How we built more than 6,500 affordable homes

In the run up to the 2007 Assembly election, it was clear that housing was a key issue. We were challenged on the lack of affordable housing, the condition of much of the housing stock particularly in the social sector, and the inadequate systems and policies that were in place.

When I was first appointed Deputy Minister, I found a queue of housing professionals at my door to tell me what was wrong, but more importantly, how we could improve delivery. I had little housing knowledge and knew I would have to listen to and work closely with the housing sector. I wanted to make sure that I listened to all the voices, tenants, housing associations, local authorities, homelessness charities, professional bodies, lenders, private landlords – everyone who had an interest in housing policy and who could help us deliver what was needed.

Four years on I’m proud to look back at what we achieved, not least:

• Exceeded our target to create 6,500 homes over the four year period of the government.

• Improved standards of social housing and £430 million of Welsh Government investment in our housing stock with an additional £265 million being contributed by the housing association sector in extra borrowing.

• 1200 training opportunities and jobs created on the back of housing investment, by using the i2i toolkits and targeted recruitment and training techniques.

• Cross sector implementation of changes to Housing Related Support that will deliver more effective use of resources to vulnerable people.

• A Mortgage Rescue Scheme which helped 384 households and prevented 808 adults and 383 children from becoming homeless during the height of the recession.

• £30 million of Welsh Government investment in the Arbed programme to reduce energy bills, create green jobs and tackle climate change on top of 300 new homes built to the highest sustainability standards.

• A robust and challenging new Regulatory Framework for housing associations which expects them to put the needs of tenants and communities at the heart of their decision making.

I believe the approach we brought to government – ambition, mutual respect and shared responsibility – was key to enabling such strong results to be delivered. Fundamental was our determination to work in close collaboration with key partners in the housing sector, building relationships of mutual respect whilst welcoming challenge. Without this, we could not have achieved the ambitious targets that we set ourselves in One Wales. The efforts and resources of partners across the housing sector – housing associations, local authorities, tenants, lenders, the third sector, private sector and professionals – were crucial to secure improved housing. What made this distinct approach so successful was:

• A truly collaborative approach to policy formation and implementation, with all partners equally able to influence and contribute to outcomes.

• Policy devised with the interests of the service user being central to its formation.

• Clear roles and responsibilities, with the Government’s role remaining strategic and separate from those whose role relates to delivery or planning/commissioning.

• Ownership of solutions increased by inviting all partners to contribute resources to resolve collective problems.

• Openness and transparency to improve relationships and enable difficult conversations to take place when interests diverged or clashed.

• A stronger emphasis on providing evidence of need and measuring outcomes.

• Encouraging innovation and good practice.

• Using legislative powers where appropriate to strengthen policy.

• Raising the profile of housing and housing related disciplines and ensuring government is challenged by setting up independently chaired external groups to advise on key areas.

• Establishing a risk based and outcome focused regulatory approach for Housing Associations.

During my time as Deputy Minister I’m proud of our record of delivery against the One Wales commitments. However, I believe we did more than just hit those headline commitments. Working closely and in equal partnership with the wider housing sector, we began to transform key aspects of our housing system for the better.

One of the first things I did as Deputy Minister for Housing was to commission an independent Review of Affordable Housing, chaired by Sue Essex. All those involved in housing in Wales were invited to give their views and offer suggestions for how the system could be improved. The result was a report with 43 recommendations for action. I accepted them all and put into place a new collaborative system to work through each of the challenges the Essex report identified.

The report was clear that in order to deliver the key housing commitments in the One Wales agreement and specifically to deliver an additional 6,500 homes by 2011, wide-ranging and urgent changes were needed to the way that the provision of affordable housing was regulated, funded, assessed and delivered.

Working in collaboration with the sector, that is exactly what we did. We supported a wider community regeneration role for Housing Associations, building on the landlord services they currently provide, and transformed their regulatory framework. Housing associations are now expected to use all of the resources within their power to increase housing supply and community benefits. This new regime is based upon increased intervention powers.

We changed the basis for allocating Social Housing Grant so that investment is allocated according to need. The role of Local Authorities was also strengthened so that they decide priorities for new development locally. They were also made more accountable for their decisions by the requirement to produce annual Affordable Housing Development Statements.

