A new way of looking at Council Housing

I wrote this last year, and although it does not conflict with and Labour policy it caused some upset amongst the top politicians in Hounslow and probably started me down the path which resulted in me being expelled from the party.

It is a little out of date in detail, but the principle is entirely valid. I would add if I was recreating it now, I would add a view that the level of rent applied to council homes is below the level that makes it viable, because it is plainly not enough to cover the capital cost, nor to provide adequate maintenance.

My comments about the council finances are also out of date. We have got into 25/6 with a big mess, and whilst we will not go bankrupt soon, we are facing 'hard choices'. The Labour leadership seems to me to be completely dominated by the officers so we are doing things like cutting subsidies in Council tax for vulnerable people (though admittedly it used to be unusually generous).

Why the website has turned the last few paragraphs an entirely different colour and look is matter I don't understand. Nor do I know how to rectify it!

I want to set out an argument which will be quite short, but which I suspect is controversial. But I think it shows a sustainable way to contribute to what must be one of the most pressing challenges – the poor financial state of so many local authorities.

In LB of Hounslow, we are not in immediate danger of insolvency because the borough has  decent reserves which have been built up by many years of careful financial management, but our budget is of course very stretched and there are many services that are not what we would like, and unlikely to improve any time soon unless we hear an unlikely show of generosity from the Treasury.

My suggestion concerns council rents.

The average rent of a council 2BR place in Hounslow is £126.99 per week ie £6603.48 per annum

There is an official definition which sets the amount the Department for Work and Pensions will allow to be paid to support claimants. The is called the Local Housing Allowance (LHA), actually set by the Valuation Office Agency, part of the HMRC. A private rent at LHA level in central Hounslow is £229.18 per week ie £11917.40 per annum

A private rent at market rent in Hounslow starts at about £1700 per month ie £20400.00 pa

That is an enormous difference.

The myth is that council houses are for poor people, but that really isn’t true. Many are on low incomes, but by no means all of them, and many people on low incomes are renting from private landlords.Council homes attract discounts if tenants decide to buy them. A 2BR flat here is worth perhaps £300K and if you’ve been there 10 years you are entitled to a discount of 60% - £180K, but that will be limited to £136,400. That discount would be well over twice the whole rent that would have been paid over 10 years.

If we moved council rents to LHA level - a discount from market rent of about 40% so still a bargain - for 4M housing properties, that would generate over £20 Bn pa. Charging market rent would generate £55 Bn pa. Of course, the numbers would not be quite like that because different council and market rates apply in other places, and probably significantly less in some areas, but the principle is the same.

I would not advocate we would do this immediately: there should be a phased implementation to reduce shocks. Some, perhaps many, would need income top up but at a time of our parlous state of public finances, why should we provide an enormous subsidy to council rents and deny any subsidy for those who do not win the council accommodation lottery and in some cases really don’t need that subsidy?

Many others do, whether their aspiration is to attain a secure rental, or to finance the start of a home purchase.

Practically every week now I meet someone who lives in a desperate hovel or is sofa surfing. We have practically no response to this because there is very little accommodation locally and very little that exists is attainable by someone with meagre income. Quite often people are being evicted for no fault of their own (which is another concern).