This was a letter published in the Guardian.
The suggestion that lifting the borrowing cap will enable councils to build council housing on a grand scale ignores the funding crisis faced by local authority Housing Revenue Accounts. Council HRAs still have £26 billion of ‘debt’ which they have to service. When 136 authorities were given an extra £13 billion debt in 2012 when ‘self-financing’ was introduced, it was based on estimates of income over 30 years which bear no comparison with the rent councils are actually collecting.
They are taking in much less rent than was built into the ‘debt settlement’. Over the course of their 30 year business plans individual councils are taking in hundreds of millions of pounds less as a result of government policies such as the four year rent cut. This shortage of funds has led them to cut back on vital work on existing stock. Failing to renew key housing components before they wear out can only lead to a deterioration in the conditions of the stock and hence tenants’ living conditions.
Fundamentally, council HRAs have insufficient funds to maintain and renew their existing stock. The ‘debt’ was manipulated by governments of all stripes to fleece tenants who have in fact paid more in rent than the cost of historic building programmes.
There can be no large scale council building programme without central government grant.
Martin Wicks
Secretary Swindon Tenants Campaign Group
Martin Wicks 