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How to increase investment in council housing and capitalise on the economic benefits

The Prime Minister has made clear his ambition: to “oversee the biggest council house building programme since the post-war period”. This is a hugely positive step forward for the Government’s housing policy; it marks a generational break with 45 years of housing policy that failed to articulate a clear aim beyond merely maximising overall output – with little regard to affordability for people on low incomes or at risk of homelessness. And, crucially, it will help to capitalise on councils’ knowledge of local housing need, significant land value capture powers, and masterplanning capabilities.  

Yet the decline of council housing was driven not only by housing policy, but by the rise of restrictive fiscal policy that actively constrains government investment in social homes and has pushed Housing Revenue Accounts (HRAs) into existential financial jeopardy. Despite being justified under the guise of ‘fiscal responsibility’, debt-to-GDP spiked sharply during austerity while investment in public assets like social housing collapsed and vital services were cut – demonstrably impoverishing both people and the state.

At the Autumn Budget, to realise its ambitions on council housebuilding, the Government must reconnect political ends with economic means and drive a change in economic consensus that places social housing investment at the centre of national renewal. In an upcoming report on council house building, we argue the Budget marks a clear opportunity for the Government to cancel £31.8bn in HRA debt to unlock councils’ capacity to build, covered in detail here, and do more to bring forward and increase funding – ensuring its fiscal framework supports rather than hinders greater investment in council and social homes.

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The financial and economic case for cancelling HRA debt and increasing investment

Modelling commissioned by Shelter and undertaken by Pragmatix sets out an ambitious scenario for the Government to cancel HRA debt and provide the necessary investment to deliver 284,000 social rent homes within a 10-year trajectory – in addition to those already expected to be delivered through the Social and Affordable Homes Programme. Pragmatix estimates that the economic benefits of the policy would outweigh its costs within twenty years, around a decade after the final homes are built. Over the report’s 60-year appraisal period, the modelling estimates a net economic benefit of £141.5 billion, including substantial savings to the public sector from reducing reliance on more expensive forms of housing. Government departments are estimated to save £64.7 billion over the period, including £26.3 billion for the Department for Work and Pensions, while savings to councils from reducing the number of households in temporary accommodation eventually reach £672 million a year.

Cancelling HRA debt is broadly fiscally neutral; the majority of debt is owed to Treasury, meaning it is largely a series of inter-government transfers, involving cancelling debt that the public sector owes to itself.

The fiscal framework should support rather than hinder investment

Within this Parliament, debt cancellation and delivery, as outlined above, is also compliant with the Government’s ‘investment rule’, using around 56% of the current ‘headroom’ as of the OBR’s 2026 spring forecast. While council and social housing is a more-than-worthy use of investment ‘headroom’, this self-imposed restraint on public investment creates artificial trade-offs with other policy areas and reduces the Government’s appetite to increase funding. More flexibility is therefore needed within the fiscal framework to ensure that the long-term economic net benefit of investing in social housing is recognised.

The Government’s fiscal framework disincentivises social housing investment

The narrow and short-term focus of the current fiscal framework discourages social housing investment and hinders the Government’s aim of delivering a council housing revolution. Firstly, the Government’s rolling target (the ‘investment rule’) requires its chosen debt measure to be falling as a share of GDP in the third year of the OBR’s forecast period – but this disregards the longer-term savings and additional revenue social housing generates.

Secondly, the Government’s chosen debt measure – Public Sector Net Financial Liabilities (PSNFL) – fails to value the physical asset created on the Government’s balance sheet when it funds a new social home.

Thirdly, PSNFL creates a two-tier fiscal system that favours social housing delivery through housing associations and for-profit registered providers over public-led social housebuilding from councils and development corporations. Unlike most EU countries that use a general government debt measure, PSNFL includes the entire public sector. It means that our fiscal rules include the debt of our public social housing providers, even though their debts are paid for by rents and other independent income as opposed to taxation or wider government expenditure – i.e. they are classed by the ONS as ‘market producing’.

Finally, because of this public-sector focus in the debt measure, the central government financial asset recorded under PSNFL when investing in council housing (created by loaning money to HRAs via the Public Works Loan Board) is actually netted off by the liability held by the loan recipient (the council or development corporation) in the national accounts. This leaves only the liability on the Government’s balance sheet created from the borrowing it undertook to ‘fund’ the loan. In contrast, liabilities held by private registered providers to pay back loans to central government are excluded from PSNFL, making these loans more fiscally attractive for central government: the asset (the loan) and liability (borrowing to ‘fund’ the loan) held by central government cancel each other out.

The consequences for social and council housebuilding are stark

Rather than seeing good growth and healthy public finances as the outcome of social housing investment, the current framework forces housing policy towards day-to-day spending on housing benefit and expensive temporary accommodation – which flows outwards from the public sector to private landlords. Investment remains far below what is needed:

  • Social and Affordable Homes Programme grant, while welcome, only enables the delivery of 18,000 social rent homes a year on average – we need to deliver 90,000 a year for 10 years to end the housing emergency.
  • Interest rates from the Public Works Loan Board available to HRAs remain far too high with 50-year maturity lending at around 6%.
  • HRAs and public development corporations are excluded from £2.5 billion in 0.1% interest loans recently provided to housing associations and for-profit providers, a distinction that reflects their different treatment within the fiscal framework.

Fiscal reform is needed to support the scaling up of council housing delivery

To deliver its promise of a council housing revolution, the Government must scale up current grant funding and available low-cost finance to much higher levels. In doing so, it must ensure that councils and development corporations, who were the key players of the post-war social housing boom, are empowered to support the Government’s social housing ambition. In an upcoming report later this month, we argue that, if the Government remains committed to not change the current fiscal rules, it should instead exclude HRAs and development corporations from PSNFL. This would finally end central government incentives to limit their borrowing, devolving power to HRAs and development corporations, and support the Government to provide them with the low-cost loans needed to deliver social housing at scale.

