What’s new in the Elphicke-House Review?

The coalition’s new report on local authorities’ role in housing supply coincided with a warning from a leading parliamentary committee that council services will soon become ‘unviable’. But it’s clear that the review by Natalie Elphicke and Keith House had to tiptoe around the issue of the cuts to council services, which have decimated their planning and strategic housing roles.

It means their report is pretty bland and difficult to criticise, because it says very little that’s new. It’s already been overshadowed by the Lyons report, which for all its faults was a far more comprehensive assessment and produced a much fuller list of recommendations. Nevertheless both reports either duck certain key issues or fail to address them fully: cuts in capital programmes, the need to build homes at genuinely affordable rents, the effects of cuts in council housing services and why councils aren’t allowed to borrow more on the back of their council housing accounts.

The Elphicke-House report makes much of encouraging councils to develop stronger roles as ‘Housing Delivery Enablers’. It’s a change of language from talking about councils’ ‘strategic housing role’ but it amounts to the same thing. There’s little here that can’t be found in the Labour green papers published in 2000 and 2007, and the truth is that councils’ performance as ‘delivery enablers’ has always been mixed: many councils, including some small rural ones as well as big cities, have been excellent; others haven’t. But the erosion of resources and powers to secure affordable housing over the last five years have hardly helped. Councils’ housing services (not including their council housing) have been cut by 34% and their planning services by 46% in real terms: it is impossible to sustain this level of cuts and still to maintain adequate services. But on this issue, Elphicke-House are silent.

One effect of the cuts is that councils now find it much harder to draw in outside advice when they need it. One of the Elphicke-House proposals might help here. They want the government to set up a ‘Housing And Finance Institute’ to support both councils and business to work better together. If this could provide free consultancy services for councils to take new initiatives like setting up joint venture companies, to build a mix of market and affordable housing, this could be worthwhile. But will the government set up a new body that’s properly resourced?

Councils also need the ability to secure housing at the right quantity, scale and mix of tenures to suit local needs. Again, the coalition has been eroding councils’ role and Elphicke-House make no criticisms of the changes. Council’s ability to get the right proportion of affordable housing has been reduced by the paring back of the powers to require developers to provide affordable homes using ‘section 106’. Yet this key provision is barely mentioned in the report (despite evidence being submitted on the issue). The government has taken away councils’ ability to insist on proper space and other standards in new homes: another subject that’s barely touched on. And there is no mention either of levels of grant available and their effects on affordability. Indeed, the terms ‘social rent’ and ‘affordable rent’ only occur in the case studies, not in the main body of the report.

Then there is the issue which Gavin Smart called the ‘elephant in the room’: the caps on council borrowing. Elphicke-House weren’t allowed by their terms of reference to challenge the caps, but they say they aren’t a problem anyway, as councils can borrow outside their housing revenue accounts, with no restrictions. This is disingenuous. Councils are perfectly aware they can borrow to build market-rented housing, and some are doing so. But for many the priority is to build genuinely affordable housing, and they want to use their borrowing capacity and any available land to do just that, not just to build homes at prices that are almost at market levels. There’s also an irony in Elphicke-House encouraging councils to borrow prudentially outside their HRAs: if this is such a good idea, isn’t it an even better one to borrow within the HRA, where borrowing costs are lower, the income stream more secure and the outcome can be houses at really affordable rents?

The Elphicke-House report also coincided with a devastating study of the effects of right to buy in London. This offers evidence that, far from achieving one-for-one replacement after right to buy sales, London councils are losing three houses for every two new ones they build. In other words, their new build programmes aren’t even replacing houses sold, let alone adding to the stock. This is another issue on which Elphicke-House received evidence, and they do call on the government to allow more borrowing to facilitate replacement building – but of course only within the same borrowing headroom that’s already permitted. Yet in practice, as the government continues to jack-up right to buy discounts, the gap between numbers sold and numbers replaced is certain to get worse.

Overall, if the report is supposed to make us optimistic that a new Conservative government would take seriously the idea that councils should be ‘Housing Delivery Enablers’, it fails miserably. The one proposal that could make a difference – a new body to share experiences and develop skills – got a lukewarm reception from government. It ‘might’ be pursued, but only if it can give ‘value for money without creating unnecessary bureaucracy’. In other words, no new money will be spent and no staff we be employed. Or am I being unnecessarily cynical?

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One Response to What’s new in the Elphicke-House Review?

  1. Pingback: More homeowners at any cost? | Red Brick

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