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Luton Borough Council



Strategic context: Luton Investment Framework (LIF) and Corporate Plan

The LIF, launched in 2016, underpins our ambitions to deliver sustainable growth and opportunities for our town. With the LIF on course to exceed our target of £1.5 billion of inward investment over the next two decades, we have a clear focus and determination that the benefits of this programme will be felt by the whole community.

Combined with the fact that we are now home to the UK’s fifth largest airport, alongside major businesses in the aviation and engineering sectors, there is a growing confidence that Luton is the ideal place to live, work and invest.

Our LIF strategic priorities are:

  1. building economic growth and prosperity
  2. enhancing skills and education
  3. improving health and wellbeing
  4. developing quality homes and infrastructure
  5. supporting safe, strong and cohesive communities

Alongside the LIF, we've successfully rebranded our organisation, forming our new mission statement, a renewed vision and fresh strategic priorities which are already contributing to a transformation of Luton as a place, both in reality and in the perceptions of our residents.

Our Corporate Plan sets out our organisational direction across all our services and identifies the how we best target our resources to improve.

Already, significant improvements have been made. Luton has seen:

  • the fastest private sector job growth
  • the largest increase in real wages
  • the highest number of new enterprises anywhere in the country

Life expectancy is rising, our schools delivered the best key stage 2 improvements in the country for Maths in 2017 and our Prevent and counter extremism agendas were rated as outstanding by the Home Office in 2018.

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Luton is a vibrant, modern and diverse town in the East of England, thirty miles north of London, and at the centre of the Oxford-Cambridge strategic growth corridor, the town has excellent transport links by road, rail and air.

London Luton Airport is the fifth largest airport in the UK today, with over 15 million passengers annually. Luton is situated by the M1 motorway, just 10 miles from the M25 and is 22 minutes from London by train.

Luton is a vibrant, modern and super diverse town. With a population of around 214,700 people, it's more densely populated than many London boroughs. Luton is the third youngest town or city in the UK, with 26.6 per cent of 0 to 17 year-olds accounting for the population in Luton, compared to 21.1 per cent nationally.

Around 55 per cent of the town’s population are from non-White British origins including large communities of Asian, African, Caribbean, Irish and Eastern European communities. There are over 130 languages and dialects spoken and significant religious groups including:

  • Christians
  • Muslims
  • Hindus
  • Sikhs
  • Jews
  • Buddhists

Recent research into population movements, found a high level of movement in and out of the borough. There is also a high birth rate. This is significant for the delivery of council services and across the wider public sector particularly the NHS.

It's estimated that approximately 50 to 60 per cent of the current population were either not born or not living in Luton at the time of the 2011 Census.

Our Stronger Communities strategy sets out how the council will act with the wider community to promote cohesion, equality and inclusion in the town.

The population of Luton increased from 203,400 in 2011 to 216,800 in 2016 in this time, international migration has grown and the population of Luton has become more diverse.

Internal migration is showing an increase of people moving from North London boroughs to Luton, but the highest number is from Central Bedfordshire.

Between 2011 and 2016:

  • 43,000 people moved to Luton from elsewhere in the UK and 53,000 people left
  • 19,000 international migrants arrived in Luton and 6,000 left
  • there were 18,000 births and 7,000 deaths

Population turnover is greatest in South, Farley and High Town wards. Biscot and Dallow wards have the highest birth rates.

Luton has a younger population than the rest of England and the Eastern Region, with 22 per cent of the population under 15, compared to 18 per cent regionally and nationally.

The over 65 age group represents 12 per cent of the Luton population compared with 16 per cent nationally and 18 per cent regionally.

Age demographics in Luton 2011:

  • 65 plus - (12 per cent)
  • under 15 - (22 per cent)
  • 15 to 64 - (66 per cent)

There is now a recognition that Luton is one of a few ‘super-diverse’ places. The town is ethnically diverse, with approximately 55 per cent of the population being of black and minority ethnic (BME) origin, with significant Pakistani, Bangladeshi, Indian, Eastern European and African Caribbean communities.

