The right’s way to more council housing

Posted: August 14, 2025 | Author: julesbirch | Filed under: Council housing |Leave a comment

Originally written as a column for Inside Housing.

England should be building 100,000 new council houses a year, says a new report out this week.

It’s a call that would be routine if it was being made by one of the usual suspects, but this time it comes from, of all places, Policy Exchange.

The right-wing think tank was the incubator for the ideas that dominated the Conservative agenda in the 2010s and its alumni played a key role under successive Tory-led governments. 

Among its greatest hits in the glory days of the coalition were calls for all social homes to be nationalised, with most sold off to tenants and only a rump left for the most vulnerable.

That was followed by proposals to sell off all ‘high-value’ social housing and fully commercialise housing associations.

True, the ideas were usually justified as ways to generate more affordable homes overall but the underlying agenda seemed to be that, far from tackling social exclusion and poverty, social housing was a cause of them

In the wake of the 2024 election, Policy Exchange is playing a less partisan tune and this report comes with endorsements from Labour as well as Conservative politicians.

The foreword comes from former Labour cabinet minister Ruth Kelly, who argues that ‘building more council homes is likely to sit at the centre of any credible strategy to tackle the current housing crisis’.

Amen to that but she too seems to have changed her tune. When she was communities secretary in the mid-2000s, the Labour leadership routinely blocked party conference calls for local authorities to become the ‘fourth option’ for delivering social homes. 

As the Policy Exchange report points out, Labour built far fewer council houses between 1997 and 2010 than Margaret Thatcher’s Conservatives did between 1979 and 1990 (though this was the result of Labour failing to challenge the policy regime she put in place).

Housing finance reforms first proposed by Labour and then implemented by the coalition have led to a modest revival over the last 15 years but on nothing like the scale envisaged here.

Most of this report by architect Ike Ijeh is about design and it follows Policy Exchange’s work on the Building Beautiful agenda under the last Conservative government.

He contrasts that with the architectural mistakes of the 1960s and 1970s without ever quite admitting the role played by incentives from central government for councils to take up cheaper and quicker building methods. 

The beauty agenda proved to be a good way to make the case for more homes to Conservatives even though it has since been downplayed under Labour.

And it’s hard to argue with his call for a new generation of council housing founded on quality designs or the many successful examples he cites from the UK and around Europe.

But it’s that call for 100,000 council homes a year that really captures the attention. After all, even the £39 billion pledged in the spending review will only deliver 300,000 affordable homes over 10 years, with just 180,000 for social rent.

Unless action is taken, he argues, we will continue to spend more and more on housing benefit, with most of it an indirect state subsidy for social landlords. 

Investing in new council homes would ease pressure on the private rental market by providing homes for the most economically disadvantaged while restricting the Right to Buy would ensure they ‘remain a state asset in perpetuity’.

Attitudes on the political right towards social housing have softened in the last decade but it’s still a surprise to see arguments usually advanced from the left coming from a think-tank like Policy Exchange. 

The report also comes with endorsements by both former shadow housing secretary Kevin Hollinrake and shadow minister David Simmonds – though don’t rule out a Conservative reversion to their ‘market knows best’ comfort zone before the next election.

Where the report is much weaker is on how its ambitious plans would be paid for.

‘Limited capital grant funding’ is seen as one of the most significant financial barriers and it calls for increased grant to be linked to the adoption of National or Local Design Guides for Council Housing with more to follow ‘if councils can demonstrate a material uplift in the quality of new council housing’.

The report calls for ‘a compulsory, flat rate and locally set version of the new Infrastructure Levy to help local authorities self-finance the construction of new council homes’. 

It argues that this will provide a more reliable income stream that the voluntary Community Infrastructure Levy and Section 106 and put them in a strong position to partner with developers and contractors.

This seems flimsy at best and the report does not begin to grapple with Treasury objections to the case for bricks and mortar over personal subsidies.

For now, though, the details matter less than that the case for council housing is being made from a surprising new direction.

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