30 January 2015
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.
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
- Through business leadership, bringing together partners to meet
housing needs and help business make the most of local
- Management of housing supply through identifying and bringing
forward land for development, making active use of planning
- 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
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
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
to the Elphicke-House report