In recent years the diversity of the population has increased. There has been a significant shift in the population, primarily driven by those arriving from the eight countries that joined the EU during its enlargement in 2004.

Since then, there have been over 30,000 new National Insurance registrations in Luton by people originating from these eight countries, with more than 75 per cent coming from Poland.

A study by Mayhew Harper Associates showed there are concentrations of new communities of Congolese, Somalis, Ghanaians, Nigerians, Turks and Zimbabweans in Luton.

Foreign students coming to study at the University of Bedfordshire have also contributed to the increased diversity in the town.

This diversity influences the demand for housing and housing services, whilst poor housing and homelessness impacts disproportionately on certain groups.

Our Stronger Communities strategy sets out the role of the council to support community cohesion in the town; housing and neighbourhood management play a role in this. This housing strategy aims to support equality of access to appropriate housing and services.

Ethnic origin in Luton:

  • White - (45 per cent)
  • BME - (55 per cent)

The LIF is showing signs of success with the town increasingly recognised as a leading place for innovation. Wages are rising and there is significant investment in skills and training. Employment is growing and GVA per head grew by three per cent between 2016 and 2017.

However, low incomes remain a concern. Average incomes for those who live in Luton are lower than those who work in Luton.

The borough is ranked as the 59th (out of 326) most deprived local authority. In 2010, Luton was ranked as the 69th most deprived local authority and in 2007 as the 87th.

This indicates that Luton is becoming relatively more deprived in comparison to the other local authorities of England.

Luton has nine output areas in the top 10 per cent most deprived areas in the country, three of these are in Northwell ward, two each in Farley and South ward, and one in Biscot and Dallow wards. Research by the Centre for Research in Social Policy showed that about a third of children in Luton are living in poverty.

The affordability, liveability and transport links for Luton have led to an increase in internal migration, with the average house price gaining an extra £41,702 in value in 2016.

Numbers leaving London are at the highest level since 2006 (ONS) - this has also impacted on rent levels, affecting homelessness and making it challenging to place homeless families in accommodation.

The relative affordability of Luton compared to other nearby areas and London has created competition for the provision of accommodation for homeless households. This has had wider impacts on Luton including resource challenges for schools, social services and advice services.

Housing issues impact more widely on other aspects of life, among families approaching the Flying Start family support service in 2017/18, a quarter was experiencing housing problems, the single largest area of concern for families.

Nationally, overcrowding is more prevalent among minority ethnic groups, particularly the following:

  • Bangladeshi
  • Pakistani
  • Black Other and Black African communities

In Luton, research found that Asian families were more likely to be living in larger household groups, so the accessibility and availability of larger homes is an issue which impacts on some ethnic groups more than others. Provision of larger homes and good space standards within homes are therefore important locally.

We recently adopted a Key Worker Housing Strategy which supports target professions including teaching and social work. Housing affordability and availability are crucial to support some of the priority services the council provides.

The average house price in Luton at £239,582 recently exceeded the national UK house price which is £232,797 although it is below the average for the east (£292,107) and south east (£329,264)

Since 2016, house prices in Luton have increased significantly and the bigger properties have shown a bigger increase compared to the smaller units such as terrace and flats. (please see graph in PDF for more information)

Detached properties are higher in resale price then the other property sizes, the growth has been gradual and it shows that Luton is a place that people are moving into, possibly attracted by lower prices than surrounding areas.

Rents for Luton as of 2014 to 2017 have shown a steady increase for all properties, many people can't afford to rent in the private sector, as LHA rates are based on historic 30th percentile rates which haven't kept pace with actual 30th percentile rents.

Meanwhile, many landlords charge rents at average to upper quartile rates, therefore making it difficult for many people to live in private rented accommodation.

Our analysis of local costs (in the housing ladder diagram) shows that Local Housing Allowance (LHA) costs lag behind 30th percentile costs - creating a gap of over £50 per week for one bedroom properties, and over £30 per week for two bedroom properties.

