A delegation of members of the Council Housing group of MPs at Westminster met with Housing Minister Margaret Beckett last Wednesday, February 4th, to ask the government to act quickly on its new undertaking to build new council houses.
The delegation also asked the government to provide the finance for a big new building programme by fully funding allowances to councils to enable them to manage, maintain, repair and improve 2.5 million existing council homes and provide the money for a massive programme to build a third generation of first class council homes.
Commenting on the meeting Austin Mitchell MP, chair of the House of Commons Council Housing Group, said: ‘We received a warm and sympathetic response from the minister who acknowledged that councils have insufficient resources to manage, maintain repair and improve existing council homes.
‘She reassured us that the Review of Council Housing Finance will provide the solution tenants need.
‘Margaret Beckett also re-affirmed her public statements and the commitments made by the Prime Minister last week to change the rules and provide the funds to enable councils to build first class council housing again.
‘Her warm words are always welcome but we reminded the minister that they must be acted on quickly and backed up with hard cash immediately before the review is complete.
‘The Review has to come up with proposals, which the Treasury has to accept, that will put a stop to the “robbery” from tenants rents and council housing capital receipts so that councils get the allowances they need.
‘In the meantime there should be an immediate moratorium on any further attempts by councils to bamboozle tenants that privatisation is the only way of getting improvements.
‘We’re pleased that things are moving at last and now that the Prime Minister has agreed to give councils its full backing and put to aside any of the barriers that stand in the way we must have a budget put in place to support councils building the new council housing with “secure” tenancies, low rents and an accountable landlord that Britain needs.
‘Our national consultation forum on the February 25 will be consulting councils and tenants on how this should be done.’
The delegation included MPs Austin Mitchell, Ken Purchase, Michael Meacher, Frank Dobson, Paul Holmes, David Drew, Brian Iddon, Kelvin Hopkins and Alan Walter from Defend Council Housing who advises the group.
Austin Mitchell has tabled an early day motion in parliament – EDM 355 Council House Building.
The Council Housing group is holding an inquiry session at Westminster on February 25 to collect evidence to support investment in council housing.
Tenants, local authorities, trade unions and academics will be attending to show support and give verbal evidence to the group.
Meanwhile the delegates addressed two main issues during their visit with Housing Minister Beckett, these were:
1. Securing the long term financial future for 2.5 million existing council tenants.
2. Starting a massive council house building programme to provide the homes with ‘secure’ tenancies, low rents and an accountable landlord that people need.
On Securing the financial future for 2.5 million existing council tenants they stated:
Government has been taking money out of council housing every year.
Government robs money from council housing in two ways: Firstly it collects more in rents than it pays in allowances to local authorities to manage, maintain (M&M) and carry out major repairs (MRA) to our homes. This amounts to more than £19 billion since 1997.
Secondly, government takes 75% of the capital receipt from ‘right to buy’ sales and has benefited from stock transfer receipts.
In 2008/09 each tenant will pay £3,120 per home in rent (£6.4 billion according to the HRA Review team) but only receive £2,391 per home (£4.7 billion national total) back in services.
Government lets councils keep just £1,720 per home (£3.4 billion) for management and maintenance and £671 (£1.3 billion) for major repairs.
Nationally, this means the government will rob tenants to the tune of £1.7 billion this year, and it’s increasing (Figures from DCLG subsidy determination 2008/2009).
Ministers claim that negative subsidy that most authorities pay is to support historic debt but:
‘Receipts from the Right-to-Buy sales of council housing that have yielded around £45 billion – only a quarter has been recycled into improving public housing.’ (Joseph Rowntree Foundation 01/12/05).
Stock transfer has produced £6.08 billion ‘Total Transfer Price’ – money which comes from council housing and should have been reinvested in council housing (UK Housing Review 2006/2007).
It is essential that government accepts that it should now take over/write off historic council housing debt.
Tenants don’t have a financial interest in the value of the asset and so should not be individually paying off this debt and that government has received capital receipts to the value of historic debt four times over.
In December 2007 Yvette Cooper announcing the Review of Council Housing Finance promised:
‘to ensure that we have a sustainable, long term system for financing council housing’ and ‘consider evidence about the need to spend on management, maintenance and repairs’.
Research commissioned by government from the Building Research Establishment (BRE) in 2001-02 showed that Management and Maintenance Allowances should have been £5.5 billion when in fact they were only £3 billion.
In 2004, Parliament was given an update and told ‘Hence the 2004-2005 level of allowances would have to increase by about 67% in real terms to reach the estimated level of need’ (PQ 1705 03/04 29 April 2004).
Adjusted for today’s prices and stock numbers, the BRE’s findings show that M&M (management and maintenance) allowances are now about £1,300 million too low.
According to the report from the government’s ‘opt out’ pilot study current Major Repairs allowances ‘undercuts basic investment needs by 43 per cent over 30 years’ (Inside Finance, March 2008). This amounts to £950 million a year.
Taking into account this evidence on under-funding of M&M and MRA (major repairs allowances), council housing allowances need to be funded by an additional £2.25 billion (£1.3bn M&M plus £0.95bn MRA) per annum to meet actual need.
On Building new first class council housing the delegation said:
The announcement by the Housing Minister on January 21 that councils will be able to access Social Housing Grant and retain all rents and capital receipts from new build is welcome (but why the consultation?).
The Prime Minister’s speech on January 29 seemed to take this a stage further with the following explicit remarks :
‘In the past we have placed restrictions on local authorities delivering social housing.
‘But let me today be clear, if local authorities can convince us that they can deliver quickly and cost effectively more of the housing that Britain needs, and if local authorities can build social housing in sustainable communities that meets the aspirations of the British people for the 21st century, then we will be prepared to give you our full backing and put aside any of the barriers that stand in the way of this happening.
‘We will not allow old arguments and old ideologies to stop us getting on with the job together.’
The following statement by Bob Kerslake on January 30 in Public Service is also helpful:
‘Sir Bob Kerslake said: “Local authorities can play a stronger role and many are up for it.
‘We would provide grants for councils to directly develop sites as we do with housing associations and they would then potentially borrow prudentially to cover that cost through future rents – it’s a very simple model. It’s critical that we do keep affordable housing activity going in this difficult economic climate.”
The key questions are:
1. Does government intend to increase the amount of grant funding available (current levels of Social Housing Grant are too small)?
2. Is government now committed to supporting councils build a new generation of first class council housing providing ‘secure’ tenancies, low rents and an elected and accountable landlord that people want?