Email your councillor today and ask them to add their name to a letter to the chancellor, urging him to knock down the barriers to getting councils social homes again.  https://campaigns.shelter.org.uk/tell-your-cllr-fight-for-social-homes

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How can people who need air conditioning the most afford to run it during heatwaves?

As climate change drives hotter summers, cooling is becoming a public health necessity, not a luxury.

For anyone looking for an answer to this question, the recent Climate Change Committee (CCC) report, titled A Well-Adapted UK and backed up by no less than 1,841 references, is essential reading. Among many other necessary recommendations, it highlights the importance of adapting existing homes to keep them cool in hot weather.

Air conditioning and the cooling hierarchy

How do we do this? Experts at Shade the UK are correct that we need to use a combination of ‘nature-based’, ‘passive design’, and ‘active ventilation and cooling’ measures in the right order. In this cooling hierarchy, a significant and often sufficient amount of cooling can be achieved by simple external shade and good insulation. However, passive measures will not always be sufficient. In some homes, active cooling such as air conditioning (AC) will be needed.

Until recently, we haven’t had a good idea of how much active cooling we might actually need, or how many people currently have AC.

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Now, we have a much better indication. According to a recent academic study, published in June of this year, estimates of present-day AC use across the UK vary widely, with figures ranging from 3 per cent to 19 per cent of homes.

Although future trends are uncertain, one conclusion this study comes to is that previous official assumptions about AC uptake “are too narrow, and present ownership is potentially an order of magnitude higher.”

Cooling is also becoming an issue of inequality. As with all energy services, AC ownership and use is fundamentally unequal. Recent evidence shows that some people who are at the most risk from heat in the UK, including older adults, low-income households and many social housing tenants, are less likely to have and use AC. As a result, the side of energy poverty long experienced elsewhere in Europe – summer cooling – has landed in the UK.

Leaving aside the upfront purchase cost, in what follows we want to focus more on the running cost issue. A small AC unit using roughly 1kW for seven hours per day over 30 days would cost around £54.83 in electricity. That might not seem like much, but for those on the lowest incomes, it absolutely is.

A Hot Weather Payment?

In what you might call classical UK fuel poverty policy, energy affordability is driven by three factors: energy prices, the energy efficiency of the home, and low household incomes. The same factors will shape the affordability of running AC and other active cooling measures.

It follows that policy interventions might be required to support lower-income and heat-vulnerable households with the costs of running AC in summer, and especially during heatwaves, when they will be needed most.

One option is for the Government to start thinking about a Hot Weather Payment. This could mirror the current design of the Cold Weather Payment, with some improvements based on previous learnings. The objective would ultimately be to reduce heat-related mortality and morbidity during hot weather.

For example, eligible households could receive a payment for each period of hot weather between 1 May and 31 October. The trigger for this payment could be based on temperature, like the Cold Weather Payment. Another possibility would be to link payments directly to Heat-Health Alerts, ensuring that financial support is automatically triggered when dangerous temperatures are forecast.

Any Hot Weather Payment system would need to make payments in advance of a heatwave, and would also need an eligibility criterion that effectively targets those on low-incomes and most vulnerable to heat-related mortality and morbidity.

To be balanced, there might be alternative ways of achieving the same outcome as a Hot Weather Payment. The CCC is right, but perhaps a little optimistic, to suggest that our future energy system could have enough clean, cheap electricity to make this problem go away without direct financial support. Homes with solar PV could also feasibly generate enough electricity to power an AC unit.

However, we would be wise not to rely on renewable electricity generation and wider energy system reform to meet the potential costs of keeping cool in the more regular 40°C summers of the future.

22 per cent of homes will need AC

Astute readers might have realised that earlier we wrote that until recently we haven’t had a good idea of how much active cooling we might actually need. But now we have estimates of this too.

The recent CCC report states that in future climate conditions of 2°C global warming – which is around what we are heading for – approximately 22 per cent of UK homes will require active cooling, like AC, to cope with overheating. Under more drastic warming scenarios, which are still not impossible, active cooling is required for almost every single home in England.

The exact level of warming we hit is still subject to choices made by us all. But if we assume a minimum of 22 per cent of UK homes will need AC, and that many of these will be lower-income households and/or particularly vulnerable to heat-related harm, the question of how these households will afford to run their AC units when they need to becomes inescapable.

A Hot Weather Payment might not be the best solution. Wider electrification, solar PV, battery storage, and smarter electricity tariffs could instead reduce cooling costs over time. Either way, the time to begin that conversation has clearly come.

Further reading

You can find original research from Matthew Scott at the Chartered Institute of Housing and Mehri Khosravi at the University of East London below:

From building codes to behaviour: Strengthening extreme heat adaptation policy in the United Kingdom – May 2026

Heat Adaptation in the UK: Policy Brief – October 2025

A nation unprepared: Extreme heat and the need for adaptation in the United Kingdom – June 2025

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Building a better private rented sector: A conversation with Edward Benyon

RB: The Labour Government’s Renters’ Rights Act 2025 is one of the biggest changes to England’s private rented sector for generations. How does it change things for you?

Edward: I couldn’t agree more with the abolition of Section 21 – I’ve never used it in all my time at the Benyon Estate and in previous roles – but I don’t think reform has gone far enough on security for tenants.

For me, the legitimate reasons why a landlord might need possession of a property are fairly straightforward: if the tenant is behaving antisocially, if they aren’t paying the rent, if the landlord genuinely wants to move into the property, or if they need to sell it. All of those circumstances still exist under the Renters’ Rights Act. That’s one reason why I don’t think the reforms have gone far enough.

