The new ‘self-financing’ system for Council housing is being introduced in April of next year. The supposed amount of debt that exists in the national housing revenue account is being divided up between all those Councils that maintain ownership of their housing stock. Swindon was told that its extra debt as part of this settlement would be £145.5 million (to be added to its £12 million of actual debt). This was the main reason which the Council gave for its ‘prefered option’ of transfer to a Housing Association.
The final consultation document issued in November of this year (the Housing Revenue Account Self-Financing Determinations) saw a small decline in this figure to £139,665,000. This is the amount that the Council will have to pay the government on March 28th next year. In return Councils will be able to keep all their rent income.At the September Council meeting I asked Lead Member for Housing, Russell Holland, whether the Council would press the government for a reduction in the debt level that we would be saddled with (£145 million at the time). Mr Holland’s reply was that the government had made it clear that the debt level for individual authorities was ‘non-negotiable’. Of course, if the Council thought it had a good case then it could have gone back to the government and argued strongly that the level we were being given was unjust and they should change their mind. Admittedly that would have meant the ruling group arguing with their own government, something that they did not appear to be prepared to do. Moreover, they did not intend to keep their housing stock. They were determined that a transfer would take place and appeared to be taking for granted that they would win the ballot.
Yet now we hear that Birmingham Council has managed to negotiate its debt level down from £434 million to £342, a more than 20% decrease. The leader of Birmingham Council explains that they argued that
‘The figure we were first given was based on the value of our stock, but my argument [to the CLG] was about the fairness of it; other councils have not invested in their own homes as we have.’
Having brought 99.6% of their homes up the Decent Homes Standard, the Council argued that it was being punished unfairly as a result of the increased value of the stock. A similar argument could be apllied to Swindon, where we reached the Decent Homes Standard for all our stock in 2008, 2 years earlier that the original target of 2010.
Some of the reduction relates to the fact that the Council is planning to demolish 1,500 homes. However, what the case of Birmingham shows was that the debt level was negotiable but that Swindon Council and its ruling group have failed the Council tenants in the town through their refusal to challenge the government. Birmingham is governed by a coalition of Tories and Liberals, so there was nothing to stop Swindon standing up for its tenants. However, the ruling group has shown that it places its own interests, and the capital receipt of £40 million that it would get for the sale, above the interests of its tenants.