Director of External Affairs at the Home Builders Federation, Emma Ramell, reflects on Chancellor Rachel Reeves’ recent speech about the Oxford-Cambridge Growth Corridor and takes a closer look at the government’s approach to housing and economic growth.

Last month, Chancellor Rachel Reeves addressed an audience of business leaders to unveil new plans for the Oxford-Cambridge Growth Corridor, a key part of the Government’s broader Plan for Change.

The most intriguing aspect of the speech wasn’t so much the specifics of the announcement—though the confirmation that the Environment Agency had lifted its objections to 4,500 new homes around Cambridge was certainly welcome—but rather the glimpse it provided into the Government’s broader philosophy on economic growth and its approach to achieving it.

Perhaps most telling was Reeves’ assertion that “low growth is not our destiny, but economic growth will not come without a fight”. For the home building industry - one of the sectors expected to drive this growth - this was an encouraging acknowledgement. After all, 1.5 million new homes cannot simply be willed into existence. Rather, achieving this ambitious target will depend on the Government’s willingness to fight against the many barriers which are impeding supply.

The problem, however, is that while the rhetoric sounds promising, actions speak louder than words—and so far, the Government’s actions (planning policy reforms aside) have left developers wanting. This is especially evident in the challenges facing the Section 106 Affordable Housing market, where at least 17,000 S106 Affordable Homes remain uncontracted due to a lack of bids from Registered Providers.

As a result, developments are being delayed or paused, future site acquisitions are under review, and the delivery of both open market and Affordable Homes—nearly half of which are supplied by the private sector—is at risk.

The declining appetite of RPs to invest in S106 homes is explored in detail in our recent report, Bid Farewell. Fundamentally, however, this trend is driven by the need for RPs to redirect substantial funds toward maintaining, repairing, and upgrading their existing housing stock—all while facing a significant drop in rental income.

Without intervention, this situation is set to deteriorate in the months and years ahead. The 2023-24 English Housing Survey revealed that the proportion of housing association dwellings affected by damp has risen from 4% to 5% since 2019. Additionally, the Government recently confirmed that Awaab’s Law will take effect for the social rented sector from October this year. While this is undoubtedly the right and just decision, the financial implications will further constrain RPs' ability to invest in new housing.

To date, the Government’s response to the challenges in the S106 Affordable Housing market has been limited to introducing a new clearing service aimed at matching developers looking to sell homes with RPs looking to buy them. However, developers have raised multiple concerns about the service including:

• The service is ‘back to front’: Rather than placing the burden on developers to list available Section 106 units, the responsibility should shift to registered providers (RPs) to outline their requirements. This would provide greater visibility into RP capacity for both house builders and local authorities (LAs). It would also clarify the types of homes RPs are looking for, addressing a common industry criticism that developers are not building homes RPs want—when, in reality, these specifications are dictated by LAs and beyond developers’ control.
• The matching process is often redundant: Developers often register units only to discover that the same RPs, whom they had already approached independently and received negative responses from, are the only ones registered.
• Limited functionality: The platform lacks essential features, such as the ability to upload plans, layouts, and key documents necessary for RPs to assess and submit meaningful offers.
• Unrealistic data requirements: Some requested details, such as ‘first and last private completion dates’ and ‘completion of public works,’ are difficult to estimate accurately, making compliance with the requirements of the process challenging.
• Lack of defined timelines: The system should allow developers to set firm deadlines for expressions of interest, as units cannot be advertised indefinitely without resolution.

Practicalities aside, the service also has a fundamental flaw; it fails to address the financial constraints that are preventing RPs from investing in new homes. To that end, the Government has confirmed that the outcome of the Spending Review will provide clarity over the future of the Affordable Homes Programme beyond its current end date of 2026. It has also recently concluded a consultation on a longer-term rent settlement for the RP sector. Both initiatives will be helpful in rebuilding the financial capacity of housing associations and their confidence to invest.

However, they do not offer a solution to the urgent challenges facing home builders today. From the industry’s perspective, the most practical short-term solution would be for the Government to issue a Written Ministerial Statement (WMS) encouraging Local Planning Authorities (LPAs) to incorporate cascade mechanisms into Section 106 agreements. This approach would help ensure that homes continue to be built while offering developers reassurance that if an RP cannot be secured, the Affordable Homes can be converted to an alternative tenure or, as a last resort, a financial contribution can be made to the LPA in lieu of the Affordable Housing.

Where possible, developers are already working with LPAs to negotiate cascade agreements, but not all are open to their use. As such, a direction from the Government to LPAs is needed to ensure that all developers can benefit from such flexibility if needed. Yet, there are no signs of such action. Instead, Housing Minister Matthew Pennycook has merely stated that the Government will “consider what further measures may be necessary to address the problem, informed by data from the (clearing) service.”

This is not entirely surprising, as cascade mechanisms would likely shift homes from social rent—the most challenging tenure for developers to secure RP bids for—to Shared Ownership or discounted market sale.

But during a worsening housing crisis, isn’t it better to accept homes of an alternative tenure than to build nothing at all? That is the difficult question the Government must confront if it truly wants to tackle this issue.

Ultimately, if the Government is serious about boosting housing delivery and driving economic growth, it must be willing to take bold action and accept that to reach 1.5 million homes, there will need to be trade-offs. If it doesn’t, it will fail the very people who need new homes the most.