for the idea that councils should play a much greater role in house
building has come from some expected - and less expected -
quarters, in submissions to the Lyons Housing Review.
ARCH, CIH, LGA and the National Federation of ALMOs have all
argued for lifting HRA debt caps to allow councils to borrow to
prudential limits. No surprises there. But support for
the public sector to play a bigger role has also come from the
Council of Mortgage Lenders, whose submission points out that new
build activity has only exceeded 200,000 once in the past 30 years,
since councils stopped building on a large scale.
ARCH's submission argues that, while Labour's
aspiration to deliver 200,000 homes a year by the end of the next
Parliament is realistic, the long-term ambition should be to reach
at least 250,000 new homes a year, of which a third need to be
affordable homes at sub-market rents. This would involve expanding
private sector output by about 60 per cent over current levels, but
by only about 15 per cent above what was being achieved before the
recession. The output of affordable housing, by contrast needs to
be doubled, to a level of output never achieved since housing
associations took over the main responsibility for new social
housebuilding. There is an obvious case for letting councils
In another submission to the Review, the G15 group of London's
largest housing associations said a 'big increase in the government
subsidy budget is a pre-requisite for a big increase in affordable
housing production'. Not if HRA debt caps were removed to
free councils to build.
Council HRAs have the financial capacity without external subsidy
to support an additional £20 to £25 billion in investment, enough
to support the construction of perhaps 20,000 homes a year over a
sustained period. The only obstacle that needs removing is
the prejudice that council borrowing on the HRA should be subject
to the same constraints that apply to general government borrowing
even though it will be repaid from rent income and not
The ARCH submission reviews other approaches to the delivery of
new housing in which councils are involved, including wholly-owned
council companies, such as Gloriana Thurrock, and partnerships of
various types between council and private sector partners, often
involving housing associations as well.
It argues that such initiatives have an important role to play,
but can be legally complex and time consuming to manage. A
simpler alternative would be to provide more flexibility for
councils to build for sale and market rent in the HRA.
The submission also reviews the contribution to the supply of
affordable housing available from so-called s106 agreements on new
private developments, and more recent Government initiatives
including the Community Infrastructure Levy and New Homes
It concludes that there is more potential to fund infrastructure
and affordable housing through planning gain than these new
measures seem likely to deliver.