Latest / Centre for Cities / City Talks: The new Prime Minister's plan for council housing

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City Talks: The new Prime Minister's plan for council housing · Centre for Cities

0:06
Welcome to City Talks, where we discuss the big issues facing UK cities
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and the latest thinking on urban policy with expert guests.
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I'm your host, Andrew Carter, from the think tank Centre for Cities. Enjoy the
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episode.
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Welcome to this episode of City Talks. Today I'm joined by
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my colleagues Anthony Breach and Maurice Laing, and we're going to be talking about
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housing. And in particular, we're going to be unpicking
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the statements and comments that the new Prime Minister
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has made, Andy Burnham, about housing, and in particular his emphasis
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on council house building, why he's emphasised that,
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what that might mean more broadly, So we're going to try and figure out what
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he means by council house building. How does it fit into the broader urban housing
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crisis, which we've definitely written about and talked about for a very long
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time? And if we are to see a meaningful change, both in house
1:05
building more generally and council house building within that, what additional
1:09
reforms are going to be needed around for the planning system? How do
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we think about density and all of that? So we're going to explore these different
1:17
elements. Maurice, you kick us off, take a step back. As I
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say, in his opening speech, which was a couple of weeks ago now, talked about
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housing in general but also about council housing. Just paint
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a bigger picture about the nature and shape of the urban housing crisis.
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Why was it in that speech? What do we know about it? What have we
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written about it? I think Andy Burnham is absolutely right.
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In his speech, he described the UK as being in a housing trap,
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as housing supply being the source of a lot of problems.
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I think we'd definitely say there's something not
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working very well with how we build houses in cities. That's due
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to the planning system constraining the way that the urban form evolves,
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such that we've ended up with cities with far fewer homes in them and
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closer to the city centre than in comparable countries.
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And that's also on council housing, affordable housing. You know,
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we've got incredibly long temporary accommodation waiting
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lists. A temporary accommodation crisis paired with very long
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council housing waiting lists is clearly an issue with people on lower wages
2:20
being able to access jobs in cities or
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live in them at all. Yeah. And obviously we've written and
2:29
talked about housing and the housing crisis for quite a long time with some
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big numbers. I mean, Maurice has given us a sense of some of the issues,
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but we've also attached quite large numbers to those sort of problems,
2:40
which is decades in the making, not just more recent.
2:43
Yes, that's exactly right, Andrew. So we did some research a few years ago looking
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at how many houses have we underbuilt relative to other European countries.
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Since the introduction of the planning system in 1947,
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found that relative to the average Western European country, we're missing about 4.3
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million homes. It's about 13, 14% of
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the country's housing stock.
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And if you look then within cities in particular, we've done some more recent research
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led by Maurice, suggesting we found over 2 million houses are
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missing from our cities being lower density than their peers in France
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and Japan. So I think it's important
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to stress that this housing shortage, this absence of building
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in the country, it's bad. It's causing
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a bunch of social problems, but it's also causing a large number of economic problems
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as well. Some of those are quite short-term in terms of low construction.
3:42
We're missing construction jobs as a result of this. Having lower investment rates as
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a result of this. But also I think this is where, you know, we have
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particular interest, is it has impacts on agglomeration effects
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and on urbanisation as well. Yeah, and Maurice,
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I was going to say, he kind of talked about an emphasised council
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building particularly. We'll come on to the ownership and
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the control aspect of that agenda for a minute.
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We've all seen and all used and we've produced our own versions of
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house building over the longer term and the relevant contribution that the private
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and public and non-public, non-private have made to that. So again,
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just paint us a picture because he talks about going back to
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days of past. Just give us a sense of how the non-private
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contribution has evolved and changed over time. Yeah.
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So the non-private contribution, which in this context
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I guess you take as subsidized, not market rent housing. Yeah,
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it's not an easy way to describe it, use an actual term.
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Maybe non-private is not the best way, but— We called it public because
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understanding that it is a non-market good. And so
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in the post-war period, the first 10 years after Second World War,
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it was building 80% of all housing. The 25 years
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after that, There's a mixed public-private model, but the
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public sector is still building over 100,000 homes a
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year, every year. And then you see a really distinct change
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in that through the '80s, after a combination
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of the introduction of the right to buy and the reduction in grants
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for public house building. It doesn't disappear completely,
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and there's a transition from it being provided by councils to
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housing associations, but we've definitely not been hitting those post-war
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100,000+ numbers since the '80s.
