What the government can do to show it really values social housing

By:
25 Sep 18

Ken Lee, chair of CIPFA’s housing panel, says there are plenty of actions the government can take if it wants to send a positive message about social housing.

Housing - Photo: Shutterstock

 

The prime minister has on a number of occasions taken a little time out from her Brexit traumas to say how much she values social housing.  Last week, she announced that there would be a £2bn grant available from 2022.  This comes after the chancellor promised another £1bn in extra borrowing capacity for social housing.

That all sounds good and any funds are very welcome, even if a long way down the road. But the example of self-financing shows that promises made one day, can soon be broken if other pressures come along. I am sure the million plus people on housing waiting lists will hear the good news but then be disappointed that the money is not for their area or will not produce homes for another four or five years.

As well as these extra building resources, the government is consulting on the use of Right to Buy receipts, probably because the revamped Right to Buy scheme has singularly failed to produce the promised one-for-one new homes for each one sold. Extra freedoms in this area would help in trying to halt the decline in social rented accommodation as housing associations deplete their numbers and local authorities find Right to Buy numbers in most of the country increasing. 

The message from the sector really should be: we need social rented homes now. Not allowing this to happen seems to undermine, and possibly reinforce, the stigma attached to social rented accommodation, something the housing green paper claims the government wants to tackle.

The devolved governments in Wales and Scotland have recognised this already and abandoned Right to Buy. At a stroke, they have done far more to preserve and value social housing than any offers of funding to build more accommodation.  However, clearly, this is an ideological step that governments of all hues in England have shied away from.

So if we’re stuck with Right to Buy, what else could be done to enable more provision?  There are a number of options available to a government that says it values social housing.

Firstly, it could abandon the notion of pooling receipts from the sale of council houses. After all what company with an asset on its balance sheet willingly allows a government to keep a proportion of its sale value by right? And then, if it cannot meet difficult conditions on its use, pinches another large slice of the receipt along with a punitive interest charge that means that further cash is withdrawn from the task of looking after the remaining council houses? 

Local authorities should keep the cash with the vast majority of it being only available for social housing either at their own hand, or in collaboration with others.  It should not be forgotten that the Treasury has had a large slice of cash for these council houses having already gained £8bn from local authorities during self-financing.

Secondly, if local authorities wish to build, they should be free to use as much of this cash to support any grant aid that the government chooses to make available. Others are in this position but local authorities can only use this cash up to the value of 30% of a scheme (and that excludes land costs). To not allow this means that extra debt has to be taken on to try and fund new build. That is of course if there is any “headroom” against the borrowing cap available. What nonsense, any business that wants to improve its asset base is able to reinvest and local authorities should be free to do this.

Thirdly, the local authority should not be constrained by artificial time limits for using its cash. Yes, we need social housing now and the measures set out above will accelerate the push to deliver this. We must also recognise that the amount of land that is readily available to local authorities is decreasing. Years of reduced funding have seen councils cash in on much of their surplus land.  What is needed now is a more strategic approach around the use of brownfield sites and the regenerations of estates. These are not achieved overnight and imposing a three-year thou-shalt-use-thy-receipt-or-else-we’ll-have-them approach – fails to recognise the issues on the ground.

Fourthly, local authorities should be free to use their money from the sales of their assets with their own companies, be they ALMOs or house building companies etc. To deny them this right makes no sense. 

Finally, the absurdity brought in with self-financing of introducing a debt cap on Housing Revenue Accounts should be removed.  The prudential borrowing regime that local authorities work under on the general fund side has clearly demonstrated that Section 151 officers are financially sound people who ensure their councils do not take on capital commitments that cannot be afforded. Social housing is no different. Grant, if available, monies from the forced sale of other housing stock and sensible borrowing, can all be used to ensure homes for those who are most in need can be provided.

It is time central government took the shackles off local government and really showed it cared enough about social housing to allow councils the freedom to decide what the needs are in their area. We do not need Big Brother dictating, with its London-centric focus, who should build what and where.

The views in this article are purely personal

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