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Housebuilding: collaboration is key
How new procurement rules could affect the housing sector’s ability to hit the government’s ambitious 1.5 million-home development target
GROWTH, REGENERATION & DEVELOPMENT
Mark Cook
Partner, Anthony Collins Solicitors
Mark Cook
Partner, Anthony Collins Solicitors
Issue 75| December 2024
There’s plenty of energy and creativity that folk are devoting towards the government’s commitment to accelerate housing development and build 1.5 million homes during the course of this parliament. It’s not just about having oven-ready projects, but also having the ovens that are ready for the projects. What is the current situation and how might imminent new procurement rules affect this?
Development now
Several registered housing providers already build social and affordable housing that is not only on their books, but can also be council housing. This happens through various routes, including mixed-tenure developments and joint venture/partnering arrangements.
Then there are the frameworks and dynamic purchasing systems for developing homes on land owned by Homes England and other public sector bodies. In some instances these frameworks are issued by Homes England itself, and in others they are led by organisations masquerading as central purchasing bodies.
New procurement rules
The Procurement Act 2023 finally comes into force in February 2025 and will bring with it new procedures covering the whole procurement cycle (including contract management). New requirements to publish notices at every turn of a project could further embed a ‘contractualism’ that is often already evident in the commissioner-contractor dynamic.
A key question arising from the 2023 Act is whether there should be a competitive tendering procedure in the first place – is it always necessary? Answering this will still require an understanding of whether a project is a public works contract or not. The logical order in which this point is considered will not remain the same as at present.
However, it is important to note that the current assumption that a public works contract should always be tendered will be less important than demonstrating value for money, public benefit, open compliance with policy objectives, and transparency in acting with integrity (see section 12 Procurement Act 2023 (Objectives)).
“A key question arising from the 2023 Act is whether there should be a competitive tendering procedure in the first place – is it always necessary?”
“A focus on long-term collaboration could be more effective in some circumstances.”
What about real collaboration?
A focus on long-term collaboration could be more effective in some circumstances. There is the opportunity to develop a relationship-based approach that addresses the same objectives but in a context outside the full rigour of the procurement regulatory regime. This approach would need to build in safeguards that:
- Address the statutory duties of councils to obtain best consideration on disposals of land
- Make sure that there is no subsidy or if there is a subsidy, a pre-stated case is prepared and processed
- Allow the regulatory framework for housing associations (where applicable) to provide further assurance in the stewardship of resources
- Establish an agreed process that sets out the stages for demonstrating project viability and the gateways for proceeding with a project
- Ensure clarity on how the money flows to pay for the resources devoted to each project in the pipeline covered by the partnering arrangement
- Allow others to take part, beyond the initial players (to release the greatest resources available)
- Are monitored with comprehensive and tight programme management
Underpinning this is trust, with key people from all parties showing tenacity, commitment to the long game, mental dexterity, a sense of proportion, openness to challenge and technical competence.
A recipe already being trialled
A recently announced example of an initiative with all these ingredients is the partnering arrangement between Homes for the West Midlands LLP (which has five registered housing providers as its promoters) and West Midlands Combined Authority (Mayor announces new partnership to help drive more social and affordable housing). It took time to get to the point of launching both the LLP itself and the collaborative partnering agreement that the LLP has with WMCA, but it has all the components needed for an oven to turn the ingredients into a healthy diet of homes in the right place for the people who need them.
