November 25, 2012 9:40 pm

Treasury poised to take over land sales

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A general view of housing in north London©AFP

The Treasury is poised to seize control of the sale of public land owned by Whitehall departments after losing patience with the slow pace of the government’s land disposal programme, the Financial Times has learnt.

George Osborne, the chancellor, is set to announce in next month’s Autumn Statement that all departments will be forced to cede control of their properties and land to a central body, the Homes and Communities Agency.

He hopes this will speed the sale of Whitehall real estate, a main part of the government’s housebuilding strategy that has so far amounted only to a half-hearted drip-feed.

The decision was one of the recommendations made by a panel of housing sector experts appointed by the government this year to examine what could be done to speed the sale of state-owned land.

Mr Osborne and Danny Alexander, his Liberal Democrat deputy, have tried to find ways to force departments to move faster because of concerns that they are deliberately timing their sales slowly so as to fill holes in their budgets.

Often when a ministry has balanced its budget for the year but predicts a hole in later years, it will schedule a land sale to coincide with that. As a result there has been only a sluggish release of land rather than the urgent sell-off demanded by ministers.

Mark Prisk, the housing minister, wrote to the Treasury a few weeks ago backing a swift intervention to solve the Whitehall gridlock.

Ministers have long argued that selling publicly-owned sites could lead to the building of vast numbers of homes. Grant Shapps, the previous housing minister, said in May that the government was on course to “smash” its ambitions for releasing previously used land.

Ministers had identified enough surplus public land, including empty offices and unused storage, to build 102,000 homes, Mr Shapps said. That surpassed the prime minister’s aim to release enough land for 100,000 homes by 2015, he added.

But there is virtually no evidence of progress since that announcement.

Ministries were asked to work alongside the Homes and Communities Agency to make the land available and sell it at a suitable price as soon as possible.

Land will be sold from nine departments, with the lion’s share coming from defence, transport, health, environment and the Olympics Delivery Agency. The Ministry of Defence alone was earmarked to sell enough land for 37,630 homes.

The 102,000 figure has been greeted with scepticism by some, with one expert saying he believed there was enough publicly held land for only 30,000 homes.

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The FT asked the nine ministries a month ago how much land they had sold since May and in the previous financial year. Of these, eight were unable to give an answer.

Only the Homes and Communities Agency replied, saying it had sold enough land for 3,809 homes in the year to April and that more recent data were not available.

The lack of progress in the past six months has prompted growing concern within the Treasury and the communities department, which are overseeing the programme.

“Danny Alexander and Mark Prisk have both been trying to get departments to get rid of land and have been holding departments’ feet to the fire,” a Whitehall official said.

In 2011 Mr Shapps proposed a “build now, pay later” scheme for former state-owned sites. This is another proposal supported by the government’s land advisory panel, the FT understands.

Hilary Benn, shadow communities secretary, described the situation as “extraordinary” and urged the government to do more to reverse the collapse in housebuilding.

“Given the great fanfare with which this programme was launched in June 2011, it is extraordinary that a year and a half later the government appears unable to say how many of these sites have actually been sold for housebuilding,” he said.

“What on earth have CLG [communities and local government] ministers been doing when they promised to monitor the whole process with a fine-tooth comb?”

Additional reporting by Kiran Stacey

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