One of the few clearly articulated commitments which Andy Burnham has made is “the biggest council house building programme since the post-war period”. No sooner had he made the pledge than critics were lining up to pan it. The Economist, far from being Labour’s fiercest critic, described it as “the wrong fix” and the council house system as “wasteful, unfair and a barrier to growth”. Others have dismissed it as impractical, even if desirable, and a throwback to a bygone age.
It is not clear if the Burnham pledge is to use councils – either mayoral combined bodies or single district councils – as developers to boost housing supply of a variety of tenures; or specifically to build and own more houses for – below market -social rent. In the three decades after 1950 local authorities did both, at scale. The high point was 1968 with over 190,000 houses were built, and let, by UK councils and the 1970’s average was 130,000. I was a Glasgow city councillor in the heyday of council house building to replace slum dwellings in the early 1970’s and 5,000 a year was achieved in Glasgow alone (albeit that some were of poor quality and later demolished – like the Red Road development). With the advent of the Thatcher government, council house building largely stopped, 2 million council homes were sold at a discount under the Right to Buy policy and most new ‘social housing’ was provided by non-profit housing associations. In 2025, English councils delivered a mere 1,705 new council houses and started a negligible 300.
Nonetheless, 16% of the total housing stock still consists of social housing.
Much of the criticism of Burnham’s vision is a criticism of social housing. Tenants, who enjoy (implicitly) subsidised rents, are not necessarily in financial need: one third are not judged to need welfare benefits with a small number -usually well publicised in the popular press – enjoy relatively high incomes. There can be indefinite tenure and, in some instances, inheritance. Most council tenants are in a more favourable position than those who rent privately, often with insecure short-term tenancies, and – if they can find a landlord willing to house benefit recipients- rely on far-from-generous housing benefit ( capped by local Housing Allowance). And there are growing numbers of homeless in temporary accommodation or shipped out to councils with housing surpluses, far from work and family support networks. Such invidious comparisons do not however mean that we should have less social housing. Rather, more. Without more social housing, families on low and unstable incomes are forced out of more prosperous areas, where there is work; there is a rise in homelessness; and villages die for lack of trade and tradesmen. At the same time, rents can rise, gradually, to reduce the subsidy element (with housing benefit for those in need) and the option of sale is available for those who are able to progress to ownership.
So who should build the social housing? And why councils? Housing associations have hitherto carried much of the responsibility but many are having to divert resources to improving and repairing their current stock. Councils have increasingly looked to ‘piggy-back’ social housing on the back of private developments in the form of obligations linked to planning consent. That formula, where it works, provides more social housing and also integrated communities. However, private developers are struggling. Despite some regulatory reforms to speed up development, building is depressed with total homes built in 2025/26 (April/March) only around two thirds of the government’s 300,000 a year target. Developers argue that rising costs, taxes and increased regulation make much new development commercially unviable at prevailing prices. The Mayor of London has scaled back the minimum share of social housing from 35 to 20% and some councils are having to settle for none, in order to get houses built. If the social housing obligation were to be assumed by the state, it would help private developers build more homes for sale (or private rent).
But are councils in a position to provide more housing, themselves? Most councils have disbanded their direct labour teams: architects, quantity surveyors and builders. Outsourcing could be expensive and hiring scarce skills, internally or externally, would be at the expense of private sector firms involved in housing development. At best, it would take several years to create the necessary capacity which could, genuinely, add to the stock of new homes. Then there is the issue of funding. One of Rachel Reeves’ achievements was to make it easier to borrow to invest, creating assets to net off against the capital cost. But social housing is still subsidised, reducing the value of the asset as a stream of income though the subsidy element will be lessened if social rents move closer to market value.
Burnham’s supporters argue that there are two other potentially mitigating factors. One is that rehousing homeless people or private tenants dependent on housing benefit would ‘save’ money from housing benefit, costing a staggering £38 billion; but, depending on the social rent, there will still be a need for public subsidy. Another is that councils can access cheap land for development – augmented by land obtained by new powers for compulsory purchase with compensation at valuations before planning approval. But the same, cheap, land could be used for any form of development, public or private.
