The CIH and CIPFA have published a report: 'Investing in council housing: the impact on HRA
business plans'. It examples the 2012 self-financing settlement
that put in place a robust long-term plan for council house
It argues that successive policy changes have cut rental income
so that today, just 45,000 new homes are expected, no more than
were planned before the settlement was made.
ARCH has provided information and evidence to the report authors
and is referenced at various points in the report.
In the report they argue that the 2012 self-financing
- had the potential to build over 500,000 new council homes over
thirty years but this has been undermined by successive government
- encouraged councils to take on £13bn extra debt to finance
investment in existing housing stock and new building against the
promise of future rental income
- however, successive policy changes have cut rental income so
that today, just 45,000 new homes are expected, no more than were
planned before the settlement was made.
Rob Whiteman, CIPFA Chief Executive, said:
"The situation is desperate. Families across the country
will not get the homes they need because the Government keeps on
tinkering with housing policy without properly thinking it through.
At best, successive governments have turned a blind eye to the
consequences of inconsistent housing policy, at worst they have
deliberately set out to undermine local authorities' best laid
"By reducing rents to soften the blow of welfare cuts, the
Government has choked the revenue streams that were meant to fund
new house building. At the same time, the Right to Buy policy has
led to assets being sold off, further reducing the ability to
councils to finance new homes.
"We need urgent action to reset the self-financing
settlement, with assurances that its foundations won't be pulled
away the moment government attention turns to something
Terrie Alafat, chief executive of the Chartered
Institute of Housing, said:
"If the government is to achieve its aim of building one
million homes over the next five years then it must ensure that all
parts of the housing industry are building new homes, and not rely
solely on the private sector. In 2012, with the introduction of the
self-financing deal, local authorities looked to have excellent
opportunities to contribute to the numbers of homes we
"But just four years later, significant policy change has
hampered this ability, notably the reduction to the rents that
local authorities can charge. The report we're launching today,
shows that the effect on the ability of local authorities to invest
is dramatic, at the current rate many will struggle to maintain
their current rates of house building, let alone raise it. CIH and
CIPFA are urging government to look again at the policy decisions
which have undermined the 2012 settlement, and consider offering
councils a new deal over their rents and borrowing, in return for a
commitment to increase the numbers of homes they build."
The report makes a series of recommendations to the government
and to councils to get council house building back on track.
The report recommends that the government:
- review policy impacts on councils finances and act to restore
their investment potential;
- moderate the remaining three years of planned HRA rent
- review the next-stages of welfare, particularly measures that
would mitigate the impact of universal credit, such as direct
payments to landlords;
- compensate councils on high-value asset sales by allowing them
to invest receipts to generate future income streams; and
- offer stock-holding councils a refreshed deal with flexible
The report also recommends that councils:
- urgently review their HRA business plans; and
- consider (through the LGA, ARCH and the NFA) what commitments
could be made to the Government to improve housing supply in return
for commitments that would provide more stable HRA Business
Read the full report.
ARCH Chief Executive, John Bibby,
"I welcome this report and its recommendations. The previous
Coalition Government put the framework in place to enable councils
to invest in much needed social housing through the self-financing
regime introduced in 2012. The new Prime Minister needs to reaffirm
the principles of self-financing to enable councils to invest in
new council housing for the benefit of lower paid workers and the
economy as a whole.
With the uncertainty around Britain's exit from the EU, now
is the time for the government to invest in Britain's
infrastructure including new municipal housing. If Britain is to
reassert its independence in a global economy. it is essential that
working people have access to decent affordable housing and a
renaissance in council house building will ensure the provision of
an appropriate mix of housing of all tenures which is essential in
attracting employers and employees to an area and creating a
flexible and mobile workforce."
ARCH urges its members to share a copy of the report
with their local MP(s).