Mrs T must have turned in her grave. Last week, her latest successor ushered in a return to mass council house building, undermining the defining policy of the Thatcherite revolution.

Alastair Stewart

Apart from the image of Theresa May dancing on to the stage to ABBA – a spectre I’ll never quite purge from my psyche – the real substance of the PM’s party conference closing speech was her proposal to remove local authorities’ borrowing caps, which had restricted council house building to a trickle long after Margaret Thatcher had sold or offloaded most of them under Right to Buy or large-scale transfers to new bodies.

May promised to “scrap” the Housing Revenue Account (HRA) borrowing cap. HRAs are ring-fenced local authority budgets that allow councils to spend the funds from rents exclusively on building and maintaining their housing stock. Councils are able to borrow to supplement this investment. However, the limits are tight and the rules governing them are not only labyrinthine, but have changed with the seasons since 2012.

Theresa May dancing

Theresa May didn’t dance around the issue of housing

Source: Alamy / Mark Thomas

The normally critical social housing movement appeared almost unanimous in approval. Savills calculated that councils will be able to borrow an extra £10bn to £15bn, sufficient to build 100,000 new homes. Last year, 3,280 local authority homes were started; in 1978, the year before Margaret Thatcher came to power, it was 110,170.

There was, of course, much to condemn in the way council housing was built in the 1960s and 1970s and subsequently managed. But private ownership and private provision of new housing has simply not been able to make the numbers stack up in terms of sufficient quantities of new stock coming on to the market.

A multi-tenure approach – in stark contrast to predecessor David Cameron’s private mantra, exemplified by Help to Buy – was adopted by the May government’s housing white paper in 2017. But that seemingly got lost in the fog of Brexit infighting. Now it’s back centre stage.

I bumped into the chief executive of a stock-market-listed mixed-tenure developer a couple of days after the speech. “It’s the right thing to do,” he insisted. But it will probably take a year or two to get up and running, he cautioned.

Councils may be able to borrow, but can’t build without land. The most obvious source is their own land, but they then run into the conflicting aim of securing the highest price they can for sites.

Simplify the rules

The rules need to be made simpler, as should planning. No doubt every Tom, Dick and Harry, especially from the world of architecture, will want to stick their oar (and invoice) in. If the mistakes of the past – many of them architectural – are not to be repeated, council housing should form a part of a multi-tenure approach rather than vast new estates.

Finding the skills and materials is yet another challenge. Translating bold conference pledges into reality may require somewhat defter footwork than May demonstrated on stage.

However, this wasn’t May’s only foray into housing policy at the annual rally of the Tory faithful. She kicked off events in Birmingham by threatening to impose a new swathe of stamp duty, up to 3% extra, on individuals and companies not paying tax in this country. This sent housebuilders’ shares sliding, especially developers with exposure to the London housing market.

“Translating bold conference pledges into reality may require somewhat defter footwork than May demonstrated on stage”

By contrast, housing secretary James Brokenshire’s speech was bereft of big housing policy announcements other than, perhaps, the creation of a New Homes Ombudsman.

This elevation of the housing mandate has to be welcomed. Prior to the Grenfell fire, there was no official representation of housing around the cabinet table: the housing minister was a subordinate to the communities secretary. Now that role has been rebadged as housing secretary and Brokenshire will have to fight for the initiatives with his boss.

No doubt chancellor Philip Hammond will try to get in on the act later this month in his Budget. As the Iron Lady proved, few issues are greater vote swingers with the electorate than a roof over their heads. Under Thatcher they became private; May appears to be turning the clock back further to another Conservative PM, Sir Harold Macmillan, under whose six-year tenure two million homes were built, almost half of them by local authorities.

Alastair Stewart is an equities analyst and consultant