Homes England to move away from ‘pure’ supply in social value shift

Homes England will shift away from a “purist” focus on housing supply towards regeneration, with performance judged by a much wider range of metrics including social value per pound of investment.

Harry Swales, chief investment officer at the agency, speaking ahead of the agency’s new five-year strategic plan published today, said Homes England will adopt a less “universal” approach to funding schemes as it seeks more “ambitious” partnerships to shape places.

Its activity will be underpinned by 18 key performance indicators, covering supply metrics but also measuring design quality, sustainability, share of homes built using MMC, job creation, brownfield land use and share built by small businesses. 

It will for the first time measure the social value per pound of investment, using the Treasury’s Green Book which will includes consideration of the  environmental, cultural,  health, social care and other benefits to schemes. 

Over the past five years Homes England’s performance has been judged on narrower criteria focusing on the economic benefits of schemes, including value for money.  

Homes England boss Peter Denton had previously trailed the fact the agency was working on new ways of measuring public value when appraising scheme scemes, in November 2021. 

Swales said the agency, previously described as the government’s ‘housing accelerator’, has an “exciting opportunity” to consider social value and supporting wellbeing in addition to the housing that is being delivered.

Swales said: “The last strategic plan was really quite focused on housing supply and was more purist on that front.” 

He said Homes England will take a broader role over the next five years, potentially making greater use of its compulsory purchase order powers (CPO) and by establishing planning authorities. 

“Those are all powers that are there and if you can see the assertiveness of the plan those are all things that continue to be reviewed, and if there’s appropriate points to use them I’m sure that’s a conversation we will be having with the department”, said Swales.

Swales said the agency’s new plan will allow it to respond to last year’s levelling up white paper, which had a strong emphasis on regeneration, including a £1.8bn brownfield fund, and devolution. He said Homes England will use its funding and expertise to help partners build a delivery plan for local areas.

He said Homes England, which will administer £16.5bn of funding, will look to “bring forward brownfield land first to really drive regeneration”. The agency intends to “tailor its powers, funding, expertise and technical capacity to the specific challenges faced in different areas.”

The strategic plan document published today says the agency’s “renewed and expanded mission” will see it not just deliver homes but work with partners to ”support the creation, regeneration, development and continued wellbeing of communities in England.” The agency will seek to enable access to sites for development, work with investors and provide expertise and support to developers, associations and the public sector.

Swales said: “One of the things that is really important to us is actually not just thinking about different funding programmes and assessing things individually, but actually bringing those together to respond to the priorities of a place.”

Homes England said it wants to see the master developer sector grow and will help master developers work in new parts of the country. It will also itself step into a master developer role where a clear need for one exists and other parties cannot do so, a role it currently fulfils in 20 schemes.

Swales also said Homes England will be ambitious about the quality of design and sustainability in homes it supports, although he said it would not set its own standards. He pointed to the agency’s £175m greener homes alliance scheme with Octopus Energy – which makes loans to SMEs housebuilders to help them deliver energy efficient homes - as an example of its approach.

Homes England will publish a “statement of intent” on design quality and sustainability within the next six months, setting out a framework for ensuring this is embedded in its processes.

While the strategic plan outlines Homes England’s aims for the next five years, the agency also appears to be facing difficulties delivering on commitments under its current affordable homes programme.

The Public Accounts Committee of MPs last year highlighted forecasts showing a large shortfall in the programme, with only 157,000 new homes out of an expected 180,000 set to be delivered.

Homes England in 2021/22 also missed all five of its housing delivery targets. Many registered providers are understood to have been renegotiating their delivery numbers under the programme due to the economic turmoil of the last few months.

Swales said Homes England has had a “constructive conversation” with providers over the past few months about “how we can shore up and optimise delivery” in the face of headwinds.

However he said it is “not appropriate” to talk about where the programme is in terms of numbers of units delivered.

The Labour party is currently considering a draft policy programme which would see Homes England repurposed as part of its drive to deliver its housing pledges, including a 70% home ownership target.

Swales declined to comment on the policies but said there is a clear process by which the civil service engages with political parties in the run up to an election and said Homes England would have the “appropriate discussions at the right time” to prepare in case Labour wins the election.

Homes England’s previous key performance indicators

Below is the narrower criteria Homes England’s work was measured by in 2018 to 2023.