The great Housing Revenue Account raid

14 Jul 15

Last week’s Budget saw George Osborne mount an audacious swipe at Housing Revenue Account funds. The impossible just got harder.

Popular legend has it that it was Marie Antoinette who said: “Let them eat cake.” Fast forward a couple of centuries and another member of the ancien régime is certainly looking to not only have his cake but very much wants to eat it, and some of the icing on the top as well. And the providers of these comestibles are to be the least well off members of society.

I refer of course to Mr Osborne’s Budget pronouncements about social housing. 

It is no more than three years since local authorities and their tenants, via the HousingRevenue Accounts (HRA), were asked to pay considerable sums to effectively buy the rental streams for the next 30 years in their HRA. The idea was to give them resource certainty so there would no longer be a decline in the standard of local authority social housing. The amount paid into the Treasury was around £9bn! 

At the time of self-financing it was promised that, if any of the components that were used to calculate the buy-out price changed, then this once-and-for-all settlement could be reopened. Since then, there have been a series of changes that have made HRAs more difficult to operate: bedroom tax; rent increases guidelines changed from the RPI measure of inflation to CPI; removal of rent convergence; increased discounts on Right to Buys; Universal Credit  – to name but a few. Yet in the face of all this, local authorities have continued to increase efficiency, improve their property services and even managed to start building some new houses to try and meet the 200,000+ per annum target. The shedloads of money applied to the private sector has so far not produced the goods.

However, the election introduced the challenge of selling off the best HRA properties (some estimate this will be £4.5bn per annum handed over to the Treasury) to enable the dogma, sorry, dream of everyone owning their own home, yes even housing association tenants. This means the local authority stock’s income is reducing possibly to the point when it starts to become questionable if they all can continue.

And now the very same chancellor who received that dollop of cash is looking to take another £1bn from the HRAs in a four-year hit because he claims social housing receives a subsidy. Projections over the remaining life of the 30-year settlement show many billions of pounds will be lost – the impossible just got harder. As to a subsidy, his fist-waving colleague Mr Iain Duncan-Smith’s Universal Credit now sees the decoupling of the money paid in benefit from the housing landlord accounts. The money is paid to the tenant and the landlord now has to extract the rent.  A really efficient approach for rent collection – NOT!!  And yet Mr Osborne claims this £1bn can be found by being even more efficient.

Poor old Marie Antoinette lost her head in the end and now I fear it will be HRAs that die – a death of thousand cuts. As for Mr Osborne, well time will judge if has provided us all with a living wage and he can reign supreme (perhaps drinking Chateau de Chasselas).

Meanwhile, where are those at the bottom of the pile going to live? In a cardboard box in the middle of the road?

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