If the government wants a council housebuilding boom, it should give mayors a bigger role, writes Maurice Lange, senior analyst at the Centre for Cities
The government has set itself an ambitious goal: delivering the biggest council housebuilding programme since the post-war period.
It is a good ambition. More council housebuilding would help tackle homelessness and long waiting lists, increase overall housing supply and support economic growth.
Centre for Cities’ new report, Rewiring Council Housebuilding, sets out what a council housebuilding programme for the 21st century should look like. At its heart are two arguments: government needs to put more money into public housebuilding, and it needs to make much better use of that money.
The first point is settled. Social and intermediate rents do not cover the full cost of building and maintaining new homes, so council housebuilding requires subsidy.
The government’s £39bn Social & Affordable Homes Programme is a substantial commitment – twice as large in real terms as spending during the 2010s. But it remains small compared with historic public housebuilding programmes, and achieving the highest sustained building rates since the 1970s will require more money.
Just as important, however, is where that money goes.
Targeting housing need
The sharpest housing pressures are concentrated in cities. London and other large cities tend to have longer council housing waiting lists, worse private rental affordability and greater pressures from temporary accommodation.
These pressures are also bound up with economic success: productive cities create jobs and opportunities, but competition for scarce land pushes up housing costs.
Yet public housing grant is not currently targeted in a suitable way according to these pressures. Large cities, and London in particular, should receive a substantially larger share of grant funding than is currently planned.
An effective programme should direct subsidy towards places where housing need is greatest and where a lack of housing is most likely to constrain economic growth.
A bigger role for metro mayors
Housing markets do not stop neatly at council boundaries. This is particularly obvious in large cities such as Manchester, Birmingham or London, where people live, work and move across several local authorities.
Central government should therefore increasingly devolve public housing grant to established mayoralties, with mayors taking responsibility for coordinating how it is spent.
This would improve on a system that relies heavily on housing providers bidding into centrally managed funding pots. Short-term and project-by-project funding mostly aimed at housing associations makes it harder for councils to build permanent development teams, acquire land in advance or plan a long-term pipeline with confidence.
Mayors could instead offer councils longer-term funding agreements, giving them certainty over how much grant they can draw down over a number of years. That would allow councils to coordinate grant with their own land, borrowing and any income generated through market development.
Mayors should also play a larger role in coordinating delivery across their city. They could agree housebuilding targets with constituent councils based on the funding they receive, the land available and local development viability. Mayoral Development Corporations could also play a greater role in assembling land and unlocking large regeneration sites.
Mayors can also help address mismatches between where new council homes can be built and where demand is greatest. Some councils will inevitably have more land or greater capacity to build than their neighbours. High-priority households should have the option of accessing new homes across their wider city-region if being rehoused more quickly matters more to them than remaining within one council boundary.
Our report therefore recommends that mayors play a role in coordinating both housing supply and waiting lists across authorities.
None of this removes the role of councils. Councils will continue to own housing, manage waiting lists and homelessness services, acquire sites and, crucially, build homes. Central government will also remain essential: it must provide sufficient grant, make it easier to acquire land using compulsory purchase, reform policies which unnecessarily increase construction costs, and give councils greater financial flexibility.
But mayors can provide the layer that is currently missing between Whitehall and individual local authorities. If the government really does want the biggest council housebuilding programme in generations, it should start by recognising that it needs to be organised city by city.