A second reason is that it limits the kinds of tenancies we’re able to offer. People talk about the abolition of Section 21 as though it’s automatically increased tenant security, but I don’t think it’s that simple. Before the Act, if tenants wanted a three-year fixed-term tenancy, we were perfectly happy to offer them because we are a long-term business. Families knew where they were going to live and what rent they were going to pay, so they could plan ahead and have their children settled happily in schools. To me, that’s an important kind of security. We’re no longer able to offer that.

I don’t think the Renters’ Rights Act has changed very much for us in practice, and there’s very little in the Act that worries us. I do have some concerns about how parts of the new system will work. Tenants can challenge rent increases at the First-tier Tribunal, and the increase can be delayed while the case is considered. There are also already long delays in the courts when a landlord has a legitimate reason to regain possession. We’ll have to see how that works out in practice.

What I think is more interesting is where reform goes from here. If you look back before the Housing Act 1988, tenants had a huge amount of security and landlords had very little control. The 1988 reforms swung the pendulum completely the other way. What we should be trying to do now is establish more of a middle ground.

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RB: How can we build long-term security into the private rented sector?

Edward: I think the Government should spend less time thinking about what it wants to ban and more time thinking about what it wants to encourage. Suppose landlords had the option of offering ten-year tenancies, and the Government created the right incentives to encourage that model. That could be transformative for families living in the PRS.

Ten years is long enough for a family to build a life. Children can stay in the same school. Parents have certainty. People know where they’re going to be. That starts to feel like genuine housing security.

I think there could be a bargain here between landlords and government. If you’re prepared to commit a home to the private rented sector for the long term and give a family ten years of security, government could give you something in return.

RB: How could policy encourage a better private rented sector?

Edward: Take VAT. At the moment, if you build a house to sell, the development is zero-rated for VAT. You can recover the VAT you’ve paid during construction. Whereas if you’re building or improving property that will remain in the private rented sector, you can’t reclaim that VAT.

The same applies when we’re repairing or improving our existing homes. Whatever the construction cost is, we effectively have to add another 20 per cent because we can’t recover the VAT. I’ve never understood why the tax system treats investment in homes for sale and investment in homes for rent so differently. When you combine that with licensing costs and everything else landlords now have to absorb, investment becomes significantly more expensive.

Now, I fully accept that what I’m about to suggest costs money, and the Treasury’s instinctive answer to that is usually ‘no’. But suppose the Government wanted to encourage much longer private tenancies. One answer would be to say: “If you’re prepared to commit your property to the private rented sector on a genuinely long-term basis, we’ll allow you to reclaim VAT on repairs.”

That would create a real incentive for landlords who want to invest in secure homes for the long term. Landlords would be taking on some risk, because if you were to sell a property with a tenant in place on a long lease, it would typically be worth perhaps 20 or 25 per cent less than if it were vacant. My proposal wouldn’t completely compensate for that reduction in value, but if you’re genuinely a long-term landlord – if your intention is to keep renting that property for decades rather than selling it – it matters much less.

RB: What’s the balance for you between affordability, security and quality in your stock?

Edward: Our day-to-day challenge is creating contemporary living within period properties. People live differently today than they did twenty years ago, and we’ll need to continue adapting our homes to reflect that. Fundamentally, though, we want to keep the portfolio together and continue managing it for the long term.

Our objective isn’t to advertise a property at the absolute highest rent we think somebody might eventually pay. We advertise at a rent we think is fair and achievable because we want somebody to move in quickly, be happy there and stay for as long as possible.

The thing we as a landlord really want to avoid is voids: empty properties cost money. Long-term tenants are good for us. They’re good for the business. They’re good for the community. They’re good for the property.

I sometimes wonder whether that’s one of the differences between long-term landlords and some smaller buy-to-let investors. A private individual may genuinely need to move back into a property, or decide to sell it, or simply change their plans. That’s perfectly understandable. But businesses like ours – and, I suspect, most institutional landlords – don’t want to do those things. We want long-term, stable occupation.

One thing I would add is that successive governments have introduced legislation aimed at dealing with rogue landlords. There are rogue landlords who deserve to be dealt with robustly, but the overwhelming majority of landlords are decent people trying to provide good homes for good tenants. Measures such as Awaab’s Law are absolutely right and we fully support them. I think we’d get much better outcomes if government worked more closely with landlords who are genuinely trying to invest for the long term.

The private rented sector isn’t going away, so let’s work out how to make it better.

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If Andy Burnham is serious about a council housebuilding revolution, what does he need to know about the self-financing settlement for the HRA? 

I was one of the many council housing finance geeks working with councils to influence the self-financing settlement for Housing Revenue Accounts (HRAs) back in 2012.

It was aimed at making council housing finance more accountable and transparent at the local level as well as more business-like and efficient.  The process of moving from a national subsidy system to individual self-financed HRAs was also designed to make the finances sustainable in the long term and allow for growth and investment. 

It was a hard-won deal between tenants, councils and different governments over a number of years that ended up not delivering on its promise from the outset, only to further suffer from a series of policy and financial setbacks in the years following 2012. These have meant that most councils do not have a sustainable HRA – just 14 years after the original settlement.  The sector is now asking the Government to put things right, but there are many options to look at. 

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Why self-financing replaced the ‘tenant tax’

Before 2012, HRA revenue finance was tightly controlled at a national level within the HRA Subsidy System.  The key feature was an annual calculation made to capture surpluses generated by most councils through their rents and redistribute them to others whose rental income did not cover their necessary expenditure. Part of the surpluses also went to the Treasury.

This was dubbed the ‘tenant tax’ by tenant groups who campaigned for change in the years running up to the settlement.  They objected to their rents being used to repair homes at the other end of the country when new homes or improvements could have been made in their areas.  Councils also objected to the lack of control and uncertainty inherent in the annual determinations, which left them with no ability to plan long term or manage maintenance over multi-year projects. 

