Housing – Group Leader's Comment – 13 October 2017

English councils have taken a reduction of £16m in Government Grant funding from income tax, only partly offset by the 50 per cent retention of local business rates.

It has been good to see so many of you this month at our Group Party conferences and at the National Conference of Children and Adult Services. We also ran the first module of the Next Generation leadership course.  All this adds skills and knowledge to the many talents of our members and enables us to discuss issues and craft better solutions. The regional meetings also start shortly in every area, so we shall soon be at a place nearer you to hear your views first hand. Thank you to those who made it to the recent information and development seminar on campaigning, either in person or online in the webinar. 

Latest funding shortfall

English councils have taken a reduction of £16m in Government Grant funding from income tax, only partly offset by the 50 per cent retention of local business rates. 166 councils will be expected to pay the Government instead, further centralising money and power, exactly contrary to the agreed direction. The LGA is working hard on this in their Budget submission. 97 per cent of councils signed up to the four year agreement, but on the promise that 100 per cent of the business rates would be retained in local government, now a broken promise. If you are one of the 166 councils, have you passed a motion to seek a better deal? Please let us know. 

Housing: a cool £2billion

The funding shortage puts our services at risk and makes it hard to support more people with increased housing. We have called long and hard for powers and funds to build the houses people can afford. It is bizarre that councils can borrow to build a swimming pool or a hotel, but not for much needed housing, regardless of a sound business case. 

Instead of lifting this cap, Theresa May has announced a £2bn fund for social and/or "affordable" housing. If you rely on the media it is unclear whether this is intended for affordable or social housing, but only available to some councils and then only through abiding process rather than just giving us the funds. Her calculation of 5,000 homes a year is based on an £80,000 subsidy per dwelling, but in areas of greatest demand, where she says she wants to direct the funding, this falls woefully short. The Chartered Institute of Housing recommended £1.5bn subsidy every year to build 28,000 homes. Compare this to the Government's stated target of one million new homes by 2020.

Sadly, although genuine funds are always welcome, this fund will not tackle the problem. We cannot plug the housing gap while the "right to buy" continues to drain our resources. In many councils, these have almost doubled this year, each sale taking two thirds of the value out of the public purse and into central government and private hands. We have to start to limit these expensive donations to what we can afford.

Our councils have paid for council houses, twice, in fact, and we need to use money from sales to build more. The LGA is calling on Government to let us keep our own money, extend the time available to spend the receipts and lift the borrowing cap.

We cannot flood the market to bring house prices down while demand is unrestricted. Anyone in the world can buy here, and they do. Like a foreign holiday home, the first sale brings money into the community, but after that sales are often passed from one absent owner to another and sometimes left empty – more a place to house funds, rather than people.

We cannot make housing affordable while rents spiral without restraint and "affordable” is not linked to income, but to 80 per cent of commercial value. Many people will continue to struggle. A housing rent statement is expected to confirm the move back to a maximum of 1 per cent above the consumer price index.

Meanwhile, homelessness is rising. I visited EMMAUS which provides an en suite room, regular meals, a community and a job for 720 homeless people. But it uses Housing Benefit that is about to be swallowed up in Universal Credit, an issue colleagues and I have raised at all levels. Our Vice President, Lord Victor Adebowale, CE of Turning Point was on Twitter this week supporting the work of community enterprise.


Greg Clarke, one the most thoughtful of our Ministers, responded brilliantly to my question recently, pointing out that growth could be an empty target if it did not provide balanced communities with work and housing to match. 

However, DCLG has been consulting about increasing the pressure on councils to give permissions for housing, regardless of local ability to provide jobs, services, infrastructure such as roads and schools, and regardless of land availability without damage to the environment. Our Group's Deputy Chairman, Rachel Eburne, is on the LGA board for the Environment, Economy, Housing and Transport. She pointed out that the cross party board was unanimous in its objection to the centralised steamroller approach. 

The LGA has sought powers to prevent land-banking that prevents houses being built, while councils are required to compensate by giving ever more permissions, making a mockery of a planning system which is prevented from planning ahead. DCLG has not chosen to put any pressure on the developers to get on with it, despite our calls to give councils the ability to step in. Speculative applications passed at appeal undermined the extensive five-year provision already available in the local plans, making it less likely that any of them can go ahead.

Also the viability studies remain obscure and enable developers to reject the requirement for much-needed contributions to affordable housing or infrastructure. At the LGA, we also continue to lobby for costs to support the work needed following Grenfell. Council costs are currently estimated as between £130 and £160m. 

Members from the 168 councils being asked to refund the government next year have particularly asked if you are passing a motion at full council to let us know so we can put you in touch with each other. Whatever you are doing for your residents, I wish you every success. You can add your voice to this debate, and others, through the Independent Group Think Tanks.