Constructive debate

After decades of being sidelined from house building, councils are finally emerging from the shadows. Last week some of the major players among the new generation of council house builders debated the key issues at a question time event hosted by Inside Housing.

There was plenty to talk about - from the level of funding set aside by ministers for new council homes to central government’s proposals to allow councils to leave the housing revenue account subsidy system and become self-financing.

Councils as developers

On the subject of the role of local authorities in house buiding, Steve Douglas, director of housing and regeneration at consultancy DouglasWood, argues that: ‘The doubt is not about whether they should have a place at the table. In my view, it is about whether they have the skills. It will take time to get the skills to deliver on the required scale and manage the risks associated with development.’

Jon Rouse, chief executive of Croydon Council and former Housing Corporation boss, suggests that: ‘The idea we [councils] will grow 440 new development teams is bonkers. What we need to do is have a shared service where maybe we have a number of local authorities in London that have the competence and can make it available to wider number of local authorities. The other alternative to contract out that to a registered social landlord.’

Matthew Taylor, MP for Truro and St Austell (Liberal Democrat) and chair of the National Housing Federation, says: ‘I do not think that should lead to local authorities being the lead developers - that is not how communities are most empowered. We do not need to own the land. We have to be in control of the assembly of it.’

He added: ‘Urban renewal programmes have learned lessons about this. They are almost always mixed developments, but we do not apply it to new build on the edge of towns and communities and the result is they are mostly appalling.’

Mr Rouse laments: ‘The shame is the Homes and Communities Agency has not been set free by the government to use its resources flexibly to enable the strategic acquisition of land and investment in infrastructure. Almost all of its resources have gone into back-ended gap funding of existing schemes, which it is paying almost twice as much for as it would have done few years ago.’

Financial reform

Next up was the thorny issue of reform of the housing revenue account susbsidy system. The government is due to publish its plans for the future of the system imminently, but some councils are worried by the suggestion existing housing debt could be redistributed between them.

Mr Rouse says Croydon could live with a 10 to 12-year payback period of redistributed HRA debt and be able to keep all its surpluses in future. London boroughs could look at the idea of a voluntary deal for the capital to leave the HRA subsidy system, he says, although they had not yet agreed on the numbers.

Croydon gives £16 million of its tenants’ rents back to Whitehall each year, which is redistributed to councils whose HRA is in debt. Westminster, meanwhile, is currently a ‘minor recipient but we are about to contribute,’ says Philippa Roe, cabinet member for housing at Westminster Council. The authority has set up a housing charity to take ownership of its new build properties and homes undergoing refurbishment which, she claims, ‘frees us from the straightjacket of the HRA,’ although rent from properties built through the government’s current new build funding programme are au-tomatically kept outside the HRA too.

Mr Rouse thinks the government should be looking at the size of councils’ general funding reserves to see whether they could pay for repairs, management and maintenance rather than automatically taking the HRA surpluses of other councils and redistributing them to those with an HRA debt.

Tenure reform

The issue of tenure raised its head in two forms. On one hand, the introduction of council new build should have been seized as an opportunity for tenure reform, such as shortening tenancy periods to encourage mobility, suggests one audience member.

Mr Douglas agrees saying he hoped to look at other forms of tenancy in Hackney such as shorter terms, intermediate, rent now buy later and use of empty property. He warns against allowing local authority new build schemes to become mono-tenure - because councils are only funded to build social rented housing - and said other tenures such as intermediate rent should also be introduced.

Mr Rouse says that pressure for tenure reform will grow as the demand for social housing gets further out of step with supply. Public objection to the changes to the existing secure tenancy will be outweighed by anger at supply shortages, he predicts.

Looking ahead

It has been more than 20 years since councils built new homes in any quantity and now they are beginning to build once more. But where could they be in 25 years’ time? Mr Rouse foresees a role for councils as a ‘commissioner’ of affordable housing. But for those who build there may be a survival of the fittest culture.

‘Of those who become developers, some will crash and burn, some will dabble and give up, 25 to 30 nationally will achieve critical mass and become developers in their own right,’ says Mr Rouse. Those survivors may spin off into local authority trading companies or management-employee buyouts and build homes beyond their home borough, he anticipates.

Mr Taylor, though, believes councils will take more of a co-ordinating rather than a developing role. ‘I believe the future is about the delivery of stable communities with not just social housing but market and intermediate housing too,’ he says. ‘Not just housing but job opportunities, facilities, shops, restaurants, cafes, things that make communities function; that is what local authorities will be about.’

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