In his recent Budget George Osborne announced Government proposals for a 1% reduction in council house rents each year for the next four years. This might appear attractive at first sight to East Devon District Council tenants, but will mean a £7 million cut in East Devon District Council income by 2019/20.
Personally, I believe that this proposal is illconceived and, coupled with the promotion of tenants 'right to buy' reported elsewhere, risks making the economics of entending delivery of additional local authority housing untenable. This makes an overall reduction in council housing stock a real possibility at a time when we are striving to increase housing availability.
The council is now seeking urgent meetings with its MPs Hugo Swire and Neil Parish to seek their support in pressing for the compulsory 1% rent cut announced in the Budget to be scrapped.
A major challenge facing East Devon District Council is the provision of more truly affordable housing for local people. The Council is already landlord of 4,245 council homes, with its social rents, at less than £82 a week, already well below equivalent affordable rents charged by most Registered Housing Providers.
I believe that direct Council housing provision is probably the best possible option to deliver 'truly' affordable housing for those local people in need. This can only happen with proper investment planning for new development, which cannot be achieved without confidence in central government actions.
My colleague Cllr Jill Elson, East Devon District Council’s Portfolio Holder for Sustainable Homes and Communities confirmed, at the Full Council meeting last evening (29th July), that the £7 million cut in income over the next four years will hit the council’s plans to invest in maintaining its current properties and affect any plans to buy or build new council homes.
“While a 1% reduction may seem good news for existing tenants, we may not be able to carry out the kind of maintenance on properties as we do now. We have invested £9 million each year on the repair and improvement of tenant’s homes over the last three years. It would also affect our future tenants too, as the £7 million rent income we are at risk of losing, equates to being able to provide 66 new affordable homes assuming £120,000 per home.”
East Devon, along with other local authorities who have housing stock, has a thirty year business plan to ensure that it is able to maintain its properties. The 1% rent cut could mean East Devon’s ring-fenced Housing Revenue Account would reduce by £77.2 million over the next three decades. This loss of income makes the business plan unviable.
The proposal is particularly unwelcome as the government required East Devon District Council to take on £84.5 million of debt in 2012 in return for freedoms and flexibilities to run its council housing free from government interference. The debt was based on the government’s assessment of income and expenditure over thirty years, yet just three years into that arrangement, central government is proposing to fundamentally “move the goalposts”. If it truly believes in the need to provide appropriate levels of suitable housing, this step would appear fundamentally at odds with that objective.
I am adding my full support to Jill in urging the Government to reconsider the policy, which is short sighted and has tough consequences on we as a council and our tenants. We need to secure a more effective balance between the needs of present and future tenants in the longer term.
The council is hoping to meet with MPs in the next few weeks. I hope that our MP's will recognise the folly of this proposal and seek to have it reversed. Not to do so will severely restrict our ability to properly house all our residents.