Recently, the Chancellor of the Exchequer, Sajid Javid, announced over £600m of additional funding for five projects from the Housing Infrastructure Fund (HIF).
There are a number of infrastructure-related barriers to delivering more homes, including a lack of existing infrastructure – and the funding for it – to support new housing development.
HIF forms part of the broader National Productivity Investment Fund announced by the previous Chancellor Philip Hammond in 2016 and is a £5.5bn pot of money designed to make more land
available for housing and deliver physical infrastructure to support new and existing communities.
HIF itself is split into two sections: the Marginal Viability Fund and the Forward Fund.
The most recent announcement of £600m is part of the Forward Fund, which is substantially larger than the Marginal Viability Fund and typically reserved for strategic infrastructure projects that unlock large-scale housing developments, such as train stations or significant road upgrades.
Individual bids for marginal viability are capped at £10m, as the government’s aim is for local authorities to use it for “the final, or missing, piece of infrastructure funding to get additional sites... unblocked quickly”.
As part of the conditions which the government attaches to the funding, it must be spent within a certain time period. This means that successful awards of funding are often given to schemes that are already well advanced in their planning phase.
The impact of HIF funding and future allocation
The ICE policy team has been speaking to stakeholders, including many from our membership, about the effectiveness of HIF funding as part of the evidence gathering activities for our forthcoming State of the Nation report on improving connectivity between infrastructure and housing.
There was consensus that HIF funding is delivering better integrated infrastructure and housing for many local communities. However, there was also some concern expressed at the methodology for awarding HIF funding and how this is unfairly penalising areas with lower land values.
Indeed, since the launch of the HIF, much of the £2.5bn that has been allocated has gone to authorities in London, the South East, East of England and South West.
While there's no doubt that areas of highest housing and infrastructure demand should be prioritised, it was clear from the stakeholders that we spoke to that the government should consider allocating a separate portion of HIF for areas of lower land value, ensuring that strategic sites nationwide are unlocked for housing development.
In addition, there are still improvements that can be made to HIF, such as moving to a continuous programme of funding rather than defined bidding rounds. This can ensure a more strategic approach to infrastructure provision and enable bidders to take a more measured approach in their applications.
State of the Nation 2019: connecting infrastructure and housing
ICE’s 2019 State of the Nation report on connecting infrastructure with housing will be launched on 10th September. If you'd like any further information, please get in touch.