Home ownership has remained predominant, 61 per cent still own a property in Luton in comparison to the other forms of housing. Shared ownership is a growing tenure which provides a more affordable option for residents of Luton.

Social and affordable rented housing has remained consistent at 16 per cent since 2001 to 2011 as the census information shows.

There has been an increase in private renters to 22 per cent which has overtaken the social and affordable rented market as many people look for alternative housing in the private sector.

The SHMA was introduced in 2010, the evidence from these documents helps to inform policy making at local and regional levels and it shows the housing requirements in a given area.

It provides evidence on the tenure and size of mix of housing required which includes market, intermediate and social rented housing.

Luton and Central Bedfordshire councils have worked together for many years to commission Opinion Resources Services (ORS) to carry out this research to support local plan development.

The most recent SHMA update for Luton was published in 2016, it calculated the need for housing in the borough of Luton, as follows:

Market housing: 10,600 (59.5 per cent)
Affordable housing/rent: 7,200 (40.5 per cent)
All dwellings: 17,800 (100 per cent)

The size mix of homes delivered from 2011 to 2016 is shown on the PDF below

These figures demonstrate the oversupply of one bedroomed homes and the undersupply of larger family homes, there is a clear need to deliver larger homes in the town to address this imbalance.

National policy changes

There have been several legislative and policy changes in the last few years which have changed the operating environment for housing.

Welfare reform and benefit cap

The full rollout of Universal Credit to Luton in the later part of 2018 has implications for many households which could increase rent arrears and create financial challenges - modelling indicates a likely 19,000 claims which will be affected, of which 8,000 will move to Universal Credit.

We've been working cross departmentally and in partnership with other organisations to prepare for Universal Credit, including preparing our own tenants and actively preventing homelessness.

Homelessness Reduction Act 2017

The act came into force for many local authorities in April 2018, and has emphasised the need for local authorities to provide concise advice and assistance at an earlier stage when customers approach the council for assistance with housing.

A reduction of local authority funding

Local authorities are under pressure to transform service delivery, generate additional income and respond to reductions in central government funding.

Luton’s Medium Term Financial Plan has helped us to maintain a comparatively advantageous position despite being the sixth worst affected unitary authority in terms of central government cuts - however, the financial impacts of rising homelessness and use of temporary accommodation has led to significant costs to council tax payers through the general fund.

Housing revenue account changes

From 2015 to 2019, social rents have been reducing by one per cent per year - this impacted significantly on social landlords’ capacity to develop, including Luton Council, a new rent settlement from 2019 will allow additional income to be channelled into new homes.

Government limits to borrowing in the housing revenue account which covers council housing have limited our ability to build new affordable homes as Luton Council is at its borrowing headroom limit.

However, an opportunity to bid for additional borrowing permissions was opened in 2018, and a bid made for around £15 million and further details are awaited regarding the lifting of the borrowing cap, announced by the Prime Minister in October 2018.

Further policy impacts on the housing revenue account, such as the High Value Levy, introduced in the 2016 Housing & Planning Act have subsequently been cancelled.

There has been a recent consultation on the use of Right To Buy receipts which could make this a more flexible form of funding for new council homes, however, the final arrangements are not known at this time.

Affordable housing programme

The homes and communities agency, now Homes England, has gradually returned to funding affordable rented homes but funding is reduced compared to previous investment programmes.

The opportunity to bid for funding, potentially in conjunction with Right To Buy receipts, is something that Luton Council will consider in order to increase our development capacity.

Analysis of local housing costs and income levels allows us to plot affordability in Luton and clarify what is genuinely affordable for households in different income brackets.

The affordability ladder on page 13 (on the PDF attached below) shows weekly costs of different tenures of housing at one, two and three bedroom sizes. It also shows what would be considered affordable on local incomes, as reported by the Annual Survey of Hours and Earnings (ASHE) for incomes in Luton, taking 35 per cent of gross fulltime income as the maximum that a household should pay for housing.

