Councils need government grant to fund large scale council house building programme

January 28, 2018

This is an article published on the Labour Briefing website

 

Raising the ‘borrowing cap’ is not a solution to the council housing shortage

There has been much talk of late about councils being able to “ borrow to build” new council housing. They are each currently subject to a borrowing cap/limit. Calls for raising the cap or ending it are based on the premise that this would enable councils to significantly increase council house building. Shadow Housing Minister John Healey recently suggested that lifting the cap would enable councils to build “tens of thousands” of new council homes, though he offered no evidence.
It’s the contention of Swindon Tenants Campaign Group that the funding crisis which local authority Housing Revenue Accounts (HRAs) suffer precludes building again on a large scale by means of taking on more debt. To test out this view we have analysed government data on local authority HRAs. What we found undermines the idea that more borrowing can open the way to re-launching a large scale council house building programme.

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“Tenants pay for housing fiascos, from post-Grenfell bills to ‘self-financing’ “

January 28, 2018

This was a letter published in the Guardian.

The suggestion that lifting the borrowing cap will enable councils to build council housing on a grand scale ignores the funding crisis faced by local authority Housing Revenue Accounts. Council HRAs still have £26 billion of ‘debt’ which they have to service. When 136 authorities were given an extra £13 billion debt in 2012 when ‘self-financing’ was introduced, it was based on estimates of income over 30 years which bear no comparison with the rent councils are actually collecting.

They are taking in much less rent than was built into the ‘debt settlement’. Over the course of their 30 year business plans individual councils are taking in hundreds of millions of pounds less as a result of government policies such as the four year rent cut. This shortage of funds has led them to cut back on vital work on existing stock. Failing to renew key housing components before they wear out can only lead to a deterioration in the conditions of the stock and hence tenants’ living conditions.

Fundamentally, council HRAs have insufficient funds to maintain and renew their existing stock. The ‘debt’ was manipulated by governments of all stripes to fleece tenants who have in fact paid more in rent than the cost of historic building programmes.

There can be no large scale council building programme without central government grant.

Martin Wicks

Secretary Swindon Tenants Campaign Group


“A radical programme of action”

October 10, 2017

This is an article published in the Morning Star on October 10th 2017

Jeremy Corbyn’s conference announcement that Labour would be carrying out a review “of social housing policy – its building, planning, regulation and management” is very welcome. So is his comment that “Labour would speak to social housing tenants all over the country” and bring forward “a radical programme of action” in time for next year’s Labour conference. However, one critical issue needs adding – funding.

The review gives tenants and supporters of council housing the opportunity to tell Labour what we think would constitute “a radical programme of action”. It suggests that Corbyn recognises the need to go beyond the Manifesto which was still rooted in New Labour’s housing policy. For instance, Labour’s “first priority” was not a council house building programme but helping first time buyers onto the proverbial housing ladder.

Whilst Jeremy had spoken of 100,000 council homes a year this was watered down to 100,000 ““affordable homes” for “rent and sale” by the end of the Parliament, with no indication of the proportion of each. Read on below or download a PDF here radicalpoa Read the rest of this entry »


Homelessness and the Housing Revenue Account

May 11, 2017

Swindon Council’s second raid on the housing account

As Swindon Council faces the decline of central government Revenue Support Grant year on year, it has scrabbled around desperately looking for ways of saving money. Its imposition of parish councils on the town without a democratic mandate was one such means, transferring services and costs to the new parishes1. Casting its eye around for other sources of money to cover the growing financial chasm in the General Fund, it organised a “transfer of assets” between that fund and the Housing Revenue Account (HRA), the separate account for council housing. It transferred garages and some shops owned by the HRA to the General Fund, giving the latter an extra annual income of £1.25 million. After some housing owned by the General Fund was transferred to the HRA as a sweetener, the housing account still loses an income of more than £500,000 a year. The ruling group had said that the outcome of the transfer between the two accounts would be “fair and balanced”. In reply to a question at a cabinet open forum the Cabinet Member cynically replied, “yes, but we never said it would be equal”! “Fair and balanced” meant the General Fund gaining at the expense of the HRA and tenants.

Now faced with a funding gap for homelessness prevention and relief (for reasons explained below) they decided to make another raid on the HRA. The Council Cabinet proposed to use £17 million of HRA money to buy 80-100 properties on the open market so that they could transfer some families currently housed in the private rented sector and thus prevent the General Fund from having to pay for them. Their presentation of this as action to deal with homelessness was pure propaganda. This was simply a means of preventing the General Fund having to cover a funding gap of £400,000. (Read on below or download a PDF here sbcraid ) Read the rest of this entry »


Tory war of attrition against Council housing

August 11, 2015

Just before the general election the Tories announced that they were going to extend ‘right to buy’ to Housing Associations and to force Councils to sell off so-called ‘high value’ Council homes to fund it. Not only will this mean that Councils will lose scarce housing stock but it will undermine the finances of Council housing for reasons we will explain below. Only 6,600 Council homes were built in the five years of the coalition government. More than double that number were demolished: 13,530 in the first four years of the coalition (we don’t have a figure for the last year yet). The coalition introduced an ‘enhanced right to buy’ scheme with higher discounts which increased sales significantly (see Appendix). Over the first four years of the coalition government Council housing stock shrank by 104,000 in England alone.  {Read on below or download a PDF here attrition } Read the rest of this entry »


What future for Council Housing?

February 20, 2015

Council housing and the housing crisis

A book by Martin Wicks

Everybody knows there is a housing crisis. However, it is usually written about by academics or professionals who work in the housing sector. Tenant voices are rarely heard. What Future for Council Housing? is written by a Council tenant and reflects the work and ideas of Swindon Tenants Campaign Group which has successfully resisted the sell-off of our homes; managed to secure more money for their maintenance; and challenged the dominant policies responsible for the crisis.

What Future for Council Housing? is a contribution to the local and national debate on housing policy. It begins with a detailed account of the ‘Swindon Housing Vote’ in which tenants decisively rejected ‘transfer’ of their homes to a Housing Association with a 72% ‘No’ vote on a 65.6% turnout. It gives a blow by blow account of the dirty tricks of the Council and how the campaign challenged their propaganda. The experience is rich in ideas that can hopefully be used by other tenants facing a ballot. (Download a PDF here whatfuture  or read on below) Read the rest of this entry »


Osborne’s Mansion House speech: no market solution to the housing crisis

June 21, 2014

Download a PDF of this article here osbornemansionspeech2014

George Osborne’s recent Mansion House speech had a few rabbits in the hat supposedly designed to address “the challenges of the housing market”. Firstly, he has decided to give the Bank of England new powers over mortgages including the size of mortgage loans as a share of family income or the value of the house. He says

“In other words, if the Bank of England thinks some borrowers are being offered excessive amounts of debt, they can limit the proportion of high loan to income mortgages each bank can lend, or even ban all new lending above a specific loan to income ratio. And if they really think a dangerous house bubble is developing, they will be able to impose similar caps on loan to value ratios as they do in places like Hong Kong. It’s important that decisions to use these powerful tools are made independently of politics by the Bank of England.”

The idea that such decisions are not political is as illusory as the original decision of Gordon Brown to give the Bank the power to set interest rates. The advantage for Osborne is, of course, that any mistakes can be identified as those of the Bank rather than his.

How these powers are applied will be worked out by the Bank and the Treasury though Osborne said that legislation would be introduced before the end of this Parliament. In any case the impact of this policy will not have worked its way through by the time of the General Election. Read the rest of this entry »


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