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ARCH and NFA to meet Lord Best 21/01/2016

Councillor Paul Ellis, ARCH Chair, John Bibby, ARCH CEO, and Eamon McGoldrick, Managing Director at the NFA, will be meeting Lord Best to discuss the implications of the Housing and Planning Bill for stock retained councils and ALMOs.


Following the Third Reading of the Bill in the House of Commons and the passage of the Bill to the House of Lords, the ARCH Executive Board met on 18 January to discuss how the views of stock retained councils are heard in the debate on the Bill in the Lords.


As part of the strategy agreed by the ARCH Board, the ARCH Chair and CEO will be joining the NFA at a meeting with Lord Best later this month to discuss the implications of the provisions of Part 4 of the Bill.


Lord Best, previously Chief Executive of the Joseph Roundtree Foundation and current President of the Local Government Association, is well respected in the housing sector and recently spoke in a House of Lords debate on the impact of the four year reduction in social housing rents proposed in the Welfare Reform and Work Bill.


His views reflect the ARCH view of the impact of the rent reduction on the building of affordable rented accommodation when he said:


"The Government, in the DWP's impact assessment for this measure, justify the rent cuts on the grounds that housing association rents have been increasing at a much greater rate than those of private landlords, but it has been government policy that associations should raise their rents toward market rent so that social housing grants can be cut. The higher rents have been necessary to enable associations to borrow more to compensate for grants being reduced from some 90% of the costs of a new home down to around 15%. Lower grants and higher rents have meant more people needing housing benefit. Although previous Conservative Housing Ministers have said, "Let housing benefit take the strain", now Ministers responsible for welfare want to dramatically reduce housing benefit expenditure and the rent cuts are intended to save nearly £2 billion per annum by 2021 and every year thereafter. These savings will have significant negative consequences for the Government's housing policy.


The housing associations, whose incomeswill have fallen by £1.6 billion per annum by 2020-21, and annually thereafter, can try to make up the difference in three ways. First, they can cut their development programmes, which would damage the Government's hopes for the building of substantially more homes, as explained by my noble friend Lord Kerslake. Secondly, they can cut their revenue costs; a number have already announced that their added-value programmes will be axed, such as tackling anti-social behaviour, supporting loss-making specialist housing, helping people into work, reducing tenants' energy costs and so on. Removing these local services means extra costs for society elsewhere. Thirdly, associations can reduce the surpluses that some have generated in recent years, but these surpluses have been ploughed back into housing and services, as well as being important in satisfying lenders, from whom the housing associations have been borrowing some £3.5 billion a year on excellent terms. With increased risk, raising loans will be more difficult and more expensive.


As far as local authorities are concerned, those that have retained their council housing are currently charging rents rather lower than those for housing association properties, so cuts in their rents are likely to be particularly difficult. For council landlords, any hope of developing new homes is likely to be the first casualty of their rent cuts, so once again the rent cuts impact on supply.


Taken across the piece, no doubt the social housing sector will survive and the opportunity for a waiver for housing associations that might otherwise get into serious financial difficulty is helpful. But the overall result will be reduced housebuilding programmes and a reduction in the preventive local services that have been doing so much for local communities…" (Hansard: 12 Jan 2016: Column 211).

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