The most compelling argument for councils becoming developers is that the private developer model, however valid for most housebuilding most of the time, depends on a set of circumstances – the ability to earn a profit margin above rising land and property prices – which may not exist. Public sector developers can build through economic cycles and where market conditions are unattractive for private developers. Their role is complementary.
Ideological arguments about public v private should not obscure the fundamental point that there is a need for more housing of all kinds and to reduce the regulatory and other obstacles to construction. Nor should we forget that, even if the target of 300,000 new houses were to be met that would constitute less than 1% of the total stock, meaning that comparable attention should be paid to removing barriers to better use of the existing stock, public or private.
But let councils get ahead with expanding council housing in their own way, reflecting local circumstances. That is what devolution means.
* Sir Vince Cable is the former MP for Twickenham and was leader of the Liberal Democrats from 2017 until 2019. He also served in the Cabinet as Secretary of State for Business, Innovation and Skills from 2010 to 2015.
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12 Comments
Good article and shows that we could be starting on the correct path to heal the country. If we could get the EU to accept more asylum seekers back and share numbers fairly by moving some of the numbers we have reform voters could be convinced to vote re join the EU.
My memory of being brought up in a council house was that ordinary working people lived in council houses and wealthy people lived in private houses. Today, the perception around social/council housing is that the people who get social/council housing are mainly those who don’t work for a living, those with drug addictions etc, while those who end up in private rented accommodation – and paying a fortune in rent – are those who do work for work for a living but can’t afford to buy.
So yes, let’s expand social/council housing but as a way of helping those currently with no alternative but to be ripped off in the private renting sector.
I agree that capacity is the problem, but I think we might be fixing the wrong end of it first.
Right now thousands of affordable homes are going up under planning deals with no housing association lined up to buy them, and hundreds of sites have stalled because of it. The associations say the homes are not good enough. The builders say the associations have run out of money. From where I sit both are probably true, and neither gets solved by laying more bricks.
Then there is the space we already have. According to LSE research – empty shops and offices could make over 500,000 homes, with 175,000 empty commercial buildings sitting there in England. What stops it isn’t bricks and it isn’t really tax. It’s that a parade of shops has a dozen different owners, and half the flats above have no front door of their own. That’s a paperwork job, and councils are actually rather good at paperwork 🙂
So maybe the ask isn’t for councils to become builders. It’s for councils to become assemblers: buy up the sites, sort out the access, tie the homes to the council waiting list so it doesn’t just turn into buy-to-let, and let local builders do the actual work. Homes above the shops, and customers for the shops below. Isn’t that the quicker win?
Young people won’t much care who supplies the housing providing it is going to be more affordable. Local councils can supply but only in partnership with central government. There’s no obvious economic reason why not. The government could do what they did in the post war period, buy land at agricultural prices, put the building work to tender, and create more “garden cities”.
Given the current high price of housing, and the likely high price of the assets they’d create, it is hard to see how they would lose. There would be no obvious cost to the tax payer.
But let’s look beyond the obvious. The UK economy has been set up to float on a sea of private debt with housing as a collateral. Any fall in values, caused by a government deliberately undercutting the market, would create a widespread problem of negative equity. The high levels of private debt would turn into a high level of bad private debt. The economy could collapse.
The second arithmetical possibility for more affordable housing is to allow wages to rise whilst holding down prices. Not very likely though.:-)
So although politicians are keen to be offering some hope, as they have for the past 20 years or so, it hasn’t happened yet. If the economy crashes and housing prices fall as they did in 2008, the government will reduce interest rates to push them back up again. As they did in 2008.
This is the best we can hope for.
