Housing review ‘should have gone further on finance’

30 Jan 15
A Whitehall-commissioned review has urged councils to do more to increase housing supply, but has been criticised for failing to recommend changes to the Housing Revenue Account, which limits borrowing.

By Richard Johnstone | 30 January 2015

A Whitehall-commissioned review has urged councils to do more to increase housing supply, but has been criticised for failing to recommend changes to the Housing Revenue Account, which limits borrowing.

The review, undertaken by Natalie Elphicke, chair of Million Homes, Million Lives, and Keith House, Eastleigh council leader, called on councils to conduct local housing needs assessments and work with businesses to boost construction. Local authorities should also consider whether they might provide land, finance or training to help start-up firms.

The Elphicke-House review was commissioned by the Treasury and Department for Communities and Local Government last January but stopped short of recommending reforms to the HRA.

Chief Secretary to the Treasury Danny Alexander accepted its recommendations on Tuesday, saying local authorities had scope to ‘go further to help solve the country’s current housing crisis’.

CIPFA local authority housing panel chair Ken Lee said the report demonstrated how councils should be instrumental in ensuring housing provision in their areas.

‘CIPFA has long supported the move towards localism that this report promotes calling for community leadership and strategic clarity,’ he added.

But he said it was disappointing that the report stopped short of proposing greater reforms to finance.

‘Local authorities could be helped with their resources by allowing them to keep all the money from council house sales to plough back into the provision of further housing,’ Lee said.

‘The report could have also recommended the reinstatement of the Prudential Code as the controlling limit on investment, rather than an artificial ceiling that bears no relation to local needs.’

Peter Box, the Local Government Association’s housing spokesman, also called for the removal of the housing borrowing cap, which was set when the HRA subsidy system was abolished in April 2012.

‘Councils must have a lead role in building if we are to deliver the homes and infrastructure we need, as this report recognises,’ he added. ‘It is positive that the report recommends a stronger role for councils in joining up public sector land and highlights opportunities for new ways of financing housing which the LGA is working with councils to explore.’

Launching the report, House said some councils were already driving housing for their areas. Among the cases highlighted in the report were a local asset-based vehicle by Gateshead council where the authority provides land to developers and shares the risks and rewards of new developments, and the creation of housing joint ventures in Peterborough, Derby and Luton.

More authorities must have the ‘skills and confidence’ to take forward such initiatives, House added.

The report’s recommendations also included a call on the government to provide additional advice to help communities develop local plans.

 

 

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