The Elphicke-House review

An independent review has called on local authorities to become "housing delivery enablers". Tonia Secker considers the report's recommendations.

The Elphicke-House review, commissioned by Government in January 2014, published its findings on 27 January 2015 in its report "From statutory provider to Housing Delivery Enabler: Review into the local authority role in housing supply".

With certain areas – the planning system and HRA debt cap – off limits, the Report presents an interesting and pragmatic set of 30 "Make Do and Mend" recommendations as to the role for councils in managing and boosting local housing supply within the current legislative and financial framework.

The principles of the Report have been broadly endorsed by Government and the underlying message to local authorities at the House of Commons launch was to have greater confidence, to look at housing in a multi-tenure and, arguably more commercial way, to stop looking to Government for permission to do things and to use their assets, borrowing capacity and powers to drive supply.

We have identified recommendations in the Report which are likely to be of direct interest to practitioners.

Housing Delivery Enablers

A central tenet of the Report is that local authorities should sit at the heart of housing delivery in their area and take a wider role in the coordination and delivery of housing supply – a role which arguably extends beyond their current obligations in relation to Housing Strategy to one which more pro-actively seeks to align housing need assessments to delivery on the ground.

Such a Housing Delivery Enabler role, which does not necessitate the creation of prescribed or complex legal structures, encourages local authorities to look beyond their traditional affordable housing remit and consider housing (and their own role in its supply) in a broader, multi-tenure context.

The Report does not suggest that the wider supply side role should sit with local authorities alone – the authors are alive to the constraints on Council budgets and resources – but challenges authorities to create the vision and broker and coordinate arrangements with other bodies (private and public sector) to facilitate the delivery of new housing that their areas and residents need. 

The Report suggests a number of tangible ways for local authorities to act in that enabling capacity – many are not new and a number of councils are already pursuing comparable activities, but many are not. The report operates to identify options and encourages Government to find means of disseminating know-how to local authorities generally.      

Partnership working and delivery vehicles

Partnership working is a key theme and the local authorities are encouraged to "work with businesses and other partners to…understand opportunities to work together". Local authorities are identified as the catalysts for those partnerships – engaging with third parties to deliver their wider housing vision for the area and utilising their assets to create and unlock housing. Inevitably, that raises questions about the legal bases of those partnerships, the appetite amongst officers and members to accept commercial risk in pursuit of housing supply, and the willingness of finance directors to release assets now on the promise of a deferred return or as straight equity into the project.

Risks do, however, need to be balanced against the potential return both in social value and economic terms. The role of local authorities as true investors in housing is one which has yet to be fully explored, but opportunities for joint ventures, intermediate and private housing products and the use of lease and covenant arrangements offer the potential for returns to the Council's general fund. Practitioners will need no reminding that effective partnership structures take a long time to plan, and that clarity about vires (in particular de facto limitations to the scope of the exercise of the general power of competence), purpose, valuation and risk and their proper analysis and documentation are fundamental to a successful outcome. 

To the extent that local authorities wish to respond to the encouragement to think about housing in the commercial context, then the limitations on their choice of vehicle imposed under Section 4 of the Localism Act 2011 and the taxation consequences of participating in a joint venture company need to be carefully considered. If Government is serious about incentivising local authorities to participate in wider partnerships, then the greater flexibilities and taxation benefits offered by limited liability partnership structures would be a helpful starting point.

Value for money

Given the economic climate, it is unsurprising that the concept of value for money in local authority housing was explicitly considered. The Report cites evidence of local authorities securing significant (between 20% -30%) efficiency savings through the externalisation of housing related services but notes that less than 2% of housing management contracts were subject to external competition. If the Report's mathematics are correct, then a projected £675m worth of savings could be generated. The clear recommendation from the authors is that periodic value-for-money testing of contracts should be implemented by councils. This is one of the recommendations which received the immediate endorsement of Government and is perhaps a space to watch.

The price of self determination

The Government has welcomed the Report and its suggestion that local authorities should make fuller use of their existing powers and assets and approach housing from a much wider perspective. If local authorities take it at its word, then inevitably there will be tensions between Government policy and local delivery – for example, building housing through joint venture vehicles, for sound commercial or project specific reasons has the capacity to exclude resulting social units from the Right to Buy. It remains to be seen whether such an exercise of localism will be palatable to Government in the event that the Coalition remains in place after the next election.   

Tonia Secker is a partner at law firm Trowers & Hamlins. She can be contacted on 020 7423 8395 or This email address is being protected from spambots. You need JavaScript enabled to view it..