Ministers have today launched an independent review into increasing the supply of social housing which will question if councils are making full use of their existing powers and freedoms.

Launched this morning by chief secretary to the Treasury Danny Alexander and communities secretary Eric Pickles, the inquiry is set to focus on how local authorities could use cash receipts from property sales to fund the construction of new affordable homes.

First trailed in last December's Autumn Statement, the review will report to ministers by the end of 2014 on how authorities had made use of the reformed Housing Revenue Account self-financing regime to boost local housebuilding.

Led by Natalie Elphicke, chair of Million Homes, Million Lives and leader of Eastleigh BC, Cllr Keith House, the review will also consider if councils should gain new freedoms and flexibilities to help deliver more new homes.

Its scope will also encompass how councils could work more closely with housing associations, housebuilders and businesses.

Communities secretary Eric Pickles said: ‘Our reforms have already untied the hands of councils so they can take more responsibility for housing in their area.

‘This review will now consider if extra freedoms and financial flexibilities could be devolved to councils, so they can build more homes that local people need,' Mr Pickles added.

Cllr Ketih House said the review would test how councils were meeting the challenge to increase housing supply and assess where there was potential for innovation and creativity to increase the number of new homes built.