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Welfare Reform & Work Bill: ARCH representations on 1% rent reductions 02/10/2015

We've made formal representations to the Public Bills Committee arguing that clauses 19 to 22 (sections imposing a year on year one percent rent reduction) should be deleted.    


Our submission calls for the deletion of clauses 19 to 22 of the Bill which would impose a one percent reduction in social housing rents for four years starting 2016/17 but if this fails then as a minimum the government should make a new ten year commitment on Social Housing Rents to give councils and housing associations a firm basis on which to plan for future investment in housing.


In summary, we argue that: 

  • It is disappointing that the government is proposing to abandon the principles of self-financing for council housing agreed, with the support of all political parties, by the last government a little over three years ago as a key plank of its localism agenda, together with the ten year commitment on social rents it made only two years ago; 


  • As a minimum, we would urge the government to make a new ten year commitment on social rents to give councils and housing associations a firm basis on which to plan for the future; this commitment should include a return to rent increases at CPI + 1% after 2020;   

  • A one percent reduction in council rents for four years would mean that by 2020/21 councils will suffer an income loss of £2.4 billion, and a further £30 billion over the remainder of the 30 year business plan period; 

  • This loss cannot be accommodated through efficiency savings alone; we anticipate that 20,000 new homes that councils are currently planning would not be built; 

  • At a time when the government is committed to increasing the volume of new housebuilding, it is counterproductive to introduce measures that will have the effect of preventing councils and housing associations from making a real contribution to this ambition; loss of new council housing supply will mean greater numbers of tenants reliant on securing accommodation at higher rents in the private rented sector reducing disposable income for those working people in lower paid employment and increasing the cost of housing benefits payable for those entitled to support under the government's wider welfare reforms; 

  • The proposals in clause 19 to prescribe the rents payable by individual social sector tenants undermine the coherence of national and local rent policy by locking in existing rent anomalies for a further four years.   

  • The proposal to cut the rent paid by council tenants earning any amount less than £30,000 a year (£40,000 in London) but to increase the rent of any tenant with a household income above these thresholds to a market or near market rent will create substantial work disincentives for tenants near these limits.  We want to work with the government to develop a better scheme for linking rents to tenants' incomes that avoids these problems and which enables councils to retain and invest the additional rent collected from higher-income tenants. 


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