Ministers publish plans for social housing upheaval

22 Nov 10
The government today published its proposals for reforming social housing, outlining radical changes to council financing and tenancy arrangements.
By Lucy Phillips

22 November 2010

The government today published its proposals for reforming social housing, outlining radical changes to council financing and tenancy arrangements.

Powers for funding council housing will be devolved to local government from April 2012, putting an end to the centrally pooled Housing Revenue Account system. A new self-financing structure will enable councils to keep all the rent money they raise and spend it locally on their services.

The government claims the current system is too complex, leaving councils with ‘no certainty about future income, no ability to plan long term, and few incentives to drive up efficiency’.

Other widely-trailed proposals in today’s consultation document, LocalDecisions: a fairer future for social housing, will allow councils to give new tenants fixed-term tenancies, ending the right to a council home for life. Tenancies would be for a minimum of two years but could stop after ten or 20 years for those whose financial circumstances improve. These people would be encouraged to move into low-cost home ownership or private rental.

At the same time, housing associations will be allowed to set rents at up 80% of the market rate.

Local authorities will also be given more powers to manage their waiting lists, with new freedoms to decide who should qualify for and get priority to social housing, as well as the ability to discharge their homelessness duty by housing people in the private rented sector. Changes to legislation will be included in the forthcoming Localism Bill.

According to the government, the number of people on social housing waiting lists over the past 13 years has almost doubled to reach 5 million, despite £17bn of public investment. A quarter of a million social homes are overcrowded and 400,000 are under-occupied.

Local government ministers condemned current ‘centrally determined rules’ used to allocate social homes, pledging a ‘fairer and more flexible’ system.

Housing minister Grant Shapps said: ‘For far too long in this country there has been a lazy consensus about the use of social housing, which has left one of our most valuable resources trapped in a system that helps far fewer people than it should.’

Communities minister Andrew Stunell added: ‘We need to have a much smarter system that protects lifetime tenancies, but also provides the flexibility to ensure that help is targeted at people who really need it, and enables us to get more for every pound of taxpayers’ money.

‘In times of economic hardship, it is vital that social housing is effective in helping people get back on their feet.’

But the plans immediately came under fire. The Local Government Association warned some of the changes would ‘present councils with practical challenges that will often be hotly contested politically at a local level’.

Gary Porter, chair of the LGA Environment and Housing Board, said: ‘There needs to be consideration of the implications of councils in the same housing market adopting different approaches.’

Sarah Webb, chief executive of the Chartered Institute of Housing, said changes to the homelessness duty for councils must be ‘carefully thought through’. She added: ‘In some areas, it will become easier to help homeless households, but the recently announced reforms to Housing Benefit will mean that in some areas households will struggle to secure accommodation in the private rented sector, which will reduce councils' ability to deliver with this new reform.’

David Orr, chief executive of the National Housing Federation, warned that the package of reforms would work only if housing associations had ‘as much flexibility as possible so that they can make decisions locally based on the needs of their local market and the homes they manage’.

Brian Johnson, chief executive of the housing association Moat, added: ‘We do not believe that moving people on when their circumstances improve is the way to tackle the pressure on social housing. We are calling on government to rethink its plans and reform rents so that people who can pay more do, but that no one is asked to leave their home just because their circumstances have improved. Put simply, we believe that subsidy should follow people rather than bricks and mortar.’

The public consultation runs until January 17.