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Elphicke-House report on the local authority role in housing supply 18/02/2015

ARCH briefing 01/2015


Issued by:

Issue date:
30 January 2015


Key proposals: 
Councils could and should achieve much more by taking a more central role in providing new homes.  They should not be just statutory providers but Housing Delivery Enablers.


The Government should look again at the arrangements for replacement of homes sold under RTB including considering the case for additional borrowing.


The Government, with the LGA, should establish a Housing Finance Institute to provide research, advice and guidance on innovative financial mechanisms for new housing provision.


In January 2014, announced an independent review into the local authority role in housing supply, led by Natalie Elphicke, Chair  of Million Homes, Million Lives and Keith House, Liberal Democrat Leader of Eastleigh BC.  The review was asked to consider whether local authorities are making the most of their existing powers and flexibilities to deliver new housing.


The review's terms of reference precluded any recommendation that would lead to an increase in public borrowing.


Key points:     
Councils are encouraged to become Housing Delivery enablers. The report breaks down this enabling role into five elements:


  • Providing strategic clarity around housing need, growth and opportunity in the area;


  • Through community leadership, creating local opportunities by galvanizing and securing local support for housing and business activity, developing local skills and making the case for housing and growth;


  • Through business leadership, bringing together partners to meet housing needs and help business make the most of local opportunities;


  • Management of housing supply through identifying and bringing forward land for development, making active use of planning powers;


  • Providing access to resources to support housing - development finance, long-term investment, sales guarantees.


While community leadership and the strategic housing role are not new for councils, the report found that performance varies and urges all councils to take a more active role.  In particular, housing strategies need to be more robust and take better account of housing demography and tenure choice.  More attention also needs to be devoted in some areas to engaging local communities and winning their support for the local strategy.  Housing needs assessments were found to be variable in approach and quality, and in their clarity and accessibility.  Councils are urged to work together more where housing market geography spills over local authority boundaries.  The LGA is asked to consider how its peer challenge scheme can be used to support delivery of these improvements.


The review's terms of reference precluded any increase in local authority borrowing, but the report recognizes that current arrangements for RTB replacement are failing to deliver one-for-one replacement and asks the Government to look again at these arrangements, including additional borrowing to ensure one-for-one replacement.  Recognising that councils already have powers to build homes outside the HRA, the report nevertheless calls on Government to publicise this fact, and - to help councils which have transferred their stock - to raise the maximum of "council" homes that can be built without an HRA from 50 to 200.


The report's discussion of the relative efficiency of building by councils, housing associations and private builders is thin on evidence.  The review was unable to find evidence of any systematic difference between local authority and housing association construction costs.  Councils are recommended to periodically market test services to ensure value for money.


Councils are urged to be more active in identifying land for housing development, encouraging smaller builders and new construction start-ups.  Helpfully, the report notes that many councils report difficulties in securing release of land held by other public sector bodies on acceptable terms, and calls on government to consider giving councils a new power of direction allowing them to dispose of sites owned by other public bodies.


The review found many examples of innovative financial mechanisms used to provide new housing - 14 distinct approaches are listed in the report.  But the reviewers also found that many councils lacked the knowledge, skills or confidence to take advantage of these opportunities.  To address this problem they propose a new Housing Finance Institute to act as a source of research, advice and guidance. 


Overall, the reviewers make few recommendations for changes in Government legislation or policy.  The main thrust of the report is that councils can do more within the current framework - as the more innovative councils are already demonstrating.  Of the report's 30 recommendations, 11 are for action by councils, and of the 15 recommendations for Government, the majority relate to publicizing, clarifying or issuing fresh guidance in relation to existing legislation.


ARCH Comment:  
The report, disappointingly, fails to suggest that changes are needed to the planning system to enable councils to make more use of planning gain as a source of development finance, commenting only that there is no appetire for further planning reform.  It is also largely silent on just how councils can justify and pay for enhancements to their strategic and enabling housing role - which must be largely funded from the General Fund - in the current financial climate.


Link to the Elphicke-House report

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