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More innovation, more ambition? Matthew Warburton - 21/11/2013

stock_investment_300This time last year councils with housing were surveyed on their investment plans for housing over the next five years. ARCH, working with the Councils with ALMOs Group, the National Federation of ALMOs, the LGA and HouseMark, wanted to collect evidence to demonstrate how the 167 councils which still own housing - managed directly or through ALMOs - were taking advantage of the new freedom provided by self-financing to make plans to renovate their existing stock, build new homes and come up with innovative ways of meeting intractable housing problems.

The results were striking. Published as 'Innovation and Ambition: the impact of self-financing on council housing' the survey showed that councils were planning to invest £15 billion over the next five years in their existing stock - an average of £9000 per home.

Three-quarters of councils were planning to build new homes - in many cases for the first time in twenty years - a total of 20-25,000 new homes over five years. And there was evidence to show that councils could do much more if current arbitrary restrictions on housing borrowing were lifted.

One year on, what has happened to councils' plans? The last survey went out barely six months after the start of self-financing. Although it showed clear evidence of plans for major investment, it was also clear that many councils were still firming up their detailed proposals, particularly for new homes, and were reluctant to commit to an estimate of the number of dwellings that would be built within a five year period.

A year on, it is likely that most, if not all, councils will have firmer, perhaps more ambitious, plans - 25,000 could easily underestimate the number of new homes now planned.

On the other hand, there have been significant developments over the last year that might motivate councils to rein back investment. Our recent survey of council and ALMO rent arrears showed a sharp rise in rent arrears over the first quarter of 2013/14, primarily because of a big increase in arrears among tenants affected by the spare room penalty.

Councils will be factoring the continuing impact of this and other welfare reforms into their income estimates. Last year's survey showed that councils had already begun to increase provision in the HRA for bad debts; many may now have further increased those provisions.

Councils have also needed to take account of the Government's decision to change the guideline for rent increases from RPI plus ½% to CPI plus 1% from 2015. Many must also cost the impact of the potential withdrawal of provision for rent convergence from 2015 on.

For all these reasons, it seems likely that council plans have changed since last year, creating a strong case for re-surveying councils to get an updated picture. ARCH has worked with the LGA and the Councils with ALMOs Group to prepare a much shorter survey - there is no point repeating questions where not much is likely to have changed since last year - which the LGA Research team sent out to all councils with housing earlier this week.

We have asked for responses by 25 November in order to publish a quick analysis of the results ahead of the Chancellor's Autumn Statement on 4 December, and also to allow the results to feed into responses by ARCH and the LGA to the consultation on rents policy, which ends on Christmas Eve.

I would urge all readers - especially in ARCH member councils - to make sure their council responds to the survey. The more councils respond, the more reliable are the results and the more credible they are in making our case to Government. Any queries about the survey can be directed to me (matthew.warburton@arch-housing.org.uk) or Hilary Tanner at the LGA (Hilary.Tanner@local.gov.uk).

 

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