Innovation in council housebuilding: chapter six

This chapter focuses on the local authority drivers for council housebuilding.


The positive benefits centre on the theme of boosting affordable housing supply, especially meeting housing need and filling a gap in provision. In most cases, it is not ‘numbers’ that are significant – instead, it is quality and type of supply. An exception is Birmingham, where the council is the largest single provider of affordable housing (between a quarter and a third of all new homes built in the city each year). It is also important to signpost that there are concerns, especially among councillors, over provision by other public and private sector developers.

The findings in this chapter draw on the policy and research review, the case studies and the online survey. There has been considerable interest since the implementation of the self-funding settlement in 2012/13 on the motivations for local authorities to restart council housebuilding. There have been a number of relevant studies, including Morphet and Clifford (2017) and the Town and Country Planning Association (2017). However, there are difficulties in bringing together these different reports with this project. This is because these other studies take a wider perspective involving additional forms of direct delivery (such as LHCs) and the strategic enabling role of local authorities.

Earlier publications (for example the Chartered Institute of Public Finance and Accountancy and the Chartered Institute of Housing, 2016) are more useful but concentrate on the initial years of self-financing. In addition, these reports frequently discuss broader issues such as rebalancing government funding in favour of bricks and mortar subsidies (also referred to as object or supply-side subsidies) at the expense of subject or personal subsidies, such as housing benefit. These types of consideration were not significant in our online survey or case studies.     

A significant message is the importance of ‘doing’ – i.e. direct delivery. This has been particularly emphasised by local authorities that have small and/or intermittent programmes such as Nuneaton and Stroud. An officer in a non-case study authority that had halted its new-build programme on reaching the debt cap feared loss of momentum, making it difficult to resume in future. Members and officers in one non-case study local authority highlighted that even though their programme was less than 50 units over a five-year period, it was vital that the council was seen to be taking action by other providers and by the community. This was summed up by a councillor as “expecting housing associations and builders to provide rented homes does not look good if we don’t take action ourselves”. This type of comment links to an underpinning moral philosophy that ‘councils should be building homes’.

The overwhelming driver for council housebuilding centres on the types of supply of new housing. There are four overlapping dimensions:

  • meeting housing needs – over 90 per cent of respondents to the online survey highlighted this factor
  • filling a gap in the provision of affordable housing – nearly three-quarters of respondents
  • provision of new sub-market rented properties – nearly half of respondents
  • specific and different types and sizes of housing – approximately half of respondents.

The case studies provide a detailed insight. They firstly highlight the importance of new affordable rented housing  – factors such as social rent and affordable rent (for example East Riding of Yorkshire Council). Secondly, there is an emphasis on the type and quality of new housing. This includes (i) homes that meet the needs of older people wishing to downsize (Birmingham) and (ii) high-quality housing standards (including energy efficiency and environmental sustainability) (for example Stroud and Sutton).

Thirdly, there is the location of new housing. This encompasses infill plots on estates where there has been relatively little investment in new stock in recent decades through to small schemes in villages and towns, where there has been limited or no affordable rented property built for many years (such as North Kesteven). Fourthly, there is the quality aspect. This goes beyond the design standards for individual properties to encompass ‘planning for place’ and ‘neighbourhood sustainability’. Camden and Stoke-on-Trent are interesting examples of this focus on regeneration in contrasting housing markets.   

A range of other factors have been emphasised in previous studies. These include asset management of low-demand stock, replacing properties sold under right to buy (RTB) and making use of council-owned land. Some case study councillors drew on tenants’ support for retention of council housing as a driver for building to replace lost stock. This was supported by a tenant in a case study authority who wanted “millions more” in funding for councils to build.  

Although these were mentioned by most of the case study councils (especially replacement properties sold under RTB), they were not fundamental drivers for council housebuilding. Similarly, reports that have investigated the wider direct delivery and enabling functions have pointed to considerations such as tackling homelessness, supporting small and medium enterprises (SMEs) through construction contracts and providing local training and jobs. These are mentioned by councils in the case studies and in follow-up contacts with a small number of online survey respondents, but again, they are not major reasons for engaging with council housebuilding. Nevertheless, it is evident that especially for groups of councils with continuing and growing programmes, these factors are becoming more significant in making the continued case for local authority housebuilding, both internally and externally to other stakeholders.   

Finally, and related to the previous point, for local authorities that had initiated council housebuilding programmes prior to the 2012/13 self-financing settlement, one of the drivers was the ‘tried and tested’ nature of the approach (such as Birmingham and East Riding). Pilot schemes at the end of the last decade and beginning of the current decade had provided a base for moving forward to larger and more complex projects, utilising the growing in-house skills and expertise. 

Both this and previous studies have pointed to concerns by local authorities, especially councillors, on provision by housing associations and private sector housebuilders. There are many elements and cumulatively they have created frustration that has propelled direct provision (council housebuilding and LHCs) up the policy agenda. They include:

  • slow build-out rates by larger housebuilders that, in particular, detrimentally affects affordable housing provision through planning agreements
  • conflicting and different definitions of ‘affordable housing’, with concerns over the emphasis on low-cost home ownership and future worries over new initiatives such as starter homes and affordable rent-to-buy 
  • apprehension over the increasing emphasis by housing associations on market rent and market sale, which is seen as being at the expense of affordable rent
  • unwillingness to consider small difficult-to-develop sites such as infill sites on social housing estates
  • reluctance to consider the provision of affordable rented homes in specific locations such as villages 
  • type of provision (such as size of houses) that leads to an unbalanced mix of properties
  • perceived low quality (for example space standards)
  • lack of focus on the needs of vulnerable households through, for example, not adopting lifetime home standards for new homes
  • low environmental standards (for example energy efficiency to address fuel poverty issues).

Although boosting housing supply, especially affordable rented provision, is the most important reason for council housebuilding, it is the cumulative impact of and interplay between a wide range of factors that creates the conditions to take forward the concept of council housebuilding. The balance between all of these factors is different for each local authority. Furthermore, it is also evident that reasons and motivations change over time in response to local issues and the external environment.