Council Housing update

Why is Swindon Council rushing to ballot tenants when the government’s Housing Revenue consultation is not even finished?

In July the ruling Conservative group on Swindon Council decided to withdraw its resolution to ballot tenants for transfer of our Housing to a Housing Association, owing to the announcement of a government consultation on Housing Finance. The government intends to end the current Council Housing Subsidy system and has published draft proposals for what it calls a ‘self-financing’ system. The ruling group decided to assess the implications of the draft proposals for the town’s Council housing finances.

Having made their assessment they have decided to reinstate the ballot proposal, though before the consultation has even finished. The deadline for submissions is October 27th. We understand the Council intends to make its own submission to the consultation, so why not wait to see the outcome and the government’s finalised proposals? If there are any significant changes in these then the Council will have to redo their financial calculations in any case.

Housing ‘debt’

Why the rush? The government says that in order to introduce its new system there needs to be a ‘one-off debt settlement’. The national ‘debt’ which is currently managed by the government would be divided up and managed by each local authority. Under the current system, although Swindon has a housing debt of only around £12 million the government determines that we have a ‘notional’ debt of £30 million. The Council, using the criteria of the government for determining what level of debt each Council will have under this settlement, has estimated that Swindon’s debt is likely to be somewhere in the region of £150 – £213 million.

Clearly the dumping of such a level of additional debt on the tenants (who have to pay it through their rent) is completely unacceptable. As we understand it the Council’s submission to the consultation will say that we should not have any additional debt above the ‘notional’ £30 million. The majority of local Councils will be responding in a similar fashion since most of them will also see increased debt under the government’s draft proposals.

What the ruling group in Swindon is doing, however, is proposing to ballot on the basis of financial calculations for a system which is likely never to be introduced. The government has said that the new system can be introduced under existing legislation only if all Councils agree to the formula for determining debt. There is no chance of this since most of them will see significant increases in it. If not, then primary legislation would have to be introduced in Parliament. The government will have to consider the submissions to its consultation and draw up its response and finalised proposals. This cannot happen until January of next year at the earliest. The chance of legislation being pushed through before the election is extremely unlikely to say the least.

What is the Conservative ruling group’s response to this? They say that since legislation will probably be necessary a new system will not come into force for another three years. Given their calculation that in the next five years there is likely to be a shortfall for capital expenditure for Swindon of £19 million we cannot afford to wait. David Renard told members of Swindon Tenants Voice: “The problem is here and now and we have to act now.”

But wait a minute, what if as seems likely a Tory government is elected next May? Will they not come riding to the rescue of the tenants? The Lead member tells us that he has been trying to find out what his Party’s policy is, but alas he has drawn a blank. With the approaching General election they are “keeping their cards close to their chest” (his words). From this he makes the assumption that whatever government is elected we will have to wait three years for a new Housing finance system.

What do they want their party policy to be?

A question springs to mind here. The Swindon Conservative group has been placing demands on this government; for instance, the right to keep all the rent they collect from tenants. This has been conceded. Are they just passively asking what the national policy of their party is? Why are they not telling their own Party leadership what policy they want them to adopt? What are they doing to press their own leadership to act in the interests of our tenants? Of one thing you can be sure; if the Conservative group thought that a newly elected Tory government was going to offer more than the current government to our tenants they would not be rushing ahead with a ballot. They would wait to see the outcome of the consultation and the outcome of the soon to follow General Election.

A better service?

Councillor Renard tells us that a transfer is in the best interests of tenants because a Housing Association will be able to provide a better service for tenants than the Council can. This, of course, is based on a financial projection over 30 years. It is true that the government tells Councils to make these projections, but they are nothing more than very rough estimates over a time-scale which will see at least six governments come and go. There are so many variables in the equation that are impossible to predict.

But even if you accept these projections the question of the best interests of the tenants is not just determined by financial calculations alone.

The disadvantages of transfer

When the Council carried out its consultation on transfer they were selling the idea that there was ‘no alternative’. They said they were merely presenting the facts to tenants yet they did not mention a single disadvantage of transfer. What are these?

