When there is a big shortage of Council housing the obvious thing to do (for the coalition government, at least) is not to build more of them so as to lessen the shortage, but to encourage more of them to be sold. This is at a time when over 1.8 million households, comprising 5 million people, languish on the housing waiting lists.
Never fear said the government, there will be a policy of ‘one for one replacement’: a new home built for every home sold. Well, not quite, since the government has admitted that some Councils will not have sufficient money to build replacements, blithely accepting that there would be a decline in available housing in some areas. Where Councils will have insufficient money to build replacements the Government will simply snaffle the receipts and new homes would supposedly be built elsewhere. However, ‘one for one replacement’ on the national level is unlikely to happen, as the example of Swindon underlines.
For all the talk of ‘localism’ and ‘giving power back to the localities’, the government has imposed a dictat on Councils. In order to spend the money received from the sale of homes, each Council is obliged to sign an agreement that they will cover no more than 30% of the cost of new homes with receipts from the sales. The other 70% they would have to fund from their own resources or through additional borrowing.
Of course, even if each home sold was replaced by a new one that would still do nothing to tackle the shortage of homes available. It would mean that the numbers would stay the same, and housing waiting list numbers would continue to rise. In reality the relaunch of ‘right to buy’ will produce a decline in the numbers of Council houses available.
When the idea of ‘one for one’ replacement was announced by the government it was received with scepticism by tenants and housing professionals. The case of Swindon shows that even if a Council accepts the government’s 30% dictat, it will not be able to replace each home sold, so it will see a decline in the size of its stock.
Swindon Council estimates that it is likely to sell 30 homes this year. The receipt that it expects for those properties, taking into account the level of discount that tenants will receive, is estimated at £1,350,000. The Council will have to hand over £511,000 of this to the government. Why they should take any money from the sales of our housing stock is something of a mystery. Under the new housing finance system each Council had to pay a portion of the supposed national housing debt in what was described as a ‘oneoff settlement’. Swindon had to borrow £138 million from the government to pay off our share
of it, and we will have to pay interest on this loan. For this we were supposed to have local control of our stock yet the government (‘giving power back to the localities’) is not only telling us how much of our money we can spend, but stealing some of it as well!
With all the various deductions which are taken from the £1,350,000 that the Council estimates it will receive from selling 30 homes, it will be left with only £839,000 to spend on new ones. To keep the receipts it will need a programme of building to the value of £980,000 so it needs to find £141,740 from its own resources or new borrowing. A programme of this size means that, according to Council officers, they will be able to build 7 to 9 new ones. So we will lose more than 20 homes as a result of the new Right to Buy scheme; 20 less for a housing waiting list which continues to grow.
‘Right to buy’ was a social disaster which created a massive shortage of housing from which we are still suffering today. The ‘relaunch’ of ‘right to buy’ can only worsen the shortage.