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It's been more around 20,000, 30,000, 50,000 at tops.
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And that's quite important because, as you say, the terms on the one hand,
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they're never exact, but in a sense we've had council housing that was once
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literally owned and run by councils, but we've
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also had quite a big programme of transferring that stock into housing associations
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or registered social landlords at times. So it kind of sits in a sort of
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quasi councils/affordable social housing space,
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but it's not classically and traditionally thought of as council
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housing. Yes. So it all gets more complicated the
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more you understand about it. Stay with us, stay with us. But yeah,
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I suppose you've got a wave of transfers
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to housing associations, and you've got housing associations
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taking over the majority of new building, because after the introduction
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of the right to buy, which wasn't applied to housing associations,
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and the fact that receipts from Right to Buy, even at
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discount, went to central government rather than local authorities. Local authorities from the
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1980s onwards were in an incredibly undermined position. They would've
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lost money with any council house building that they did. So responsibility
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for new building almost wholesale transfers to housing associations.
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But then in different parts of the country, you've seen different approaches to who owns
6:56
the remainder of the stock. Most cities, but not
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all of the ones that we look at as central cities, have retained
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at least a large chunk of their social housing stock under
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local authority management. But housing associations take
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on a significant share in all places. And in some councils, or in half of
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councils across the country, housing associations are the only social housing
7:18
providers. We can talk also about the changing tenure
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mix, because what Andy Burnham, I think, means when he says
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council housing is he means social housing.
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And the last version, or the the most recent version of the Labour
7:33
government, they did sort of change the emphasis in terms of the tenure mix
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towards social housing. And so I guess Burnham's
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emphasis on council housing is an extension of the preference for social rent.
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But then there is a question about whether or not he really means local
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authority building, which would be a really big change in terms of the— That would
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be a big change. And it does seem to be as if there's something
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in that, not least because Yes, he talked about housing in the way that we've
7:59
just described it, but he's also thinking about housing as one of the foundational
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pillars of a good life and of good
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growth. And there he emphasizes issues around control and
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ownership in the same ways he might do that for water or he might do
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that for electricity, or indeed he has done that for transport.
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And so there's not just a development kind of question,
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there's a control ownership question, which I think is interesting. We'll see how— we
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don't know how this is going to play out. As you've said, if we are
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really going to get lots of councils building more homes, that's going to be quite
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a significant change across a number of different levers. But it's just interesting,
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there's a sort of philosophical element to his thinking as well
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as a practical element. Yeah, the accountability argument's an interesting one, right? Because it's
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not one you often hear in the devolution space where A lot of it's about
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the economics. A lot of it is about democratic
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accountability,
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dealing with anxieties or frustrations that the
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public has. I think to make it— to try and join up a few of
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these different things together by saying part of the frustrations
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that the public has with our current government settlement is
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that too many decisions are taken not just by
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Whitehall and by decision-makers in London, but even
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those institutions that aren't on Whitehall but
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are perhaps in quangos, perhaps in housing associations, perhaps in
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the water companies. There's actually very limited ability for people in different
9:33
parts of the country to shape the outcomes that they experience every single
9:37
day and are reduced essentially to harassing customers
9:41
on the on the end of a phone line. So, you know,
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I think it's an interesting argument for sure. I think there's
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then a bunch of implications that then follow from that in terms of not just
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your funding, but in terms of how much discretion are we going to allow places
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and locally elected leaders to deviate from each other
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and indeed set different standards and choices for themselves
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that differ from what we are, you know,
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deciding nationally. I guess there's 2 things I'd say in addition to
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that. Firstly is on the kind of accountability thing.
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At a kind of minor league in terms of scale of importance,
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but still quite important, we have seen, especially in London,
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the movement in recent years from arm's-length
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bodies, which are not housing associations, but they're council-affiliated management
10:32
organizations. Those that through the 2000s, as recent
10:36
as New Labour, they were pushing councils to set up these organizations, which would
10:39
be outside of political accountability, basically.
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The idea that politics is chaos, and so if
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we just give it to some bureaucrats, it'll all run itself, okay.
