England & Wales

Councils building houses – updated

UPDATE:  I had a great response to my post and tweets about council housing, which fed into my contribution to this useful feature in the latest issue of Local Government Chronicle.

After several decades of central government seriously limiting the role of councils in the provision of affordable housing, reducing council house building to virtually nothing (400 units nationwide in 2008), and pushing councils to divest of their housing stock, the tide may be turning.

Speaking last week, the Prime Minister said he is considering, favourably, the idea of councils building houses.  I talked to Sir Bob Kerslake, of the Homes and Communities Agency about it yesterday, and later to former housing Minister, Nick Raynsford.  They confirmed the renewed interest in the role that councils could play now in kick-starting local house building, which would be good for the economy, and provide much needed additional affordable housing.  Here’s the a-b-c:

a) the council puts the land in for free

b) the Homes and Communities Agency provides grant aid

c) the council borrows and starts building.

There are two main stumbling blocks – we need to persuade government to change the rules on the Housing Revenue Account, and convince sceptics at the Treasury who will be concerned about the effect of councils borrowing on the PSBR and the government’s liability.

Housing Minister Margaret Beckett published a consultation document on 21 January on proposed changes to the revenue and capital rules that apply to new council housing.  It is positive and we need councils to weigh in on the consultation.

As for the Treasury, we need to pull together ideas for a framework that gives the Treasury some assurance, such as an aggregate limit on local authorities borrowing against the PSBR.  Your ideas welcome.

In addition to council housing, we should also look at other good ideas for increasing supply, such as Community Land Trusts and Mutual Home Ownership.