New for old

Posted by: Jules Birch

11/05/2009

The slow death of council housing started in the borrowing crisis of 1976. What a neat symmetry if the rebirth of council housing started in the borrowing crisis of 2009.

The public spending cuts that followed the Labour government’s decision to go to the IMF were the start of a remorseless rundown of local authority housing that accelerated with the introduction of the right to buy in 1980, further Conservative spending cuts in the 1980s and the advent of stock transfer in 1988.

Flash forward 21 years and the government is poised to publish its review of council housing finance. Hopes of a rebirth of council housing have been raised and dashed so many times since Labour was elected in 1997 - most recently the advance spin that the Budget would lead to thousands of new council homes - that it’s hard to expect too much.

In a report published today, the House of Commons council housing group calls on the government to:

• resolve fair sustainable funding of existing council homes to make new-build financially viable
• change the way public sector borrowing is calculated
• substantially increase the grant funding available.

Having spent years banging their heads against a brick wall, the advocates for council housing are at last making their voices heard. 

Their hand has been strengthened in a negative sense by the way the credit crunch and recession have undermined the model for delivering new homes through private housebuilders and housing associations.

But the case for council housing is also being made far beyond its original Old Labour/trade union base. Birmingham’s Conservative chair of housing John Lines says the city could spend the entire £100m the Budget allocated for new council homes on its own and local authorities like Preston that have transferred their stock say they should not be discriminated against when it comes to building new.

So much now rests on how bold the government is willing to be. Some sort of funding reform seems a given, however fiendishly complicated the council housing finance regime may be.

Reform of the public borrowing rules is the big prize - and hopes of it were raised considerably by positive statements from Sir Bob Kerslake - and really would provide the neat symmetry with 1976.

Substantial increases in funding seem unlikely given the state of the public finances. But it is precisely that state, and the wave of public spending cuts that are just around the corner, that make the case for radical and urgent action to free up council housing now all but unanswerable.