A closer look at the Housing Infrastructure Fund

What kinds of projects are being funded?

The £5bn pot is split into two sections, which the government call ‘marginal viability’ and ‘forward funding’.

Most of the money is in the latter section, with only £0.9bn allocated for marginal viability. Bids for this money, which were allocated in February, are also capped at £10m, as the government’s aim is for local authorities to use it for “the final, or missing, piece of infrastructure funding to get additional sites... unblocked quickly”.

The government says it is open-minded when it comes to what kinds of infrastructure it will fund, giving examples as diverse as transport, schools and internet connections.

Debbie Hope, strategic manager for housing growth at Stoke-on-Trent City Council, explains what her local authority will do with the £10m of marginal viability funding it will receive from the government.

“We’ve got an area in the city that’s got several stalled sites,” she explains. “What we said was, we’ll use that £10m as a revolving fund. We’ll invest it in the sites to get them kick-started and then have some kind of memorandum of understanding with the individuals while we’re working things through.

Money already allocated for the £0.9bn for ’marginal viability’

“We can get to a point where we’ve got some kind of legal agreement that once the houses are built and the money starts to come back in, then they can start to share some of that success with us in terms of finance, and what we get back we’ll continue to invest in other regeneration projects.”

The much larger, £4.1bn forward funding pot, is intended for bigger projects and is aimed at highest tier authorities, with the government willing to provide “a significant proportion of the upfront development costs” to create confidence and attract more investment later.

These could include major new highways networks, bridges or electricity capacity, to name a few.

Paul Smith, cabinet member for housing at Bristol City Council, admits: “A lot of its not very sexy. It’s things like putting in new bus lanes, building new roads, either into sites or connecting sites to the city.

“A significant amount of the HIF bid that we’ve got in at the moment – the big one – is around making a contribution to remodelling the main railway station in Bristol so that it serves the area to the east of it, where most of the development would be. At the moment, it faces mainly west.”

Bristol has reached an interim deal with the government as part of the West of England Combined Authority. The bid described by Mr Smith was for £250m, but for now they’ll have to make do with £3m to do more work for the next stage.

How does the bidding work?

Before it will part with any of this money, the government wants bidding authorities to demonstrate ’market failure’. This means that the scheme, though it would benefit society, could not happen without the support of the fund.

Judith Atkinson, strategic director for housing at Local Partnerships, a joint venture owned by the Treasury and Local Government Association to advise councils, has worked advising authorities on their bids.

She says that one of the main challenges in putting together a bid is demonstrating the link between an infrastructure project and the homes it could unlock.

She explains: “If you find that the infrastructure delivery expertise is held in a different directorate to the people responsible for increasing the number of housing units each year in that area, sometimes it can need a new unified delivery team to be brought into place so there’s a single project team dealing with these things rather than in separate bits of the council.

The shortlist of local authorities that could receive part of the main £4.1bn pot of HIF funding

“Regarding this as a single, unified endeavour rather than two separate programmes is a particularly important aspect.”

There have been some complaints about the bidding process from a regional perspective. The government makes a calculation when comparing bids to judge which ones will deliver greater value for money.

In crude terms, this involves seeking the highest financial return for the lowest investment – but this has a bias towards areas where homes are sold at higher prices.

Last month, Greater Manchester mayor Andy Burnham, West Midlands mayor Andy Street, Liverpool City Region mayor Steve Rotheram and Tees Valley mayor Ben Houchen, sent a joint letter to Theresa May criticising this formula for prioritising London and the South East above other areas.

Stoke City Council, for example, bid for £65m to build a road from the suburban part of the city to the centre called the east-west connectivity bid. Its plan was to make former mining areas and industrial sites more easily accessible and unlock 5,000 homes.

This bid was rejected, and Ms Hope suggests that the government’s formula was part of the reason.

Nevertheless, she is diplomatic, telling Inside Housing: “You’ve got to find some way of allocating a limited amount of funds. Whichever one they choose will mean that someone is not going to receive the money, so there’s always going to be some criticism.

“Obviously I’m very disappointed that we didn’t get the money, but I’m glad we got the £10m.”

A government source also insists: “We are committed to building the homes this country needs, where they are needed.

“It is important that this fund is available to local authorities in all parts of the country with good housing sites which need unlocking or ambitious plans for infrastructure led housing growth. We received a large number of competitive projects from across the country and are keen to progress these.”

What does the government want in return?

Of course, all this money doesn’t come without a few strings attached.

The government has shortlisted four bids from the Greater Manchester Combined Authority for chunks of the forward funding section of the HIF as part of its housing deal.

These will see money put into Manchester’s northern and eastern gateways, investment to unlock housing in Salford City Centre, new roads connecting Bolton and Wigan and new bus lanes for south-east Manchester.

“The government looks as if it’s prioritising those areas that look to be getting on with joint strategic planning in some form", James Stevens, Home Builders Federation

As part of the deal, Andy Burnham has committed to increase his housing target above the level suggested by the government in its recent assessment of local housing need. The idea is that the extra funding should enable the delivery of housing over and above those that the authority should – in the government’s view – be able to deliver anyway.

James Stevens, director for cities at the Home Builders Federation, explains: “The government looks as if it’s prioritising those areas that look to be getting on with joint strategic planning in some form. They’re really looking at combined authorities.

“[The government is supporting Andy Burnham’s] promise to the electorate that he would prioritise brownfield development. But in return for that, the government wants to see more homes delivered in the next 10 years than would have otherwise been the case.”

These conditions have got other authorities – who have yet to sign deals – wondering what conditions may appear when deals are actually on the table.

It may not quite be the end of austerity, but for many local authorities desperate to up housing development it’s a welcome change.