The re-birth of council housing
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 John Vincent Cable is a British politician who led the Liberal Democrats from 2017 to 2019 and represented Twickenham in Parliament from 1997 to 2015 and again from 2017 to 2019. He served as Secretary of State for Business, Innovation and Skills and President of the Board of Trade in the coalition government between 2010 and 2015. Cable studied natural science and economics at Cambridge before working as a finance officer in the Kenya Treasury and lecturing in economics at Glasgow University, where he also earned his PhD. His distinguished career included roles in the Diplomatic Service, directing research at the ODI, advising the Commonwealth Secretary-General, heading the international economics programme at Chatham House, and serving as Chief Economist for Shell Group Planning.
