The government is promising £3.7bn for affordable housing – but will this solve the housing crisis?

Great, all we need is another 249,999 of those every year and we're sorted. Image: Getty.

This post is presented by WhatHouse? the leading portal for new build homes in the UK.

As part of last year’s Autumn Statement, chancellor Philip Hammond said the government would invest £3.7bn in building 140,000 new houses – 40,000 of them classed as “affordable”. The announcement was cautiously welcomed by many within the housing industry; a number of other industry figures, though, were quick to point out that £3.7bn was still a drop in the ocean compared to what was really needed to tackle the housing crisis.

So who’s right? Could this £3.7bn make some difference or even solve the housing crisis altogether? Or has the housing crisis already got to a stage where it would be nigh on impossible for any government to tackle it successfully?

Apart from anything else, it’s hard to overestimate the scale of the UK housing crisis right now. The Redfern Review, published in November last year, was just one report of many to highlight how severe the shortage of affordable homes had become. It showed that since 1996 real house prices have risen 151 per cent, whilst wage growth has been much slower – and for the last decade has entirely stagnated. 

The result of this is the average price of a UK home is now six times the average income. This widening ratio between house prices and earnings means it’s younger house buyers in particular who are finding it hard to get on the property ladder. This in is just one consequence of a complex housing crisis that looks increasingly difficult to solve with each year that goes by.

The good news is that, in addition to the £3.7bn put aside for new homes, the Chancellor also announced that the government was committed to doubling the annual capital spending on housing. Further good news is that the government has pledged is to build 200,000 new homes each year until a total of one million new-build properties are completed by 2020-21.


However, most analysts believe that at least 250,000 new homes need to be built annually, to keep up with population growth alone. In addition, the government’s promised figure of 200,000 new homes is thought by many to be a little optimistic. Only 160,000 new houses were completed in the UK during 2015.

As for that £3.7bn investment, even if it doesn’t make a significant impression in regards to the overall housing crisis, its importance as the headline act in the chancellor’s first Autumn Statement could still prove to be significant. It suggests that the government is indeed serious about making housing policy one of its top priorities, as it has previously stated.

It should also be noted that the first major government policy announcement of 2017 was regarding housing and the creation of 14 “garden” towns and villages in England which should result in around 200,000 new homes being built.

So if, sometime in the next few years, it becomes clear that the housing situation has significantly improved due to government policy, then the £3.7bn announced in last year’s Autumn Statement may be remembered – not so much for the actual amount, but as the first sign the government was genuinely willing to tackle the crisis. The next test to see if this optimism holds up is when the government’s White Paper on housing is published later this month.

Keith Osborne is online editor at WhatHouse?, the UK’s best new homes portal and housing scheme advisory source. Keith has over 15 years’ experience writing within the property and new build homes industry. Each year he inspects new build homes as a regular judge for the biggest housebuilder awards in the UK – The WhatHouse? Awards.

 
 
 
 

Two east London boroughs are planning to tax nightlife to fund the clean up. Will it work?

A Shoreditch rave, 2013. Image: Getty.

No-one likes cleaning up after a party, but someone’s got to do it. On a city-wide scale, that job falls to the local authority. But that still leaves the question: who pays?

In east London, the number of bars and clubs has increased dramatically in recent years. The thriving club scene has come with benefits – but also a price tag for the morning clean-up and cost of policing. The boroughs of Hackney and Tower Hamlets are now looking to nightlife venues to cover these costs.

Back in 2012, councils were given powers to introduce ‘late night levies’: essentially a tax on all the licensed venues that open between midnight and 6am. The amount venues are expected to pay is based on the premises’ rateable value. Seventy per cent of any money raised goes to the police and the council keeps the rest.

Few councils took up the offer. Four years after the legislation was introduced, only eight local authorities had introduced a levy, including Southampton, Nottingham, and Cheltenham. Three of the levies were in the capital, including Camden and Islington. The most lucrative was in the City of London, where £420,000 was raised in the 2015-16 financial year.

Even in places where levies have been introduced, they haven’t always had the desired effect. Nottingham adopted a late night levy in November 2014. Last year, it emerged that the tax had raised £150,000 less than expected in its first year. Only a few months before, Cheltenham scrapped its levy after it similarly failed to meet expectations.


Last year, the House of Lords committee published its review of the 2003 Licensing Act. The committee found that “hardly any respondents believed that late night levies were currently working as they should be” – and councils reported that the obligation to pass revenues from the levy to the police had made the tax unappealing. Concluding its findings on the late night levy, the committee said: “We believe on balance that it has failed to achieve its objectives, and should be abolished.”

As might be expected of a nightlife tax, late night levies are also vociferously opposed by the hospitality industry. Commenting on the proposed levy in Tower Hamlets, Brigid Simmonds, chief executive at the British Beer and Pub Association, said: “A levy would represent a damaging new tax – it is the wrong approach. The focus should be on partnership working, with the police and local business, to address any issues in the night time economy.”

Nevertheless, boroughs in east London are pressing ahead with their plans. Tower Hamlets was recently forced to restart a consultation on its late night levy after a first attempt was the subject of a successful legal challenge by the Association of Licensed Multiple Retailers (ALMR). Kate Nicholls, chief executive at the ALMR, said:

“We will continue to oppose these measures wherever they are considered in any part of the UK and will urge local authorities’ to work with businesses, not against them, to find solutions to any issues they may have.”

Meanwhile, Hackney council intends to introduce a levy after a consultation which revealed 52 per cents of respondents were in favour of the plans. Announcing the consultation in February, licensing chair Emma Plouviez said:

“With ever-shrinking budgets, we need to find a way to ensure the our nightlife can continue to operate safely, so we’re considering looking to these businesses for a contribution towards making sure their customers can enjoy a safe night out and their neighbours and surrounding community doesn’t suffer.”

With budgets stretched, it’s inevitable that councils will seek to take advantage of any source of income they can. Nevertheless, earlier examples of the late night levy suggest this nightlife tax is unlikely to prove as lucrative as is hoped. Even if it does, should we expect nightlife venues to plug the gap left by public sector cuts?