Council housing is central to the new government’s growth ambitions

This situation has been created not by councils or their tenants, but by a succession of previous national policy changes that have torn up the council housing self-financing deal that was agreed in 2012.

Simply put, the deal was that councils would fund the full cost of both managing and maintaining their homes and service £13bn of historic national housing debt. The quid pro quo was a promise that councils would have both rising rental incomes and predictable housing management and maintenance costs. Neither has turned out to be true.

“Previous governments have repeatedly intervened in ways that have reduced council landlords’ incomes and raised our costs”

Instead, previous governments have repeatedly intervened in ways that have reduced council landlords’ incomes and raised our costs. Many of these interventions have been for good and often essential reasons – protecting tenants on low wages from high inflation and driving the quality and safety of homes up. However put together, they have placed councils in the impossible situation of having bigger bills to pay than we have money coming in to pay them. It simply does not add up.

The result is a national £2.2bn black hole in local authorities’ housing budgets predicted by 2028. This deficit, combined with the strict ringfencing rules that govern council housing finances, leave councils with impossible choices.

Increasingly, the only way to balance the books will be to sell off some homes to fund the work needed to maintain the rest. However, our communities urgently need more, not less, council homes.

The situation is stark. Without urgent national action, we will face a future of even more households living in unsecure and unaffordable housing.

Our report outlines a route out of this crisis. Setting out five solutions to put council housing back on firm foundations. We have developed it together as England’s largest council housing landlords. To provide a roadmap for the new government. A 10-year plan to secure council housing for the next generation.

We will publish our full plan in September, but given the urgency of these challenges, we have now published our interim report so we can work with the new government from today to realise our shared ambitions together.  

“Confidence in the sector must be restored through immediate commitments to a fair financial model and long-term income certainty”

The starting point must be an end to years of inconsistency through two urgent measures. First, confidence in the sector must be restored through immediate commitments to a fair financial model and long-term income certainty. Second, the government must stabilise our council housing finances in the short-term through an emergency capital funding injection.

Then, our five solutions present a pathway for local authorities to work with central government to secure the future of our country’s council housing over the next decade:

• Establish a new fair and sustainable financial deal: councils have to keep their income and expenditure for their council homes in a ringfenced Housing Revenue Account (HRA), but the current system is broken. The government must introduce a long-term and certain rent-settlement, an adjustment of HRA debts and change national accounting rules to remove the inbuilt bias against investment in council homes.
• Reform unsustainable Right to Buy policies: reducing discount levels and eligibility, protecting newly built council homes from sale and ensuring 100% of any Right to Buy receipts that are received are invested in replacement council homes.
• Remove red tape on the Affordable Homes Programme and other funds: including extending the strategic partnership model to councils. Funding should be streamlined, allocated simply, reflect recent cost inflation, and allowed to be used with full flexibility to increase the number of council homes.
• Announce a Green & Decent Homes Programme: a long-term, capital-funded programme to bring all council housing up to the new standard of safety, decency and energy efficiency by 2030 – and a roadmap for achieving net zero by 2050. Recognising that rents alone cannot fund the scale of investment needed to deliver the upgrade of housing quality we should rightly require.
• Fund the completion of new council homes: limit the short-term loss of housing supply and construction sector capacity caused by the unfolding market downturn, by funding councils to rescue and complete stalled development projects.

Our interim report sets out these recommendations in full detail, and we will be publishing our full report in September. This will outline the path to deliver each recommendation, including examples of the innovative work that councils across the country are already doing to deliver more and better council homes.

Our plan will not only deliver the security of affordable homes but will boost economic growth across the country, create thousands of jobs and be essential for achieving our national net zero commitments.

The new government has promised a long-term plan to rebuild our country. Nowhere is that needed more than on housing.

As the 20 largest council landlords in the country, we are united in our drive to see in a new golden age of council housing. We look forward to working with the new government to deliver it.