  • Council tenants at least have the right to vote their Council out of office if they are unhappy with them. You cannot do this with the Board of a business.

  • Housing Associations are businesses run on commercial lines. They have to borrow money at higher interest rates than a Council can. That is why their rents have been around 20% higher than Council rents.

  • Tenants transferring to an HA will lose their ‘secure’ tenure and have only ‘assured’ tenure. It is easier for HA’s to remove tenants,e.g. ‘ground 8’ which is a ‘mandatory’ ground for eviction. This means a court has to order eviction even if arrears of rent are not the fault of the tenant (e.g. a mistake made by the Benefits Office or their failure to deal with a claim in time).

  • The agreement which is made in a transfer which usually affords some protection in relation to rents, say for five years, does not cover service charges. HA’s are using these more and more as a means of driving up rents.

  • A common feature of transfers, especially when Housing Associations are under increasing financial pressure, is the cutting back of staff that provide the service to tenants (as the wages of the senior officers rise sharply).

  • Although the government has been trying to drive up Council house rents to HA levels (giving the message to tenants that there is no difference between the two tenures) they have had to keep putting the deadline for ‘equalisation’ back. Whilst Councils recently cut this year’s rent increase by half, owing to more money being made available from the government, HA’s have not made this cut. Moreover, their national lobbying body is pressing the government for the right to push up rents faster.

So there are good reasons to maintain our Housing stock with the Council even if it appears there might be more money available for a HA over 30 years.

Transfer won’t address the Housing crisis

Given the shortage of Council housing, waiting lists have risen massively over the past decade. This has happened in Swindon where the latest figure is 8,600 individuals/families. Many people who might put their name on the list do not even bother because they have no chance of getting a Council property.

How does the Council propose to address this problem? It cannot rely on the private sector which is well known for its profiteering. Only yesterday news was released of over a hundred building companies being fined for colluding in what was effectively price fixing in relation to public sector contracts.

The current government has finally conceded the right of Councils to build new Council housing, though on a tiny scale. We are getting all of 13 in Swindon. But to address this crisis we need a large scale Council house building programme. For many people buying a house is a necessary evil which can become an albatross around their necks, making life a constant struggle to get by month by month. Many people would not bother if Council housing was available. Home ownership and easy, irresponsible levels of credit has played a big part in the crash. The Tenant Services Authority has recently announced a survey which shows a decline in the number of tenants in ‘social housing’ who want to own their own home, from over 30% to only 12%.

To ballot or not to ballot?

The ruling group in Swindon wants to ballot tenants but its resolution has a caveat. It will ask the government whether the ‘same conditions’ for transfer which were available will apply now that they have decided to abandon the existing Housing Revenue system. For 12 years the government sought to end Council housing by offering incentives for transfer, such as write-off of housing debt. However, because of the housing crisis and the campaign against transfer waged by tenants, trades unions, and Councils, the government has decided to end these incentives to transfer.

If the government responds to Swindon Council in the negative – that the ‘same conditions’ do not apply – (e.g. there will be no debt write-off) then the the issue will have to come back to the Cabinet. If the Council is told that the same debt level under the new system will apply for maintaining Council stock or transfer then it is unlikely that they will ballot, since they could not even offer a ‘better service’ under a HA (even if on the basis of a dodgy 30 year projection). If they say that Swindon can have the current ‘notional’ debt then the Council will press ahead with a ballot.

If a ballot proceeds we will campaign for a ‘no’ vote and the maintenance of our Council housing. However, even if they decided against a ballot we will still have to campaign for the funding necessary to maintain and improve our housing.

The current government has made some concessions – such as being able to keep all our rent – but they have not gone far enough. The discrimination against tenants should be ended and the love affair with home ownership which has proved so disastrous should be abandoned. The ‘right to buy’ should be ended.

Housing debt should be written off, or at the very least no Council should have any more debt imposed on them than their current ‘notional’ debt.

We need more Council housing, not less. Were Swindon to transfer its stock they would still have a statutory duty to house the homeless but would have no stock to do so.

September 24th 2009

Visit these websites for the national campaign for the Swindon Defend Council Housing campaign


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