10:50
In a very short amount of time, that has not proved itself to
10:54
be all that good, and we've seen the return of those to council
10:58
control. So lots of London local authorities I know have
11:02
brought back in-house those arm's-length bodies in the last few years,
11:06
and that has to some extent then put them in a position where they can
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start to build more themselves. Already. And I guess as well as
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the kind of accountability political point for why you would think about
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councils being the more sensible authority to
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be managing social housing stock, it's that they also have the legal responsibility
11:23
for meeting homelessness, preventing homelessness,
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particularly of families. So the people that get added to the waiting lists are
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added to councils' responsibility. And then councils at the moment have to
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go, okay, Housing Association A, B, and C, you are building this. Can I put
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people off my list onto your houses? If that was the council managing all of
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that, that would presumably be more streamlined. And then also councils are
11:47
in charge of planning permissions. And so if you had a housing association
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which was coming up against difficulties in planning, that's because they're 2 different entities.
11:54
And you would hope that a council would not be chopping
11:58
its own feet off through the planning system, although you could never guarantee
12:02
against that. But you can't guarantee it. Guarantees it by far. Think of examples where
12:07
that is happening. Yeah. Okay, so let's kind of move
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on to a little bit around the scope of it. So, Maurice, you've looked
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at this. I mean, since it's important to say that the Starmer government made
12:19
quite a significant increase to the Affordable Homes Programme
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when they came in, announcement, quite a substantive increase in grant
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available to do these sorts of things. So just
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unpack that a little bit. And then related to that, I guess, is that
12:34
just understanding within that, which is where it gets slippery,
12:38
what that affordable homes actually means, because that will also
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ultimately determine the type of thing that you want, determines how
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much of it you can get given a set amount of cash.
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So just unpack a little bit of that. I think that the Starmer government
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under Rainer when she was in CLG made quite a substantive commitment
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to boosting the affordable homes programme, of which there were different tenures, but all
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in our social housing mix. Yeah, yes, definitely.
13:05
Yeah, so setting aside the question of who for now, thinking about the
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main determinant of how much social housing or other non-market
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housing you get is basically the types of non-market housing
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you ask for, i.e., the degree of subsidy required.
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If it is 50% of market rent, that requires more subsidy
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for any given home that you build. If it's only 80%, you can maybe build
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2.5 times as much with the same amount of grant. Yeah. So it's the mix
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of those 2 things, and then how much money you're going to put in.
13:37
On the size of the commitment, yes, in the Spending Review about this time
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last year, there was the £39 billion commitment over 10
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years. It sounds like a very big number. It is roughly
13:48
equivalent to twice what was given in the preceding decade, but it
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is slightly backloaded. So it's a kind of ramp up rather than
13:56
an even spend of £3.9 billion a year. And from some
13:59
perspectives, that makes sense. Given that, you know, the sector
14:04
needs to adjust to a change in their circumstances. But recently we've seen
14:08
both the GLA and Homes England, who administer that grant,
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say to housing associations and councils, you're overbidding,
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you're being too ambitious, we don't have the grant to give out that you're
14:18
asking for, suggesting that there is capacity in the sector to absorb more grant.
14:23
But that is nevertheless a significantly bigger chunk of money than had been given previously.
14:27
It does compare not all that favourably to the sums
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of money that were being given in the post-war period. You would
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be spending between £10 and £15 billion a year in today's money through
14:40
the post-war period on subsidy for social housing, whereas the equivalent £3 to
14:44
£4 billion is obviously significantly smaller,
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which results in significantly fewer homes. And then the
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question on the mix of social versus other tenures, this government is making
14:54
slight or the recent Labour government before Burnham,
14:58
is making slightly less of each of
15:02
the grant in terms of numerical gains because they're preferring social
15:06
housing. So at the moment, it's a 60/40 split
15:09
is what councils are being asked to, or what Homes England
15:13
and the GLA are being asked to deliver. And that's what's coming through in the
15:16
new London Plan draft out today, expecting 60% social housing and
15:20
40% intermediate tenures. If Burnham were
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to say, I'm not changing my grant, but I'm going to go 50/50,
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he could reasonably claim, I'm going to build more homes, but those homes would be
15:32
for different people. Yeah. Because what we don't know, and we assume
15:35
at least, that council housing, if it's
15:39
built by councils, will be subsidized in some shape or form. It's not like
15:43
we want— I don't think he envisages councils becoming active in
15:47
the housing market across all tenures and at all price
15:51
points. I mean, that may prove, that may happen,
15:55
we don't know, but I don't imagine that that is the case at
15:59
the minute. This is a particular subset that he's particularly interested
16:03
in, which is the sort of subsidised element to it. Yeah, I think
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it's a bit unclear as to what he thinks at the moment. I think all
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of the potential things are in play. I don't think, like some
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councils have a lot of public land which they dispose of,
16:19
through a mix of public and private schemes, and in so doing basically
16:23
serve as a builder of
16:27
all tenures, and they manage that private land in different ways. You can
16:30
imagine a situation where local authorities using compulsory
16:35
purchase or just purchasing land perform more of a role in development.