During earlier years of the subsidy system, the Treasury topped up the pot to ensure that basic management and maintenance could be covered by all councils. But as rents increased and assumed expenditure did not, the overall system went into surplus. By 2008 the vast majority of councils were paying into central government, and the Government was making a surplus on council housing. 

This only increased the arguments for a self-financing deal and could have provided for a more generous and sustainable settlement, had it not been for the financial crash and its impact on wider government finances. 

How a sustainable settlement became unsustainable

The deal that was finally offered to councils by the Coalition Government in 2012 meant most councils had to take on additional debt and did not build in any allowance for investment in new homes. These councils had effectively to buy themselves out of the system to compensate the Treasury for its loss of annual income.  Councils therefore took on debt which the Government calculated would be sustainable for them to hold alongside managing their homes. Collectively, councils took on £8 billion of extra net debt. 

This was not an appealing offer to many councillors or tenants, especially where Housing Revenue Accounts started out debt-free, but ultimately, they agreed it was a price worth paying for a more independent future which would allow them the freedom to make local decisions and plan over the long term. 

Unfortunately, the assumptions underpinning the self-financing deal did not last long –Right to Buy was immediately ‘re-invigorated’ and many more sales were made than assumed, reducing the rental income the 2012 debt calculation was predicated on. 

Rent policy was then changed significantly. Instead of increasing steadily by inflation, rents were reduced by 1% in cash terms each year from 2016 to 2020 taking a significant amount of money out of councils’ budgets.   

Alongside that loss of income have been unforeseen drivers of increased costs; the need for increased building and fire safety work and meeting new decent homes and energy efficiency targets, alongside much higher cost inflation than expected.  Whilst councils were always prepared for some ups and downs, these pressures have pushed some to breaking point. There is simply not enough money in the system to allow council housing to be run properly.

Why debt write-off alone won’t solve the problem

Shelter has recently published further analysis on debt in the HRA by Savills which builds on work they did for CIH in 2024 to look at an updated debt settlement.  Savills conclude that “there is little or no capacity to support the ability for local authorities to contribute meaningfully to the government’s target of 1.5million new homes and therefore to enhance the delivery of social rent homes.” Shelter is therefore calling for the write-off of all HRA debt. 

We agree there is an urgent need for HRA debt to be looked at, but councils’ ability to invest in new homes will still be limited by the needs of their existing homes.  Due to different original rent levels, the type and age of the homes they own and the level of housing need in their areas, each local authority is in a very different position now compared to 2012. London and other inner-city authorities are facing significantly increased costs in dealing with building safety and the need for wider regeneration, whilst others have lost more homes through the Right to Buy and lack the land to replace them.    

A new settlement for a new council housebuilding era

We are therefore calling for the Treasury and MHCLG to be tasked jointly with reviewing these issues to facilitate council house building.  The review should meaningfully engage with councils and tenants as well as sector experts at the earliest opportunity to ensure that key stakeholders concerns and aspirations are fully understood and that lessons from the past are learnt. 

It took almost a decade for councils, tenants and the government to develop and agree the principles for the original self-financing settlement. We urge the new administration to start this work urgently so that councils can be placed back onto a sustainable footing to invest in both existing and new homes.  Tenants have already waited long enough.

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The trouble with rent controls

Rent controls are attractive for an obvious reason: when rents are rising rapidly, limiting how much landlords can charge promises immediate relief. However, decades of international experience point to fundamental problems. Attempts to design around these problems create new distortions of their own. Ultimately, while rent controls can change the price some people pay for housing, they fail as a genuine solution because they fail to address why housing is expensive in the first place: scarcity.  

Private rents in England rose by 9% in the year to March 2024, the fastest rate on record. In London, the average private tenant spends around half of their take-home pay renting a one-bed flat. Against this backdrop, it is no surprise that rent control is back on the political agenda. But before policymakers reach for this lever, it is worth looking at how rent control has worked elsewhere in the world.

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Rent control policies tend to spring up in places where housing costs become unaffordable for many people. Since World War 1, most countries have tried a version of rent control. Over time, regimes have tended to become more flexible as governments attempt to address some of the unintended consequences of rent control.

When supply shrinks

Analysis of rent control has tended to find that it damages the supply of housing. Partly this happens by discouraging construction, but it falls just as readily through removal of existing stock from the market. However, there is some disagreement about whether this is a fundamental problem of rent control or a problem that can be designed out of the system. Disagreement tends to flow from differing analysis techniques, time periods and metrics, as is the case for research into the supply effects under rent control in Catalonia.

Berlin introduced ‘hard’ rent controls in 2020. Rents were frozen in the city at 2019 levels for five years, with maximum rents set, per metre square, depending on location and amenities. Rents in the city did fall, but so too did the number of housing options.

Rental advertisements halved, from 600 per week before the announcement to 300 per week following the policy’s implementation. The number of properties that were converted from rental to owner-occupied, increased from 12,700 in 2019 to 19,200 in 2020. Overall, the construction of new dwellings declined by 14% in Berlin over the same period, while across the rest of Germany construction increased by 5%.

San Francisco’s rent control policy, introduced in 1979, was ‘softer.’ To mitigate the damage to supply, rent controls only applied to buildings that existed when the controls were introduced and it was possible to reset the rent after tenancy. In 1994, rent control was extended to smaller landlords, meaning that small rentals built before 1980 were now covered by controls, and all after weren’t.

Facing a lower return than the uncontrolled market, landlords converted their units to homeownership or redeveloped buildings to create new units exempt from rent control. As a result, the rental supply in San Francisco dropped dramatically. Overall, landlords reduced the supply of rentals by 15%. Restrictions on redevelopment have tried to stop this but were found merely to result in building deterioration and abandonment as rents failed to keep up with maintenance costs.

