Russell Holland’s extraordinary outburst reported in the Advertiser ( £400k for no houses ‘money down the drain’) shows his prejudice against council housing and his seeming lack of understanding of council housing finance. He complained that the Labour group wants to build thousands of council houses which will “cost the council and the taxpayer money.”
The Tory group appears content that the number of council homes at the disposal of the council is lower now than in 2011. They support the continuation of Right to Buy which is in large part responsible for the chronic shortage of council housing. Yet they are using tenants’ rent, as well as RTB receipts, to buy back ex-council homes to cut the amount of people they have to put into the more expensive private rented sector (PRS). Of course, they have to pay a lot more to buy them than the original tenant paid for their council homes.
How exactly building council housing will cost the council money is a mystery. The ‘ring fence’ of the housing revenue account makes it illegal to use council tax for council housing. What few are being built are paid for by use of Right to Buy receipts, housing revenue account resources and borrowing. The cost of servicing housing revenue account borrowing is paid for by council tenants alone.
The ironic thing about Russell’s outburst against council housing is that other Tories who have some grasp of the causes of the housing crisis are calling for a large scale council house building programme. None other than the leader of the Tories in the Local Government Association has done so. Tory Lord Gary Porter said that the last time 300,000 homes were built in England more than 40% of them were built by councils. “That’s what we need to return to,” he said. Obviously Swindon’s Tories don’t agree.
Without a large scale council house building programme house building will be dominated by speculative builders whose only interest, like Persimmon, is driving up their exorbitant profits. We are told of the apparent cheapness of housing in Swindon. They may be cheaper than in Reading or Oxford but the key issue is are they affordable for local people? As the Centre for Cities report highlights, the cost of an average house is more than 8 times the average wage in Swindon. We are, they say, a “low wage town”. Hence a council house building programme is all the more critical since house prices are way beyond the means of many people.
Central government grant would be necessary to fund a large scale building programme but it would cut the housing benefit bill by enabling people to leave the expensive PRS. It would also be likely to lead to a fall in house prices and private rents because the market would be less of a sellers’ market. Less people would be forced to try for a mortgage or to rent in the PRS. Of course, the main benefit of council housing is that it provides secure and affordable housing for people who would otherwise have to live in the private rented sector, where conditions are the worst; nearly one in three homes being ‘non-decent’.