16:39
And definitely some of Burnham's advisors have spoken positively
16:43
about the idea that they might do that. The idea of a state house builder
16:47
has floated around in recent months. And that is, as I understand
16:51
it, what it would be doing as a purchaser of land and procurer of development.
16:55
But yeah, I think what Burnham is saying when he says council house building is
16:59
probably social rent. I think one of the biggest tensions
17:03
here is, obviously, Burnham has this
17:07
impulse to increase council house building nationally. But there's
17:11
what central government wants to do, and then what all the individual councils
17:14
then want to do. Are not necessarily going to be the same.
17:18
And if Burnham is serious about increasing devolution and
17:23
allowing places to, you know, be held accountable
17:26
for the choices that they're making, it may be the case that some councils choose
17:30
to have very different tenure mixes or price points to what Burnham might regard as
17:33
the ideal. Yeah, and also, I mean, there's going to
17:38
be housing challenges all over the country, and the housing challenges
17:41
will be slightly different in different parts of the country.
17:45
But there are certain parts of the country where the size of the challenge is
17:48
significant and the nature of the challenge is quite significant,
17:52
not least because it straddles, you know, whether you think about it from an accessibility
17:56
labour market perspective or temporary accommodation or homelessness
18:00
issue, those things are not evenly distributed across the country,
18:04
both in terms of the presence of the issue but also the nature,
18:07
the scale of the issue. So you're also hoping would assume,
18:11
a geographically variant, variable kind of response, right? And then
18:15
the other problem with that is then some of the public land on which it
18:18
would be easiest to build on is not necessarily anywhere near where these
18:22
issues are, right? You know, former RAF airfields out in the middle of nowhere,
18:27
very easy to build council housing on those compared to, you know,
18:30
Zone 2 London or kind of inner city Manchester. Yeah, yeah. I mean,
18:34
we've done bits of research looking at the sort of why
18:37
would you have a rationale in today's economy for building social housing?
18:41
The first indicator might be the length of your waiting lists, which serve as a
18:45
kind of proxy for demand for subsidized housing.
18:48
And they vary massively across the country. And there's
18:53
a clear urban, less urban picture there,
18:57
although it varies. But then otherwise, private rents in urban areas tend to
19:01
be slightly higher than the surrounding rural areas. So if you are thinking about building
19:04
cities which are for everybody and mixed, then you would prioritize cities
19:09
as places where you would build subsidized housing. And that
19:14
is complicated because then you're saying let's deprioritize other
19:17
areas which still have a waiting list. But in our
19:21
view, London should be receiving a significantly larger share
19:25
than it is. London has received only a 50% uplift compared
19:28
to the last decade, whereas everywhere else has seen more of an increase. Whereas London
19:32
alone has over half of the people living on temporary accommodation. And if you were
19:37
being really sort of hard-nosed about it, you would go, where is the biggest problem?
19:40
Are you going to give them half the money? And if
19:44
that isn't politically acceptable, then I think then you go, well, we've got to increase
19:47
the size of the overall pot. Yeah. Yeah.
