Ten myths about council housing – and one ask

The New Era Estate, Hoxton. Image: Getty.

A Labour councillor and the executive member for housing & development at the London Borough of Islington on what we get wrong about council housing.

Everyone seems to agree that we have a housing crisis in London and that we need to increase the supply of genuinely affordable homes. And everyone, including the Prime Minister, seems to agree that a big part of this must be building more new council homes.

So the question is, how do we get council homes built in sufficient numbers to start addressing the housing crisis? To begin, we need to correct some widely-held, but inaccurate, views on council housing. Let’s do some myth-busting.

1. Council housing is subsidised

It isn’t. Far from it.

Here in Islington, most council housing blocks were built decades ago and tenants have been paying rent on their properties ever since. Council housing is administered through an account that is separate from all other local authority spending, the Housing Revenue Account, which has to remain solvent.

Council housing pays for itself either through rents or by the building of some new private homes for open market sale. This is what many councils have to do in the absence of government funding.

2. Housing Benefit covers the majority of Council tenants’ rent

It doesn’t. Households who claim housing benefit to help pay their rent live in all kinds of tenures in both the private rented and the social rented sectors.

Between 1995-96 and 2015-16, the UK’s housing benefit bill increased by 51 per cent – with the largest increase being in the private rented sector, which has seen a rise of 57 per cent over the past two decades.

Housing someone in the private rented sector costs an average of £110 per week in housing benefit compared with £89 in social housing, an extra 23 per cent. Far fewer people would be reliant on housing benefit if they were able to access council housing in the first place, and the government’s housing benefit bill would also come right down – freeing up more funds annually to spend on building new council homes.

3. Council rents are too low and most people can afford the Government’s new “affordable” rents

They can’t. “Affordable Rents”, under the government’s Orwellian definition, are set at up to 80 per cent of market rent in any given area. In Islington, this is completely unaffordable for most people. The median rent in Islington is £1733 per month. With the median gross monthly salary in the borough at £2713, many private rents are around two thirds the average income.

4. Councils don’t care about council housing anymore – they spend their time building private housing

We do care – and we get little government support to build.

In Islington this year, we are building more new council homes than at any time in the last 30 years. But we are forced to build some private housing as part of our new developments to help pay for the new council homes. We do not have the funding to do it any other way.

5. Right to Buy is fine because it replaces any homes that are lost

It doesn’t. Under the current rules, local authorities only receive 75 per cent of the proceeds of any property that is sold under Right to Buy. The rest goes to the government.

But government red-tape means that this receipt is only allowed to be used to pay for one third of the build costs of a new council home: we still need to find the other two thirds.

Right to Buy proceeds are also not allowed to be combined with any other grant funding, so many councils are struggling to spend them in the time allowed by government.

6. Yes, but the Government gives out grants for councils to build new homes

This has been cut massively and doesn’t fund the cost of building council homes.

In London, councils can obtain grants of £60k per new council home from the Greater London Authority, but this generally doesn’t cover any more than a third of the build costs of a new home and it cannot be combined with Right to Buy receipts. Government spending on building new homes fell from £11.4bn in 2009 to £5.3bn in 2015 – from 0.7 per cent to 0.2 per cent of GDP.

7. Then councils should just borrow more to build more

We’d love to, but we can’t. Sadly, councils can’t just borrow to build. The government caps the amount that local authorities can borrow through the Housing Revenue Account.

In our new developments in Islington, the current split between council housing and private housing is around 60:40. If this cap – what we like to call the ‘New Home Blocker’ – was lifted, we could make it 85:15, immediately converting hundreds more new private homes into council homes.

8. Why not just borrow to build homes outside of the Housing Revenue Account then?

We can’t.

Non-housing spending is administered through a local authority’s General Fund. But in an absurd quirk of the rules, councils would be permitted to borrow to invest in commercial property anywhere in the country through this fund, but not to invest to build self-financing council homes for local people that would reduce the housing benefit bill.

9. Councils should rebuild existing estates and use a more efficient design, creating new council homes for the existing residents and more council homes for new residents

Sounds good on paper, doesn’t it? In Islington we’re building new council homes out of old garages, on unused parts of estates, and on top of existing council blocks.

However, unlike new council homes, there is no grant funding available for replacing existing council homes. The bottom line for Islington is that any project must create more council homes than we had before – otherwise, why do it? So larger scale rebuild projects are impossible for us under the current rules.


