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Six modest asks of the Chancellor – tackling the housing crisis

29 October 2018

Six modest asks of the Chancellor – tackling the housing crisis

Last year the Prime Minister made it her priority to address the housing crisis, saying "I have made it my mission to build the homes the country needs and take personal charge of the Government's response". So a year on, and as Philip Hammond approaches the dispatch box later today, the Chancellor has a real choice to make: whether the Government will respond to the housing crisis by giving councils the support they need to tackle the housing crisis, or will it promise but not deliver as seems to be its approach across all domestic policy.  

If he chooses the former, below are the six announcements we can expect to see…

  1. Full flexibility over right to buy receipts.  Southwark has lost more than 1300 homes through right to buy since 2012, we have been restricted in our ability to replace lost social housing stock. The current rules dictate that right to buy receipts can only meet 30% of development cost, that they can’t be combined with grant, and must be spent within narrow timeframes or be returned to the Treasury with interest. This both restricts our ability to maintain the overall stock of social homes so meeting the needs of our residents, and undermines the principle that a local authority home is a local authority home. The Chancellor must use his Budget to enable the full retention and reuse of right to buy receipts for the purpose of like-for-like replacement.


  2. Lifting the HRA borrowing cap to allow Southwark to borrow against its rents and assets to build new council homes.  We are pleased and intrigued at Theresa May’s long-overdue u-turn to allow councils to borrow to build, and await the detail with anticipation.  It is important that Treasury allows repayments against prudentially borrowed monies to be modelled against appropriate timeframes, without ideological impositions (like match-funding, or home ownership requirements) that dilute the investment focus away from meeting local housing need.  In Southwark, we have over 11,000 families on the waiting list and more than 2,000 children growing up in temporary accommodation. Our express intention is to maximise the delivery of secure, high quality, social rent level homes for our residents, and the Treasury should support this.


  3. Increased grant to make a properly expanded council homes programme more viable. If Treasury modelled council homes investment as an infrastructure item rather than a revenue item, they would see new social housing delivering huge savings to the benefit bill and temporary accommodation costs, as well as significant extra income, corporation and council tax receipts on their books. As when the rules were changed to take housing associations off the public balance sheet (and no creditors batted an eyelid), so must the same principle be applied for new council housing. The demand for council homes is enormous, and you’d be hard-pressed to find a credit rating agency that doesn’t regards council housing as triple A spending item.


  4. New land assembly powers for council homes.  Current compulsory purchase powers limit the ability of councils to assemble new land within the finite budgets available to them. Southwark has been a beneficiary of great public sector land assemblers in the inter-war and post-war periods, but our generational commitment to build 11,000 new council homes by 2043 needs new (or old!) land assembly powers to achieve this.  We are greatly encouraged that Oliver Letwin has been pushing for restraints on land speculators to this end, and we are calling for a purchasing powers on land valued at the existing (rather than the optimal market) use of a plot of land, to drive huge savings for Southwark’s council house-building programme.


  5. Supporting the delivery of new homes by increasing funding for transport infrastructure. Much has been said about redressing the balance between transport infrastructure in the North and that of London, and anyone trying to get from east to west will recognise the need for this. However one shouldn’t be at the expense of the other and to unlock the housing growth across this part of London the Chancellor should announce a commitment to transport funding growth, for South London this would be committing to funding for both phases of the Bakerloo line extension.


  6. Dedicated funding streams for homelessness prevention: The current system of bidding for funds for homelessness prevention doesn’t work. Southwark is reliant on being successful in bidding for funds and if these bids aren’t successful it means we are severely limited in the work we can do to help prevent homelessness. The average rent for a 2 bedroom flat in Southwark is now approximately £2000 and three quarters of private landlords will not rent to tenants on benefits (including in work benefits). This restricts our ability to find suitable accommodation in Southwark and in many cases means that homeless households have to move out of the borough, away from their families and support networks. If the Treasury were to announce  a dedicated grant funding stream for homelessness and increase funding for Discretionary Housing Payments, this would provide much needed support for the increasing numbers of homelessness residents who are in desperate need for a home.


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