David Montague

David Montague urges Chancellor to liberate councils to ease housing crisis

After more false dawns than I care to remember, housing finally seems to be top of the government’s domestic agenda.
Published on 13/11/2017

After more false dawns than I care to remember, housing finally seems to be top of the government’s domestic agenda.

There is an acknowledgement, explicitly referred to in a White Paper earlier this year, that Britain has “a broken housing market” and supply of all housing tenures must be urgently increased.

At Conservative conference last month, the Chancellor announced another £10bn for Help to Buy and the Prime Minister offered an additional £2bn specifically for social housing. Perhaps more important than the funding was the language: there was talk of a new generation of council housing, and a pledge by the PM to take personal ownership of the housing crisis.

True to her word, Theresa May convened a summit at Number 10 to hear what the housing experts have to offer.

From a housing association perspective, I spoke about the importance of flexibility, partnership working, investment in skills and the need to deliver land.

Alongside me was Lord Gary Porter, urging the government to lift the Housing Revenue Account borrowing cap, let councils keep 100% of Right to Buy receipts, and ensure adequate funding for planning departments.

The very fact that housing associations and local authorities were represented at this summit was positive. Government is engaging with all housing providers, and sees that the rental market is just as important as home ownership.

So what can Phillip Hammond offer in his first autumn budget to get Britain building? With Brexit on the horizon and a determination to bring down the deficit, the Chancellor has little room for manoeuvre, but there could be a review of what we have now and how we can make the most of it.

Even with Help to Buy discounts, the average age of a buyer remains stubbornly in the late 30s. The first rung of the ladder is too high for younger people, so I would like to see Help to Buy adapted to include shared ownership. With shared ownership grant currently at £30,000 per unit, £10bn would fund 330,000 new homes – compared to 135,000 on offer under Help to Buy – and lower the first rung of the ladder.

I also think it would be a major step forward if the Chancellor took the advice of Lord Porter and lifted the HRA borrowing cap.

Since the 1988 Housing Act housing associations have borrowed almost £70 billion and now own and manage 2.7 million homes – conservatively valued at around £400bn.

Housing associations also deliver an annual surplus in excess of £3 billion, every penny of which is reinvested in homes and communities. 

If local authorities had been given the same ability as housing associations in 1988, perhaps we would now be talking about a housing crisis in the past tense.

Liberating local authorities in this way would not lead to a massive and overnight increase in debt.  Like housing associations, they would need to acquire the skills, develop business plans, gain the confidence of investors and grow carefully over many years.

Housing associations would be only too happy to stand alongside them, building on our existing partnerships to ensure that we can eventually return to a time when everyone had a quality affordable home, and a clear pathway to ownership.

This blog was first published by the Local Government Chronicle on 13 November 2017

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