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Shadow housing minister: ‘Majority of grant funding under Labour government will be for social rent’
Matthew Pennycook is shadow housing minister. At the Labour Party Conference on Tuesday, his party had just set out its plans to deliver 1.5 million homes over the course of the next parliament. He talks to Stephen Delahunty about how he will go about delivering those plans
Mr Pennycook had a busy week darting between housing fringe events at the Labour Party Conference in Liverpool, patiently laying out the work a Labour government would have to do to speed up the delivery of affordable homes in the UK.
When Inside Housing finally caught up with him before yet another panel discussion in a corridor on the second floor of the ACC centre on the Kings Dock, Mr Pennycook was in a buoyant mood.
Labour leader Sir Keir Starmer had just promised to “bulldoze through” what he described as a “restrictive” planning system to deliver the “next generation of Labour new towns” with a target of 1.5 million homes.
We spoke to Mr Pennycook to add some flesh to the bones of those proposals, and find out what planning reforms he thinks are needed to quickly boost housebuilding.
We also spoke to him about Build Social, Inside Housing’s new campaign calling for the main political parties to commit to building large numbers of homes for social rent – including 90,000 a year in England, or 900,000 over 10 years.
We wanted to find out what Labour thinks about the campaign, and what commitment it is ready to make at this stage to building homes for social rent if it gains power.
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We will start with the campaign. What does Mr Pennycook think about the call to build 900,000 homes for social rent over the next decade?
He is enthusiastic in response: “I definitely agree with the aspiration. We want as many affordable homes of those 1.5 million as possible.”
This includes an indication that, in the early years at least, a significant focus will be on social rent.
“There’s obviously a lot of work to do but I think we have set out a clear sense of direction,” Mr Pennycook adds. “On social in the first year, we are going to direct the overwhelming proportion of grant funding under a Labour government towards social rented homes. In terms of the principle, they are the homes we need more than any others.”
In order to increase delivery of any type of homes, though, Mr Pennycook is clear that reform of the planning system is essential.
“We are going to direct the overwhelming proportion of grant funding under a Labour government towards social rented homes. In terms of the principle, they are the homes we need more than any others”
“We’re very clear that you’ve got to do a lot of stuff early on in terms of the planning system. We’ve got to amend the National Planning Policy Framework (NPPF) to undo some of the damaging changes the government has made.
“There are other interventions such as writing to chief planning officers with directions, as we’re going to get more serious about enforcing local plan coverage and trying to drive up rates of plans that are up to date.”
The delay to local plans is an issue. Research from August this year found that uncertainty about the direction of the NPPF and the subsequent slowdown in local plan-making could mean that as much as 78% of English councils will not have an up-to-date local plan in place by the end of 2025.
Mr Pennycook does not believe that it will be necessary to amend or introduce legislation for these changes to the planning system or to deliver new towns.
There have been a number of New Towns Acts since 1946 that give the government powers to designate areas of land for new town development, and the setting-up of development corporations to deliver those towns.
On plans for an Infrastructure Levy, the shadow minister says it is not something a Labour government would bring forward and should not be “too disruptive” to scrap, thanks to the test pilot approach the government is taking.
Labour plans to reform the developer contribution system of Section 106 – which usually raises around £7bn per year – and was responsible for delivering 47% of all affordable homes built in 2022.
These reforms will include the setting-up of a specialist government unit to help upskill local authorities on Section 106 negotiations.
There will also be an increased transparency around the viability process for the development of new affordable and social housing by creating guidance on viability levels across different parts of the country, and a model assessment form that developers and councils can use when evaluating this.
Under the plans, developers will only be able to challenge their affordable housing commitments where there are genuine barriers to delivering these new homes.
Asked whether these plans will look at minimum affordable home commitments on new development sites, Mr Pennycook says: “I don’t think we want to prescribe affordability levels in local areas. It’s about giving local authorities the tools to more robustly negotiate with developers.”
Mr Pennycook’s brief will also include introducing greater flexibility into the Affordable Homes Programme (AHP) to enable funds to be diverted to projects where there is higher demand, so funding for no-go projects can be freed up to create the housing people need.
Homes England, councils and housing associations will be allowed to use a greater proportion of grant funds that they receive to buy social and affordable homes from existing housing stock, to help get the homes needed and deliver stalled sites.
“I don’t think we want to prescribe affordability levels in local areas. It’s about giving local authorities the tools to more robustly negotiate with developers”
Labour’s proposals also include improving economic modelling and contingency plans to stop external pressures from having such disproportionate effects on the AHP in the future.
The current funding round of the AHP expires in 2026, and Mr Pennycook acknowledges that if Labour gets into power next year, most of that funding will already be out of the door, and that some “very careful thought was going into what a post-2026 AHP will look like”.
It is not a decision that is going to be made before a general election. “But in the short term,” he explains, “let’s ensure it does all get out of the door in a way that addresses needs in different parts of the country.”
Labour has been keen to point out that due to the state of the economy it expects to inherit, there will not immediately be any new funding, but Mr Pennycoock tells Inside Housing he believes there are a number of brownfield and regeneration funds that are currently not that easy to access that could be streamlined in the meantime.
He adds: “There’s a bit of devolution to it. Mayors in combined areas will be given stronger powers over transport and housing.”
Last month, the National Housing Federation called for a new settlement on social rents in England, and Mr Pennycook promised that a Labour government would look to provide “far more certainty over a much longer period” with its rent policy.
At the conference there was a lot of talk about how the freeze in the Local Housing Allowance since the coronavirus pandemic was a major cause of more families facing homelessness.
The Labour MP says it is an issue that comes up in his constituency so there will need to be a solution in the short term, but with the housing benefits bill “on an exponential trajectory” it was an issue he was discussing with his Department for Work and Pensions colleagues on fixing over the long term.
He adds: “But part of that solution in the long run is just about building more affordable homes.”
