Prime Minister Andy Burnham has promised the largest council house building programme since the immediate post-war period, pledging more than £9 billion of investment.
While the commitment is substantial and will deliver much-needed social housing, it is unlikely to push the government much closer to its promise of delivering 1.5 million homes during the period of this government. Achieving those ambitions will require more than just additional subsidy.
Measured against historical programmes, the initial scale of investment is impressive. The government has committed £39 billion over the lifetime of the Social and Affordable Homes Programme. This is significantly more than the £11.5 billion provided under its predecessor (the similarly named Affordable Homes Programme) that operated between 2021 and 2026.
Last month’s announcements were presented as new policy, but it should be noted that the total funding available through the programme remains unchanged from Keir Starmer’s time in Number 10.
Furthermore, only 60% of all homes built through the initial investment will be social rented housing. The remaining 40% is likely to consist mostly of affordable rent and shared ownership properties. In total, the programme is expected to deliver around 70,000 affordable homes.
However, even if delivered in full, this would represent less than 5% of the government’s wider ambition.
There are though promising details in the announcement. For the first time, three councils – Cambridge, Eastleigh and Newcastle – have been awarded strategic partnership status. These local authorities will receive funding and work directly with Homes England, the government’s housing and regeneration agency, to deliver affordable housing.
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There are also plans for established mayoral strategic authorities to play a much greater role through the creation of joint delivery units to work with locally elected mayors and Homes England.
The challenge is not simply one of funding. England’s housing system is structured around a model of development in which a relatively small number of large private housebuilders play a dominant role.
A Competition and Markets Authority investigation found that 11 housebuilders accounted for around 40% of new building across the UK. The report concluded that developers are not incentivised to maximise the speed of construction as doing so could affect profitability or local sale values. This creates a tension at the heart of government housing policy.
Ministers can announce new funding and ambitious targets. Yet most of the delivery relies on companies whose motivations do not necessarily align with government targets. Planning reforms should help speed up the building of new homes, but more needs to be done to fix the structural problems at the heart of our failing system.
Stark consequences
The consequences of this failure are stark. More than 1.3 million households are currently on social housing waiting lists in England. Current plans will make only a modest contribution towards addressing this backlog.
Meanwhile, the New Economics Foundation thinktank estimates that more than £70 billion could be paid to private landlords through housing benefit between 2024 and 2029, illustrating how public subsidy continues to flow into the private rented sector rather than new social housing.
Fixing the country’s housing crisis will require the prime minister to fulfil perhaps his most ambitious pledge: rewiring the British state. Despite successive reforms, England’s housing system remains highly centralised. Funding continues to flow from Whitehall to councils and housing associations through competitive bidding processes.
Much of the actual delivery of housing is left to a small number of major housebuilders. Social housing providers play a much smaller role in overall delivery, while councils now account for only a tiny proportion of annual housebuilding.
Government can set targets and allocate funding, but it has limited control over the pace and location of development. There is no institution with responsibility for strategically acquiring land, coordinating development and deciding what is built and where. Until that changes, ambitious housing targets are likely to remain easier to announce than to achieve.
Much more active
Research comparing land policy in the Netherlands, Germany and Scotland has found that Dutch and German municipalities take a much more active role in development, with land more likely to remain in public ownership during the process. This enables local municipalities to shape development more strategically and achieve goals by redirecting increases in land value towards infrastructure provision and affordable housing delivery.
Binding land-use plans can ensure that affordable housing is delivered as part of new development. Where municipalities retain control of land during the development process, they can also choose to sell sites to developers offering the strongest proposal for creating sustainable and inclusive communities, rather than simply accepting the highest financial bid.
Giving councils in England the powers and resources to acquire, assemble and manage land would enable local leaders to make more deliberate choices about whether land is used for private housing, social housing or something else.
Real change is only likely to occur if the government’s current plans are the beginning and not the end. Achieving both its council housebuilding ambitions and its broader target will require changes to the way Homes England works with local leaders, alongside further reforms to planning and the land market.
If the government is serious about delivering its objectives, local leaders will need to play a much greater role in housing delivery and be given the powers to shape outcomes for their communities.
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