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New council homes funding targeted towards wealthy Conservative-led areas
More than 70% of the councils allowed to bid for new funding to build homes are Conservative-controlled and most are in wealthy parts of the South East, Inside Housing analysis reveals.
The rules for bidding for £1bn of additional borrowing headroom were published today, with the government limiting eligibility to 165 councils where private rents outstrip social by at least £50 a week.
Of these, 117 are Conservative controlled, with only 18 Labour and eight Liberal Democrat councils eligible, Inside Housing analysis reveals.
The formula also heavily favours councils in high-value areas of the country and means that of the 155 councils, 63 are based in the South East, 40 in the East of England and 28 are in the South West.
Only 11 are based in Northern regions, with just one, Newcastle-upon-Tyne in the North East.
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The move sparked criticism from local authority figures.
John Bibby, chief executive of the Association of Retained Council Housing, said: “While we welcome the lifting of the cap for some councils, we are pushing for the complete lifting of the cap for councils across the country.
“Housing need is a much more complicated story than a £50 difference between market rents and social rents. You need to look at homelessness figures and housing waiting lists, and what people are actually able to pay.
“It’s crazy,” said one Labour councillor at a Northern council who preferred not to be named. “It’s completely crazy to say there isn’t any need for social housing here.”
The £1bn of additional borrowing flexibility, announced by Philip Hammond in the Autumn Statement, allows councils to bid for extra borrowing power to build new homes.
The bidding rules only apply outside of London, where £500m is being allocated. The programme in the capital will be led by Labour mayor Sadiq Khan.
Council borrowing powers were limited in 2012 under a financing deal which allowed them to keep the income from council rents rather than pass it back to government.
The influential Treasury Select Committee has called on the government to lift the borrowing cap entirely, saying it could lead to hundreds of thousands of council homes being built.
It is understood officials at the Ministry of Housing, Communities and Local Government (MHCLG) have defended their decision privately to housing sector figures, saying they struggled to get any capacity for housing borrowing signed off by the Treasury.
The plans to allow councils to increase their borrowing capacity were developed in negotiation with councils including Sheffield, Stoke-on-Trent, and Newark and Sherwood – none of which will be allowed to bid under the current rules.
Grant funding for 12,500 socially rented homes, also announced today, will also be allocated to “areas of high housing need”.
Details of how this will be determined have not yet been published, but it is likely to follow the same methodology.
A spokesperson for Conservative-led East Riding of Yorkshire Council added: “The council is disappointed [not to be able to bid], as increasing our new build programme is a key objective in our business plan.
“The criteria used to assess which local authorities can bid is based around comparable affordability between social rents and private rents – this is not necessarily a measure of need.”
An MHCLG spokesperson said: “We have been clear that we would provide extra borrowing in high costs areas which will ease the burden of rent on hard-working families.
“This funding is just one of a number of measures we are bringing forward to the deliver the homes this country needs, which includes the £9bn we are investing in affordable properties and our proposed new planning rules to ensure these homes are built in the right places.”
