Council Housing “rebirth”: the child is dead on delivery

1 Comment

This is an intial response to May’s announcement on housing, as we await more detail.

On the morning of Teresa May’s speech government Minister Damian Green announced that there would be a “rebirth of council housing”. Yet when she spluttered her way through the sppech it was clear that the child was sadly dead on delivery.

The money available for “affordable housing” was only £2 billion, compared to £10 billion for Help To Buy. According to a Tory Party press release the £2 billion “could” be used to produce 25,000 homes over 5 years. Even assuming these were all council homes 5,000 is a puny amount which would make little difference to the housing crisis. It would not replace those homes lost to RTB. Sales are running at more than 12,000 a year in England. Between 2010-2017 57,677 were sold off. In addition, from 2010-2016 there were 20,300 council homes demolished and only just over 10,000 built. Since 2010 there has been a decline in the number of council homes by 174,000. More

Advertisements

What is Labour’s council housing policy?

1 Comment

One of the expectations of Labour supporters is that a Labour government with Jeremy Corbyn as leader would build council housing on a large scale once again. From the start of his first leadership election campaign up to just before the General Election Jeremy spoke of building 100,000 council homes a year. In April the Guardian reported that his “top priority” was to build more council housing and introduce tougher regulation in the private rented sector. However, Labour’s policy as expressed in its Manifesto was far different from Jeremy’s statements.

The draft version of the Manifesto which was leaked to the media spoke of a commitment to building 100,000 council and housing association homes, with no indication of the proportion for each. Yet even this figure, which diluted the council housing component, did not survive in the published document. It was transformed into 100,000 “affordable homes” for “rent and sale” by the end of the Parliament; i.e. by year five. There was no indication of how this would break down. Would it, for instance, be 50,000 of each? The Manifesto does say that Labour will “begin the biggest council housing programme for at least 30 years”. However, we checked how many were built then. In England it was only 16,000.  Read on below or download a PDF here labourschcommitment More

Grenfell Tower: the deadly consequences of under-funding of council housing

Leave a comment

Kensington & Chelsea Council documents confirm reports in the media that Leadbitter was “the proposed contractor” for the work on Grenfell Tower. It gave a price of £11.278 million1. However this was £1.6 million above the council’s proposed budget. So they put it out to tender again. A council update on the Grenfell Tower work read:

The refurbishment of Grenfell Tower is a large and complex project and time and careful planning has been required to ensure that the proposals and design of the scheme meet the requirements of residents, RBKC and Planners. Particular focus has been required to ensure that the project representing value for money and can be successfully delivered to the satisfaction of residents.”

Value for money”, of course, in the context of cash strapped councils often means short-cuts, cheap and shoddy work. In this case the question is posed, did this “value for money” decision lead to the deaths of Grenfell Tower residents? The contract went to Rydon for £8.77 million, 22% less than Leadbitter’s tender. (Read on below or download a PDF here underfundingandgrenfell) More

Underfunding of council housing – the impact on Bristol

1 Comment

Underfunding of council housing – the impact on Bristol

Swindon Tenants Campaign Group has shown how the coalition and Tory governments have under-funded council housing. We have explained the impact on Swindon’s Housing Revenue Account (HRA). All local authorities that own council housing are being starved of funds as a result of ‘self-financing’, the new council housing finance system introduced in 2012 and policies implemented since then. More than £13 billion of extra ‘debt’ was loaded onto 136 councils in what was described as a ‘debt settlement’. What was said to be the national council housing debt, though largely fictitious, was redistributed amongst stock owning councils. The amount of debt each authority was given was based on an assessment of how much rent income they would collect over 30 years, the cost of managing the stock, and the number of homes expected to be sold under RTB (each one being rent income lost). To enable them to pay off this ‘debt’ each one was given a loan from the Public Works Loans Board (PWLB). To service this debt they are obliged to pay an annual interest charge to the PWLB. They have discretion on how they deal with the ‘loan’ itself, how much they pay each year towards paying it off. They were told that the settlement would ensure that all councils would have sufficient money to maintain their housing stock over 30 years. However, the 30 year business plans which councils had to draw up have been blown out of the water by changes which the coalition and Tory governments introduced. Here we look at the situation facing Bristol council’s HRA. (Read on below or download a PDF here bristolhra )
More

