Janet Sillett describes how councils have once again found a role in local housing provision
A popular view of councils is that they are bureaucratic, slow to respond, and frustrating to deal with.
Yet local government can be innovative and ambitious, with success ranging from Birmingham’s Joseph Chamberlain in the 1890s to the partnership working councils embrace now.
Local authorities are responding with determination to the devastating change in the economic climate – and this is especially true with housing.
Councils do not have the same influence in the housing market as they had 30 years ago. They have largely lost their development role, only a minority are landlords, and housing policy around rents and allocation is highly centralised.
Many local authorities, however, are determined to take the lead in protecting residents from the worst effects of the downturn – from providing expert advice to considering the rebirth of council mortgages, and from looking for opportunities to buy vacant private housing to developing plans to start building council homes again.
Regeneration across the country is at risk. An LGiU housing credit crunch seminar heard fromLiverpool City Council why it had to intervene to try and protect its major housing and regeneration programmes.
A key objective is to try and ensure first-time buyers gain access to mortgages, creatively modifying mechanisms that already exist. For example, in 2002, changes to private sector renewal enabled councils to offer a wider choice of financial assistance.
Liverpool City Council is going further in developing schemes to provide council-backed mortgages, in partnership with lenders. Of course, this is not new – there were 600,000 council mortgages in 1980 – but the context is different, and there are new powers that potentially can be used, such as the wellbeing power and prudential borrowing.
The former approach is ripe for updating, but there are risks in intervention. It cannot just happen overnight. The mortgage offers will have to be affordable, minimising risk to councils, lenders and recipients.
Offers will need to be targeted and long-term funding must be secured, but Liverpool City Council and other authorities clearly believe that they have no choice but to get involved.
Councils need, however, to be given greater borrowing flexibility to have a major role in prime lending. There must be a strong case for this, given the chaos in the banking industry, the drying up of capital, and the loss of confidence by the public.
The pre-Budget report (PBR) spelled out the Government’s concern about the drying up of mortgage finance, and it is considering the Crosby report’s recommendation that the Government uses taxpayers’ money to guarantee the market for mortgage-backed securities, but where do councils stand here?
Leaders have called for the Public Works Loan Board to encourage local authorities to actively revive their public banking functions, and for the chancellor to set aside public borrowing capacity for council mortgage provision and frame new guidelines in conjunction with local authorities.
Councils can already see the devastating effects of the steep decline in new house building in their areas. Again, local government is determined to take action.
London Councils, for example, is proposing to set up a new housing agency, Homes for London, which will operate separately from normal council housing. It will help boroughs buy existing or planned market housing from developers or housing associations, which will be offered for five or 10 years at intermediate or market rents.
Other councils want to develop homes themselves, but there are numerous barriers.
Allowing councils to borrow against their assets, to retain rent income and capital receipts would enable some to start to build again, on their own and in partnership.
The Government still has an ambivalent attitude to councils having a more direct role in new provision. It has acknowledged the role of local authorities in responding to the crisis in the housing market, but still plays down direct council provision. The housing Green Paper and the review of council housing finance need to remove the obstacles.
The Government’s response in the PBR to the shocking cuts in new social housing was, frankly, underwhelming. The amount of money brought forward for social housing is clearly inadequate.
The housing collapse should concentrate the mind – surely, amid this period of change, it is time to rethink conventional wisdom? The business model for housing associations is not working.
Obstacles are being put in councils’ way and the Government has discarded its finance rules in ‘extraordinary’ times. It is about it started being creative with local government finance and realistic about how much additional funding is needed urgently, if it wants councils and housing associations to rescue us all from a catastrophic housing future. n
Janet Sillett is a policy analyst at the LGiU’s Centre for Service Transformation
Yet local government can be innovative and ambitious, with success ranging from Birmingham’s Joseph Chamberlain in the 1890s to the partnership working councils embrace now.
Local authorities are responding with determination to the devastating change in the economic climate – and this is especially true with housing.
Councils do not have the same influence in the housing market as they had 30 years ago. They have largely lost their development role, only a minority are landlords, and housing policy around rents and allocation is highly centralised.
Many local authorities, however, are determined to take the lead in protecting residents from the worst effects of the downturn – from providing expert advice to considering the rebirth of council mortgages, and from looking for opportunities to buy vacant private housing to developing plans to start building council homes again.
Regeneration across the country is at risk. An LGiU housing credit crunch seminar heard fromLiverpool City Council why it had to intervene to try and protect its major housing and regeneration programmes.
A key objective is to try and ensure first-time buyers gain access to mortgages, creatively modifying mechanisms that already exist. For example, in 2002, changes to private sector renewal enabled councils to offer a wider choice of financial assistance.
Liverpool City Council is going further in developing schemes to provide council-backed mortgages, in partnership with lenders. Of course, this is not new – there were 600,000 council mortgages in 1980 – but the context is different, and there are new powers that potentially can be used, such as the wellbeing power and prudential borrowing.
The former approach is ripe for updating, but there are risks in intervention. It cannot just happen overnight. The mortgage offers will have to be affordable, minimising risk to councils, lenders and recipients.
Offers will need to be targeted and long-term funding must be secured, but Liverpool City Council and other authorities clearly believe that they have no choice but to get involved.
Councils need, however, to be given greater borrowing flexibility to have a major role in prime lending. There must be a strong case for this, given the chaos in the banking industry, the drying up of capital, and the loss of confidence by the public.
The pre-Budget report (PBR) spelled out the Government’s concern about the drying up of mortgage finance, and it is considering the Crosby report’s recommendation that the Government uses taxpayers’ money to guarantee the market for mortgage-backed securities, but where do councils stand here?
Leaders have called for the Public Works Loan Board to encourage local authorities to actively revive their public banking functions, and for the chancellor to set aside public borrowing capacity for council mortgage provision and frame new guidelines in conjunction with local authorities.
Councils can already see the devastating effects of the steep decline in new house building in their areas. Again, local government is determined to take action.
London Councils, for example, is proposing to set up a new housing agency, Homes for London, which will operate separately from normal council housing. It will help boroughs buy existing or planned market housing from developers or housing associations, which will be offered for five or 10 years at intermediate or market rents.
Other councils want to develop homes themselves, but there are numerous barriers.
Allowing councils to borrow against their assets, to retain rent income and capital receipts would enable some to start to build again, on their own and in partnership.
The Government still has an ambivalent attitude to councils having a more direct role in new provision. It has acknowledged the role of local authorities in responding to the crisis in the housing market, but still plays down direct council provision. The housing Green Paper and the review of council housing finance need to remove the obstacles.
The Government’s response in the PBR to the shocking cuts in new social housing was, frankly, underwhelming. The amount of money brought forward for social housing is clearly inadequate.
The housing collapse should concentrate the mind – surely, amid this period of change, it is time to rethink conventional wisdom? The business model for housing associations is not working.
Obstacles are being put in councils’ way and the Government has discarded its finance rules in ‘extraordinary’ times. It is about it started being creative with local government finance and realistic about how much additional funding is needed urgently, if it wants councils and housing associations to rescue us all from a catastrophic housing future. n
Janet Sillett is a policy analyst at the LGiU’s Centre for Service Transformation
