黑洞社区

Peter Freeman, chair of Homes England, is the guest in today鈥檚 first episode of 黑洞社区 Talk鈥檚 latest series which is focused on the housing crisis and is co-hosted by Jackie Sadek and Peter Bill.

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Freeman, who has been in post over two years having been recently reappointed until 2025, is widely known in the industry as co-founder of Argent and instrumental in the redevelopment of King鈥檚 Cross. He is also chair of the Cambridge Delivery Group, announced by the government in the spring budget to drive growth and provide more housing for Cambridge.

As Homes England chair, he has responsibility for overseeing the agency鈥檚 strategy as well as the 拢11.5bn Affordable Homes Programme and the 拢1.8bn brownfield redevelopment fund, among other initiatives. Last summer the agency published its five-year strategic plan, shifting its focus towards regeneration, and in the last month it was the subject of an independent review by PwC鈥檚 Tony Poulter, who endorsed its work while also outlining recommended improvements in how it operates, which Freeman describes as 鈥渧ery fair鈥�.

In this wide-ranging interview, the podcast鈥檚 co-hosts wanted to find out what difference Homes England makes when it comes to boosting the supply of new homes. In Freeman鈥檚 own words, 鈥渄espite the name, we don鈥檛 build any homes鈥�, so what are the limits to the agency鈥檚 impact and influence? And how does Freeman believe it could do more in the future?

The extracts below reveal insights into how Freeman feels about Homes England鈥檚 achievements so far and the challenges it faces. He talks openly about better ways the agency could receive funding from central government, the methods behind its lending and investment decisions, how much influence it can have on design quality and what it has learnt from the losses it has made investing large sums in delivery partners using modern methods of construction. Here are some of the highlights.

Q: What is Homes England for?

A: Nearly two years ago I was asked that question by Michael Gove, when he became the first secretary of state for the Department of Levelling Up, Homes and Communities. And I described how we have gone to local authorities to put in infrastructure to open up new housing sites, how we give grants to housing associations to build more affordable homes, how we make loans to SME builders who can鈥檛 get loans from banks, how we give advice to combine mayoral authorities on regeneration in their areas, how we鈥檝e been put in charge of some of the funds for remediating cladding and how we run the Help to Buy programme, which is about 拢18bn of second mortgages.

Michael Gove said to me, 鈥楽o you鈥檙e my Swiss Army knife?鈥�, which really rang a chord with me

So when I described this to Michael Gove, he said to me, 鈥淪o you鈥檙e my Swiss Army knife?鈥�, which really rang a chord with me because my Swiss Army knife is one of my favorite tools 鈥� because you can do almost anything with it.

And in fact Homes England is the agency the government uses to do almost anything in housing and regeneration. We are a rename of the Homes and Communities Agency; it became Homes England as a rename. But deep down we are also a regeneration agency, and the strategic plan which was approved last year makes it clear again that we are back in the business of regeneration.

This is a transitional year with the upcoming election, how do you see Homes England shaping up for a new administration?

At the core of the agency is its staff. It has remarkably good staff; a lot of them are passionate about what they do. They could [get] jobs in the private sector earning at least 50% [more], perhaps double [what they earn at Homes England]. We have a fantastic team. We鈥檇 like a bigger team if we were given a bigger budget.

That concept where we are the Swiss Army knife means if we are asked to pivot by a new government to do other things, we can pivot. My own view is that in order to deliver the most, we need the most long-term promises, the most consistent policies. So, hopefully, while we can turn on a sixpence, we will not be asked to.

It鈥檚 partly certainty; it鈥檚 partly delegations, fundings. It鈥檚 longer term for the money we spend, because although if you look at our accounts 鈥� we looked at if we have a 拢20bn balance sheet, most of that is Help to Buy which goes straight back to the Treasury as it鈥檚 repaid 鈥�  most of the money we get comes in a sort of two-, three- or five-year package with a very specific purpose.

The more a government could give us the ability to store up a balance sheet, I think, the more effective we could be

One of the things I think we鈥檝e done very, very well recently is go to towns like Sheffield and look at a few different packages, managed to get a few of them and so 1+1 becomes three, or 1+1 becomes five, if you can bring them all together. The more flexibility we have and, in the longer term, the [more] programmes, the better.

There鈥檚 still the issue that money tends to come in relatively short-term packages, and money doesn鈥檛 sort of evolve. So if we give money under the Housing Infrastructure Fund to a local authority to put in a dual carriageway to open a site, if any money is recovered from the development, it goes to the local authority; it doesn鈥檛 come back to Homes England. The more a government could give us the ability to store up a balance sheet, I think, the more effective we could be.

The government has always been desperate to lend money to SME housebuilders, and they鈥檝e never really succeeded. How is your programme either succeeding or not succeeding?

We are lending money to about 300 SMEs; most of it is lent to joint programmes, where we put together a kind of equity partnership. We鈥檝e got one with Barclays, one with Lloyds, one with Octopus, so that we can have operational leverage in the sense that they have teams who are banking teams in the market anyway. And we get financial leverage, because if we put in a quarter of a billion and they put in three-quarters of a billion, there鈥檚 one billion. Whereas if we just had our quarter of a billion, there鈥檚 only a quarter of a billion.