19:50
Okay. Let's take a step back or
19:56
put it in a broader context? Because we've talked
19:59
obviously about what the new Prime Minister has said in this space, particularly around council,
20:04
but we started with the housing crisis more generally. And even
20:08
if we get substantive increases in the council stuff, there's still an awful lot of
20:12
other housing that is being built through the market system as
20:16
currently. And also, if we want really,
20:19
even if we want to get the gains in the way that have been expressed,
20:23
there's a bunch of other things we probably need to think about substantively. And again,
20:27
zoom back out, put this in a bigger picture. The housing crisis
20:31
is 4.3 when we did it. That was a couple of years ago. It's probably
20:35
bigger than that now because supply side has nowhere near
20:40
responded to the nature of it. So it's a bigger problem than it was even
20:43
then, and it was big then. And we're going to need to figure out
20:46
a system-wide approach to how we deal with that. So put it in that broader
20:50
context of how we move forward on the housing problem, and particularly the urban
20:53
housing problem, in the round? Yeah, for sure. So the government's ambition
20:57
is to build 1.5 million houses over the course of this Parliament.
21:02
As the Parliament has unfolded, I think ministers have become more and
21:06
more— I don't know, what is it? It's challenging? Challenging.
21:10
Is it bold? Bold, yeah. The adjectives continue to evolve
21:16
as we proceed. I think it's certainly wider public
21:20
debates, I think there's very little expectation, if any, that that 1.5 million can be
21:24
met under the current regime. Certainly, it seems where the government
21:28
has been quite active on the planning reform agenda, rewriting the NPPF,
21:31
introducing strategic planning for the
21:35
metro mayor, shire mayor tier that is evolving, it's essentially trying
21:39
to get the current system to work, current planning system to work
21:43
a little bit better, than it does currently,
21:46
particularly focusing on these kind of greenfield sites,
21:49
where we know at various points in history, the 1947 planning system
21:53
has worked okay at facilitating such kinds of urban expansion
21:57
onto these greenfield sites. The mirror image
22:01
of that is that the government really seems to be struggling in urban areas
22:05
in particular, not least, you know, London, where they increased the
22:08
capital's target substantially. And house building is now at
22:13
a very low level. So the gap between the government's target of about 85,000
22:17
a year, we're now running at about 12,000 a year, according to MoLior stats released
22:22
earlier this week. So figuring out how we increase
22:27
house building in urban areas in particular is important for the
22:31
government's national house building agenda. Our argument would be that
22:34
we do need pretty big R planning reform to the,
22:38
to the system itself, moving away from the discretionary case-by-case
22:41
system that seems to particularly struggle in urban densification,
22:45
urban development, replacing that with a more flexible zoning system like
22:50
that what we see in France or Japan or New Zealand, which we were in
22:53
places we know are much better at building urban house building than,
22:57
than we are. I think some of the conversation, I think Burnham was sort of
23:01
given a bit of a nod to this, You sometimes see people say, oh,
23:05
well, planning reform's not a silver bullet, therefore it's not worth doing. We should
23:10
do something else instead. It's more complicated, isn't it? More complicated than that. It's actually
23:14
very complicated, unlike every other aspect of human life.
23:18
Sometimes those people will say, oh, but council house building,
23:22
that's the solution. That is actually a silver bullet. I think our position is
23:27
that actually we need lots of silver bullets if we're
23:31
going to stop this particular werewolf. And, you know, we should be doing
23:34
kind of big-scale planning reform, making it easier to build.
