The government has a secret weapon in the battle to build more homes. Its own land.
The National Audit Office has just looked carefully into what the government owns, and its disposal programmes. It makes for interesting – but disturbing – reading.
HM Government owns more than 16,000 plots, with an estimated value of £179bn. In fact, that’s just central government. Most publicly owned land – some 57% – is owned by the rest of the public sector. That’s a lot of hectares.
Creating incentives
Back in 2015, ministers committed to release enough public land for 160,000 potential homes by next year.
However, as the NAO discovered, they are way off that target. With less than a year to go, land for only 65,000 homes will have been released – that’s just 41% of the target.
Clearly this ‘weapon’ is secret even to the civil servants running it. So why is government so wide of the mark, and what needs to change?
First, the system is skewed in favour of inertia. There are no targets for reducing land occupancy costs, as in many companies. Indeed, many departments don’t measure their land occupancy costs. Meanwhile, sale receipts usually go back to the Treasury, removing any incentive to reduce landholdings.
This needs to change so that every department measures, and is judged on, its occupancy cost of land. Where land is disposed of, the department should retain the majority of the receipt, the balance going to the Treasury. Only if you create the right incentives will the culture change.
Second, value for money is still, in the eyes of the Treasury and public sector auditors, about sale receipts. Yet very often if that public land was vested in a development partnership, more money would, over time, be realised.
The way in which value for money is defined in our public accounts is too narrow. Also, by remaining the landowner, government could control what is built, and for whom.
Third, we need to widen the scope of this programme. At present less than half of public land is in scope. Local authorities, many NHS Trusts, higher and further education and many other public bodies are not involved, and very often their ownership is concentrated in the centre of our towns and cities, where the need for homes is greatest.
Extra income
This land needs to be brought within the programme for enabling surplus land to be turned into homes. Not by trying to run things by Cabinet committee, which is the current approach, but by putting in place a clear incentive for all public bodies to identify and cost the land they own, and then manage their holdings efficiently. Receipts could then be retained either as a capital sum or as a revenue stream over several years.
The prospect of securing additional revenue over several years, above any deal done in the next Spending Review with the Treasury, would be attractive to many Whitehall departments and public bodies.
It might help square the circle in what threatens to be a tough spending settlement, in enabling assets to help support vital public services. Some accountancy rules would have to change, and Treasury would have to resist clawing money back, if it isn’t to kill the very incentives which would deliver the change.
What is clear, however, is that the current approach isn’t working, and frankly isn’t likely to. If we are to build the homes we need, then public land needs to play its part.
Mark Prisk is MP for Hertford & Stortford, and former housing minister