Starving Council housing of funds: An update

Leave a comment

Swindon Council’s June Cabinet meeting had before it a Medium Term Financial Plan for the Housing Revenue Account (HRA), the separate account for Council housing. Since there is no government subsidy for the HRA it is entirely dependent for its income on rent and service charges paid by its tenants. However, the rent it charges is determined by central government. So it has no direct control over its income. For instance, the current government decided that Councils would have to cut rent by 1% each year for the next four years. This has completely disrupted planning to maintain the standard of housing. Government rent setting regulations had previously set increases for ten years at the level of the Customer Price Index + 1%. However, this commitment was abandoned and the rent cut imposed. As a result the loss of rent was expected to be £22.8 million. Subsequently the government decided to allow Councils to exclude supported accommodation for elderly and disabled people from the rent cut (at least for this year) and allow them to increase rent under the old formula. Swindon increased rent for these people by 0.9%. However, the loss of rent overall during those four years is still estimated at around £22 million. (Read on below or dowmload a PDF here starvingchupdate )
More

Why Labour should write-off the fictional Council housing ‘debt’

3 Comments

In order to stop the rise in Housing Benefit payments the government has imposed on local authorities which still own their Council housing stock, a 1% cut in tenants’ rent, for four years, starting in April of this year. By this and other policies Council housing is being seriously under-funded. In order to understand the extent of the problem and what to do about it it’s necessary to appreciate how Council housing is financed under the system known as ‘self-financing’.

‘Self-financing’

In April 2012 a new Council Housing finance system, ‘self-financing’, was introduced. The system had been designed by the New Labour government just before it lost the 2010 General Election and was implemented by the coalition government. Housing Minister Grant Shapps said that the new system would “give Councils the resources they need to manage their own housing stock for the longer term – correcting decades of under-funding”. In fact under-funding was not corrected but built into the new system (see Appendix). Most Councils did have more money than they had under the previous system because what was known as a ‘negative subsidy’ was ended. In 2005 the Audit Commission reported that 82% of local authorities were subject to ‘negative subsidy’, meaning they received no government subsidy and had to make a payment to central government from their rent income. According to the Audit Commission at the time this comprised some £630 million a year. Whilst some of this was redistributed to other Councils, in the four years from 2008 tenants’ rents subsidised the Treasury to the tune of almost £1.5 billion1. It was predicted that if the old system, the ‘housing subsidy system’, continued, then eventually all local authorities would suffer from ‘negative subsidy’, largely as a result of year on year rent increases above the level of inflation.

(Read on below or download a PDF here chdebtwriteoff )
More

Dear Jeremy and John: Why Council housing ‘debt’ should be written off

Leave a comment

An open letter to Jeremy Corbyn and John McDonnell on the under-funding of Council housing and Labour’s housing policy

From Swindon Tenants Campaign Group

Dear Jeremy and John

Jeremy’s election as Labour leader reflected a desire on the part of existing Labour Party members, the new members, re-joiners and registered supporters, for a break with politics of New Labour. One of the critical aspects of such a break is in relation to housing. New Labour did not just ‘do too little’ in relation to the housing crisis. It set out to wipe out Council housing by means of transferring stock to housing associations. This policy was premised on making housing debt ‘off balance sheet’. Moreover, to encourage tenants to vote for transfer housing debt was written off just so long as they voted the ‘right way’. New Labour also maintained Thatcher’s disastrous ‘right to buy’ and worshipped home ownership. It was only after the global crisis and the UK housing market crash that they ended their ban on local authorities bidding for ‘social housing’ grant, and even that was on a puny scale.

In contrast you have raised the need for large scale Council house building which is essential to tackle the housing crisis. However, a question yet to be addressed is the problem of under-funding of Council housing resulting from the new Council housing finance system drawn up by New Labour and implemented by the coalition government. Subsequent changes in policy by the coalition and by this Tory government have now made the funding crisis for Council housing even worse. It is this crisis which we think Labour under your leadership needs to address, both in terms of your Party’s policy and in challenging this government on the impact of its policies on Council housing funding. It’s this issue that we address in this letter. (Read on below or download a PDF here dearjeremy ) More

Older Entries

%d bloggers like this: