A.  INTRODUCTION

  The Housing Corporation (the Corporation) welcomes the opportunity to give evidence to the Committee's inquiry into Planning for Sustainable and Housing Communities. Background to the Housing Corporation and housing associations is provided in Annex 1.

B.  THE CORPORATION'S ROLE AS INVESTOR

  The Corporation distributes funding to housing associations via its Approved Development Programme (ADP); the amount provided under this programme will rise to nearly £1.3 billion in 2003-04.

  The Corporation has three key investment objectives:

(i)  providing new, affordable housing in areas of economic and demographic growth;

(ii)  contributing to regeneration and neighbourhood renewal; and

(iii)  meeting the needs of a wide range of vulnerable people.

C.  PLANNING FOR SUSTAINABLE HOUSING AND COMMUNITIES

Background

  The ADP funds both homes for rent and low cost home ownership. The Corporation's target for the period covered by Spending Review 2000 (2001-02 to 2003-04) is to complete over 65,000 homes; last year we completed 22,875. During the current year, the rent/ownership balance in terms of resources is about 87%/13% of the ADP. In terms of numbers about 23% of the homes produced are for low cost home ownership, given their lower grant rates.

  Homes for rent are provided at rents which comply with the Government's rent restructuring guidelines. Broadly there are two types of low cost home ownership funded via the ADP: Homebuy where the recipient is given an equity loan via the housing association to help them purchase an existing property (and the loan must be repaid when they sell the property); and shared ownership where the recipient buys part of a property provided by the housing association and pays rent on the part they do not own.

  Spending Review 2000 also provided funding for a Starter Home Initiative which provides low cost home ownership for key workers, primarily nurses, teachers and police officers. This programme is providing £250 million towards helping these key workers into home ownership and the Corporation is funding the housing association element of this Initiative. It is intended that around 10,000 keyworkers will be assisted.

  In addition Spending Review 2000 provided resources for a Safer Communities Supported Housing Fund. Under this programme housing associations receive funding to provide both new homes and revenue support for particularly vulnerable groups: people fleeing domestic violence, ex-offenders, people with drug or alcohol problems, young people at risk and schemes for teenage mothers. Around 3,000 new units will be provided under this programme.

  In addition to the Corporation programmes, local authorities also provide social housing grant to housing associations; about £500 million annually providing around 7,000 homes for rent and sale.

ADP 2003-04

  The 2003-04 ADP was launched by Lord Rooker on 18 September and a copy of the executive summary of the Corporation's National Investment Strategy which accompanied the launch is enclosed. There will be two parts to the 2003-04 ADP. The bulk of the ADP will be distributed to the 10 regional investment areas using the Housing Needs Index and used to fund schemes that meet the regional and sub-regional priorities set out in the Regional Investment Strategies. This approach allows us to target our funding on growth areas and sites which are of strategic importance and will enable us to contribute to providing homes in the four growth areas identified in the DPM's Statement as necessary.

  The regional and sub-regional priorities have been developed with local and regional stakeholders including local authorities, housing associations, Regional Development Agencies, Regional Assemblies and Chambers as well as the Government Offices.

  We are also working closely with national bodies such as English Partnerships. We are seeking to identify which of their land holdings and strategic sites tie in with our own Regional Investment Strategies, so that affordable housing can be provided more effectively and efficiently. In addition we are working with the National Health Service Housing Co-ordinator to ensure that the NHS housing strategy that is being developed and implemented ties in with our own work where relevant. Recently this has included co-operation on the Starter Home Initiative and helping the NHS to establish relationships with housing associations for mutual benefit.

  For 2003-04, as part of the step change in housing foreshadowed by the Deputy Prime Minister in his statement to the House of Commons on 18 July, approximately £200 million of the ADP is being ringfenced for a Challenge Fund focusing on increasing supply, providing for keyworkers and the homeless and increasing the use of innovative methods of construction such as off site manufactured (OSM) systems. The process by which the resources available in this fund are allocated is different from that for the rest of the programme. We will be employing a partnering approach and have issued guidance to those associations we believe are in the best position to make proposals which meet the requirements of the fund—although we will accept proposals from other associations if the schemes they put forward meet the criteria. A copy of the letter inviting bids for the Challenge Fund is attached.

  Under the Challenge Fund we expect to secure around 4,000 new homes in London and the South East of England of which at least 1,000 will use off site manufacturing methods. A significant proportion of the programme will be directed towards providing homes for keyworkers. We will continue to help keyworkers into home ownership through our traditional low cost home ownership schemes described above but we will also be piloting the provision of homes for key workers at intermediate rent ie rent below market rent but above restructured rents. In addition we will be piloting a new version of our Homebuy programme under which associations will build new homes and then provide an equity loan of 25% to the purchaser.

  Many of the issues driving the Challenge Fund will be of equal importance to the rest of the ADP. In particular it will be important to focus more of the programme on increasing the supply of homes in areas of high demand and to promote higher levels of density in urban areas to make the best use of the land. We will also be looking to see greater use of off site manufacturing techniques as part of the rest of the ADP as this can reduce the time that keyworkers and homeless families have to wait for homes to meet their needs. We have been promoting the use of off site manufacture over the past two years as part of our Kickstart programme.

Sustainability and Quality

  It is very important that the homes provided by housing associations contribute to sustainable communities—ie communities where people want to live in now and in the future. As part of our bidding process we require all housing associations to certify that the schemes they are bidding for will be sustainable. In order to help them assess the sustainability of their schemes we provide a sustainability toolkit which associations can use to identify the key factors affecting the sustainability of their schemes.

  All the schemes funded by social housing grant must meet our scheme development standards. These standards, which include essential and recommended items, aim to ensure that homes provided by housing associations are of a high quality.

  Since 1996, the Corporation and ODPM have been developing a system of Housing Quality Indicators (HQIs) which involve an assessment of the quality of key features of a housing project in three main categories: location, design and performance. HQIs have to be used on all new developments receiving Social Housing Grant from April 2001. Housing associations must submit HQI data to a national database and within two years, we believe we will have enough HQI data to prepare quality profiles of the full range of housing produced. At this point, the quality aspects of schemes could be determined by prescribed ranges of HQI, rather than detailed quality criteria within the Scheme Development Standards (SDS). The HQI system is expected to become an important tool in the measurement, benchmarking, assessment and continuous improvement in value for money.

  Some housing associations are at the forefront of raising the standards of housing design across the whole housing sector. Many associations have responded to government expectations and produced innovative, high density and well designed and built housing. We wish to see the focus on design quality becoming central whenever associations consider new schemes and are working closely with the Commission for Architecture and the Built Environment (CABE). To try to create the right environment we are pursuing several themes namely:

—  the appointment of design champions; one at board level and one at field director level. We are encouraging associations to adopt this approach also;

—  the funding of an update to the Urban Design Compendium (UDC) and further promotion of UDC principles in a new round of regional seminars;

—  the publication of a document Better Public Housing in association with CABE to supplement the currently available guidance on design;

—  the offer of "project enabling" design services from CABE on 10 pilot social housing grant-funded projects;

—  participation with CABE in a joint Anglo/French demonstration programme to share ideas and best practice on good design and layout in affordable housing; and

—  continued liaison with CABE to resolve any real or perceived barriers to good design.

Decent Homes

  The Corporation is working with the Government to help meet the target of bringing all social housing to a decent standard by 2010. We have issued a circular to housing associations about the decent homes target and are working with the National Housing Federation to help housing associations achieve the target. Each year around £50 million of the ADP is used to fund works to existing housing association stock and we are considering how best to use this funding to contribute to meeting the decent homes target.