Council housing's future remains uncertain - according to a recent report
The Local Government Association (LGA) has published a new report, highlighting the financial challenges facing England's council housing system. The report, conducted in partnership with Savills, the National Federation of ALMOs (NFA), and the Association of Retained Council Housing, proposes addressing these challenges primarily by reforming the council funding system.
The proposed solutions include reforming funding allocation mechanisms to account fully for housing deprivation and costs. This would ensure councils receive funding that aligns with actual local needs and pressures, enabling them to maintain vital services and work towards financial stability.
One key solution is ensuring that government funding formulas, such as those used in the Fair Funding Review, adequately include housing poverty data, especially for high-cost areas like London. This would help councils in these areas, where housing costs significantly impact poverty and service demand.
The LGA is also urging the government to restore lost revenue due to the rent cap, estimated to be worth more than £600million, and to introduce a long-term rent settlement. The call for action precedes the Autumn Budget, due next week, where it is expected that the council housing crisis will be addressed, including the restoration of lost revenue and the introduction of a long-term rent settlement.
In addition, the report proposes increasing investment in affordable and social housing. The government’s 10-year £39 billion plan, which allocates about 60% to socially rented homes, aims to meet the scale of housing need, though benefits are long-term.
Supporting councils by reconsidering the allocation of financial burdens is another proposed solution. Proposals urge the government to assume borrowing costs related to specific service deficits, such as the Dedicated Schools Grant for SEND services, which would help councils avoid cuts to frontline services and improve financial sustainability.
The current state of England’s council housing sector is likened to a "dark jungle full of diamonds." The LGA's housing spokesperson, Cllr Adam Hug, has stated that council housing is in a precarious position for over a decade and urgent action is needed. The increase in the amount of capital investment needed for existing council housing is a significant issue, as it involves upgrading properties to meet the Decent Homes Standard and net zero carbon requirements.
The report also addresses the impact of rent cuts from 2016-2020 and the rent cap introduced in 2023. Day-to-day repairs costs are spiraling above the rate of CPI inflation, and pressures arising from new qualifications for housing staff are also a concern.
The NFA has emphasized that a strong council housing sector is necessary to address the national housing crisis. Mike Ainsley, chair of the NFA, has echoed the need for a strong financial settlement to restore lost rent revenue and make Housing Revenue Accounts viable.
The Savills data presented in the LGA report paints a dire picture of the state of the council housing sector after years of decline. Local authorities across England don't have enough money to maintain council houses, and authorities will face the choice between HRAs going into deficit or failure to meet statutory repair obligations, including Awaab's Law.
The Autumn Budget is expected to address these issues, providing a much-needed lifeline for England's council housing system.
- The Local Government Association (LGA) urges the government to consider reforming funding allocation mechanisms to account for housing deprivation and costs, ensuring councils receive funding aligned with local needs and pressures, thus enabling them to maintain vital services and work towards financial stability.
- The LGA also calls for the government to restore lost revenue due to the rent cap and introduce a long-term rent settlement, with the Autumn Budget, due next week, expected to address these matters.
- To improve financial sustainability, the LGA proposes increasing investment in affordable and social housing, as the government's 10-year £39 billion plan aims to meet the scale of housing need, although benefits are long-term.
