Media Release

Stop starving council housing of funds

An Appeal to Labour to press the government to reopen the 2012 ‘debt settlement’

Swindon Tenants Campaign Group has initiated an Appeal (see PDF attachment) which calls on Labour to press the government to reopen the 2012 council housing ‘debt settlement’ and to cut the ‘debt’ councils were given, to take account of the significant income they are losing as a result of government policies since then.

Tenants groups, council Leaders, Labour councillors, housing academics and MPs, are calling on the Labour Party to challenge the government’s starvation of existing council housing of the funds needed to maintain and renew council homes. The Appeal is calling on Labour to press the government to cut the so-called debt which councils were given in 2012, to take account of the income they are losing as a result of government policies since then.

The ‘debt’ given to each council was in large part based on an estimate of income over the 30 years of the business plans which they had to draw up. Council Housing Revenue Accounts1 are losing hundreds of millions of pounds as a result of policies such as a four year rent cut, 1% each year, and increased discounts for right to buy sales. As a result councils are taking in far less rent than was planned for in 2012 (see Appendix to the Appeal).

This is forcing them to cut back on planned work. Many are extending the lifetime of housing components (e.g. roofs, kitchens, bathrooms etc2) which means increased maintenance costs if they are not replaced in good time. The consequence of these cuts can only result in a deterioration in the condition of the stock and hence the living conditions of tenants.

The cuts can have even worse consequences. One of the factors in the Grenfell Tower catastrophe which has not received the public attention it merits is the impact of the funding crisis on the Kensington & Chelsea HRA. It has insufficient funds to carry out the capital works (renewal of components rather than day to day maintenance) which is required to maintain homes in good condition. Over the next five years alone it has a shortfall of £87 million. This is the financial background to the fatal decision to cut costs in the refurbishment of Grenfell Tower.

Whilst there can be no excuse for the decisions taken in relation to Grenfell the declining income of HRAs makes it inevitable that cuts in work programmes will impact on the quality of the homes and may risk people’s lives, as the Grenfell refurbishment so graphically illustrates (see http://keepourcouncilhomes.files.wordpress.com/2017/06/underfundingandgrenfell.pdf ).

Martin Wicks, Secretary of Swindon Tenants Campaign Group said

“It’s high time to end the silence in Westminster on the starvation of existing council housing of the funds needed to maintain and improve the condition of council homes. This under-funding of local authority housing revenue accounts is part of the war of attrition against council housing which the coalition and Tory governments have conducted. We are calling on Labour to challenge the government on its under-funding of existing council housing. We cannot just wait in hope of a Labour government. We need to campaign now to demand that council housing has the funding it needs to prevent the deterioration of existing stock. Labour should be highlighting the government’s responsibility for this crisis and demanding that the bogus debt3 is cut at least by the amount that HRAs are projected to lose over the course of their business plans as a result of the policies introduced since 2012.”

Doina Cornell, Labour Leader of Stroud Council said:

I am happy to support this Appeal. In 2012 the old housing subsidy system was replaced. Steps towards this began in the final days of the Labour government and continued under the coalition. Councils could choose to take ownership of their council housing stock and keep the rents paid by tenants in order to build and to renovate.

This deal didn’t come for free. Stroud had to borrow £91.7m from the Public Works Loan Board and hand this over to central government to buy our own housing stock, taking on a debt, and a plan for the next thirty years based on projected rental income.

Then the Tories changed the rules. They imposed a 1 per cent rent reduction, which wiped millions off projected future income and forced us to cut back on renovation plans to bring existing homes up to a more decent standard.

They massively increased the right to buy discount so tenants could buy their own homes. As a result, sales of council homes nationally have gone up five times. Each sale marks a loss of rental income for future generations, and further reduces our capacity to build and renovate.

The 2012 deal should be revisited. Better still, why not just cancel the debt?”

Notes

Website

The campaign has a dedicated website http://council-housing-debt-campaign.org

Anybody wishing to add their name or that of their organisation to the Appeal should email us at stcg@btinternet.com

For further information or comment please ring Martin Wicks on 07786 394593

1 Housing Revenue Accounts are ‘ringfenced’ accounts which sit inside a council’s General Fund. They keep the income from council housing separate from a council’s other income. The ring-fencing was introduced by Thatcher to stop the rates (a precursor of council tax) being used to support council housing.

2 Under the Decent Homes Standard each component is given an estimated lifetime, x number of years, after which they are expected to be replaced.

3 In 2009 the House of Commons Council Housing Group did a report which showed that over 25 years council tenants had paid £91 billion in rent but their councils had only received £60 billion in ‘allowances’. Hence council tenants paid more in rent that the historic debt associated with building homes. The so-called debt imposed in 2012 was a form of ‘creative accountancy’ by the Treasury that is fleecing tenants and council HRAs.