An excellent overview, thank you Vince. The larger developers do seem to have considerable power to control
An excellent overview, thank you Vince. The larger developers do seem to have considerable power to control the housing market. They have land banks, large cash reserves and can choose what to build and where. Councils that try to force a percentage of affordable housing into new developments usually capitulate and reduce the affordable element in order to get the development moving. These companies have no interest in the effects of their decisions upon society, which is why so many major developments lack necessary infrastructure. Many homes are poorly designed and shoddily constructed using inefficient methods barely different from those a century ago. We have the capability to build to much higher standards with prefabricated factory-built housing that takes weeks to go from planning permission to completion. We also need additional national standards for dwellings that are enforced, which include room sizes, storage, light etc. Post war council houses had such standards that many new homes would fail to meet, but people’s needs are barely considered at the ‘affordable’ end of the market.
As a long serving town Councillor i am seeing a growing number of families locked in private rented accomedation with little or no real recreational space and insufficent income to secure alternative dwelling .it has consequences with growing numbers of complaints of antisocial behaviour and noise nuisance . getting families out of unsuitable and in many cases overcrowded housing has to be a priority . Housing Associations used to secure and rehabilitate poor housing stock and offer it as affordable housing .Now we have TV shows promoting buy to let landlords who in many instances convert former family town houses to quick for profit HMOs .
Yes, thanks for an excellent contribution, Vince. We do need to have a detailed discussion about the best way to provide social housing. Those of us with long memories can recall the catastrophic history of council-run housing. These failings are why housing associations came into being as part of the voluntary (or “third”) sector. If we are supporting Burnham’s aim of carrying out 1.5 million new homes – the largest part being social housing – we need to get the structures right. These new homes should be provided and managed by housing associations – or something akin to housing associations – with councils (or devolved authorities) not involved in property management but responsible for planning housing developments, setting and overseeing standards, and for funding the housing associations which will never be in the position of self-financing.
Can I suggest an experiment with social housing? We’d need to find a local council who will be willing to co-operate.
The government will need to lend out, say, £1 million. I would estimate that this should be enough to build at least 6 dwellings. 4 of them can then be sold for £250k each which will enable the loan to be repaid. There will be then 2 remaining for the council to use for social housing.
There would have to be some work done to prove the concept, and the exact numbers may have to be tweaked a little, but I’d be confident that this could work in principle at little or no cost to the taxpayer.
“Without more social housing, families on low and unstable incomes are forced out of more prosperous areas, where there is work; there is a rise in homelessness; and villages die for lack of trade and tradesmen.”
Social tenants are much less likely to be in work than private tenants (largely because they are lifetime tenancies and have a high proportion of pensioners). Those that are in work are less likely to work locally (because they stop tenants moving where the work is). Tradespeople are typically exactly the sort of people who never get social housing and subsidise those that do.
Vince has listed a number of perfectly valid criticisms of social housing (you could find a fuller list in the Economist recently) but I don’t think he’s answered any of them. What Britain lacks is an affordable commercial sector. I use the word affordable in its traditional sense not the government definition. We specifically favour individuals as landlords ahead of the property companies found in other countries. We have vast amounts of legislation which is not enforced meaning that those who don’t know the rules or are willing to bend them thrive. Fearful tenants seldom use the legal channels available. Above all though, commercial rents are extortionate because we don’t build enough homes.
An interesting idea from Peter Martin which sounds similar to some [most/all] local authorities who impose “affordable” home percentages on new developments as part of planning regulations. Developers claim these are not viable and they cannot afford to build social homes. So would local authorities be able to succeed where the developers fail? In calculating viability HMG allows developers to charge for profit. Perhaps Mr Burnham might devolve the viability rules to local councils. If some councils were to say that developers could no longer charge a 15% profit element before saying their scheme could not afford social housing how would that effect the supply of new houses in their area.
@ Richard,
I wasn’t suggesting that there should be no profit element for private contractors. However, the control of building projects should be kept in the hands of local councils.
The council can purchases building land then put out the building work to tender. This still allows those putting in the tenders to make their profit. The council then chooses the winning bid. Local people can be invited to give their opinions. A number of properties can be sold to recover the initial costs and the remainder can kept for social housing,
The concept can be implemented for both large and small projects.
I would imagine that the major developers would hate for this to become the norm for building projects and would lobby strongly against it. They’d no longer be in control.