Rent control breaks the usual link between income and housing choice, in which people weigh space, location and amenities against what they can pay. This gives incumbent tenants greater security and less pressure to move. For supporters, that’s a good thing as it prevents gentrification. But it also means tenants have every reason to stay put even when their needs change. An empty-nester keeps the three-bed flat; a growing family doubles up in bedrooms rather than lose their discounted rent. Glaeser and Luttmer found that about 21% of New York renters live in apartments that have more or fewer rooms than they’d chose in a city without rent control.

Who benefits?

Rent control policies often end up doing the opposite of what their supporters want. This is because rent controls tend to be introduced where the market is hottest – which usually means the most desirable parts of a city. As in Berlin, richer residents tended to live in these expensive, high-amenity locations. Predictably, Berlin’s rent control benefited richer households over poorer households.  

That’s because rent control is not a needs-based welfare policy. When price no longer decides who gets a home, something else must. In Oslo, landlords would request specific characteristics like gender, age, religious affiliation, or services that tenants would provide themselves, such as renovation and garden work, snow clearing, or baby-sitting. Elsewhere, it’s simply your position in a queue: first-come-first-served.

In the 1970s, Nat Sherman, a tobacconist that produced hand-rolled cigars, gold-tipped cigarettes and $800 custom-made pipes, paid $355 a month for his six-room Central Park West rent-controlled apartment he’d had for nearly four decades. His response, when asked if it was fair, was that as he used the apartment so little the rent was reasonable. He spent about half the year in Florida.

These inequalities become baked in. In New York, controlled apartments are inheritable goods. Family members that have been living in the apartment as their primary residence for at least two years can take over the tenancy. While in Sweden, controlled tenancies are treated as individual assets. Rental contracts are sometimes bundled into property sales to reduce the headline price – effectively treating rent-controlled apartments as currency.

The rent control hydra

Supporters of rent control freely admit that the policy’s history is rife with bad outcomes. But they say that’s because it’s never been designed properly. Exceptions, licencing schemes, additional regulations and price-pegging measures are offered as sensible remedies to past design failures. But we have already seen that these fixes create more problems than they solve. In this way, rent control is a hydra.

None of this makes the people who reach for rent control wrong to be angry. The housing crisis is worsening people’s lives. But the core of the issue is scarcity. Rent control can’t prevent housing being scarce, no matter how many times the design is refined. The only thing we can do to address this fundamental problem is to build more homes where people want to live and invest in the success of other cities and places outside London, so that supply rises and demand is spread more evenly around the country.

Jenevieve Treadwell is a Policy Fellow at the London School of Economics’ School of Public Policy. Follow her work here.

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Housing-led regeneration in Rotherham town centre is essential to improve opportunities, health and quality of life

The regeneration of Rotherham town centre is one of the top priorities that residents set for us. Like many places, residents here have greeted the decline of the high street, the withdrawal of major shopping brands and decaying public realm with a foreboding sense of permanent decline.

In our case, the downward trajectory probably started earlier than for many others, with our neighbouring centres at Meadowhall, the out-of-town centre at Parkgate, Barnsley, Doncaster, Sheffield and Worksop town centre all within easy driving distance of many of our residents – and this was even before Amazon arrived.

The Council has been successful in securing significant central Government investment over recent years, strengthening the interventions that the Council has been able to make. We’ve brought cinema back into Rotherham for the first time in thirty years as part of our flagship Forge Island leisure development. Our markets complex is undergoing a £40+ million redevelopment, which will also bring our central library back into the heart of the town. Our public spaces are being upgraded, our events programme boosted, and we’re putting in place additional support for traders and local businesses.

Rebuilding the Town Centre Community

But making all that investment sustainable requires more people to live in and around our town centre – in what we’ve begun to call our town centre community.

Our town centre is already home to approximately 3,500 people. Incomes are relatively modest, households are younger than the borough average, and most households live in private or social rented accommodation.

The introduction of additional residential accommodation is a key component in supporting the continued diversification and long-term vitality of the town centre. Increasing the resident population within the centre will help to generate sustained footfall and local expenditure, which are widely recognised as key factors in supporting the viability of high streets and town centres.

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A greater level of town centre living will also contribute to activity beyond traditional trading hours, helping to support the evening economy and a broader mix of uses, including leisure, food and beverage, and community services. This in turn supports a more resilient and vibrant town centre, reducing reliance on traditional retail and aligning with national trends which identify housing-led regeneration as a key driver in the revitalisation of town centres.

Why Council Leadership Matters

In 2023, the Council built the first new affordable homes in decades in the town centre. This Council investment has delivered 171 new homes across three Council-owned sites at key gateways to the town centre.

The focus of this investment was to deliver mixed tenure communities – and whilst the majority of these homes were for council rent or Shared Ownership (forming part of our wider commitment to the delivery of new council homes), we also delivered a small number of homes for private market sale.

The delivery of Council-led housing in Rotherham town centre has required overcoming a number of challenges, including development viability in a relatively low-value market, the complexity of bringing forward brownfield sites, and the need to create a new residential market within a traditionally retail-focused centre. Success has depended on significant public sector investment, strong project management and complementary investment in leisure, culture and public realm to create an attractive and sustainable place to live.

Without the Council taking on the risks associated with site assembly, viability gaps and placemaking, much of the town centre residential offer that now exists would be unlikely to have come forward through the market alone. The market wasn’t failing because nobody wanted regeneration. It was failing because nobody could take the first step.

The Next Phase of Regeneration

Rotherham town centre is now entering a new phase of transformation, with significant opportunities emerging through the delivery of the Town Centre Masterplan and the Council’s programme of Strategic Sites. Building on substantial public sector investment already made across the town centre, the focus is now shifting towards creating an even stronger residential offer that complements new employment, leisure and cultural opportunities. It’s an approach that also helps to reduce the pressure on green belt development, given our National Planning Policy Framework housing delivery target has effectively been doubled.

