More questions than answers, by Ken Lee

26 Oct 10
Failure to get the housing finance system right will once again mean increasing numbers sleeping rough. Demand for homes will increase beyond capacity in cheaper areas, with health, education and life expectancy worsening

Johnny Nash’s 1972 album ‘I Can See Clearly Now’ contains a number of gems, one of them being ‘There Are More Questions Than Answers’.  That title certainly seems very applicable to last week’s Comprehensive Spending Review and its possible effects on local authority housing.

Arguments continue as to whether housing funding has been halved or even cut as deep as 70%. Social housing rents are going up to 80% of market rents, but will this also apply to new tenants of council houses?  Will the extra rental income really be enough to fund the 150,000 new homes promised, especially when £4bn less will be spent than in the last three years?

And it doesn’t end there. It is feared that many local authorities will be asked to take on more debt for housing and then not allowed to keep the money when they sell the asset. But can any new self-financing system that relies on borrowing large sums (£25bn at the last count) work with Public Works Loan Board rates forced upwards?  And will the New Home Bonus be simply a ‘bribe’ to keep General Fund costs down or will it truly support new build in the Housing Revenue Account?

What of the lot of tenants?  Benefit changes, it is suggested, will force them to move from their homes and be excluded from wealthier areas. Will they only be given short tenancies?  Will council house estates finally become ghettos of last resort housing?

So we have no clarity and no certainty.  What we do know is that the system for council housing finance is no longer fit for purpose; the case for reform has been made and won by CIPFA, the Local Government Association, the Chartered Institute of Housing and other bodies.

The confirmation of plans to devolve powers to councils to help meet their housing needs is welcome news – potentially benefiting up to 2.6 million council homes and their 5 million or so occupants. However, the underlying numbers have changed and it seems there may a danger that this opportunity could be lost, with self-financing smothered at birth.

Will the prescription and tight control of the Local Government and Housing Act 1989, the extreme complexity of housing subsidy, the wasteful and uneconomic single-year planning time frame be replaced by just another straitjacket? Will local authority housing, now facing higher interest costs, lack government investment and be unable to retain locally generated resources in order to undertake essential maintenance on council estates let alone building new houses?

Failure to get the housing finance system finally right will once again mean increasing numbers sleeping rough on our city streets. Demand for accommodation will increase beyond capacity in cheaper rents areas, with life chances, health, education and life expectancy worsening.

The CSR answers none of these questions and we are left seeking clarification about what it all means and what the real impact of it is – so there are indeed more questions than answers and I certainly don’t feel that I can see clearly now.

Ken Lee is director of resources at Wigan and Leigh Housing Company and chair of the CIPFA housing finance panel

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