10. The problem is the bureaucracy of the planning system

Ah, that old chestnut. Conservative peer and Chair of the Local Government Association, Lord Porter, has said that, “The truth is that councils are currently approving nine in ten planning applications, which shows that the planning system is working well and is not a barrier to building.”

The noble lord is also refreshingly succinct when it comes to how we can get more homes built. “The last time the country delivered 300,000 homes which this country needs each year, in the 1970s, councils were responsible for more than 40 per cent of them and it’s essential that we get back to that. In order for that to happen, councils have to be able to borrow to build homes again.”

So I have one ask of the Government: cut the ‘red tape’ around building new council homes

Scraping the New Home Blocker would immediately allow us to build hundreds of new council homes in Islington alone, and would free other councils across the country to do the same.  

Ending the restrictions on the use of Right to Buy receipts and grants would also help councils to build more new council homes.

There is no lack of political will in local authorities to build council homes – but the government needs to stop stacking the system against us.

Diarmaid Ward is a Labour councillor and the executive member for housing & development at the London Borough of Islington.

 
 
 
 

Transport for London’s fare zones secretly go up to 15

Some of these stations are in zones 10 to 12. Ooooh. Image: TfL.

The British capital, as every true-blooded Londoner knows, is divided into six concentric zones, from zone 1 in the centre to zone 6 in the green belt-hugging outer suburbs.

These are officially fare zones, which Transport for London (TfL) uses to determine the cost of your tube or rail journey. Unofficially, though, they’ve sort of become more than that, and like postcodes double as a sort of status symbol, a marker of how London-y a district actually is.

If you’re the sort of Londoner who’s also interested in transport nerdery, or who has spent any time studying the tube map, you’ll probably know that there are three more zones on the fringes of the capital. These, numbered 7 to 9, are used to set and collect fares at non-London stations where the Oyster card still works. But they differ from the first six, in that they aren’t concentric rings, but random patches, reflecting not distance from London but pre-existing and faintly arbitrary fares. Thus it is that at some points (on the Overground to Cheshunt, say) trains leaving zone 6 will visit zone 7. But at others they jump to 8 (on the train to Dartford) or 9 (on TfL rail to Brentwood), or skip them altogether.

Anyway: it turns out that, although they’re keeping it fairly quiet, the zones don’t stop at 9 either. They go all the way up to 15.

So I learned this week from the hero who runs the South East Rail Group Twitter feed, when they (well, let’s be honest: he) tweeted me this:

The choice of numbers is quite odd in its way. Purfleet, a small Thames-side village in Essex, is not only barely a mile from the London border, it’s actually inside the M25. Yet it’s all the way out in the notional zone 10. What gives?

TfL’s Ticketing + Revenue Update is a surprisingly jazzy internal newsletter about, well, you can probably guess. The September/October 2018 edition, published on WhatDoTheyKnow.com following a freedom of information request, contains a helpful explanation of what’s going on. The expansion of the Oyster card system

“has seen [Pay As You Go fare] acceptance extended to Grays, Hertford East, Shenfield, Dartford and Swanley. These expansions have been identified by additional zones mainly for PAYG caping and charging purposes.

“Although these additional zones appear on our staff PAYG map, they are no generally advertised to customers, as there is the risk of potentially confusing users or leading them to think that these ones function in exactly the same way as Zones 1-6.”


Fair enough: maps should make life less, not more, confusing, so labelling Shenfield et al. as “special fares apply” rather than zone whatever makes some sense. But why don’t these outer zone fares work the same way as the proper London ones?

“One of the reasons that the fare structure becomes much more complicated when you travel to stations beyond the Zone 6 boundary is that the various Train Operating Companies (TOCs) are responsible for setting the fares to and from their stations outside London. This means that they do not have to follow the standard TfL zonal fares and can mean that stations that are notionally indicated as being in the same fare zone for capping purposes may actually have very different charges for journeys to/from London."

In other words, these fares have been designed to fit in with pre-existing TOC charges. Greater Anglia would get a bit miffed if TfL unilaterally decided that Shenfield was zone 8, thus costing the TOC a whole pile of revenue. So it gets a higher, largely notional fare zone to reflect fares. It’s a mess. No wonder TfL doesn't tell us about them.

These “ghost zones”, as the South East Rail Group terms them, will actually be extending yet further. Zone 15 is reserved for some of the western-most Elizabeth line stations out to Reading, when that finally joins the system. Although whether the residents of zone 12 will one day follow in the venerable London tradition of looking down on the residents of zones 13-15 remains to be seen.

Jonn Elledge was the founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.