So what does the future hold for the emerging local authority housing companies? Will they survive and prosper, or be a short-lived anomaly? Much depends on central Government and how it chooses to legislate - the Localism Act currently provides the general power of competence that, more broadly than the well-being powers that preceded it, enables local authorities to do almost anything they want to, unless explicitly ruled out elsewhere in the law. Trading offers councils a route towards self-sufficiency through commercial activity that can supplement local taxation and business rates to meet the costs of essential local services, without calling on central Government grant support. This must be a trend welcomed by the Treasury, provided the risks taken by fledgling council companies do not result in losses or bankruptcies. Arguably there are unlikely to be any outright business failures in this sector, given the reputational impact in a political environment; councils will carefully bail out any of their wholly owned companies that fail to become profitable, and then quietly dissolve them.
With the consolidation and merger trend in the housing association sector creating mega-mergers of multi-billion pound landlords, will there be pressure on local authority housing companies to rationalise and combine efforts to achieve efficiencies and economies of scale? This looks unlikely, given the rather parochial local political motivation and control of these entities. They may be mostly rather small with turnovers of only a few millions at best, but for local elected councillors they offer control, payback and something tangible to show to the community, in a way that increasingly distant larger housing associations may struggle to demonstrate.