Housing Corporation and English Partnerships: Regeneration revolution? (Special report on regeneration)

The long-expected merger between the Housing Corporation and English Partnerships seem imminent, and could transform the way regeneration is delivered. Mark Smulian goes behind the scenes to assess the likely impact.

Construction firms whose business depends on government regeneration and social housing policy could be forgiven for feeling impatient with the leisurely pace at which ministers have spent the past six months reviewing this.

Builders complain that since May it has been impossible to get important decisions from the Housing Corporation, English Partnerships (EP) and parts of Whitehall. However, the Department for Communities and Local Government (DCLG) review of the corporation, EP and wider regeneration issues expected this month will probably not improve matters.

Indeed, if, as expected, these two bodies are merged, it will inevitably be months before restructuring is complete, budgets agreed and officials slotted into jobs.

The government announced a review last May of the way that EP and the Housing Corporation deliver regeneration. It was, allegedly, going to be quick. But by early November nothing had happened.

“It has held up everything for six months,” complains one senior figure at a contractor deeply involved in regeneration. “It has been impossible to get a decision out of anyone because they just say ‘wait for the review’.”

But the review had scarcely begun before the new communities and local government secretary Ruth Kelly added to its task an appraisal of the DCLG’s own regeneration work, such as neighbourhood and estate renewal. She also added a review of social housing in general under John Hills, a social policy professor.

It is as if ministers wanted something new from housing and regeneration policy, were unsure what, and hoped that if the subject were reviewed long enough an answer might emerge.

The contractor says the best solution would be “if they merge the Corporation, English Partnerships and the part of DCLG that deals with council estate renewal, so that it was all in one place”.

Original aim

The original reason given for the review, by Kelly’s predecessor, David Miliband, was to “consider the best way of organising national delivery mechanisms to maximise the use of private investment, public subsidy and land holdings, and assets funded by past public investment, to support the delivery of new homes, the improvement of existing homes, and the creation of mixed, sustainable communities”.

Miliband’s aim was to resolve the anomaly that EP has the job of acquiring land and making it fit for development, but does not control the money to pay for the affordable homes that will be built there.

That power lies with the Housing Corporation, which has some £3.3bn at present to distribute for new build among the larger housing associations and the handful of contractors that fought their way through the bureaucratic thickets to secure the first ‘developer grants’ last spring.

The contractor gives an example of the problem caused by these split responsibilities. “You can buy a brownfield English Partnerships site, but then you have the risk of waiting to see if the Corporation will award a social housing grant to build homes on it,” he complains.

“It would be good to have everyone in one organisation. I wish they would bring the regional development agencies into it too; there are so many quangos involved in regeneration that I lose count.”

The idea of bringing together EP’s powers over land, and the Housing Corporation’s powers over the money to use that land, seems sensible to Julian Harajda, business development manager at construction firm Durkan, which works in regeneration and refurbishment.

“Anything that simplifies the process would be a good thing and the Housing Corporation and English Partnerships being merged would mean there would be one less process to go through,” he says.

“They are both doing the same thing, so that should make life a little easier. At the moment it can take a year to get through all the decision processes.”

Harajda says EP should improve its co-ordination with local authorities if it wants to increase the private sector’s involvement with its projects.

“You can have cases where English Partnerships has a site restored ready for development, only for it to emerge that the local authority knows nothing about what English Partnerships proposes to build, and the whole thing stops.”

Merger speculation

One senior figure in social housing predicts the review will merge EP and the corporation, but not draw in any other regeneration bodies.

He says: “If I was being positive I’d say that the government wants to bring the Corporation and English Partnerships together because it has realised it does not make sense to have its regeneration strategy delivered by one body when the money for housing, a key part of it, is controlled by another.”

He adds that housing associations have had “some dissatisfaction about English Partnerships’ record in respect of affordable housing, which is pretty patchy because it is still very private sector focused on homes for sale”, a situation that he believes the Corporation’s input should put right.

Were this merger to proceed, it is expected that the other half of the corporation, which regulates associations’ management and finances, would be hived off to the Audit Commission, which does a similar job for councils and the National Health Service.

One thing the government is clear about is that it wants more for its money in regeneration, and wants more homes of all kinds, in particular in the main growth areas in the South East.

This requires more private finance in housing and regeneration, in particular where low land values hamper the viability of developments.

One sign of this trend to seek more from the private sector came when for the first time, earlier this year, the government allowed private housebuilders to bid against housing associations for Housing Corporation development grants. This was based on the government’s belief that the industry would build homes more efficiently than housing associations do.

But if it was a pilot for what the expected merged body might do, it was not entirely a happy one. The interminable bureaucracy involved left the industry baffled and resentful.

