Fear the 1% cut to my council housing rent will lead to poorer service
The government’s cut of social housing rent by 1% a year for four years will come as a welcome change to council tenants used to above-inflation increases. However, what we gain in lower rent we will lose in a reduced service. The consequence will be a capital budget cut. This could mean scaling back on maintenance, and renewal of key components such as windows, kitchens and bathrooms.
While I’m not advocating a return to higher rents, there’s another solution: write off some of the historic debt councils are required to pay back to government.
When a new self-financing system was introduced in 2012, the so-called national housing debt – clocked up from social housing builds across the country – was redistributed between councils. This resulted in 136 councils being given extra debt totalling £13bn; each local authority’s share was dependent on their predicted income and [i]Northampton’s was £193m. Tenants’ rents are used to pay off this debt and the interest charges.
But this debt was the product of creative accounting by the Treasury rather than actual borrowing. The debt for each council was calculated, in large part, on the basis of estimated rent income over the 30-year business plan.
Norman Adams – December 2015
[i] The majority (£193m) of external borrowing relates to the HRA, arising from the HRA self-financing reforms in March 2012, whereby the Council was required by central government to take on the debt associated with its housing stock. http://www.northamptonboroughcouncil.com/councillors/documents/s48479/151209%20Treasury%20Management%20Mid%20Year%202015-16%20-%20Cabinet%20report.pdf