One of the contenders in the Labour leadership election has tackled the issue of council housing debt. Labour’s General Election Manifesto included a review of the level of debt held by local authority Housing Revenue Accounts. Rebecca Long Bailey, responding to questions from the Labour Campaign for Council Housing, has committed to cancelling this so-called council housing debt. She said:
“My Labour government would undertake a large-scale council house building programme, ensuring that councils are given a duty to build council housing to help meet the escalating housing crisis. I am committed to building the campaigns ask of an annual rate of at least 150,000 council and social homes, with 100,000 of these built by councils for social rent with a minimum grant of £100,000 per property in order to ensure councils have the resources to actually build the houses. Moreover, higher discount for Right to Buy sales have increased the number of sales fourfold, meaning less housing revenue – distorting the housing market further; that’s why I commit again to the abolition of right to buy. Such examples as the shortage of funding in Swindon HRA at over £300m is symptomatic of the problem our housing sector faces, that why I will commit the resources necessary and agree with the campaign that a £75 billion infrastructure fund for delivering housing over five years is a must. For too long we have not built council houses. Under my leadership this will change.
I would also introduce mechanisms to help councils meet this commitment including cancelling the so-called council housing debt, the result of creative accountancy by the treasury rather than actual borrowing. This debt was increased and imposed on councils in 2012 and was based on unrealistic estimates of rental income over 30 years. The housing revenue account (HRA) is thus unable to renew its existing council stock due to lack of funding. The previous pledge in the manifesto was to review. I will take action and cancel it. This move would mark a recognition that tenants have paid more in rent than the actual cost of ‘historic debt’.”