The phrase directly commission has been repeated without explanation in numerous news stories following the announcement of yet another Government initiative to push up house building. I wasn’t sure what it meant, though I could speculate.
For the first five years after the crash I was eager (see early blogs here and here) for Government, Labour and Coalition, to act as a developer of last resort to maintain house-building numbers and preserve building jobs and a supply chain that would be much needed in the future. This would have been direct commissioning, whether to rent, sale, rent-to-buy or whatever.
It was needed then. The suggestion was ignored. As well as an ever deepening housing crisis, we now have a skills crisis and a stretched materials supply chain. Supply of “men and materials” has heavily relied on imports. Ironic for a Government simultaneously proclaiming “we will limit immigration” and “we are the builders”.
I’ll put to one side my frustration and irony over its entry into the policy mix after its potential usefulness has waned. What particularly nagged at me was what “direct commissioning” actually meant. Would the Conservative Party really engage in a process it pretty much sought to kill off almost 40 years ago as it wound down public sector house building?
I asked a few well-informed housing market watchers what they thought “direct commissioning” meant. They seemed as confounded as me. I tweeted the question. A few retweets. No answers though.
I googled “commission definition”. I couldn’t find my handy Chambers. Under verb were:
- order or authorize the production of (something). “the portrait was commissioned by his widow in 1792” synonyms: order, put in an order for, place an order for, contract for, pay for
- bring (something newly produced) into working condition. “we had a few hiccups getting the heating equipment commissioned”
My reading was that the first definition suggested the Government would get a contractor to deliver its wishes. In this case to build homes. The second suggested Government would be responsible for twiddling knobs to make sure things work – so ignore that.
Armed with refreshed insight that seemed to back up my initial understanding, I was more eager to nail down what the Government actually meant? If I was unclear, so would others be.
I rang up the press office. I expected the answers to most of my basic questions to be on a briefing note.
My thinking was that if the Government is commissioning, firstly it is taking an element of the risk and this should reflect in the likely profit margin, but how? Secondly, it must have a say over what is built, but how much? These seemed important issues so they must have been thought through if it was a plan.
My assumption that the answers would be ready at hand at the DCLG press office was a mistake. I did learn that the Government was to commission builders on public sector land to build homes and the builders (the press officer was a bit uncertain here) would be responsible for selling them.
Not much, and it obviously opens up a raft of secondary questions. I was asked to email them in. I quickly knocked out a rudimentary email to cover a few of the basic points. They read:
“My understanding from our conversation was:
That the Government will commission builders on public sector land to build homes.
That the builder will be responsible for selling the homes.
This naturally raises subsidiary questions. The most pertinent are:
- Who is responsible for the design of the homes? What constraints are there on builders if it is their responsibility?
- Who sets the price? What constraints are there on builders if it is their responsibility?
- How much margin and what incentives are there for builders to maximise the price if they set it?
- What happens if a home does not sell? Who bears what element of the risk?
- How will the Government ensure fair competition within the commissioning process?”
It took a while and a reminder email to get a reply. But…
Broadly the answers were:
- The builder would be responsible for design within parameters set by Government.
- Details relating to pricing would be released in due course, these would be commercial arrangements.
- Details on margins and incentives would be released in due course. But they would be subject to a competitive procurement process.
- Details on risk would be released in due course.
- Competition would be ensured through existing procurement procedures.
It seems to me that without answers to these questions, to say this is “direct commissioning” is stretching a definition if not simply wishful thinking.
Surely on the face of it, this is a simple process of flogging off small plots of building land with planning permissions in place that inevitably come with strings attached in terms of design and social value. How radical is that?
At worst it is potentially a further example of socialising risk, with the taxpayer taking the gamble, and privatising profit, with the builder taking a healthy profit come hell or high water.
Which it is as yet is unclear.
Furthermore, the Government press release says: “This will lead to quality homes built at a faster rate with smaller building firms – currently unable to take on big projects – able to get building on government sites where planning permission is already in place.”
This is by no means certain, not on the basis of what we know now.
However, my concern is not whether the idea of selling on small plots with limited risk to builders is a good or a bad idea. I can see merit in it.
My concern is its half-baked nature, still an unformed idea not a plan. It is certainly not radical from what we know.
It is yet another example in a catalogue of ideas pumped out with such rapidity that it is impossible to understand anymore what actually is the housing strategy, what is working and what is not.
It is yet another example of double-speak in the style of the New Homes Bonus. It is not strictly linked to new homes and not actually a bonus, more a carrot-and-stick reallocation of funds based on a change in the level of housing stock that sees money sucked south, as predicted before its introduction.
Perhaps I’m jaundiced. Since the shock drop of the recession we have been peppered with endless radical, game-changing, ground-breaking, unashamedly ambitious policy seemingly dreamt up in the wee hours by some aspiring SpAd. Meanwhile the rise in housebuilding numbers since the shock drop of the recession has been exceptionally slow. Are the two correlated?
Meanwhile the housing crisis gets worse.