Swindon is carrying out its second ‘options appraisals’. It employed Tribal to report on the finances over the next 30 years. According to this report the projected allowance for management and maintenance, based on the current formula, will be £598 million over the 30 year period; actual costs projected over that period are estimated to be £791 million, or £193 million less than will be needed.
In order to maintain the Decent Home standard over the 30 year period Tribal estimated that Swindon needs £438 million Major Repairs Allowance. But the amount the government estimates we will need is only £254 million – an £184 million difference.
Add the two together and you get an apparent £377 million shortfall over 30 years. That sounds like a lot of money but it is only just over £12 million a year. When you take into account the difference between the notional rent which the government determines and the actual rent the Council raises we had a ‘negative housing subsidy’ of £16,576,000 in 2008/9. They give us £16 million a year less for rent than we actually take in! When you add the Major Repairs Allowance to the equation, we end up having to hand over £9 million a year to the government. This is expected to rise to £16 million.
According to Swindon Borough Council for every £1 of rent a tenant pays to them only 72p of services can be provided, since 28p per pound has to be handed over to the government. If we were able to keep all the rent money we raise, the Council would have £16 million extra each year. Conceivably the government might, if that were the case, say that we wouldn’t get any MRA money. But at the very least we would have £9 million a year for 30 years – the figure, of course, would increase over that period.
It’s our opinion that Councils should be able to keep all their rental income, not just because it would help us out, but because we do not believe that the rents of tenants in one area should be subsidising the rents of tenants in other areas. We support a national HRA based on actual need. Any additional moneys required to address problems in this or that area should come from general taxation.
It is surely politically untenable – and certainly unjust – to maintain a system which leads to a situation where £200 million of rent money paid by tenants is left sitting in the Treasury (estimated to rise to £894 million), and eventually every local authority will end up with ‘negative subsidy’.
It remains to be seen what the government review of Housing gives us. However, even if we do not get what we want, we will still be opposing stock transfer. The letter which the Council sent out to tenants explaining the ‘options appraisal’ said that the ‘only option’ in order to maintain and improve the standard of our stock is to transfer to a Housing Association.
The benefit of such a move is that a HA can keep all its rent, whereas we face a situation where the government gives us this ‘negative subsidy’. But there is no immediate need to rush to transfer (even if you accepted their rationale, which we don’t). Swindon is able to contribute from revenue to capital expenditure until 2016/17, and negative balances on the revenue account only occur in 2023/24 according to Tribal’s figures. The Council also has £36 million in ‘Right to Buy’ receipts left.
In the past period there has been a great deal of work done by the Council. For instance, every tenant who has not refused it has had central heating installed. A lot of work may have to be done towards the end of the 30 year period as kitchens and windows might have to be renewed. However, a 30 year projection of our finances needs to be taken with a pinch of salt. There will after all be a minimum of 6 governments in office over such a timescale. Moreover, in the current economic conditions a 30 day projection is a risky business.
We want to maintain our ‘secure tenancy’ and the possibility at least of unseating our landlord, something we cannot do with a Housing Association, which despite its ‘not for profit’ label is a business organised on commercial lines.
We do not accept blackmail of tenants by means of starving the Council of the funds that are needed. The housing crisis in Swindon has been reflected by the more than doubling of the waiting list since 1997. We need more Council housing not less. To propose a transfer to a Housing Association at a time when the ‘credit crunch’ is impacting on them heavily makes even less sense.
We believe that our Council and all others should be given the right and the means of building Council housing once again. And if the housing crisis is to be seriously addressed this new build needs to be on a large scale.
We would like to also raise the question of so-called ‘rent equalisation’. In reality the government’s policy has been to drive up Council rents to the level of Housing Associations in order to undermine resistance to transfer. Their spurious argument that this was to ‘simplify’ rents is risible. The impact in Swindon means that we can count on above inflation increases for at least the next decade. For 2009/10 the increase is 6.2%. In the period from 2008/9 to 2019/20 we face an increase in average rents of 60%. This is unacceptable. The government should abandon ‘equalisation’ just as it should abandon what Austin Mitchell has described as its “war against tenants”.
One final thing. The arrangements in relation to the so-called ‘independent tenants’ advisers’ are flawed. It cannot be right that these companies who are jockeying for contracts have a financial interest in ballots going ahead. In our own case our ITA is telling tenants that their rights are safe whatever happens. They are working to downplay the consequences of the change in tenure which will result from transfer, as if there is no difference between ‘secure’ and ‘assured’ tenure. Such an assessment of the situation (presented as giving tenants ‘facts’) is inevitably coloured by the potential that they will earn more money if a Council proceeds with a ballot, giving them the opportunity to be involved in the negotiation of the contract between the tenants and Housing Association.
So long as ‘options appraisals’ continue then an ITA which is given a contract in the first phase of the process should be excluded from the phase when a council has decided to go to a ballot. If they are not excluded then they have a pecuniary interest in a ballot going ahead.
Having said that, we believe that the ‘options appraisal’ process should be abandoned because it is a fraudulent process designed to pressure tenants into transfer.
Martin Wicks Secretary, Swindon TUC (and tenant) February 24th 2009