23:38
That will help both the market, which we absolutely need to increase to solve
23:42
our economic challenges in particular, but also make it easier to build social
23:46
housing as well and make it easier to tackle some of the social problems which
23:49
clearly motivate a lot of concern. Yeah, and in the spirit of silver
23:53
bullets, I mean, Maurice, you've also— that's for another day, but you've also— we've also
23:56
done quite a bit of work looking at, for example, the contribution that new towns
24:00
may or may not make to the overall housing agenda. Again,
24:03
making a similar point is that you definitely want them, you definitely want as
24:07
many as you can get, and you definitely want to max out on every one
24:10
of them, but they are a part of the solution, not just— not the
24:14
solution, and you can't rely on any one thing. I wasn't going to
24:18
ask you about that, I was going to just pick up on one
24:23
of the things that Amber said. Because again, I think as we move,
24:26
or as we are now in a new administration, new Labour
24:29
government led obviously by Andy Burnham, I think it's also important
24:34
just to emphasise that the Starmer government introduced quite
24:38
a few reforms, albeit maybe not as big and as expansive
24:42
and ambitious, whatever, that we were encouraging them to do,
24:45
but a bunch of reforms that are positive. And the
24:50
issue there is continuity, pace, but get
24:54
it done. Don't suddenly now stop and think we need to go back to the
24:58
drawing board. Actually, some of this stuff really needs to be nailed and hammered through
25:02
the system. Yeah, there's definitely a lot of stuff on planning reform which
25:05
would be relatively easy for Burnham to pick up, complete,
25:09
and see through. And certainly
25:14
the debate definitely doesn't need to sort of what the existing
25:18
Labour government has done very well is sort of say planning reform is a really
25:22
important part of the answer. And they've done things on green belts,
25:26
which, you know, I think we're not in a political space where
25:30
that is at any risk of being rolled back. But making
25:34
sure that local authorities are operationalising that through their
25:38
local plans is going to be a really important part of Burnham's agenda picking
25:42
up. Where they've left off. And then there are, there are a series of other
25:45
things which are kind of in-play consultations which have come to an end, but a
25:49
decision hasn't quite been made yet. Planning committees,
25:53
I think, has gotten over the line. There's open
25:56
on whether or not biodiversity net gain should be removed from urban sites
26:00
and quite how that will be defined. These things can be wrapped up and that
26:03
would be a positive change for the cost of housebuilding. Other things
26:07
like Allowing more developers on medium-sized sites
26:11
to give their affordable housing contributions in cash rather
26:15
than providing 3 homes, which they have to find some registered
26:19
provider to buy off them, otherwise the development stalls.
26:23
Things like that, which are small bits.
26:26
No one would ever claim that these are silver bullets, but if you see
26:30
the current crisis as being lots and lots of things which are not straws
26:35
that break camels' backs, then undoing these and introducing
26:39
lots of positive small changes is something the Labour government has been doing okay
26:42
and needs to do. I think that's probably the overriding message
26:47
in some respects, right, which is there is no one solution,
26:51
silver or otherwise, but there's also what we
26:54
want to avoid is lurches from one thing prioritization
26:58
to another thing. And sadly, but the harder challenge is
27:02
to make progress on several things, but you have to keep going on
27:06
the things that you made underway in addition to whatever else you want to do.
27:09
That's where we're going to get, hopefully get the numbers up
27:13
to where they, you know, we need them to be, not just in the next
27:17
few years, but actually for a sustained 10, 20, you know, even 30-year
27:21
period. Yeah, I think that's exactly right. And I think one area of good
27:26
fortune is I think on quite a few of these different areas, it dovetails quite
27:29
nicely with Burnham's impulse to improve
27:33
accountability and increase council control over lots of these different areas. I mean,
27:36
take for example, kind of medium sites exempting housing association
27:41
affordable thresholds for those sorts of often quite marginal
27:46
sites. We saw quite a big backlash from a number of housing associations saying that
27:50
this would be a complete disaster for affordable housing supply. What's actually
27:54
being proposed is let's give more resource to councils so that they can decide whatever
27:58
affordable housing they want to provide, given the development they're
28:02
allowing of this particular size category. So to the
28:06
extent that we can find a way to package reform in
28:09
this area, and whether it's improving incentives, improving resource,
28:13
or improving decision-making at the local level so that more stuff gets built,
28:18
hopefully we can continue to push the new government in being a
28:22
progressive force in this area. And so to finish, where we started.
28:26
As you say, for the moment at least,
28:30
the only guide we've got to the policy program is the
28:34
speech that was made a couple of weeks ago. And we've talked about the
28:38
encouraging signals that were in that speech, whether it's devolution as the centrality,
28:42
the organizing framework, whether it's a recognition of innovation
28:46
and competition and tradable firms that are exporting their activities.
28:51
Whether it's transport, the need to have integrated transport
28:54
across different big cities beyond London,
28:59
and also recognition that housing broadly
29:03
defined, but also just as having a good place to live,
29:06
but also as a function and as a role in the economy was
29:10
in that speech. And I think that's the most positive signal we can take.
29:13
I mean, that's what we've got at the minute and encouraging the
29:18
new administration to develop that out, but also to carry on with much of
29:21
what we've seen over the last few years, is probably a
29:26
good place to finish. So, thank you very much to Maurice and to
29:29
Ant. You can get all of our work on housing, there is loads
29:33
of it, on the website centreforcities.org. Until the next time,
29:37
take care and stay safe. Bye for now.
29:43
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