A key driver of future growth will be the proposed Rotherham Gateway mainline station and the wider regeneration corridor that surrounds it. The station will reconnect Rotherham directly to national rail services, acting as a catalyst for investment, new jobs, commercial development and housing growth. Its strategic location between the town centre and the planned Bassingthorpe Farm development creates a unique opportunity to link a major new residential community with the town centre, supporting demand for new homes and reinforcing the role of the town centre as a key destination for living, working and leisure.

It’s in this context that the work being done by the Northern Housing Consortium’s Renew project is so important. Their recent report found that housing-led regeneration can unlock at least 500,000 good quality homes across the North of England, but only with the right support. In communities like mine, new sustainable housing developments are key to long-term regeneration – not just putting a lick of paint on existing infrastructure. That means that viability gaps will have to be filled. The state must be actively involved if the market is going to be able to deliver. We need advocates in national Government to fill the gap left by the last Government.

For Rotherham, investment in the town centre is not just a vital place-based regeneration programme, but also a catalyst for improving opportunities, health and quality of life across the surrounding neighbourhoods.

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The first instruction: Why Andy Burnham is right to prioritise rough sleeping

“I will soon go through that door behind me and issue my first instruction: to end rough sleeping in our country.”

Andy Burnham’s first speech as Prime Minister set out his ambition to tackle one of the greatest injustices in our society. But why did he do it? Why rough sleeping, why now, and why should this agenda be a priority for the Prime Minister?

Because ending rough sleeping will rebuild hope

Across England, nearly 300,000 households are experiencing the most severe forms of homelessness. This includes people sleeping rough, staying in unsuitable temporary accommodation, living in hostels or refuges, sofa surfing, or sleeping in places not intended for habitation. More than 176,000 children are growing up in Temporary Accommodation. All of these numbers are at record highs.

Rough sleeping is only a small proportion of this broader crisis: best estimates suggest around 4,800 people sleep rough on a single night in England, and around 15,000 people sleep rough at some point over a year. Of all forms of homelessness, people sleeping rough are at greatest risk of severe harm, including rapid deterioration in physical and mental health, exposure to violence and abuse, loss of employment prospects, and premature death.

Public polling consistently finds overwhelming agreement that nobody should have to sleep rough, across supporters of all political parties. Recently, visible rough sleeping has also become a major test of people’s confidence in government and public services: when the public sees the same people sleeping outside supermarkets, railway stations and high streets night after night – often suffering from deteriorating health – it feeds a sense that ‘the system doesn’t work’. Every day, thousands of people stop to offer food, water, money or simply a conversation because they cannot bear to walk past someone sleeping on the streets – but beyond these everyday acts of kindness, they have no meaningful way to help someone leave rough sleeping for good.

Ending rough sleeping will not end homelessness, but it is the clearest and most visible place to start. Making a difference here will demonstrate that government can solve problems and strengthen communities, and will start to restore confidence in public services and hope that things can get better – that we can be better, as a country. While the barriers to supporting people out of rough sleeping should not be underestimated, with focus and dedication meaningful change is possible.

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Because rough sleeping is socially and fiscally destructive

Beyond the hugely damaging consequences for individual people, rough sleeping also comes with enormous fiscal costs for local and central government through additional pressures on the NHS, police and other public services. Analysis from the charity Crisis shows that a year of rough sleeping costs an estimated £20,128 per person, versus £1,426 for a successful prevention intervention.

In the absence of joined-up public policy to prevent and solve homelessness, an expensive ‘homelessness management industry’ has built up, weighing heavily on both the benefits system and local authority General Funds. To take one example, supported housing – where care and support services are provided alongside homes – must be a crucial part of any strategy to prevent and resolve rough sleeping. But as funding for publicly controlled provision has dried up, an exploitative ‘exempt accommodation’ subsector has filled the gap, with bad faith actors attracted by the higher housing benefits rates allowed for supported housing compared to standard social or private tenancies.

The housing Select Committee has described the system as a ‘complete mess’. An absence of regulation has led to some extremely poor quality provision and truly abhorrent treatment of residents, so that too often the safety net needed to prevent people falling into rough sleeping in the first place simply isn’t there.

When the supported housing safety net fails, more people enter rough sleeping and find it harder to exit, leaving them with no option but to sleep on the streets and in shop doorways. Beyond the horrific consequences for individuals, this affects nearby residents, local businesses and everyone who wants safe, welcoming town centres.

Because Number 10 can drive solutions across government

The reasons for a national mission to end rough sleeping are clear. The other side of the ledger is that Andy Burnham believes it can be achieved. This is partly based on his experience of driving Greater Manchester’s A Bed Every Night programme to provide a safe place to stay for anyone sleeping rough or at imminent risk of doing so. This hasn’t ended rough sleeping in Manchester, but it provides crucial lessons for how local and regional government can work together to coordinate provision – and about the limits of what can be done without changes to policy at the national level.

Crisis, Homeless Link and homelessness organisations across the country have spent years building the evidence base and practical expertise needed to prevent rough sleeping and help people leave the streets for good. Frontline services know a great deal about what works. The opportunity now is to combine that expertise with something the sector cannot provide itself: the convening power of Number 10, action across Whitehall and the resources of the state.

Crucially, many of the drivers of new rough sleeping are directly controlled by government. Above all, there is no justification for people to end up on the streets when they leave institutions like prisons, hospitals, psychiatric units, the care system, Home Office accommodation, and sometimes the armed forces. Official data shows prison leavers are by far the largest institutional route into rough sleeping, and that those who fall into rough sleeping have a substantially higher likelihood of reoffending. Allowing this situation to continue is in no one’s interest.

