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.

 
 
 
 

Are Britain’s political parties finally taking housing seriously?

Some houses. Image: Getty.

For more than 20 years we have been researching and writing about the downgrading of public housing in the UK. Thankfully, the tide finally appears to be turning.

Government failure can be seen most clearly in the form of homelessness, but the problems are bigger – high prices, high rents, housing insecurity and its high toll on mental health, overcrowding, beds in sheds and so on. For decades, financial support for public housing has been cut. Politicians have referred to estates of public housing as “sink” areas, marring the reputations of places and people.

While homelessness and rising prices and rents fill conversations about the housing problems of today, government action has focused on helping existing and new home owners. In the meantime, private landlords reap profits from an insecure, frequently poor quality and high cost sector.

But finally, several British political parties – Labour, the Green Party and Liberal Democrats – are offering evidence-based and convincing analyses of the problem and pledging to improve non-market housing provision.

It is perhaps not surprising that recent decades have generated this new position on how to fix the broken housing system, where the state – local and central – takes a more active role. It is increasingly clear that the market, often lauded as the most efficient way of providing and allocating housing, is actually a key driver of the failure to provide decent homes for many hundreds of thousands of households.

New homes

So what are the parties offering at this stage? The Conservatives focus on overseeing the construction of a million homes in the next five years. Social housing, it seems, will continue to be neglected under a Tory government.

Labour, meanwhile, have pledged to build 100,000 council homes a year by 2024 for those most in need. It also wants to fund a further 50,000 homes a year to be built by Housing Associations who also target those needing a home and will put a stop to Right to Buy: a scheme which has led to over 40 per cent of former council homes now being rented out by private landlords.

The Liberal Democrats propose 300,000 homes a year by 2024, to include 100,000 for social rent (by housing associations). The Greens match the Lib Dems while stressing the need for zero-carbon homes.

This social housing project won the Stirling Prize 2019.

The Conservatives stand out here, with their continued focus on offering public money to help aspirational owners rather than providing housing for those most in need. Their costly Help to Buy scheme, which they plan to extend, has been widely criticised for inflating prices, bolstering developer profits and doing nothing to help those in most need. The party’s election manifesto does not provide any details as to how it will increase the supply of social other than to state that “it will bring forward a social housing white paper”.

Talk of austerity, poverty and inequality may be tiring for some to keep hearing, but it is critical that we understand how bad things are for many people. Many older homeowners find it hard to understand the pressures of simply finding a place to live, let alone the ongoing challenge of funding that space, heating it or accessing it if disabled. Paying rent to help secure someone else’s retirement is particularly galling for many.


A social system

A system is needed that is designed for the needs of all people. Research shows that yes, of course a regulated market in owned housing is needed (controls are needed to ensure it is high quality and built in the right places). But this needs to exist alongside a high quality, professionally managed public housing sector capable of helping people to find decent homes. Increasingly, the shortfall in supply has enabled private landlords to offer low income households sub-standard properties.

The argument that public housing does not work is locked in a vision of large-scale estates that became increasingly unpopular as funding has been drained from them. Most analysts today envision a for-life option (the ability of tenants to stay for as long as they like so that they can feel secure) at a cost that allows other areas of life to be better enjoyed (health, education, access to work). Only home ownership and public rented housing can provide these kinds of outcomes.

Whatever our personal politics, it is vital that we understand that powerful interests circulate to promote housing as a market commodity, rather than a critical social good to be enjoyed by all. The pathway to this vision is littered with the profits to private landlords and the shattered dreams of the homeless and ill-housed.

It is precisely not in the interests of market providers to resolve the housing crisis. This may sound like heresy, but it is the evidence of many years of analysis.

Hope for the future

Looking to a future in which social housing forms a basis for social and economic investment offers genuinely thrilling prospects. There is no reason that a new council building programme cannot be enjoyed in partnership with private builders, and indeed using smaller companies, many of whom have been threatened or busted by the current crisis.

On the environmental front, social homes can be built or retrofitted to enhanced standards that are warm, safe, flood resistant and carbon neutral.

To say this will cost a lot of money is stating the obvious. But housing is a major component in the reproduction of wealth inequalities, private profiteering and carbon emissions (energy use in homes accounts for 14 per cent of the UK’s total). The fact that political attention is being focused more clearly on challenging these problems and getting traction on a home-building programme for citizens should be welcomed by all.

The housing crisis of today is an enduring problem, one that goes back more than a hundred years, when walking through the slums of the growing industrial metropolises, Friedrich Engels asked why more housing wasn’t provided when so many people were in need. The question today is, why are we still asking the same old question?

Rowland Atkinson, Chair in Inclusive Societies, University of Sheffield and Keith Jacobs, Professor of Sociology and Director of the Housing and Community Research Unit, University of Tasmania.

This article is republished from The Conversation under a Creative Commons license. Read the original article.