Why the Made Partnership may not be a marriage made in heaven

So, Homes England, Lloyds Banking Group and what we can assume is Barratt with Redrow, unless the Competition and Markets Authority upsets the applecart, have got together in what is to be known as the Made Partnership to put £150m, contributed in equal thirds by the partners, into the development of large-scale developments (1,000 or more units).

Ostensibly, this is a positive move, but I’m not cheering yet. Homes England’s record has not been untarnished in recent years. Its disastrous investment in Ilke Homes when it was already clear that 3D modular was simply not a viable proposition was compounded by its decision to not simply put in an initial £30m but to invest a further £30m of taxpayers’ money in the doomed venture. Legal & General was losing the thick end of £0.5bn at the time, and TopHat, the Goldman backed 3D modular operation, has had its own share of problems.

More to the point, what will this new partnership achieve that could not be funded by the private sector? Why is more taxpayers’ money being committed when the Chancellor is telling us there’s a large hole in the nation’s finances and we’re all going to be facing a horrible Autumn Budget at the end of next month, with the property industry likely to be among the hardest hit?

As far as I see, Homes England has a significant role, which is to fill a gap where lack of infrastructure is preventing the delivery of a significant number of homes. Barking Riverside is a classic example, where 10,000 homes were lying unbuilt on the site of the old power station until public funds unlocked the site with the extension of the London Overground. It is now on track to deliver what otherwise would not have been viable for the private sector alone. That is where our money ought to be spent.

The new housing minister Matthew Pennycook’s comment on the announcement was all about the failure of the development system, which he claimed had held back delivery of tens of thousands of homes. That, of course, is entirely right. What has been lacking over the last two decades (at least) is a radical overhaul of the planning system, which every developer knows is the real reason we are never close to building the number of homes the nation needs.

The truth is there is no shortage of capital willing to invest in housing. What deters investors is a planning system that was epitomised for me by a developer who complained at a recent meeting with developers that he got stick from some quarters for having an eight-year land bank.

“Why are you holding on to land that could be built on?” complainers argued. Utterly frustrated, the mid-range developer made the point that there was no economic argument for holding on to land for eight years while it ate its head off in interest costs, but that it took eight years on average for him to get a deliverable consent.

I have frequently criticised my own party for its failure to act and indeed, under Michael Gove’s tenure, go backwards in terms of housing delivery. Labour has made a serious start on reversing that pathetic record, but one of the most troubling aspects of the new government is its belief that the public sector should do what the private sector is perfectly capable of doing because somehow the public sector will do the job better. Homes England is not there to provide a master development platform, as Peter Denton, its CEO, asserts. It is there to do what the private sector can’t. No more, no less.