North refuses to “wither on the vine”

Claims that the North of England continues to lose out to the south when it comes to housing and infrastructure investment has left the region’s political leaders and regeneration chiefs fuming for change

By Mark Cantrell 

MONEY talks, we often hear. When it comes to the North of England, however, it evidently doesn’t have much to say. For some, that relative silence speaks volumes about Westminster and Whitehall’s lukewarm regard for our regions.

Two reports recently – one from Core Cities UK and the Key Cities Group, the other from IPPR North – both suggest that when it comes to central government’s allocation of resources, fortune favours the south.

The first report takes issue with the Government’s method for allocating investment from five of its funding programmes: The Housing Infrastructure Fund, the Estates Regeneration Fund, the Home Building Fund, the Small Sites Fund, and the Land Assembly Fund.

All told, these pots are worth around £5.6 billion over the next five years, but it is claimed the lion’s share of the money is skewed towards the south and the east of England.

At issue, according to the Core Cities UK report, is the way that eligibility for accessing these funds is calculated. In October 2018, the Ministry of Housing, Communities & Local Government (MHCLG), announced that 80% of the funding would be allocated to those parts of England with the highest affordability pressures.

The ministry’s definition of ‘highest affordability pressure’ is based on a ratio of median house price to median workplace-based incomes, ranked from least to most affordable, across all 326 local authorities in England. From this, a median affordability ratio has been devised, against which individual authorities can be measured. Those lower tier local authorities that meet or exceed this median figure are deemed to have a high affordability pressure.

Problem is, having analysed the MHCLG’s data for its report, Core Cities UK and the Key Cities Group claim that this definition, when applied, pretty much discriminates against the North, as it favours the more affluent parts of the country. To put it politely, the North’s political leaders and regeneration chiefs are somewhat miffed by the disparity revealed by this mapping exercise.

Andy Burnham
GM Mayor, Andy Burnham

“I am still trying to give the Government the benefit of the doubt on its promises of a Northern Powerhouse, but this map makes it very difficult,” said the Mayor of Greater Manchester, Andy Burnham.

“It is indefensible to shovel billions of pounds of public money into the more affluent areas when all parts of England are facing a housing crisis. The fact that only three areas north of the M62 will receive any benefit at all says everything.

“Such a skewed distribution of public money is demonstrably unfair and unacceptable. It overlooks the huge economic potential of the North of England and the Midlands, as well as several southern English cities and coastal towns, and will fuel the economy where it is already strongest.

“Right now, the Government should be working hard to bring our country back together rather than widening its economic and social divides. We need policies that will rebalance our economy and that are fair to people everywhere.”

Burnham isn’t alone in his indignation. Salford city mayor – and Greater Manchester Combined Authority’s housing and homelessness lead – called it “perverse” and accused the Government of leaving the North of England and the Midlands to “wither on the vine”.

“The North and the Midlands desperately need a new funding settlement with central government, recognising the need for serious and sustained investment in our infrastructure and services,” he added.

“There is no doubt that there are substantial issues facing the areas where affordability ratios are highest, which justify investment in infrastructure and land supply. But by crudely prioritising investment as proposed, Government risks perpetuating and reinforcing the divides between different parts of the country and failing to recognise the very real challenges of affordability and poor housing choices facing households across England as a whole.”

Across the Pennines, Councillor Judith Blake, leader of Leeds City Council and chair of Core Cities UK, said: “It is vital there is a fair approach to government housing investment across the country that recognises the range of challenges faced, and the important role for all tenures of housing in creating sustainable and inclusive neighbourhoods… The way funding for housing and infrastructure is currently being prioritised is already putting many of our major towns and cities at a disadvantage.”

Councillor Peter Box, the leader of Wakefield Council and chair of the Key Cities Group, added: “We are particularly disappointed that areas that Key Cities represent appear to suffer as a result of this formula, particularly the North of England and the Midlands. We call on the Government to reconsider the methodology being used to calculate these grants.”

The issue – and the indignation – is compounded by a report from IPPR North. In its ‘State of the North’ report, the thinktank noted that our regions have been hit disproportionately hard by austerity since 2009/10.

