MD2117 Housing Zone Revenue Budget

1.1. The Mayor initiated a review of the Housing Zones programme after his election in 2016. The outcomes of the review include a commitment to work with partners to deliver a minimum of 35% direct affordable homes across each Housing Zone, alongside measures to streamline certain processes for London Boroughs in order to accelerate the programme.

1.2. As a result of the review and some restructuring of the funding agreements the level of affordable homes within a number of Housing Zones has already been significantly increased. Most notably the level of affordable housing expected in the Hounslow Town Centre Housing Zone has risen from 40% to 49%; Poplar Housing Zone has seen an increase in proposed affordable levels from 16% to 41%; and the Blackhorse Lane and Northern Olympic Park Housing Zone has risen from 26% affordable housing to 60%. The levels of affordable housing in other zones will be increased through an ongoing process.

1.3. The outcomes of the review also included a simplification of legal agreements, internal GLA processes and reporting requirements. The review has involved regular consultation and feedback with London boroughs, including a workshop session in October 2016. Feedback identified a number of areas of the programme that could be streamlined in order to expedite delivery, and these have now been implemented.

1.4. A number of Boroughs highlighted that they could exceed their planned pace of delivery and/or levels of affordable housing if additional revenue support was made available to fund additional staff, planning/design costs etc. In order to do this an additional £300k per annum was approved as part of the Mayor’s 2017/18 budget setting process. This funding is to be allocated through a competitive process to Boroughs who can demonstrate additional delivery, more affordable housing, or greater pace.

1.5 The £300k per annum is included within a £2.620m revenue budget requirement, which is incorporated within Housing & Land’s budget growth request. The GLA’s 2017/18 budget setting process formally approved the revenue budget of £1.120m, leaving an additional £1.500m required for 2018/19 to cover the costs outlined in the table below:

1.6 The total additional revenue budget requirement of £2.620m is broken down in the table below:

2.1 The programme has been designed to be flexible and the programme’s capital budget of £600m can cover, for example: the purchase of land; the creation of new infrastructure; and the building of new homes. This is justified on the basis that the investment will unlock or accelerate housing within the designated Housing Zone areas.

2.2. The approval of the final allocations of funding will be sought from the Executive Director of Housing and Land, in consultation with the Deputy Mayor for Housing, Land and Residential Development and a record of approval in writing will be retained.

2.3 Each of the Housing Zones must deliver a minimum threshold of 1,000 homes, with a target that a minimum 35% of the directly funded units be affordable. The overall target for the programme is to deliver 75,000 new homes by 2026, with the potential for more homes to be delivered through new loan funded projects.

2.4 The Housing Zones are:-

See table in attached decision.

3.1 Housing Zones are predominantly concerned with increasing housing supply. Mayoral policies in relation to housing supply were covered by the Integrated Impact Assessment (IlA) for the Further Alterations to the London Plan.

3.2 The lIA concluded that updating housing projections and targets would support the delivery of sufficient housing and may help stabilise housing prices, supporting equal opportunities throughout communities. Furthermore, the provision of housing, including maximising the delivery of affordable housing would be in line with other policies of the Plan (e.g. Policy 3.5), ensuring that the needs of different groups are taken into account in the housing design.

3.3 The delivery of new and additional homes within the Housing Zones will help to implement Objectives 1, 2, 3 and 4 of the Mayor’s Equalities Framework “Equal Life Chances for All” (June 2014) through the creation of new homes, housing products and well-designed housing schemes.

3.4 The designation of a Housing Zone within an area is designed to identify a site or sites in an area for housing growth and delivery within London, often partnered with a series of funding streams and non-financial assistance to deliver these new homes, and therefore the decision within this report will facilitate these goals and ultimately ensure that the needs of different groups are taken into account in the design and development of housing.

3.5 In order to access funding any contracting party, be that private sector developer or Local Authority will be required to enter in to contract with the GLA and / or GLALP to deliver these interventions. Whilst there is a statutory obligation for parties to take account of the impact of schemes under the Equality Act 2010, in order to reinforce these obligations, the GLA / GLALP have included specific contractual clauses similar to the following in each funding agreement which will be in force for every intervention undertaken in the respective Housing Zones:

• The Developer shall comply in all material respects with all relevant Legislation, including but not limited to legislation relating to health and safety, welfare at work and equality and

diversity, and will use reasonable endeavours to enforce the terms of the Scheme Project Documents to ensure compliance with this clause.

• The Developer has, and is in full compliance with, a policy covering equal opportunities designed to ensure that unfair discrimination on the grounds of colour, race, creed, nationality or any other unjustifiable basis directly or indirectly in relation to the Works is avoided at all times and will provide a copy of that policy and evidence of the actual implementation of that policy upon request by GLA / GLALP.

4.1 The Housing Zones programme is explicitly designed to be innovative and flexible and as such may involve novel methods of providing funding, or tailoring housing investment or planning policy to local circumstances to increase housing delivery. Any such new approaches will be set out alongside the recommendations for Housing Zone designation in the formal decision making process. The appointment of external advisors in relation to the legal contracting process, review of state aid compliance, cost and value assumptions and governance structures will ensure the GLA can accelerate housing delivery and assess the robustness of Boroughs’ investment proposals. This approach will mitigate the risks associated with the Housing Zones Programme.

5.1. This decision requests approval to spend £2,620,000 for Housing Zones related activities (property and legal costs as well as providing additional revenue support to boroughs) in 2017-18 & 2018-19 financial years (please refer to Section 1.6 above for breakdowns).

5.2. Initial expenditure approved through MD1592 for Housing Zones consultancy fees was £1,530,000. Spend in 2015/16 & 2016/17 financial years totalled £1,150,000 leaving a balance of £380,000 (allocated to 2017/18 financial year). The current request of £2,620,000 and the balance of £380,000 will form part of the Housing & Land’s budget growth request of £3,000,000 for 2017/18 & 2018/19 financial years. 2017/18 budget setting process approved £1,120,000 of the above growth request, with remaining £1,500,000 indicative budget subject to approval through 2018/19 budget setting process.

6.1. Detailed legal implications in respect of the Housing Zones initiative are set out in MD1366.

6.2. Appointment of property/cost consultants and external legal advisors should be conducted in accordance with the procedures set out in the relevant framework agreements.

6.3. Under section 30 of the Greater London Authority Act 1999 (‘the Act’) the GLA, after appropriate consultation, is entitled to do anything that will further the promotion, within Greater London, of economic development and wealth creation, social development and the improvement of the environment. Furthermore, section 34 of the Act allows the GLA to do anything which is calculated to facilitate, or is conducive or incidental to, the exercise of any functions of the GLA. In this case, the GLA wishes to provide revenue support to boroughs in order to expedite and maximise the delivery of affordable homes. Accordingly, the funding may be viewed as being calculated to facilitate and be conducive and incidental to the promotion of economic and social development within Greater London.

6.4. The proposed grant of revenue funding to boroughs may be viewed as a conditional gift rather than a contract for services and supplies. Paragraph 6.4 of the GLA’s Contract and Funding Code requires that funding be distributed fairly, transparently and in accordance with the GLA’s obligations regarding equality of opportunity. Furthermore, officers must ensure that an appropriate funding agreement is put in place between the GLA and the relevant borough before any commitment to fund is made.

7.1 The core programme milestones are detailed below: