MPs attack RTB funding plan
An influential committee of MPs has slammed the government’s plan to fund the extension of the Right to Buy (RTB) through a levy on councils, saying it should be financed by central government directly.
The Communities and Local Government committee has today published a report heavily critical of the government’s plan to fund the extension of discounts to housing association’s tenants through a charge on councils based on expected sales of ‘high-value’ vacant stock.
The report said: “We believe in the principle that public policy should usually be funded by central government.” It said: “If only councils which have retained some housing stock will be required to make the payment to fund the RTB discounts, then the effect on some communities and the financial risk for local authorities will be far greater in some areas than others.”
The report said the policy would make it more difficult for councils to ‘plan prudently’ as they would be exposed to the risk of lower vacancy rates than expected. It also called for definitions of ‘high-value’ to reflect local circumstances.
It said the mechanics of funding the policy contain “too many unknown and unclear definitions”, and that the committee is sceptical that “forcing councils to sell financially and socially viable properties is a sustainable funding source”.
The committee, chaired by Labour MP Clive Betts, said the government should have published its anticipated costs of the three policies intended to be funded by RTB receipts by now. These are RTB discounts, replacement of sold council homes and a brownfield regeneration fund. It also said the government should be clear about how the RTB extension will be phased in.
The report, which follows a six-month inquiry into housing associations and the RTB, in total outlines 48 conclusions or recommendations.
It suggests housing associations which choose to adopt Pay to Stay should be able to set their own thresholds and mechanisms. It also said housing associations “should remain mindful of their social mission and not sacrifice philanthropy in pursuit of surpluses”, and that increasing surpluses and saving money should not be the “sole motivation” for association mergers.
The inquiry received 176 written submissions, many of them from housing associations.
The Department for Communities and Local Government (DCLG) responded to the committee’s report by defending its funding plans for the RTB extension. A DCLG spokesperson said: ““There are billions of pounds locked up in local authority housing assets. It is only right that when they become vacant they are sold enabling the receipts to be reinvested in building new homes and supporting home ownership through Right to Buy.” He added that further details on the sale of council homes will be set out in secondary legislation.
CLG COMMITTEE: KEY RECOMMENDATIONS
- Public policy (ie, the Right to Buy extension) should be funded by central government
- Definitions of ‘high-value’ should take into account local circumstances
- The government should publish costs of the Right to Buy extension, sale of council homes and brownfield regeneration fund
- Starter Homes should not be built at the expense of other forms of tenure, where the need exists
- Government should ensure Right to Buy replacement homes meet the needs of local communities
- Housing associations should be “mindful of social mission and not sacrifice philanthropy in pursuit of surpluses”
- Housing associations should be able to set own Pay to Stay thresholds and mechanism
- HCA deregulation should not weaken assurances to lenders
- Role of the regulator should be clarified with respect to monitoring Right to Buy replacements
- The regulator and the National Housing Federation have a role in ensuring that increasing surpluses and saving money are not the sole motivation for housing association mergers