MD2396 Land Assembly, Small Sites and Accelerated Construction Funds

In June 2018, the Ministry for Housing Communities and Local Government (MHCLG) agreed an indicative funding settlement for London of £100m from the £500m national Accelerated Construction Fund.

Subsequently, on 17 September 2018, MHCLG announced new funding of £1.93bn comprising the Small Sites Fund (£630m) and Land Assembly Fund (£1.3bn). A Memorandum of Understanding (MoU) has been negotiated with MHCLG, which in addition to the £100m from the Accelerated Construction Fund, allocates £386m from these two funds for investment to projects in London. The total funding settlement of £486m carries a delivery target of 8,000 housing completions in London by 2030.

The Land Assembly Fund can be used for direct site acquisition by GLA or to assist third party entities requiring financial support to unlock sites constrained by complex land ownership issues. The Accelerated Construction Fund and Small Sites Fund can be used for land acquisition, development finance, infrastructure investment and land remediation.

The funding will pass to the GLA in accordance with a schedule described in the MoU developed between GLA officers and MHCLG officials.

Under the terms of the programme, any recoverable investment or receipts generated by the programme shall be available for recycling by the GLA for further investment to support the objectives of the funds. The allocation of the funds will therefore seek to prioritise investments that are recoverable, to support the principle of a revolving fund.

In exchange for agreeing a London settlement with MHCLG, GLA will support Government departments working to release surplus land in London by utilising the full range of powers at its disposal to expedite the delivery of housing sites. The extent of support provided will be determined through direct engagement with the relevant Government department.

It is likely that funding from the programmes will involve bespoke contractual arrangements. Such arrangements would require approval through a Decision form by the Executive Director of Housing & Land as per paragraphs 18.1-18.2 of the Mayoral decision-making framework.

It is currently considered unlikely that any of the contractual arrangements proposals likely to be supported would be Novel, Contentious or Repercussive for the purposes of the Mayoral decision-making framework as all are likely to be supporting the delivery of affordable homes in London. However, in line with the Mayoral decision-making framework any proposals that are considered Novel, Contentious or Repercussive will require an MD and this will be assessed on a case-by-case basis, in consultation with the GLA’s corporate governance team.

The funding will enable the Mayor to have considerable influence over the pace, quality and tenure profile of 8,000 completions in London up to 2030. Where necessary the Mayor may elect to use these funds alongside the land assembly powers that he holds.

The GLA will be able to work with partners to inject financial support towards the cost of land and infrastructure for schemes where additional affordable housing may be possible or where acceleration of delivery of that affordable housing may be achieved.

The funds aim to maintain or increase momentum in the delivery of new and affordable housing. Increasing the supply of housing in London will help to address problems such as overcrowding and homelessness, which evidence indicates disproportionately affect specific groups, including Black and Minority Ethnic groups and women.

The delivery of high-quality housing will also promote improved health and wellbeing, given evidence of an association between poor housing conditions and poor health.

The GLA is required to commit 25% of the funds to London projects within the current financial year. Over the past 12 months the Housing and Land Directorate has established a significant pipeline of projects capable of satisfying this requirement. In addition, responses to the call for Expressions of Interest in January, will be sifted for projects that meet this requirement.

There is a risk that the Housing and Land directorate will not be able the meet the demand for support from Government departments seeking to dispose of surplus land in London. A Senior Housing and Land Officer will ascertain the level of demand for support on an ongoing basis by attending the monthly MHCLG Land for Homes Board with senior representatives from Government Departments.

This decision requests approval for the GLA to accept £486m from the MHCLG to help unlock and accelerate the delivery of 8,000 homes by 2030. 2% of the total funding (£9.72m) will be converted form capital grant to revenue to fund the cost of due diligence and other professional support required to bring forward investment opportunities.

The £486m represents London’s share of the Accelerated Construction Fund (£100m), the Small Sites Fund (£126m) and of the Land Assembly Fund (£260m).

The GLA is required to commit £133.8m (25%) of the funds within the current financial year (2018-19).

The GLA is empowered to receive funding from MHCLG and provide grant funding to eligible councils and housing associations in London, provided the Mayor considers that doing this will further one or more the GLA’s principal purposes of: promoting economic and social development in Greater London, and improving the environment in Greater London. It is open to the Mayor to take the view that the provision of funding for land assembly, infrastructure investment and the provision of gap funding, promotes economic and social development and/or improves the environment.

In determining whether or how to exercise the power conferred by section 30(1) of the GLA Act, the Mayor must:

(i) have regard to the effect that these decisions will have on the health of persons in Greater London, health inequalities between persons living in Greater London, the achievement of sustainable development in the United Kingdom and climate change and its consequences (sections 30(3-5) of the GLA Act); and
(ii) pay due regard to the principle that there should be equality of opportunity for all people (section 33 of the GLA Act).

In this respect the Mayor should have regard to section 3 above.

In addition to the above, where the Mayor is proposing to use the power conferred in section 30(1) of the GLA Act, the Mayor must consider consulting in accordance with section 32 of the GLA Act.

Officers have indicated that this project amounts to the provision of grant funding and not payment for services. Officers must ensure that:

(a) no reliance is placed upon the MHCLG funding until a legally binding commitment is secured from MHCLG in this regard and the GLA is able to comply fully with any conditions applicable to the provision of such funding;
(b) the funding is distributed fairly, transparently in accordance with the GLA’s equalities duties and in a manner, which affords value for money in accordance with the GLA’s Contracts and Funding Code; and
(c) appropriate funding agreements are put in place between and executed by the GLA and eligible councils and housing associations before any commitment to fund.

In taking the decisions requested, the Mayor must have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity and foster good relations between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not (section 149 of the Equality Act 2010). To this end, the Mayor should have particular regard to section 3 (above) of this report.

The GLA will publish a call for investment proposals from public and private sector housing providers requiring financial assistance to unlock or expedite delivery of housing sites.