance more accessible and affordable, and encouraging developers to build more new homes). The report noted the lack of comprehensive evaluation and said that, since the scheme was one of a number of government interventions addressing wider housing market failures, the department needed to develop a way to assess the combined effectiveness of its schemes. The report discussed the medium- and long-term risk to the department of building a £10 billion portfolio of equity loans that would require ongoing management, creating a heavy, and potentially long-term administrative burden. It said that the department had not ruled out the possibility of selling the Help to Buy portfolio in the future.
Source: Help to Buy Equity Loans, Second Report (Session 201415), HC 281, House of Commons Public Accounts Select Committee, TSO