More council homes a vital key to solve crisis
Across our country the housing crisis is spiralling, with record numbers of children living in temporary accommodation and an ever-growing number of families being tipped into poverty by unaffordable housing.
Work to fix this could not be more urgent writes Kieron Williams, Leader of Southwark Council (above) in an article in Inside Housing, He goes on:
There is no silver bullet to fix the crisis, which has been decades in the making. However, one thing is certain: there is no route out of it that does not include a serious plan to deliver more and better council homes.
For over a century, the simple idea of the council home – publicly owned and let to tenants for their lifetime, on reasonable rents, and then handed down from family to family – has transformed millions of lives. Not just putting a roof over people’s heads but providing a foundation for better health, education and life opportunities.
Yet, the reality is that the council housing inheritance this government has received is a perilous one. With council landlords across the country increasingly on the brink.
This situation has been created not by councils or their tenants, but by a succession of previous national policy changes that have torn up the council housing self-financing deal that was agreed in 2012.
Simply put, the deal was that councils would fund the full cost of both managing and maintaining their homes and service £13bn of historic national housing debt. The quid pro quo was a promise that councils would have both rising rental incomes and predictable housing management and maintenance costs. Neither has turned out to be true.
Previous governments have repeatedly intervened in ways that have reduced council landlords’ incomes and raised our costs.
Instead, previous governments have repeatedly intervened in ways that have reduced council landlords’ incomes and raised our costs. Many of these interventions have been for good and often essential reasons – protecting tenants on low wages from high inflation and driving the quality and safety of homes up.
However put together, they have placed councils in the impossible situation of having bigger bills to pay than we have money coming in to pay them. It simply does not add up.
The result is a national £2.2bn black hole in local authorities’ housing budgets predicted by 2028. This deficit, combined with the strict ringfencing rules that govern council housing finances, leave councils with impossible choices.
Increasingly, the only way to balance the books will be to sell off some homes to fund the work needed to maintain the rest. However, our communities urgently need more, not less, council homes.
The situation is stark. Without urgent national action, we will face a future of even more households living in unsecure and unaffordable housing.
A report by my council outlines a route out of this crisis. Setting out five solutions to put council housing back on firm foundations. We have developed it as England’s largest council housing landlord too provide a roadmap for the new government, 10-year plan to secure council housing for the next generation.
We will publish our full plan in September, but given the urgency of these challenges, we have now published our interim report so we can work with the new government from today to realise our shared ambitions together.
“Confidence in the sector must be restored through immediate commitments to a fair financial model and long-term income certainty”
The starting point must be an end to years of inconsistency through two urgent measures. First, confidence in the sector must be restored through immediate commitments to a fair financial model and long-term income certainty. Second, the government must stabilise our council housing finances in the short-term through an emergency capital funding injection.
Then, our five solutions present a pathway for local authorities to work with central government to secure the future of our country’s council housing over the next decade:
- Establish a new fair and sustainable financial deal: councils have to keep their income and expenditure for their council homes in a ringfenced Housing Revenue Account (HRA), but the current system is broken. The government must introduce a long-term and certain rent-settlement, an adjustment of HRA debts and change national accounting rules to remove the inbuilt bias against investment in council homes.
- Reform unsustainable Right to Buy policies: reducing discount levels and eligibility, protecting newly built council homes from sale and ensuring 100% of any Right to Buy receipts that are received are invested in replacement council homes.
- Remove red tape on the Affordable Homes Programme and other funds: including extending the strategic partnership model to councils. Funding should be streamlined, allocated simply, reflect recent cost inflation, and allowed to be used with full flexibility to increase the number of council homes.
- Announce a Green & Decent Homes Programme: a long-term, capital-funded programme to bring all council housing up to the new standard of safety, decency and energy efficiency by 2030 – and a roadmap for achieving net zero by 2050. Recognising that rents alone cannot fund the scale of investment needed to deliver the upgrade of housing quality we should rightly require.
- Fund the completion of new council homes: limit the short-term loss of housing supply and construction sector capacity caused by the unfolding market downturn, by funding councils to rescue and complete stalled development projects.
