1. Governance
October 8, 2018updated 04 Aug 2023 8:30am

Letting councils borrow is a start. But what else needs to happen to tackle the housing crisis?

By Diarmaid Ward

A Labour councillor from the London Borough of Islington on the government’s new housing policy.

I never miss an opportunity to tell anyone who’ll listen that, to get council homes built in sufficient numbers, the government needs to immediately scrap the borrowing cap. Here in Islington we like to call it “The New Home Blocker”.

So I’ll start with the bad news: I’m taking Theresa May’s announcement on the borrowing cap with a kilo of salt. If it materialises, it could be a massive opportunity for councils to ramp-up efforts to build council homes in the numbers that the country actually needs to help tackle the housing crisis. But I’m going to need more than one sentence from Mrs May to convince me. 

Why wasn’t it mentioned in the government’s Social Housing Green Paper published in August? When will it be enacted? This year? Next year? In 2022? Will the cap be removed without caveat immediately? Will it be removed incrementally over many years? I’m afraid the current radio silence from the communities department doesn’t fill me with confidence. 

But let’s assume for a moment that we can take the announcement at face value, and as Lord Porter has said, that the only restriction that councils will face is the prudential borrowing rules. What then?

It’s often suggested that the ultimate aim behind Margaret Thatcher’s flagship Right to Buy policy was for social housing as a concept to eventually wither away. If that was the case, it didn’t exactly go according to plan. In Islington this year, we are building more new council homes than at any time in the last 30 years. Lots of councils around the country are desperate to make this happen on their patch as well, but in many areas the infrastructure around council home building has indeed withered away.

So what else needs to be done to help councils tackle the housing crisis? 

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1. Start taking it seriously

So I’m not exactly an old hand in this business: I started as Islington’s housing and planning lead councillor in June 2016. In the time that I’ve held the brief, the housing minister’s desk has been occupied by no fewer than five people.

More worryingly, government spending on building new homes fell from £11.4bn in 2009 to £5.3bn in 2015 – from 0.7 per cent to 0.2 per cent of GDP. None of this was given to councils to deliver council homes.

May did recently announce £2bn for long-term partnerships with housing associations, starting in 2022 and spread over six years. Sounds like a lot doesn’t it? However, in 2010 George Osborne cut annual capital funding for housing associations by £25bn over a decade.

If this government is actually serious about tackling the housing crisis, it can start by getting spending back to pre-2010 levels – and it can stop changing housing minister, too.

2. Councils need expertise – where have all the architects gone?

Building council homes was a serious business in post-war Britain. In 1952 the largest architectural practice in the World was at London County Council, with 1,577 staff including 350 professional architects and trainees.

These days a mere 6% of all architects work in the public sector, and more than half of them work actually work in central government rather than local government. If we’re going to start building council homes in great numbers, local authorities need to be able to draw on this expertise once again.

3. But expertise doesn’t end at building

Of course, the real heroes are the teams of staff who manage council housing and help shape them into homes and communities. It is vital that these staff are equipped with the necessary skills.

Dr Alan Winter from London South Bank University notes that

…at least eight English universities have closed some or all of their housing courses, and all of the CIH-accredited courses have seen student numbers drop dramatically… The move away from local authorities to housing associations has for a number of years contributed to lower student numbers, as the CIH Professional Qualification was mostly supported by local authorities.

Most concerning of all, Dr Winter also notes that

It became very noticeable around ten years ago that students were increasingly self-funded and having to take annual leave in order to attend classes.

A push for council home building cannot be accompanied by a sharp and worrying decline in professional education opportunities in the housing sector. This issue is clearly not on the government’s radar – but it does need tackling.

4. Help councils to use the planning system to stand up to developers

There’s more than one way to get social housing built. As well as councils building themselves, we need to use the planning system to ensure that private developers also build their fair share of social homes. Islington has some of the toughest planning policies in the country, designed to deliver as many homes for social rent as possible.

The recent High Court judgment in Parkhurst Road Ltd v Secretary of State for Communities & Local Government and London Borough of Islington makes clear that developers cannot overpay for land, and then argue that they are not able to meet genuinely affordable housing requirements because they have overpaid for the land.

postscript to the judgement also makes clear that the Royal Institution of Chartered Surveyors (RICS) should update their guidance so that in the future this kind of dispute can be resolved before it gets anywhere near a courtroom. In particular, future guidance should ensure that developers shouldn’t seek to mitigate high purchase prices by reducing affordable housing numbers. If Theresa May’s apparent newly found passion for solving the housing crisis is genuine, she needs to make clear to the development industry that this kind of practice is no longer acceptable.

5. Finally, if you’re going to scrap the borrowing cap, scrap the rest of the red tape as well

At the risk of sounding like a broken record, the other thing that I will never miss an opportunity to tell anyone who’ll listen is that the borrowing cap is not the only piece of arcane bureaucracy that councils have to contend with. Building council homes is tied up in much more red tape than that.

Under the current rules, local authorities only receive 75 per cent of the proceeds of any property that is sold under Right to Buy. The rest goes to the government.

And government red-tape means that even this receipt is only allowed to be used to pay for one third of the build costs of a new council home: we still need to find the other two thirds. Right to Buy proceeds are also not allowed to be combined with any other grant funding, so many councils are struggling to spend them in the time allowed by government.

All this red tape around right to buy receipts and grant funding would need to be scrapped as well if we’re going to maximise council home building and tackle the housing crisis.

So Mrs May, I’m afraid I really am going to need more than one sentence to be persuaded that you’re serious about tackling the housing crisis. Let’s face it – we need actions not words. We’re waiting.

Diarmaid Ward is a Labour councillor and the executive member for housing & development at the London Borough of Islington.

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