Innovation in council housebuilding: executive summary

This study focuses on council housebuilding through a detailed investigation of actions on the ground.

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Introduction

This study focuses on council housebuilding through a detailed investigation of actions on the ground. In aggregate terms, output has been running at between approximately 1,000 and 2,000 units per year. However, with a more positive national policy framework, this could rise substantially. Furthermore, there is considerable evidence at the local level of innovation, which is defined as ‘creating, developing and implementing practical ideas that achieve a public benefit’.   

National policy framework

There is a growing interest in council housebuilding. This will expand significantly over the next few years. The Government’s Social Housing Green Paper, together with the inquiries being led by, for instance, the Chartered Institute of Housing and Shelter, will raise its profile. The Labour Party’s housing green paper, published in April 2018, states: “We want to revive the role of councils to build again at scale and kick-start the biggest council housebuilding programme in more than 30 years.” In London, the Mayor announced in May 2018 the launch of a ‘Building council homes for Londoners’ programme which will deliver 10,000 new properties over four years.

Furthermore, a series of announcements by the Ministry of Housing, Communities and Local Government has given some limited encouragement:

  • a £2 billion boost to affordable housing provision
  • an ‘in principle’ selective £1 billion increase in individual housing revenue account borrowing headroom in autumn 2017, followed by a detailed bidding prospectus in June 2018
  • a more stable business planning environment by setting annual rent policy for five years post-2010 at the consumer price index plus one per cent
  • consultation on flexibilities in using the receipts from right to buy sales.

Nevertheless, councils require significantly greater housing revenue account funding freedoms from Government, as well as the local retention of capital receipts from right to  buy, if the potential of council housebuilding is to be achieved.

Research

The findings draw on three major activities:

  • a review of policy and research (primarily since 2015)
  • an online survey of councils that have retained their housing stock
  • 10 detailed case studies. 

Council housebuilding through the housing revenue account (HRA) is sometimes referred to as direct delivery. However, care is needed, as some reports on the role of councils as housing enablers also use this term to include properties built by local housing companies.

1. Local case for council housebuilding

It is essential to continually highlight the benefits of council housebuilding to local stakeholders including tenants.

These benefits include:

 - addressing local housing requirements that are not being met by other providers, such as developing properties that meet the needs of homeless households (and therefore link with the focus on homelessness reduction)
- investing in neighbourhoods where there has been little action in recent years
- setting high-quality design standards 
- creating added value through training and jobs for local people and boosting the local economy by supporting small and medium enterprises in the supply chain
-  growing in-house development skills that can also be used elsewhere in the council.

2. Flexibility 

Council housebuilding is part of the solution for boosting the affordable rented housing supply. It can, however, be integrated with other types of provision to ensure mixed tenure neighbourhoods. This might include low-cost home ownership, open market sale and private sector build-to-rent. It requires a willingness and flexibility to co-operate with housing associations and other providers, especially on larger sites.

Moreover, changes in national policies often necessitate switching the emphasis between programmes, as has happened in recent years when councils found it difficult to continue with planned council housebuilding schemes and thus shifted attention to local housing companies. The growing interest in council housebuilding may encourage a switch back from local housing companies in the future. 

The need for flexibility reinforces the importance of councils as housing enablers, which sets the context and culture for an overall planned programme of actions to boost affordable housing supply.    

3. Quality as well as numbers

There is, rightly, considerable focus on boosting the supply of affordable rented housing and making sure that it is delivered quickly and effectively. However, there is a danger that this will result in less attention being paid to the quality of homes and neighbourhoods. This study demonstrates the role of council housebuilding in:

  • developing new types of homes that meet the needs of the local community, such as dormer bungalows for older households ensuring that wherever possible, new housing adheres to the principles of lifetime homes standards
  • incorporating high environmental standards that, for instance, have the added benefit of helping low-income households achieve affordable energy bills
  • involving existing tenants and communities in planning the redevelopment of council estates, leading to a focus on the provision of a range of housing types and improved local facilities such as schools and community hubs.
4. Exemplars

New council housebuilding is increasingly viewed, especially by councillors, as an exemplar for other providers. This is based on concerns that the location, quality and type of housing provision does not always reflect the wide range of local requirements. 

For example, providing high-quality environmentally sustainable homes through the use of in-house design standards can be used to encourage other housebuilders to ‘up their game’ and address concerns frequently raised by residents over the relatively poor quality of new housing provision. This ties in with the Government’s recent focus on emphasising good housing design. 

Similar points apply, for example, to the development of sites and filling gaps in provision. In relation to the former, councils have utilised small infill sites (such as disused garage courts) that are unattractive to other developers. In relation to the latter, the case studies demonstrate, for instance, how councils have provided new affordable rented housing in villages that has helped to sustain local communities. 