>> Podcast trailer: 黑洞社区 Talks podcast teams up with Jackie Sadek and Peter Bill for housing crisis series

I think partly because of our own budget and ability to recruit people, and partly because of the expertise of these brands in the market, it鈥檚 a very effective way [of lending].

It sounds like you鈥檇 like to do more?

We have a number of more equity discussions under way.

Do you recognise that there鈥檚 a growing sense that the only way to solve the housing crisis is a major programme involving the construction of homes that can be sold at social rent? And that means Homes England should be thinking again about the mix of housing on schemes?

I think Thatcher was right 鈥� and actually Labour had begun the Right to Buy before Thatcher 鈥� to sell and enable people to get equity. And I think it鈥檚 transformed a lot of lives. What was the mistake is that an equal number of new social homes weren鈥檛 built.

Whenever people look back and say that we used to produce 300,000 or 400,000 homes a year at that time, probably 40% of them council homes, if you really want to get the numbers up you probably have to find a way of financing more social homes. But then that becomes a government priority along with all the other priorities like health and education.

In my own view, more could be done in terms of land value capture, to get land that is free allocated for social housing, and that would help.

Would you agree that the last time we didn鈥檛 have a crisis was when the state intervened?

Statistically, you鈥檙e probably right. Housing is a difficult thing, because I think most governments since Thatcher, regardless of their party, have erred towards less government intervention, and government intervention only when there is market failure. And I think there is a lack of recognition that housing and infrastructure are in some ways nearer health and education, in terms of being something government has to intervene in and less something you can just leave to the market. Partly because it鈥檚 a controlled planning system, so the government鈥檚 in it anyway. But also it has such a huge social impact and economic impact: where you put the housing, what type of housing and how you supply the infrastructure to it.

>> Also read: 鈥楪ood, but not perfect鈥� 鈥� What next for Homes England?

I鈥檓 told it was Aneurin Bevan, when he was both housing minister and health minister at the same time, who said if we don鈥檛 build the right housing, the lack of housing will kill the healthcare system.

Your latest plan talks about things like quality, good design and sustainability. Is there anything you can do that makes any difference in the quality of the houses being built by housebuilders?

Despite the name, we don鈥檛 build any homes. We are there to intervene where there is market failure, and there鈥檚 lots of people willing and able to build homes. So our ability to influence the design of a home comes in a number of softer and harder ways. The softer way is we can publish standards like everybody else 鈥� RIBA or whatever. The harder way is in giving grants or loans. We can put conditions in, and then you get into the balance between: are we there to produce the maximum number of homes or are we there to produce a lower number of more beautiful, more sustainable homes? We walk that balance.

We set up a committee under Sadie Morgan, who was one of our non-executive directors. We brought on six or seven people as a subcommittee of the board, who are experts from different areas of design and management of homes. And the thing we probably succeeded in doing most successfully is actually enthusing the staff on design and sustainability.

But we probably don鈥檛 feel we have the teeth to force it too far by loans or grants because it would cut the number of homes being built or the number of SMEs [we could work with].

On the construction side, why did Homes England get involved with MMC? It seems like a very risky business?

So again, in a sense market failure, because the investment market has not been particularly willing to support MMC factories. We have supported several; we lost money on some of the investments.

The reason we and the government support modern methods of construction is that it is another way of diversifying the market of producing homes

The reason we and the government support modern methods of construction is it is another way of diversifying the market of producing homes. It鈥檚 a period of time when the workforce of bricklayers and carpenters is getting distinctly old. It鈥檚 another way of bringing more people into the workforce. An MMC factory can go 24 hours a day. In some circumstances the residents nearby would prefer MMC, because it happens very quickly.

There are different levels of MMC, and modular is the one that鈥檚 been difficult for Legal & General, Berkeley, lots of other people. The other aspects of MMC, the timber frames and bathroom pods, are 鈥� if not going gangbusters 鈥� definitely making meaningful contribution.

What鈥檚 your view on national housing targets?

It goes back to the question of whether housing, like health and education, is something where the government has to take a strong hand. It鈥檚 a real balance, because devolution and localism are popular and they feel democratic and they feel right, but they may not produce as much housing as we need. I think the early Cameron government, where they thought localism would produce more housing, was just a fantasy.

Homes England is grappling with planning all over the country. Do you think it is fixable in the sense that reform would increase the number of homes being built?

Yes. It needs it a lot more resource; it needs more planners with high morale who are listened to more and who get back to a mindset of 鈥渨e鈥檙e building better Britain鈥�.

Take the number of tenures. [For example] build to rent, which is now a fairly established sector but it generates less land value than houses to sell. Big housebuilders who control most of the land: they鈥檙e not long-term investors so they wouldn鈥檛 want to hold BTR, so there won鈥檛 be much BTR on their sites. If the planning system actually made more nuance about tenure, and in any major scheme a part of it had to be built to rent, then that part would get built out quicker. And the placemaking would happen quicker, because instead of 50 homes being sold a year you might get several hundred in the first couple of years, and something鈥檚 going.

If you had a magic wand, what would be the one thing that you would do to ramp up supply of housing?

My magic wand would be long term not short term. It would be to get as far as possible a cross-party agenda that meant that whether it鈥檚 the planners, the landowners, the people objecting to development, didn鈥檛 think they could dip in and out, spin it out. Know that there was a plan that was going to be delivered in 25 years 鈥� we would be as proud as I am of King鈥檚 Cross.