London Tenants Federation Response to the Government's 'Blue Skies Debate' on Housing Capital Finance

Theresa Donohue
Office of the Deputy Prime Minister
Zone 2/J3
Eland House
Bressenden Place
London SW1E 5DU

14.10.02

Re: 'The Way Forward for Housing Capital Finance' (Consultation paper)

The LTF welcomes the ODPM's encouragement of a 'blue skies' debate about housing finance. Many council tenants are living in substandard housing and suffering the legacy of decades of under-investment and 'daylight robbery', by Governments, and of desperate responses to these policies by councils. We have seen our homes used as a political football. The majority of housing investment, itself only half the level spent in other European countries goes to pay service debt and patch up dilapidated stock. Generally we are still de-investing in housing.

The fact that council housing is being sold off faster than it is being replaced by either councils or RSL housing, has particular impact in relation to shortages of housing and the continued destabilisation of our communities in London, where land and property values are high. Figures on the condition of our homes and on housing need in the capital demonstrate the enormity of our problems here.

The number registered on London council waiting lists is almost 3 times higher than the total of combined council and RSL housing in the capital. The number of homeless across London represents about a quarter of the total homeless in Britain and is almost as high as the number of homes available for letting through councils or RSLs in any one year. Almost 50,000 homeless households are living in temporary accommodation in London, which costs central and local government annually some £600 million.

Since right to buy was introduced 27% of the original stock has been sold in London. Regeneration and stock transfer schemes have seen 1,121 council homes this year demolished whilst in 2001 only 4200 council and RSL homes were built (only 490 of those being council homes). Council homes are also being sold directly to private developers and used as dowries in stock transfer or PFI schemes. The amount of money that is required to bring London's council homes up to a decent standard is £2.4 billion, whilst at the same time vast amounts of council tenants rents (in some authorities half of the total rent) are used to pay off debt.

LTF believes that to ensure all our homes are at a decent standard by 2010 and also that to achieve sufficient dwellings to accommodate the needs of affordable housing in London, government must invest positively in council housing. This should involve local authorities being able to build new housing as well as bringing empty homes in both the public and private sector into use as council dwellings. ODPM statistics on empty dwellings showed a total of 104,800 in London in 2001. These should be available to those in housing need.

Positive investment in council homes would in the long-term be beneficial to issues high on the government agenda - social exclusion, our health and our children's educational achievements - issues that are exacerbated by existing hidden overcrowding and homelessness. It would give tenants a genuine choice, as the majority of tenants want, to have decent homes and to remain as council tenants.

Specifically we propose that -

• That the Government create 'a clean slate'. Tenants should stop being penalised for past problems and mistakes of policy makers. LTF asks that the Government takes over existing council housing debt and meets payments from a central fund. This would mean an injection of 'new' money to get housing up to scratch. In reality this money would not be new but would be no more than the sums lost to council tenants during the years of 'Daylight Robbery'.
• That the roles of local authorities as housing providers and housing benefit administrators be entirely separate. LTF asks that housing benefit be paid by the DWP from central government funds. Payments should be made into councils' HRA in exactly the same way as direct housing benefit payments to a private landlord.
• That all rental and capital receipts income be retained and re-invested in council housing. Individual councils should retain all their rental and capital receipts income themselves. Once hanging debt is placed outside the equation, there is no need for complex financial arrangements to try to level the field between indebted and debt-fee authorities. Housing accounting should be as simple and as transparent as possible. To achieve this, councils' rental income, including housing benefit payments should be credited to a Housing Revenue Account. Funds would be spent on managing, maintaining and repairing existing stock. All capital receipts would then be credited to a Capital Account from which funds could be spent on new as well as existing stock. For London boroughs, which receive £600 m a year in capital receipts, an extra £450 m would immediately be released for investment in council homes.
• That councils be free to borrow prudentially against their housing income. Councils should be able to use their rental and capital income to secure borrowing to build, to renovate and maintain stock, and for new build in the case of capital income. Borrowing should be within a prudential framework and in accordance with a cogent business plan agreed with tenants.
• That government target extra funding for the most needy councils to catch up on their investment backlog. LTF asks that government make available additional grant funding to Capital Accounts of authorities with particular needs for either new provision or for urgent repairs.
• Housing investment decisions should be made locally by councils and their tenants. Tenants must be involved in a consultative and participatory fashion at all levels of decision making in relation to housing investment to ensure that communities are maintained without ghettoising council housing. This should also mean accountable tenant representatives having voting powers along side councillors in whatever forum decisions are made.
• Any changes in housing management should be the outcome of decisions by tenants about what structures perform best, prompted neither by financial need or existence of preferential funding arrangements. Tenants in some areas may choose to look at different ways of managing their housing, for example, Arms Length Management. Tenants should make such decisions in a fair ballot. Whatever structure tenants choose, tenants must be treated with equality. Thus funding arrangements must be the same.

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