Total public spending has fallen by £6.3 billion in real terms, it says. Meanwhile, the south east and south west combined saw their share of public expenditure rise by £3.2 billion in the same period. The IPPR’s report notes:

  • Productivity in the North is 12.6% below the national average, although some areas like Cheshire and Warrington are especially productive, but many areas have lower productivity than East Germany
  • Two million working-age people and one million children live in households below the poverty line in the North; a quarter of northern workers – 1.6 million people – are paid below the real living wage
  • Weekly pay has fallen by £21 (3.8%) since 2008 in real terms – more than nationally (3.3%)
  • Health is a major problem and many of the neighbourhoods with the lowest life expectancy are found within the North’s city regions – in parts of Salford, Bradford, Sefton and Sunderland – although the neighbourhood with the lowest male life expectancy in England is in Blackpool: 68

When it comes to transport – a notorious sore point for the North’s commuters – the region has received £289 per head, while London has received £708 per head on average. Furthermore, the IPPR notes that £4,155 of transport spending per capita is planned for the capital, with just £1,600 per capita planned for the North. Little wonder we’re all a bit miffed.

“This report once again makes the irrefutable case for greater investment and devolution in the North to be a national priority,” Burnham said. “This Government promised us a Northern Powerhouse and Northern leaders stand ready to work with them to close the North-south divide, which pervades right across public spending, poverty rates and life expectancy.

“But, almost five years after the Government promised us a Northern Powerhouse, we learn that public spending in the North has fallen while rising in the south. This has got to stop, and it is time that the North came to the front of the queue for public investment.”

Bradford Council leader, Councillor Susan Hinchcliffe, who chairs the West Yorkshire Combined Authority, added: “This report is right to stress that all our cities, towns and rural areas are essential to – and must benefit from – the drive to strengthen the economy of the North of England.”

Roger Marsh OBE, chair of the NP11 board and the Leeds City Region Enterprise Partnership, added: “If the Northern Powerhouse concept is to have a long-term and meaningful future, it is through the North taking ownership and being given the powers and resources to fulfil our potential.”

For that, of course, the North needs the means to tackle its housing issues head on. Oh, and get those bloody trains sorted, too. But that’s another story.

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More money for home ownership

There’s another ‘north south’ divide at work in housing, metaphorically speaking 

MINISTERS have often liked to speak of social housing, somewhat disdainfully, as a ‘taxpayer subsidised’ tenure, but a study for the Chartered Institute of Housing (CIH) has found that home owners are a far bigger ‘burden’ on the public purse.

In its report, Dreams and Reality, the CIH presents an analysis of government spending, taxation, and regulation of the housing market. The study takes in spending on grants, loans and guarantees, but also tax reliefs, and welfare benefits, to provide what is claimed to be the first study of its kind to take a comprehensive look at interventions in the housing market.

The research was carried out by Steve Wilcox, former professor of housing policy at the University of York’s Centre for Housing Policy, and Peter Williams, departmental fellow in land economy at the University of Cambridge.

It found that the Government is pumping about £8 billion a year into the private housing market over the five years to 2020/21.

Over half of this is specifically going to support home ownership, with the rest more broadly aimed at the private market. By contrast, direct funding for new social housing is less than £2 billion annually, although most of this is grant funding whereas much of the private market support is via loans or guarantees.

Tax relief, meanwhile, benefits home owners more than private landlords. Net tax relief for the former was around £29 billion in 2016/17. That is, they paid £10 billion in tax and received £39 billion in tax reliefs. Private landlords paid net tax of at least £8 billion.

However, social tenants – and to a lesser extent, private renters – received more assistance from the benefits systems than did home owners; about £15 billion annually goes to social tenants and £8.5 billion to private renters.

Terrie Alafat CBE
Terrie Alafat CBE, chief executive of the Chartered Institute of Housing

“This report demonstrates just how much government support is going to the private market, and to home owners in particular,” said Terrie Alafat CBE, the CIH’s chief executive.

“Currently, just 21% of government investment is going to affordable housing. Rebalancing this budget to support people on lower incomes who can’t afford to buy could make a big difference.”

NH

This article first appeared in the print edition of Northern Housing magazine, #3 Spring 2019

 

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