Andy Haldane is an (informal) economic advisor to the government. His view on how to resolve the housing crisis is, therefore, of greater importance than if it was just the opinion of a private individual. He has written an article published in the Financial Times, “How to fix the housing crisis”. His ‘model’ is essentially based on private finance. He says there are two constraints on success for “a programme of council or social housebuilding” which Andy Burnham has made “one of the centrepieces of his new administration”: financing and resourcing. He suggests there need to be ‘four pillars’ to tackling these constraints.
1) He wants government land handed over to local authorities and mayoral combined authorities. He says they could use municipal bonds to borrow against future revenue streams to help finance upfront housing investment.
2) Mayoral Combined Authorities and Local Authorities should set up development corporations for house building. These should be run as public interest companies but should be operated by commercial enterprises.
3) Developing housing sites “quickly and at the lowest cost” requires a “bespoke planning regime” which would consist of “streamlined planning processes and decision-making, less intensive regulatory and environmental approval, and less intrusive public consultation and review.”
4) Modular construction methods have the potential to lower construction costs and cut timelines.
In summary he says:
“Public land developed for public purpose but privately operated; co-financing by municipal bonds and private capital; a bespoke planning regime; and a transformative method of new construction — these are the base elements needed to ease the constraints suffocating the UK’s housing market and to tackle the housing crisis in every postcode.”
What about the rent?
We’ll examine these ‘solutions’, but first there is something of critical importance missing from his article. He fails to address the question of the affordability of rent and what type of rent would be applied by these development corporations? After the second world war the development corporations associated with the building of the new towns were largely publicly funded and a majority of the homes built were council housing. Haldane is suggesting something different.
Private finance is not generally interested in social rent homes because they do not make the profit margins the large scale builders have grown used to. Private finance is focused on maximising its returns, so the revenue stream it is usually interested in is private rent, or in the case of “affordable housing”, the unaffordable to many, “affordable rent” (up to 80% of market rents”) or “shared ownership”. “Affordable rent” was introduced by the coalition government to facilitate a 60% cut in grant funding for social housing. It is on average £60 a week higher than social rent in England, £90 higher in London.
In the case of both council owned private housing companies, and housing associations, less than a quarter of homes they build are social rent, the most affordable for tenants. This is the consequence of borrowing from commercial sources, rather than the lower interest rates of the Public Works Loans Board.
Mr Haldane’s proposal to have development corporations for house building, privately operated or co-financed through municipal bonds, is liable to produce the same results. We see already, in the case of the Stockport Mayoral Development Corporation, complaints by local people that rents are beyond the means of many.
In regard to planning, the government has shown its centralising instincts at the same time as talking up devolving power from Westminster. It has imposed government house building targets on local authorities, many of which are unfeasible, and its planning changes are singing the same tune as Mr Haldane.
As MP Chris Hinchliff explained, before the leadership change:
“It now seems that in the dying embers of the Starmer Government, Labour is doing its opponents work for them, with the determined unpicking of the last remnants of the democratic planning system which steered Britain’s reconstruction from the ashes of the Second World War.”
“Under these rules, almost all planning decisions that are currently democratically scrutinised by planning committees will be made behind closed doors by unelected officers. Some categories will be compulsory, like smaller housing developments, or the crucial design stage for applications under 500 homes (height, green space, traffic access), and controversial permitted development office-to-housing conversions that often produce overcrowded, overheated or poorly ventilated homes. Everything else, from incinerators to major housing developments will be expected to be taken out of Councillors hands in all but ‘exceptional circumstances’.”
“Crucially, local Councillors will lose the power to require a committee to vote on an application that is a significant issue for their community. With no committees for the vast majority of decisions, the public lose their right to speak for a few minutes in front of those deciding on the future of their local area.”
Mr Haldane appears to consider such rights as ‘intrusive’ and wants “less intrusive regulatory and environmental approval”.
Despite all the talk of planning slowing down planning permissions, the top five builders have 280,000 plots with planning applications granted. This provides them with between four and eleven years’ supply. In addition they have 225,000 more plots, typically through option or conditional agreements, providing a ‘future pipeline’.
In relation to modular construction, is it really about speed of building or increasing the profit per unit? Of late the big builders are pleading poverty, but according to the new-builds website the sector average gross margin for the 2025 financial year was 21.4%, down from the pre-pandemic days but still a very high margin.
What about the councils?
In relation to councils Andy Haldane says
“Resourcing presents a second constraint. With their resources significantly depleted, neither local authorities (LAs) nor mayoral combined authorities (MCAs) have the infrastructure or expertise to undertake council house building at this scale.”
It’s true that many councils are not in a position to begin large scale building, if any. At the end of the 2024/25 financial year there were 134 local authorities in England without a Housing Revenue Account. Their housing stock had been transferred to housing associations. They don’t have the staff to begin building again. However, councils don’t just have to build. They can buy stock. Indeed, in the last six years, owing to the shortage of grant and the extortionate price of new builds, 44% of additional council homes have been acquisitions, including ex-council homes sold under Right to Buy.
What is crucial in relation to councils’ ability to create the necessary teams to build, and build on a regular basis, is the availability of grant. Currently, with the competitive bidding process, building is piecemeal, sporadic. Government policy should be encouraging them to build council housing. However, instead of encouraging them to reopen HRAs, the government has increased the threshold at which they have to set one up from 200 to 1,000. Whilst they can build outside of an HRA by using General Fund finance, they have to borrow at commercial rates of interest. That’s why in the case of council owned private Housing Companies less than a quarter of the homes they build are social rent.
Publicly funded social rent council housing
Andy Haldane’s recipe for fixing the housing crisis doesn’t address the issue of unaffordable rents. Private funding won’t produce the social rent housing which is needed. The constraints supposedly “suffocating the market” are not the real reason for house building being on a small scale. The market is dominated by an oligarchy of large volume house builders that follow a policy of “margin not volume”. It is profit per unit which drives them. The “extreme concentration” of the house building sector is such that two of the top ten builders built 41.9% of completions in 2025.
The key to resolving the housing crisis is social rent housing, which will only be built by public funding. Private rent and “affordable rent” only serve to drive up the housing benefit bill, and place extra financial pressure on tenants. If the Attlee government could fund large scale council house building under far worse economic circumstances than today, so can this government, if it deems it a priority.
Martin Wicks
August 23rd 2026
Labour Campaign for Council Housing 