Well before the UK Government announced its plans to drastically cut the budget, we were working on how to make existing resources deliver greater public benefit and how to draw in additional finance. Smarter procurement models were introduced which have seen gains in jobs and training opportunities as well as supporting more SMEs to access contracts. The Housing Measure put our regulatory framework on a statutory footing which will increase confidence of lenders in continuing lending to Housing Associations in Wales. Crucially, housing associations themselves have significantly increased their borrowing by £265 million in order to invest in affordable housing.

One of the early impacts of the recession was a withdrawal from the lending market for social housing by a number of financial institutions. It led to a recognition that the sector was over reliant on this form of long term funding and that the capital markets should be explored as an option. A huge amount of work was done to explore how we can tap into alternative sources of funding. A number of Housing Associations are now working to put this into a practical model, particularly to increase intermediate housing.

I also pushed for reform of the unfair housing finance system imposed by the UK government. Payment back to the Treasury from surpluses made on the Housing Revenue Accounts of Welsh Local Authorities since 1999, has been a disproportionate burden, compared with English and Scottish Authorities. In that period 66 per cent of total negative subsidies were paid by Welsh Local Authorities despite owning only 6 per cent of housing stock across the three countries. I think that this is unfair and in need of urgent reform. Negotiations are ongoing with the Treasury. Wales is seeking parity with Scotland by seeking separation from the arrangements in England and autonomy in this area.

Sue Essex’s report also recommended a full review of the arrangements for setting social housing rents which has been taken forward by a cross sector review group including tenants associations. They have developed proposals for a new policy that would be fairer and more transparent and apply to all social landlords. This is currently out for consultation.

Supporting the most vulnerable people was also a priority and more recently I commissioned an independent review of Housing Related Support chaired by Sir Mansel Aylward. He was asked to put the needs of service users at the heart of suggestions for change. The review report made a series of recommendations and I put in place a collaborative process to work through and implement the recommendations.

Despite budgetary cuts, we fulfilled the One Wales promise to provide extra funding for the Supporting People programme. Our final budget published in February protects this going forward, with £140 million allocated during 2010/11. This not only targets services at the most vulnerable but has enormous preventative value, reducing the call on the public purse that would be made if needs were not addressed at an early stage. This focus on prevention has also been core to our work on homelessness and has resulted in a decrease in the numbers of those presenting as homeless to Local Authorities.

Climate change is one of the biggest threats facing our society. We’ve made important strides in reducing carbon emissions from housing whilst reducing energy bills in some of our poorest communities and stimulating green jobs. The Welsh Housing Quality Standard, which must be introduced by all social landlords, has seen huge investment in driving up standards of social housing, including standards of energy efficiency. We also levered significant external investment to deliver a major retrofitting programme called Arbed across our Regeneration Areas and secured European funding so that this can be extended in future years. And we delivered a pilot of 300 homes built to the highest sustainability standards.

Whilst much has been achieved in the past four years, much still needs to be done. In the face of severe budget cuts, the new government needs to find ways of financing more affordable housing and a greater range of affordable housing, including for first time buyers. There should ne a renewed commitment to create at least 6,500 new affordable homes. We also need more intermediate housing schemes to help people on low incomes who are unlikely to be able to access social housing into an affordable home. This should include a Rent Now – Buy Later scheme which would help first time buyers to save up for a deposit.

The new government must challenge the UK Government to end the unfair housing finance system which sees some £80 million of rent by social tenants transferred to the Treasury instead of being used to improve their homes.

There are still too many empty properties that can not only cause social difficulties but are wasted resources. We need to be prepared to be innovative to tackle this and also to draw on new powers we have to increase council tax on empty properties. This can also be used to tackle some of the issues around second homes in rural areas.

There’s much work on affordable housing reforms that were begun by the One Wales Government and which now needs to be completed. This includes a review of the rents benchmarking regime which the new government should complete in a way that protects standards, is transparent and robust, and ensures fair rents.

In One Wales we did a great deal to improve the services to vulnerable people. The new government should maintain this collaborative approach and ensure that Supporting People funds are only used to fund support services, projects and programmes that meet the needs of disadvantaged and vulnerable people. It should also continue to support the Extra Care and Care and Repair Schemes that are so important to help older people enjoy independent lives.

As fuel prices soar, tackling fuel poverty and reducing carbon emissions must remain a priority. It is imperative that the new government delivers on this by building on existing schemes but also being prepared to be innovative and find new ways of improving domestic energy efficiency and production.