But with responsibility for these drivers split across multiple government departments, progress must be led from the very top. Andy Burnham and his team can provide the leadership, momentum and cross-government co-ordination to overcome departmental silos, allowing mayors and local leaders to build on the early success of A Bed Every Night in Manchester.

Because housing policy is about people, not ‘units’

Beyond all this, Andy’s national mission offers an opportunity to put a clearer human purpose at the heart of Labour’s housing policy. We rightly talk about the homes we need to build and the targets required to deliver them. But ultimately, housing policy is not about ‘units’. It is about whether people have somewhere safe, secure and affordable to call home.

Ending rough sleeping is far from the whole solution. But it’s a great place to start.

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Why the Government’s New Towns strategy is likely to fail

In March, the Government provided an update on its New Towns strategy following its response to the New Towns Taskforce report of September 2025. But there is a major unanswered question: how will the infrastructure needed to support these New Towns actually be financed?

The Infrastructure Challenge

Roads, rail, utilities, schools and other infrastructure must be built before homes are occupied, creating a substantial financing challenge. It has been estimated that the infrastructure cost per New Town of 10,000 homes is in the region of £4bn. Some of the New Towns are expected to have more than 40,000 homes, which will drive up infrastructure costs considerably. Furthermore, infrastructure often has to be delivered at a larger scale to generate a positive net present value for the project. My own estimates (from assessing projects across city-regions where demand for housing is high) indicate upfront infrastructure costs are likely to be between £4bn-£13bn.

Although there has been no specific announcement on how the Government is planning on funding and financing the seven announced New Towns, it did announce its infrastructure strategy in June 2025. This implies the use of a mixture of Government grants, as set out in the Spending Review, alongside Public Financial Institutions such as the National Housing Bank (NHB).

The core problem for any Government trying to fund infrastructure is to solve for the “maturity mismatch problem”, and to do it without damaging the public finances. New Towns require billions of pounds of investment upfront, but many of the revenues they generate only arrive over decades.

Various solutions to this problem have been successfully deployed since the 19th century, when public corporations issued long term debt backed by identified hypothecated cash flows to pay back the bond holders.

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A Proven Financing Model

For example, 40-year bonds were issued by the Metropolitan Board of Works to finance Bazalgette’s sewer system for London. The Central Electricity Board in the 1920s issued debt at similar maturities to pay for the National Grid. The post-war New Towns borrowed at 40-year maturities from the Public Works Loan Board during the 1950s and 1960s.

This method has been copied widely across Europe since. The Oresund Bridge linking Denmark and Sweden issued debt with a payback period of 50 years, building out between 1995 and 2000. When Paris embarked upon the Grand Paris Express (a major project to improve public transport and open up new areas for housing) in 2010, they issued debt of up to 40 years.

In all these cases, the infrastructure was delivered swiftly and bondholders were paid back from long term hypothecated revenue streams. Typical revenue streams include land value capture from selling plots with planning permission, business rates and revenue from car parks, affordable housing, transport and utilities.

This approach also improves the public finances. It delivers infrastructure (which is vital to boosting productivity growth) while not placing any claims on future tax revenues. Instead, because these projects generate their own long-term revenues, they can repay the borrowing that was required to build them. This reduces the need to issue sovereign debt, maintaining lower government borrowing costs for current government expenditure.

Why the Government’s Strategy Falls Short

Despite the successful use of this mechanism to build large swathes of the UK’s infrastructure, governments since 1992 have pushed for a combination of government grants in conjunction with loans and subsidies to enable private projects to get off the ground. But this approach struggles to solve for the “maturity mismatch problem” (where projects have high short-term costs with longer term revenue streams) – hence the Rachel Reeves’s decision to propose a Public Private Partnership for New Towns. This approach will come up against significant barriers.

First, the increased capital investment earmarked in the 2025 Spending Review for Ministry of Housing, Communities and Local Government (MHCLG) and Department for Transport (DfT) already appears to already be allocated: the bulk of the additional MHCLG grant will support the Social and Affordable Homes Programme while £15.6 billion has been allocated to transport for Northern elected mayors. Hence, it is highly unlikely to be allocated to New Towns.

Second, there is very limited fiscal headroom for the Government to issue more gilts. With Government debt to GDP close to 95%, gilt investors are increasingly wary of further issuance given the declining demand for gilts. This is one reason why gilts have become so volatile in the face of external shocks – and also explains why so few European governments use this approach for infrastructure.

Third, although the Government’s Infrastructure Strategy allocated £16bn of financial capacity to the NHB (a mixture of loans, equity and guarantees) the Treasury’s own forecast for the use of Financial Transactions (Table B4) from now until 2029-30 indicates MHCLG will only use £5.4bn of capacity, while the Department for Transport will use none. The Government only expects to use a third of the capacity of the NHB. This will also mean the amount of private sector capital that can be crowded in will be significantly lower, and insufficient to allow a PPP approach to work. There is also little evidence that similar arrangements through Private Finance Initiatives have delivered good value for money in the past.

The current approach is therefore wholly unsuited to delivering the upfront public infrastructure the New Towns need if they are to be successful. There is not sufficient grant funding available, and the Government’s public private partnership (PPP) does not work at scale by the Treasury’s own admission. Where the PPP approach can work is for small-scale private projects that need a government subsidy to get off the ground. An example is the redevelopment of Brent Cross, where the developer was provided with a £100m subsidised loan alongside a £500m grant and a £140m Homes England loan to enable more than 6,000 new homes. But it would not work for 40,000 homes.

A Better Way Forward

This is why a group of investors managing about £2 trillion in assets wrote to Rachel Reeves in February, expressing their interest in buying public corporation debt to pay for New Towns including along the OxCam arc. These bonds provide good returns for investors, will help drive productivity growth, and place less pressure on the public finances, as they are self-funding.

