Two-thirds of surveyed councils fear housing budgets will collapse by next general election

Already 46 councils have cancelled, paused or delayed housebuilding projects, and more than a third have cut back on repairs and maintenance of their council homes.

At the same time, nearly half of the local authorities told Southwark Council that they have been forced to use their emergency reserves to cover day-to-day spending. More than a third found they would empty these reserves by the end of this parliament.

A total of 54 councils said they expected to cancel, pause or delay new housing developments to balance their budgets in the next five years, while 43 said they expected to make significant reductions to maintenance and repair programmes. 

Meanwhile, 21 councils said they would have to sell off existing homes, and 16 will need to borrow to meet regular revenue spending in the coming years.

Southwark Council said that “capped incomes, soaring costs and frequent policy changes since 2010” had forced councils’ HRA budgets into a crisis.

Despite measures from the Labour government, such as reducing Right to Buy discounts, the council warned that “the situation is set to worsen”.

It added that alongside the survey, councils reported being in discussions with the government about exceptional financial support and “fearing soon being unable to meet even their statutory obligations”.

Kieron Williams, leader of Southwark Council, said: “The government’s ambition to build 1.5 million new homes is critical to ending the housing crisis, and council housing must play a central role in this effort.

“However without significant further action, councils will be unable to build at scale and unable to bring existing homes up to green and decent standards fit for the future.”

This new survey followed a report signed by 109 English councils in July 2024 which set out recommendations to “save council housing”, including a new self-financing deal for councils, a long-term retrofit programme and an expanded Affordable Homes Programme.

Mr Williams added: “Like many councils, we have had to pause our ambitious homebuilding programme on a number of sites and our Housing Revenue Account is now under intense strain.

“The upcoming government housing strategy presents a major opportunity to give council landlords the headroom and the confidence to invest in the homes our country needs – addressing the scourge of homelessness and unlocking growth, jobs and security across the country.”

A Ministry of Housing, Communities and Local Government spokesperson said: “This government will deliver 1.5 million homes as part of our Plan for Change including the biggest social housing boost in a generation, and we will work with councils to achieve this."

This plan involves injected £69bn funding into council budgets across England.

The spokesperson added: “We know that local government has suffered from years of short-term decisions, which is why we have already set out important steps to help them deliver the homes we need.

“That includes overdue reforms to the Right to Buy scheme and an extra £500 million for the Affordable Homes Programme, and we will soon set out further measures.”