A fresh bid to tackle the ‘desperate’ housing shortage is set to go before councillors today.

Plans are in place to begin the process of setting up a local authority trading company which, if approved, could supply a mix of housing including shared ownership and social housing for rent.

Councillors will be asked to give the green light to proposals to use up to £4m in reserves to help fund the setting up of the company.

Figures presented in recent planning applications reveal that more than 1,550 households in West Dorset are registered as in need of affordable housing.

In a report set to go before a meeting of West Dorset District Council’s strategy committee, commercial housing enabler Clyde Lambert writes that there has been a ‘long-term under supply of housing’ across West Dorset, and that while the accelerating home building programme is underway, more action is still needed to tackle the crisis.

The report adds that the strategy committee approved the use of £20,000 at a meeting in December to investigate the legal, tax and governance aspects of setting up such a company. This has now been done and reports by consultants will be presented to the committee at a meeting at South Walks House in Dorchester today.

The set-up of the company, if approved by councillors, will be funded from council reserves and a loan.

The move has been welcomed by West Dorset MP Oliver Letwin, who described the proposals as 'highly constructive'.

He added: "I sincerely hope it will come to fruition, because we desperately need more affordable housing in West Dorset, and this is one of the obvious ways to get it."

West Dorset District Council would be the sole shareholder of the company and a board of directors would be responsible for the day-to-day running of it.

The primary aim, councillors will be told, is to increase the supply of housing but also to provide a long-term source of income. Separate plans are already in place to create a unitary authority, and West Dorset District Council will cease to exist from April next year. But the report warns that this will not improve the housing issue.

“The formation of a unitary council will not make the housing undersupply go away and as none of the district and borough councils have either existing housing companies or HRAs, setting up such a vehicle in advance would enable any successor authority to proceed at pace rather than start from scratch,” the report states.

The type of housing is expected to include open market sale, shared ownership sale, open market rent and affordable or social housing for rent.

The report states that the proposals will not only provide much-needed housing, but also boost the economy by providing employment opportunities in construction.