The information in this chart will be updated annually to track the affordability of homes in Luton.

The diagram demonstrates how private renting is increasingly unaffordable, people with incomes in the bottom half in Luton would not be able to afford a family sized property of two bedrooms and above in the private rented sector.

For most, housing benefit and the housing element of Universal Credit doesn't bridge the gap to the actual cost of lower 30 per cent rents - Local Housing Allowance (LHA) rates are well below actual rental costs.

For households needing three bedroom accommodation, the ladder shows that they would need to be in the top 40 per cent of incomes to afford the cheapest private rent and in the top 25 per cent of incomes to afford to buy a lower quartile property on the open market.

For many local families therefore, only affordable housing options provided through social landlords provide a realistic long term home at a manageable price.

Social rented homes are demonstrably more affordable and most affordable rent homes are also within reach - new council homes are capped at LHA rates to retain affordability.

The role that Living Rents could play has been a subject of discussion with various methodologies suggested and active Living Rent programmes already rolled out in London.

As an illustration, the Shelter methodology of 30 per cent of 30th percentile earnings would give a Living Rent of £126.36, whilst the Labour Green Paper and London Living Rent typical rent of 35 per cent of median income would give a rent of £175.63.

The figures also demonstrate the significant potential for shared ownership to play a role in offering stable and affordable housing for lower income groups.

At a relatively low equity level of 40 per cent, shared ownership (Homebuy) compares well to private renting or renting at affordable rents, which means that for households in the bottom 30 pre cent of incomes could afford a two bedroom property, assuming that they could provide a 10 per cent deposit on their 40 per cent share and access mortgage finance.

The updated National Planning Policy Framework (NPPF), published in 2018, indicates that sites including affordable housing should incorporate 10 per cent for low cost home ownership, unless this significantly prejudices the ability to meet the needs of specific groups, and in other specified circumstances for example in Build to Rent schemes.

In Luton the current Local Plan policy requires only 20 per cent affordable housing on sites with a gain of 11 dwellings. If 10 per cent of these sites are provided as low cost home ownership, this would mean a 50/50 split between affordable rented and ownership tenures.

However, our SHMA indicates that the split should be 72 per cent for affordable rents and 28 per cent for low cost home ownership. A standard 10 per cent provision of low cost home ownership would therefore prejudice the ability to meet wider affordable housing needs, particularly for households to whom the council owes a duty and where the private rented sector is demonstrably prohibitively expensive.

We’re committed to enabling and providing homes which are affordable to local households. This means supporting a supply of homes at price points to meet differing needs and which creates sustainable housing options for working households who are unable to access family sized private accommodation.

We’ll use the information to guide our own programme and to press for more affordable options within planning agreements. We’ll also continue to monitor and challenge the growing gap between LHA rates and actual rents.

Our approach to affordable housing provision is therefore be summarised here.

  1. We’ll deliver ourselves, and enable others to deliver, a range of affordable housing across the town to meet the significant need for stable, affordable accommodation, especially at larger house sizes.
  2. Affordable rented homes are in greatest demand and should be capped at LHA levels to be truly affordable to lower income households. Affordable housing providers will be expected to demonstrate how their homes can meet this requirement.
  3. There is a growing role for low cost home ownership, primarily shared ownership as this is the most accessible product for lower income households. However, we’ll continue to stipulate, in line with the SHMA, that shared ownership makes up no more than 28 per cent of the 20 per cent affordable housing requirement in planning agreements, or equivalent to 5.6 per cent of a site, rather than the 10 per cent recommended in the NPPF. This may be amended on certain sites depending on scale, property types and viability.
  4. Our updated supplementary planning document on affordable housing, and our revision of the Local Plan will reflect these priorities.

You can find the following diagrams in the PDF below:

  • Affordability ladder
  • Housing strategy family tree
  • Recent achievements


Download the Housing strategy 2019-22 (pdf/a)
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