Harajda feels the public sector has unrealistic expectations that the construction industry can and should jump through all the bureaucratic hoops to which government bodies are used.

“It’s right that they are careful with money from the public purse, but some processes, like developers gaining grants from the corporation, have had far too much red tape,” he says.

“The government has this idea that the private sector is gagging to invest in the public sector, but the industry will invest in anything where the risks and rewards look good, and red tape is not attractive.”

New growth points programme

Kelly’s myriad reviews are not the only regeneration initiatives in progress.

One potentially big expansion of regeneration came in October, when housing minister Yvette Cooper named the 45 winners under the new growth points programme.

This is an attempt by the government to increase the number of homes built near to the South East, if not actually in it. It designated four main growth areas at Ashford, the M11 corridor, Milton Keynes and the Thames Gateway in 2003.

All have suffered from controversy about claims of excessive development in areas already densely populated, and complaints from councils that the government has failed to finance the infrastructure required. Therefore, ministers have turned to places that actually want growth, and have designated the 45 towns as ‘new growth points’. This is where a substantial, if unspecified, wedge of regeneration money will flow over the next decade or so.

They are in a triangle roughly bounded by Lincoln, Maidstone and Truro, and received only modest sums from Cooper. But there is a promise of a lot more money once next year’s comprehensive spending review is out of the way.

That is the process that determines how much the Treasury spends over the next three years.

But since the DCLG would look ridiculous were it to launch new growth points only for the money to run out next year, the industry can assume that this programme is for the long term.

The two largest awards, of around £5.5m each, went to the ‘three cities’ – Leicester, Derby and Nottingham – and to the Haven Gateway partnership. Both are examples of the way the government hopes rising land values will tempt private cash in alongside its own contributions.

Leicester, Derby and Nottingham believe they have strong attractions for developers of homes and of industrial and commercial premises. Unlike the South East, they have plenty of relatively cheap building land available and relatively low labour costs.

Haven Gateway is the area around the River Stour on the Essex/Suffolk boundary. It is soon to benefit from vast port developments at Bathside Bay and Felixstowe South and wants the homes to go with the jobs that will be created and the infrastructure to link them together.

The government certainly remains serious about regeneration, and the anticipated merger of the Housing Corporation and EP should be seen as part of its drive to get money spent more efficiently. But never underestimate the ability of bureaucracies to devise processes that leave the industry scratching its collective head and wondering whether this is the best way to spend from its collective pocket.

No one has said whether any of the reviews will look at the costs to the industry of the cumbersome processes that surround dealings with the government on regeneration and housing.

Who’s who – the people in charge

The two men in charge of the Housing Corporation and English Partnerships both have impressive CVs and a huge amount of relevant experience. It may prove a difficult decision to pick who will come out on top if the anticipated merger of their organisations goes ahead.

Jon Rouse

Housing Corporation chief executive since 2004, Jon Rouse already has close personal links with English Partnerships, having been appointed to the non-executive board in April 2004. He was previously chief executive of the influential Commission for Architecture and the Built Environment, secretary to the Urban Task Force, and policy and communications manager at English Partnerships.

Before that, he spent five years at the Department for the Environment, working as private secretary to the minister for housing and local government, and with the London Borough of Ealing, and the Energy Saving Trust. He has a first degree in law, and a masters in urban policy and business administration, specialising in corporate finance.

Rouse also serves on the boards of Constructing Excellence, The Housing Finance Corporation and Homeless International.

His background is also highly relevant – Rouse’s father was a social worker and his grandfather’s work on educational immigration won him an OBE.

Interviewed at the time of his latest appointment, he said his eventual ambition was to be chief executive of Bradford City Council, to serve the city of his birth. If he stays at the Housing Corporation for a full five-year term, he will still be only 40, leaving him plenty of time to realise his dream.

John Callcutt

John Callcutt was appointed as chief executive of English Partnerships in May 2006 for a three-year period. A solicitor, he was chief executive of Crest Nicholson between 1991 and November 2005 and subsequently deputy chairman responsible for developing and promoting Crest’s sustainable development strategy.

Callcutt guided Crest Nicholson through a successful transformation from a regional housebuilder to a company leading the way in urban regeneration and sustainability. He led the company from an organisation with a £60m loss to a successful operation with an £80m profit and a strong reputation for architecture, quality and customer care.

About 80% of housing is produced by the private sector, and Callcutt believes his understanding of that market’s priorities and concerns enables him to help it deliver.

Callcutt is currently chairing a working group for the Housing Forum on meeting customer needs in construction and he is a director of the BRE Trust. He is also a member of the Law Society and a Fellow of the Royal Society of Arts. He was awarded a CBE in the Queen’s 2006 Birthday Honours list for services to social housing and urban regeneration.

[Contract Journal, 15 November 2006, p 22-23]