By forcing local authorities to rethink their inner workings, austerity may have caused them to become more innovative. Janice Morphet investigates whether this holds true for housing. She explains how the traditional means of provision have changed over the past few years, enabling local councils to improve their assets and to also address their social purpose.
While no one would suggest that austerity should be used to promote innovation in local government, it is almost a necessary outcome. Local authorities cannot survive without reviewing what they do and how they do it. For some services, this has meant delivering in new ways, reversing outsourcing or engaging directly in the market.
Although very little noticed, this is what has been happening in local authority provision of housing. While being hampered from providing housing through the traditional means of the Housing Revenue Account, local authorities are using powers in sections 1-7 in the 2011 Localism Act and the new International Financial Reporting Standard now operated in the public sector to provide housing of all tenures using their general funds.
By March 2017, over 180 local authorities are engaged in some form of housing provision, using more than 27 different methods, most of which are outside the traditional Housing Revenue Account. The government remains lukewarm about this. Although recognising local authorities as providers, in the recent housing White Paper, Fixing our broken housing market the government proposed that any new homes delivered by local authority housing companies or other means would be subject to right-to-buy requirements. This approach has subsequently been reversed by Ministers, but it remains in the text and serves as a disincentive to those councils yet to engage in these programmes. But for the rest, housing has returned to their agendas.
Why are local authorities getting involved in housing provision again? There are those with major development programmes such as Corydon, which uses its own company Brick by Brick to undertake development on over 200 of its local authority owned sites. Croydon is motivated by the generation of income as local government finances change. That is also the case for Birmingham and the city council which also wants to provide well-designed housing directly to try to encourage private homebuilders to do the same.
Some councils are motivated by the need to tackle homelessness costs. These are £2m per week for local authorities across the country and frequently local authorities are paying rent to owners of former council properties. By acquiring housing directly, local authorities have the benefit of an asset, they are reassured about the quality of the property, and receiving the rents. Luton is working with a hedge find to develop housing for social rent to deal with homelessness. In many cases, local authorities are also building for a range of tenures – affordable and social rents as well as market rents, for shared ownership and for sale.
Some councils are seeking the provision of housing as an important public provision agenda. These authorities are looking at hidden homes opportunities on their own housing estates such as redeveloping garages, building extra floors on top of council blocks, and additional homes through end extensions. These approaches also include looking at smaller sites where housing development may be more expensive. However, packaging some of these sites together and using smaller local builders can serve to support the local economy and provide housing but also to contribute to local place making.
Other local authorities want to regenerate their places – Kingston recently announced a partnership for 2,000 homes in its town centre, while both Enfield and Barking and Dagenham have recently taken major loans from the European Investment Bank to support regeneration and growth.
These approaches are not only the work of London councils. There are major activities happening in other regions such as the East Midlands. For example, Nottingham City Council is using a range of means including a partnership in a development company with Igloo backed by Aviva, another partnership with a builder developer, operating as a registered provider through a housing association and delivering homes using traditional Housing Revenue Account methods. The council is also attacking abandoned buildings and vacant sites using planning powers to encourage development.
Elsewhere in the East Midlands, Daventry, Mansfield, Blaby, West Lindsey, Lincoln, North Kesteven, South Kesteven and South Holland are all engaged in housing development on sites that the local authorities own. Leicester city is also building using its new homes bonus receipts.
Just how many new homes are being provided through these methods? And is the emerging engagement of local authorities in the market making a difference overall? As yet we do not know but a current research project which has been funded by the National Planning Forum and the Royal Town Planning Institute is aiming to find out. During 2017 the research team will be holding round tables, undertaking detailed analysis of activity and undertaking six case studies. At the end of the project it is intended to publish the details of all local authority housing activity that has been found in England so that this can be shared. The research will also address the legal powers and financial models being used.
Local authorities are emerging as a group of patient investors with a long-term interest in their places. The income generated from rents and sales through housing companies can support wider local authority programmes or, as in the case of Birmingham, 70 disadvantaged young people through construction skills training. Local authorities can offer better standards and work with smaller builders, where appropriate, to create a more consistent flow of work and provision.
Finally, providing housing again appears to be re-energising some local authorities. Rather than waiting for developers to build out unimplemented consents, they can directly engage in housing provision, improve their income and assets, while also addressing their social purpose. And they are all doing it in their own way…
Janice Morphet is Visiting Professor at the Bartlett School of Planning at University College London.