Theresa May’s missed opportunity: why councils should be able to borrow to build homes

Council housing in Southwark, south London. Image: Getty.

A Southwark Labour councillor on the housing crisis.

Across the country, housing supply is falling behind demand year on year.  The result is a housing crisis with high private rents, home ownership a distant dream, and families stuck on waiting lists for affordable homes.

Before Theresa May’s speech at their conference the Tories had briefed the press that there would be a significant announcement on taking action to tackle the housing crisis with new council homes front and centre. There was hope that we would see an end to the Thatcherite consensus on housing we’ve had for 40 years, which assumes that the private sector will build the new homes we need.

So when May said the government was going to put an extra £2bn towards affordable housing I felt a huge sense of frustration and anger at yet another missed opportunity for the government to actually help people. While funding for an additional 5,000 affordable homes a year is welcome, the reality is we need to be building an additional 130,000 homes a year – so it’s clear this simply won’t tackle the scale of the housing crisis.

This crisis is real: across the country, 1.2m families are on the waiting list for council housing, and in my own borough of Southwark in south London, we still have 10,000 families waiting for a council home. That’s 1.2m families who don’t have an affordable place to raise their children or a secure place to retire in, who are trapped in unsuitable or overcrowded accommodation.

The government’s other recent announcement on housing is going to do even less to help solve the housing crisis. An extra £10bn for Help to Buy does nothing to help anyone on a waiting list for a council home. It won’t even help many first time buyers as it will inflate property prices further, and as the IPPR have argued it will help people who could already afford it to buy and push prices up for those who already can’t get a foot on the ladder.

So let’s talk about what would have helped: giving councils the ability to borrow against existing housing stock. 

Southwark Council owns 55,000 council homes; these are assets worth billions of pounds. But we are limited in borrowing against them by national government. This isn’t because this would cause huge financial instability for councils – housing associations can already borrow against their existing stock to build new homes. If we could do the same, we would be able to generate the funds to build more genuinely affordable homes, including large numbers of council homes and then use the rents generated to repay the loans.

The government also needs to act to increase the land available to build on by giving councils the power to buy land closer to its actual use value. This would mean that the uplift in land value from development could be used for the public good such as building council homes, schools, and parks. The main beneficiaries from the current system are land speculators.

Sadly this week has made it very clear that the government is not serious about tackling the housing crisis – so the burden remains on local authorities. In Southwark we have pledged to build 11,000 new council homes by 2043: an ambitious target, but one we are determined to meet. We are funding this through a combination of Right to Buy receipts, some private sale to cross-subsidise and the very limited borrowing we are allowed. We are also very fortunate in Southwark that we are in central London, on the banks of the Thames, and can generate funding through planning agreements with developers which we can then use to build council homes. The majority of local authorities are not so fortunate.

The only solution to the housing crisis is to build more homes, and particularly more council homes. Labour have pledged that the next Labour government will deliver the biggest council house building programme in 30 years – and do so with the consent of existing residents. We are very clear in Southwark that consultation and working in partnership with our residents is vital.

We will keep doing everything we can to make sure all of our residents have a decent place to call home, but with diminishing resources, and the inability to borrow the money we need to build, we’ll have to wait for the next Labour government under Jeremy Corbyn for housebuilding on the scale our country needs.

Cllr Mark Williams is a Labour councillor and cabinet member for regeneration & new homes at the London Borough of Southwark.

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What is to be done? Some modest suggestions on solving the NIMBY problem

Lovely, lovely houses. Image: Getty.

The thing about NIMBYism, right, is that there’s no downside to it. If you already own a decent size house, then the fact a city isn’t building enough homes to go round is probably no skin off your nose. Quite the opposite, in fact: you’ll actively benefit from higher house prices.

So it’s little wonder that campaigning against property development is a popular leisure activity among those looking forward to a long retirement (don’t Google it, it’ll only depress you). It’s sociable, it’s profitable, it only takes a few hours a week, and, best of all, it makes you feel righteous, like you’re doing something good. In those circumstances, who wouldn’t be a NIMBY?

To fight the scourge of NIMBYism, then, what we need to do is to rebalance the risks and rewards that its participants face. By increasing the costs of opposing new housebuilding, we can make sure that people only do it when said development is genuinely a horror worth fighting – rather than, say, something less than perfect that pops up a Tuesday afternoon when they don’t have much else on.

Here are some reasonable and sensible ideas for policies to make that happen.

A NIMBY licence, priced at, say, £150 a month. Anyone found practicing NIMBYism without a licence faces a fine of £5,000. Excellent revenue raiser for the Treasury.

Prison sentences for NIMBYs. Not all of them, obviously – we’re not barbarians – but if the planning process concludes that a development will be good for the community, then those who tried to prevent it should be seen as anti-social elements and treated accordingly.

A NIMBY lottery. All homeowners wishing to oppose a new development must enter their details into an official government lottery scheme. If their number comes up, then their house gets CPOed and redeveloped as flats. Turns NIMBYism into a form of Russian roulette, but with compulsory purchase orders instead of bullets.

This one is actually a huge range of different policies depending on what you make the odds. At one end of the scale, losing your house is pretty unlikely: you’d think twice, but you’re probably fine. At the other, basically everyone who opposes a scheme will lose their entire worldly wealth the moment it gets planning approval, so you’d have to be very, very sure it was bad before you even thought about sticking your head above the parapet. So the question is: do you feel lucky?

NIMBY shaming. There are tribal cultures where, when a member does something terrible, they never see them again. Never talk to them, never look at them, never acknowledge them in any way. To the tribe, this person is dead.

I’m just saying, it’s an option.

A NIMBY-specific bedroom tax. Oppose new housing development to your heart’s content, but be prepared to pay for any space you don’t need. I can’t think of any jokes here, now I’ve written it down I think this one’s genuinely quite sensible.

Capital punishment for NIMBYs. This one’s a bit on the extreme side, so to keep things reasonable it would only apply to those NIMBYs who believe in capital punishment for other sorts of crime. Fair’s far.

Pushing snails through their letter boxes. This probably won’t stop them, but it’d make me feel better. The snails, not so much.

Reformed property taxes, which tax increases in house prices, so discourage homeowners from treating them as effectively free money.

Sorry, I’m just being silly now, aren’t I?

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason.

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