Homes for the North calls for Government to step-up to level-up the North

It has been over four months since the Government announced plans to review its Green Book; the highly influential ‘rule book’ that helps decide where public funds should be invested to drive economic development. New research from Homes for the North sets out a series of practical recommendations for changes that will ensure Government housing investment is redirected to support levelling-up.

At this critical time when the effects of COVID-19 continue to hit us hard, Homes for the North welcomes the Government’s intention to proceed with the review.

Evidence shows that there are regional differences in how COVID-19 has impacted communities and unequal access to quality homes is a driver of this unsettling geography. Housing policy has an important role in determining whether the national recovery levels-up or doubles-down on spatial inequality.

The review of the Green Book gives the Government a chance to step-up to level-up the North and support the national recovery from COVID-19.

Homes for the North research, undertaken by the Centre for Economics and Business Research (Cebr), reveals that the way the Green Book is currently used to assess major housing investment opportunities is stacked against the North.

In the absence of reform in this area, the North could fall further behind other regions, especially if it lacks the funding to deliver new homes and retain its workforce.

Building on earlier analysis undertaken by North Housing Consulting, the research starts with the stark finding that the current method for the distribution of housing investment, fundamentally disadvantages the North by channelling investment to areas where affordability pressures are highest. The rule so-called 80:20 rule used by Homes England, means that only 4 out of 72 Local Authorities in the North can access 80% of key housing infrastructure funding. This results in more funding being pushed to areas where the apparent return on investment is highest, which results in greater investment directed at the South East and away from the North of England.

Based on this research, Homes for the North is calling for the Government to:

• Remove the 80:20 funding rule and replace this with a more strategic method for the geographic allocation of Homes England funding that aligns with ambitious regional growth strategies associated with the Northern Powerhouse and levelling-up agenda
• Develop the levelling-up concept into a meaningful strategy for the North. The emerging understanding of the role of housing in helping drive transformational economic change in the North of England needs to be translated into a resource that can be used by scheme promoters in the North to articulate a consistent and persuasive strategic case for their proposed housing schemes.
• Extend the evidence base to capture a wider range of benefits in appraising projects, such as tackling climate change or impacts on quality of life. Currently, investment decisions are typically dominated by the increase in land value driven by a development (Land Value Uplift – LVU) and do not give enough emphasis to other costs and benefits.
• Only back the projects that need the money in the first place. Cebr’s research demonstrates that when applied to major housing projects, the Green Book approach means there is a high risk that much of the public money directed to activities that will deliver value for money is used on projects that would already deliver benefits without Government funding.
• Look forwards in measuring the benefits of programmes that form part of a transformative economic strategy. The economic case for investment decisions should be driven by forward-looking land value assumptions, instead of the backward-looking approach that is currently recommended in the Government guidance which perpetuates a low value low growth view of the North.

Paul Fiddaman, Chief Executive at Karbon Homes and Homes for the North member, said:

“Our latest research reinforces that the current approach to housing investment is skewed against the North, which prevents the region from accessing vital funding to deliver more quality and affordable homes. Delivering more homes in the right places will revitalise communities and economies across the North of England.

Housing has an important role to play in supporting the Government’s levelling-up agenda and an inclusive national recovery. A new approach to the distribution of housing investment is urgently required to enable the North to deliver more quality, affordable homes and close the gap with the South.”

Cebr’s full report can be viewed here: H4N Levelling up the Green Book Stage 1 Full report