"Without a stronger partnership between the public and private sectors and capacity within local authorities to take a more active role in development, the number of homes delivered will remain stubbornly below target"
- Jemma Shorrock - Boyer
Local authority trading companies and the challenge of building like it's 1977
To meet its 1.5 million homes target, a new impetus is clearly required. To meet its manifesto promise the government must deliver in excess of 300,000 homes per annum. Yet according to the HBF just 39,170 new homes were given planning approval in England during Q1 2025 - the lowest number of quarterly approvals since 2012 and the third lowest since the data set was started in 2006. This represents a 55% drop on the previous quarter and a 32% drop on Q1 2024 which is clearly unsustainable.
Britain hasn’t delivered in excess of 300,000 homes per annum for almost half a century. In 1977, Britain delivered over 300,000 new homes - a benchmark that successive governments have failed to reach since. Much has changed in that time, but the most consequential shift is that back then, local authorities accounted for nearly half of all new homes, whereas today those figures are negligible.
Private developers have, on the whole, held their output steady despite recessions and changing political tides. But it is not possible to return to the volumes of the 1970s without restoring some form of public-sector-led delivery to the system.
The £39 billion now earmarked for affordable housing, while a significant step in the right direction, is only part of the solution. Without a stronger partnership between the public and private sectors and capacity within local authorities to take a more active role in development, the number of homes delivered will remain stubbornly below target.
Can local authority trading companies bridge the gap?
Technically, local authority trading companies (LATCs) provide a means to do just that: to give councils a mechanism for more direct involvement in development while retaining a degree of commercial freedom.
Enabled by the Localism Act 2011 and shaped by the Teckal exemption, which permits councils to set up trading companies exempt from public procurement rules, LATCs have become more commonplace, going some way to replace old-fashioned council housing. By 2018, there were 743 LATCs across England, Scotland and Wales, of which nearly a quarter focused on property and investment.
The logic is appealing. LATCs provide councils with greater strategic control than third-party arrangements, enable more agile decision-making than traditional council structures, and create opportunities to reinvest profits into local services. They can also allow councils to step back into housing delivery without the political and financial exposure that accompanies direct development.
The structure has had its successes, demonstrating that councils can act as developers and landlords, often unlocking difficult sites and cross-subsidising affordable housing. But limitations are also becoming increasingly apparent.
A promising tool - but not a silver bullet
LATCs are not, in themselves, a panacea. Many have struggled with governance, transparency and viability. Others have fallen short of their housing delivery objectives due to resourcing and market conditions.
A 2024 report by UNISON, Trading Places, highlights the pressures that LATCs place on council staff, particularly in creating a two-tier workforce with differing pay and pension rights. This not only raises questions around equal pay but also undermines morale and recruitment in a sector already under strain.
Equally significant are the wider systemic constraints. LATCs still face the same planning bottlenecks as any other developer. Without access to sufficient planning officers and technical consultees, projects stall. And the viability challenges facing the sector - high costs, slow sales rates and uncertainty around demand - affect local authority ventures just as much as PLC housebuilders.
And the dip in private sales activity is felt across the development sector. According to Savills’ England’s Housing Challenge, new build sales reported by PLC housebuilders in 2024 stand at 0.6 sales per outlet per week, still 15% down on pre-pandemic norms. Unless there is a clear and sustained improvement in demand, housebuilders - whether public or private - will hesitate to ramp up delivery.
Funding the homes - but not the machine
The recent Spending Review provided a welcome boost for affordable housing, with £39 billion allocated over the next decade. But while the funding is substantial, it overlooks a critical component: the machinery of delivery.
Florence Eshalomi MP, Chair of the cross-party Housing Committee, summed it up clearly in her recent open letter to the Chancellor: meeting the 1.5 million homes target requires not just money for homes, but a “generational increase” in public sector capacity. That includes planning officers, land assembly skills and local authority teams able to drive projects forward.
A new public-private compact
To build like the 1970s, we do not need to replicate the era’s institutions wholesale. We need a model that reflects today’s economic and social realities, but which restores a balance between public purpose and private delivery.
That means empowering councils to play a more active role in development, whether through LATCs, joint ventures, or partnerships with housing associations and developers. But it also means recognising that councils cannot deliver alone.
A coordinated approach between the public and private sector is essential. From identifying land, to co-designing masterplans, navigating planning and funding infrastructure, early-stage collaboration must become the norm. Too often, the public and private sectors operate in parallel, despite there being clear benefits of early integration.
Solving the capacity crisis
Of all the bottlenecks in the system, the shortage of planning officers is perhaps the most damaging. The Planning Officers Society and the RTPI have repeatedly warned that under-resourced planning departments are a serious risk to national housing ambitions.
The government has acknowledged this in pledging increased funding for council budgets, but again, funding is only part of the solution. A report from the Home Builders Federation shows that 80% of local planning authorities are operating below full capacity, with many unable to keep up with the rising demand for housing applications. Without a targeted effort to attract, train and retain planning officers, the additional housing funds will remain theoretical; applications will pile up; good schemes will stall; housing commencements will fall, rather than rise.
So the government must both fund and otherwise incentivise the front line.
Looking forward, not backwards
The ambition to return to 1970s-level output is commendable. But achieving it means more than restoring the public sector’s role in housing. It means rethinking how the public and private sectors work together.
If we want to build like it's 1977, we must move beyond structures and towards substance, investing in the planners, officers and partners who can make delivery happen.