Yet rather than doing what has worked well elsewhere, and in the UK in the past, the stated approach will struggle to scale, place greater pressure on the public finances and keep gilts volatile during periods of stress. Unless the financing model changes, the Government risks repeating a familiar pattern: ambitious plans that never achieve the scale originally promised.

This article is reproduced here with the kind permission of the Bennett School of Public Policy, on whose website an original version appeared in April 2026.

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Two things the new Prime Minister could do immediately to boost social rent supply

Andy Burnham’s commitment to deliver the biggest programme of council and social housebuilding since the post-war era is both ambitious and hugely welcome.

For the millions of people trapped in England’s housing crisis, including the 176,000 children growing up in temporary accommodation, that ambition cannot come soon enough.

The good news is that momentum is already building. Thanks to decisions already made by the Government, councils and housing associations increasingly have the confidence, funding and policy certainty to ramp up delivery of social rent homes. NHF figures show a 57% increase in social rented homes started last year.

These are the green shoots of a renaissance in social housebuilding. But they are fragile and progress could easily stall. To sustain momentum and translate ambition into delivery, there are two immediate steps the new Prime Minister could take.

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The first is to immediately confirm successful bids for Strategic Partnership funding under the Social and Affordable Homes Programme (SAHP). These bids have been submitted and assessed and are now awaiting political approval before they can be announced. Councils and housing associations have schemes waiting, planning secured, and just need the funding confirmed to get building tens of thousands of homes. A summer of delay and uncertainty on grant funding could bring the current momentum to a halt. This creates a real risk that providers will be forced to delay, scale back or even abandon development opportunities, ultimately leaving families trapped in unaffordable temporary accommodation or private rent for longer.

The second is to top up the funding for this and subsequent years of the SAHP – either via redirecting existing budgets immediately or via new funding at the next fiscal event. The £39bn for social housing announced at last year’s spending review was a generational shift in support, but it is spread over 10 years, with the funding profile weighted toward later years, while many schemes are ready to proceed now.

We could build more homes, more quickly, on schemes that are ready to go, if more funding was available early on, for both Continuous Market Engagement and Strategic Partnership funding routes.

Doing these two things immediately would sustain momentum, get spades in the ground and more households into desperately-needed social rent homes as quickly as possible.

There are opportunities to go much further, to deliver the increase in social housebuilding we need, whether through seizing the opportunities of devolution, New Towns, Land Value Capture, reforming council housing debt rules, or exploring new models of public ownership. Councils and housing associations stand ready to work alongside communities and the government to unlock these opportunities, but they will take time to bear fruit. In the meantime, we must maintain and accelerate the progress already being made.

England’s housing crisis is one of the defining social and economic challenges of our time. It damages life chances, drives homelessness, places unsustainable pressure on public services and undermines economic growth. The government has laid important foundations for a new era of social housebuilding. The priority now is to turn that ambition into delivery – building more homes, more quickly, for the people who need them most.

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Spatial Development Strategies are a critical part of the Government’s planning reforms – but why?

A key part of the Government’s growth mission is reform of the planning system. Two years since the Labour Party set this out in the Manifesto, we now have a major new Planning and Infrastructure Act and a complete rewrite of the National Planning Policy Framework, heralding a new approach to plan-making and a standardised approach to decision-making policies.

A System Without Plans

Over the last 15 years we have had a plan-led system in name only.  We currently have less than 25% up to date local plans in England, with no certainty for developers and investors around where development should be located, or for local communities around how their areas will change over time.  To fix the system the Government is bringing back a two-tier approach to plan-making with the introduction of Spatial Development Strategies (SDS), which will sit above local plans.

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When Minister Matthew Pennycook introduced the new system of SDS last year, he made it clear that these must not be ‘big local plans’ and had to act as ‘spatial investment frameworks’.  Framing these in a positive light, being enablers of good growth and not restrictive planning documents, is a necessary part of their implementation – but what does this mean in practice?

A Framework for Growth

Over the last 15 years, since the abolition of regional spatial strategies, all the political, financial and technical risk in planning decisions has been at the local authority level. Bringing back a two-tier plan-making system and separate governance arrangements for SDS will hopefully help fix this.  Most of the heavy lifting will now be done through the SDS system. They will have to provide a long term framework for growth, setting out a spatial strategy for transforming places over a 20 to 30 year period and an investable pipeline of infrastructure. They will have to provide a spatial articulation of local growth plans and their economic priorities, allocate housing targets to each local planning authority, identify where Green Belt reviews are needed through local plans, prioritise strategic infrastructure and determine where strategic growth areas should be, which may include new towns in some areas.

Unlocking Investment

Vitally, the new strategic planning system will have to help rebuild investor confidence if we are going to deliver the infrastructure we need to support growth and the right type of housing we need to solve the housing crisis. We can no longer rely on the public sector to foot the bill and developer contributions will only go so far.  We need a different investment model and that means different investors. Institutional investors have made it clear that they are willing partners in this, but they want the new system to be up and running, providing more stable conditions for them to support the delivery of development and infrastructure.

We are seeing this start to play out in areas with Mayoral Authorities and with the support of Homes England Strategic Place Partnerships. Sites that have been unviable for years are now becoming a realistic possibility. Alongside the new funding regime, we also now have the English Devolution and Community Empowerment Act which brings with it significant new planning tools to support delivery of the priorities set out in SDS. For the first time in years, we will have strategic plans where there is a direct relationship between those preparing the plan and those delivering them, as a result of a much greater role in planning for Mayors. This can only be a positive boost for investor confidence in these areas.

Not all places will benefit equally, however. The more mature the devolved arrangements are, the more the Strategic Planning Authority will be able to directly influence delivery.  Those areas that already have Mayoral Authorities are off and running in the race to be the first to get their SDS in place. All going well, within the next 2-3 years we will see the first SDS adopted and very soon after that, the place transformation will begin. 

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