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Government / Local politics

To solve the housing crisis, we should give councils freedom to borrow

The government has this week launched a £54m package aimed at helping local authorities make the most out of their surplus land for housing. This includes a £45m ‘land release fund’, through which cities will bid for cash to remediate sites for residential projects, and to build any extra infrastructure required to unlock awkward or remote sites.

The new announcement will also see an extra £9m made by One Public Estate, a partnership between the Local Government Association (LGA) and Cabinet Office which offers funding and support for councils to “deliver ambitious property-focused programmes”.

These initiatives reflect the need for local authorities to make the best possible use of the disused land and buildings at their disposal, as set out in our recent report and previous research on this issue from 2015. Both of these reports discussed the LGA’s One Public Estate programme as a significant help, giving cities and local authorities under huge budgetary pressure the resources to help them look at their public assets and how they can be used to reduce costs, reform services and earn capital receipts from the disposal of any surplus property.

The new package announced by the government this week should make a difference in realising one of the central ambitions for the One Public Estate programme of releasing surplus council-owned land for 160,000 homes by 2020. Few people would doubt the need to do so: house prices are now at least seven times higher than average local wages in 34 of 63 UK cities, and new development will bring life and economic activity to neglected or underused parts of cities. All funding to help get more homes built and support city economies is therefore to be welcomed.


But if the underlying goal is to get more homes built, then the expansion of bid-based, centrally-directed pots of money seems like a needlessly bureaucratic way for cities to try to make the most out of their assets. Instead, it would be simpler – and more in-keeping with the spirit of the government’s continued ambitions of greater devolution – to give cities with existing social housing stock greater freedom to borrow against that steady revenue to build more housing, and in particular affordable housing. After all, local authorities already have the supply chain and infrastructure in place to get more homes built – lifting the cap would give them more of the autonomy they need to go ahead and do so.

We’ve called for the removal of restrictions on councils’ ability to borrow money in order to invest in new housing on several occasions, as have cities and the LGA. But while many local authorities have headed to the Public Works Loan Board to invest in assets that will provide the returns needed to plug their finances (as well as take a greater role in shaping their economic development), borrowing more to build more homes as this programme argues is seemingly off the table.

At a time when Brexit will be consuming the time and concentration of civil servants across Whitehall, adding another round of drafting proposals, entering bids, assessing entries and deciding on winners seems to be an unnecessarily convoluted way of achieving One Public Estate’s aim of getting more homes built on council-owned land.

Simon Jeffrey is a researcher and external affairs officer at the Centre for Cities, on whose blog this article first appeared.

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