5. Opportunities

There are, of course, significant local (as well as national) challenges such as the unavailability of sites and lack of skills. Nevertheless, the case studies show that councils are working hard with the resources that are available to ensure the best for their communities.

For instance, they are deploying a number of strategies to address the lack of sites, including:

purchasing land on the open market making use of planning agreements to purchase properties working with public and private landowners to unlock sites developing mixed tenure neighbourhoods (including council housing) on large strategic sites.

6. Collaboration 

A recurring theme throughout the research has been the importance of collaboration and joint working. This includes:

  • co-operation within councils to co-ordinate council housebuilding as part of their housing enabling role with asset management policies, planning strategies, regeneration plans and training initiatives
  • involving tenants and local communities in the design and delivery of regeneration schemes
  • working with other partners including adjoining councils, housing associations and housebuilders on sharing expertise, unlocking strategic sites and developing mixed tenure neighbourhoods. 
7. Leadership

A frequently repeated message from the case studies is the significance of local leadership. It links with the housing enabling role of councils. It involves councillors and senior officers confirming the importance of council housebuilding internally and to external stakeholders.

There are a number of interlinked elements:

 - ensuring that the provision of affordable rented housing through, for instance, council housebuilding is at the top of or high up the local agenda 
 - guaranteeing a strong corporate approach on council housebuilding by, for example, bringing together housing, planning and regeneration activities
 - highlighting to external stakeholders the role of council housebuilding.

 

The external face is particularly important. Firstly, it helps to show that councils are committed to taking direct action on the crisis of affordable rented housing. Secondly, it highlights to the local community that councils are taking action and investing resources in neighbourhoods that may not have seen any new housebuilding for a number of decades. Thirdly, by promoting council housebuilding as one element of affordable rented housing provision, it can overcome possible concerns of other providers, such as housing associations, which may initially see it as a threat to their programmes.    

 

8. Localism

One of the many strengths of council housebuilding programmes is that they have been designed to reflect local circumstances. Specific national funding initiatives with detailed requirements and tight timetables have not been popular. Instead, individual councils have set up pilot projects to ‘test the water’ in terms of meeting needs, understanding the development process, assessing financial viability and identifying skills requirements (such as project management). These have been assessed, leading in many cases to a political commitment to roll out larger programmes.

Unfortunately, changes in national policies since self-financing was established in 2012 have resulted in these being curtailed or changed. Thus, a key message for the government is that councils have the ability to deliver on high-quality affordable rented homes, but they require a stable and flexible policy environment that enables the design and delivery of programmes that meet local requirements.

 

Major recommendations  

The focus of this report is ‘innovation by local authorities in building council housing’. The recommendations are, therefore, centred on creating the local conditions necessary to take forward this agenda.

Councils 
  • develop a strategic framework that sets out the role and function of council housebuilding to address local issues
  • ensure there is political commitment
  • emphasise the added value of council housebuilding, for example providing training and apprenticeships and helping the local construction supply chain
  • ensure that there is a full understanding of the funding opportunities for council housebuilding
  • promote the exemplar role of council housebuilding in encouraging other developers to ‘up their game’ in terms of quality
  • collaborate with housing associations and developers to address issues such as skills gaps  
  • work with adjoining councils and, where appropriate, combined authorities over joint initiatives on council housebuilding, such as sharing expertise and funding
  • have ‘shovel-ready’ schemes that can be brought forward in response to government funding initiatives  
  • take an active role in debates on the future of council housing by, for example, commenting on the Social Housing Green Paper and participating in other national inquiries.
Housing associations and the National Housing Federation

There are sometimes concerns among housing associations over the promotion of council housebuilding by local authorities, which may be seen as a potential threat to their own activities. This can be overcome by:

  • encouraging a better understanding the specific role of council housebuilding in each area
  • liaising with councils on issues of mutual interest, such as the role of planning agreements in providing affordable housing for both local authorities and housing associations. 
Housebuilders and the construction industry

Housebuilders and the construction sector have relatively little awareness of council housebuilding, meaning there is a strong case for:

  • encouraging a better understanding of the role of council housebuilding
  • promoting joint working with councils on, for example, tackling construction costs through taking forward recommendations in the ‘Farmer review of the UK construction labour model’ such as investigating modern methods of construction.
Professional organisations

Professional bodies such as the Chartered Institute of Housing (CIH) and the Chartered Institute of Public Finance and Accountancy (CIPFA) have an important role in:

  • highlighting to their members the role of council housebuilding through, for instance, publications and events
  • ensuring that members are aware of the skills that are required by councils to have an effective council housebuilding programme.