A bolder approach would have been to empower the local councils to deal with the public housing problem instead of centralised planning at the national level, or adopting a purely private approach. Local councils can be empowered by instituting the radical reforms needed.
There is one simple fact that is being overlooked. Local councils report their public assets exceeding their public debt. These councils own the biggest share of assets, but do not have the wherewithal to manage these properties.
Many local councils are taking the wrong approach in property management, preferring a commercial approach akin to hedge managers. This is a path that could lead to disaster seeing as it is that these councils lack the staff and skills for this type of management approach.
The long-running debate for and against privatisation of public assets has been largely missing the point on both sides. Public assets deliver more value to the public with better management, and not necessarily higher profits. Commercial projects like malls and office parks have little public utility.
If local councils are given more leeway, they could set up the necessary funding and risk management mechanisms to get more value from public assets.
Indeed, local councils have the capacity to raise more funds than private finance initiatives (PFI) with the smarter management of public assets. These funds could see these councils potentially double their investments in public utility infrastructure including residential housing.
Presently, almost every city in the UK has publicly owned commercial property worth their GDP, with public-owned real estate accounting for a quarter of this wealth. Proper management of these properties has a huge potential to provide the funds to build and maintain public housing. Funds currently used to maintain public housing could go to other needs such as education or healthcare.
The first step a council would take would be to make a comprehensive list of assets including their market value. This would then allow for the formulation of a management strategy of these assets including underutilised spaces and neglected buildings. This can help identify areas for new and additional public residential housing.
To do all this professionally and cost-effectively, a local council could set a wealth fund managed by professionals. This fund runs independently but is accountable to the public, just like the finance department answers to the parliament.
A good example of this kind of approach to management of public assets is Copenhagen. The city has managed to improve public housing, and other infrastructure such schools and public transport. It is time for local councils to discover they are sitting on gold mines.
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