By Emily Twinch
However, as the Chartered Institute of Housing gathers for its June 2009 annual conference, help might be on its way as council house building returns.
It effectively stopped when the Conservatives’ Local Government Act 1988 pushed public finance towards housing associations, but now Labour has started to encourage councils to build once more.
Prime minister Gordon Brown spoke about plans to relax restrictions on council borrowing at the New Local Government Network annual conference in January 2009.
“If local authorities can convince us they can deliver quickly and cost effectively more of the housing that Britain needs,” he said, “we will… put aside any of the barriers that stand in the way of this happening.”
In the same month, housing minister Margaret Beckett announced a consultation on whether councils might keep
rental income and receipts from homes sold through right-to-buy to reinvest in building, rather than having to pay it into the subsidy system.
Such announcements have raised hopes, although the consultation has yet to report its conclusions.
In the meantime, however, Chancellor Alistair Darling has allocated £100m for council house building in the 2009 Budget — although local authorities will have to raise half of this through prudential borrowing.
The way forward
So is this the best way forward for councils? John Perry, policy adviser for the Chartered Institute of Housing, believes it is.
“Waiting lists are going up and councils want to replace stock lost through right-to-buy,” he says. “Councils can borrow more cheaply than housing associations at the moment. Their problem is that their borrowing counts as public borrowing, whereas that of housing associations doesn’t.”
But he says this needn’t be the case. “In most EU countries, the equivalent of council housing is outside ‘general government’ for accounting purposes.”
Mr Perry says councils have lost about 1.8 million properties since 1980 through right-to-buy, and the money allocated in the Budget would allow fewer than 1,000 homes to be built.
But he says councils are unlikely to go back to building the single-tenure estates so widely criticised in the past, as they would only be able to build in small quantities.
Wipe out
In a cross-party move, leaders from Barking & Dagenham LBC, Portsmouth City Council and Waverley Borough Council have written to the Treasury asking for the government to wipe out their housing debts and give them control over their rental incomes.
They say this would allow them to build 309,000 homes over the next decade, compared with today’s council house building rate of fewer than 300 homes a year.
Local Government Association environment board chair Paul Bettison (Con) says: “Councils could be using the money they collect in rent to build thousands of new homes to help solve the housing crisis and to improve the homes of existing tenants.
“The rent tenants pay should be spent entirely on their housing needs and the needs of local people. None of it should be funnelled through to Whitehall.”
Programmes
Westminster City Council is about to start a building programme of just over 500 homes through its arm’s-length management organisation CityWest Homes, using a £125m grant from the Homes & Communities Agency (HCA).
Philippa Roe (Con), the council’s cabinet member for housing, says: “The advantage is control over the properties longer term. I would much rather give the money to CityWest than to a housing association.
“We have more influence over the qualityof services. I am not a great fan of the RSL [housing association]structure. There are some that are extremely good but some are less good.”
In a pilot led by the HCA, 14 councils are setting up local housing companies (LHC) in which the council teams up with private developers.
Barking & Dagenham’s partnership with First Base is the furthest advanced of these and aims to build a total of 6,500 homes over the next 15 years.
Control
Programme director Ken Jones says the model will give the council greater control over what is built than have previous agreements with developers or associations.
“In the past, you have had a development agreement, a joint venture with a housing association and a developer, but quite often you don’t end up with the deal you originally embarked on,” he says.
“We have had cases where we have had to argue in the trenches with the developer over mixes in terms of tenure and size of properties.”
Mr Jones says the LHC approach will bring together a mix of skills and capabilities, which will involve “sharing teams of staff working next to each other”.
It is clear that collaboration will be important for councils as they start trying to build homes again after a 20-year gap.
As Tom Dacey, group chief executive of Southern Housing Group, points out: “There might be an issue on the skills side. Most councils haven’t built homes since 1987 and don’t employ the staff to do it.”
He believes council house building is “not something that’s going to take off quickly and significantly”.
Geared
He also thinks that the government’s £100m will not go far because many councils are not geared up to use it.
“In the short term, they would have to use development agency agreements with housing associations,” says Mr Dacey.
He acknowledges that housing associations might be disadvantaged if councils use land they would have built on. But he says: “At present, anyone else who can come to the party and deliver more affordable housing has to be welcome.”
David Orr, chief executive of the housing associations’ trade body the National Housing Federation, agrees that it is desirable to have “all hands to the pump” at the moment. “The first job we have to do is build as many new affordable homes as we can,” he says. “If by having councils building we can contribute to that, then let’s go for it.”
Mr Orr points to several positive outcomes to the possible new arrangement. “It might release land more quickly than would otherwise have been the case and mean that we can get houses built more quickly,” he says.
Opportunity
If the government creates the right funding rules, Mr Orr says, council house building provides an opportunity for “proper partnerships” between housing associations and councils, in which councils provide land and local knowledge, while housing associations provide the “finances, development capacity and expertise”.
Steve Turner, spokesman for the builders’ trade body the Home Builders Federation, suggests a model by which councils supply the land, builders build the homes and housing associations manage them.
“Councils have the gift of providing land with planning permission,” he says. “House builders have the capacity and skills to produce the bricks and mortar buildings. And housing associations have the experience in terms of management.”
There is a clear consensus that council house building presents a promising way forward for providing much-needed homes and for giving councils greater control over these properties.
The pressure is now on the government to improve the borrowing situation and the subsidy system. And the pressure is on councils to ensure that they do not return to building mono-tenure estates but use this as an opportunity to create thriving, sustainable communities.
