Jeremy Corbyn has previously said that Labour would build 100,000 council homes a year. In the draft of the Manifesto which was leaked to the media the 100,000 was described as council and housing association homes. This figure did not survive in the published document. It was transformed into 100,000 “affordable homes” for “rent and sale”. What Labour would do was counter-posed to what the 1945 Labour government did.
“The post-war Labour government built long-term affordable homes to rent, the next Labour government will build affordable homes to rent and buy. ”
In what proportions would the rent and sale be? 50,000 of each? Neither the Manifesto nor the Mini-Housing Manifesto which supplemented it indicated how the 100,000 would be broken down. In order to clarify what Labour’s position is we emailed John Healey and asked him “How many council homes are you committed to build. The 100,000 by the end of the Parliament is for ‘rent and sale’. In what proportions?”
The reply from his office was
“The exact proportion of rent/sale and exactly how many homes councils build will depend upon their choices once liberated from the cap on their housing revenue account.”
In response to the question of how much central government grant would be available we were told:
“In real terms, grant funding in 2009/10 was over £4 billion. Average annual funding under Labour would be restored to around this amount. The main difference compared to last time will be that local authorities will be liberated from their HRA cap – the LGA estimate councils can build 80,000 homes over five years without these restrictions in place. Councils will be eligible for grant funding.”
So, under Labour, councils would be able to build from two sources: central government grant of around £4 billion and their own resources, including, if they so wish, additional borrowing beyond the current cap which was set by the coalition government.
How did councils do under New Labour’s National Affordable Homes Programme of 2008-11? How many council homes were built? In 2008-9 there were 830 council homes built in the UK. In the following year it was 780 and the next 1,760. Some of this programme was delayed and carried over to the period of office of the coalition government. Yet the highpoint in 2011-12 only 3,000 council homes. Most of the money went to housing associations which in three years built 96,000 homes.
How many will councils be able to build by this route from a grant level set a decade ago? We don’t know. Labour’s recent Manifesto makes the grandiose sounding assertion that they will carry out the biggest council house building programme for at least 30 years. How many council homes were built 30 years ago? In England it was just over 16,000!
How homes many could councils build from additional borrowing? John Healey’s office quotes the (by now somewhat old) estimate of the LGA that if the borrowing cap was lifted councils could build 80,000 homes over 5 years; 16,000 a year. This estimate is somewhat questionable because the under-funding which local authority HRAs suffer has worsened as a result of government policies, including the 4 year rent cut of 1% a year. Swindon Council for instance is now expected to take in around £365 million less rent over the remainder of its 30 year business plan, than it planned for in 2012 when the ‘self-financing’ system was introduced.
If the 100,000 “affordable homes” in the Manifesto are for “rent and sale” and the rent component is comprised of council and housing association homes, then does that make the council number somewhere in the region of 25,000 at best? If councils have to bid for grant from the Homes and Communities Agency then the terms on which bids will be accepted are rather critical. Under the coalition and the Tories any council bidding for grant under their two “Affordable Homes Programmes” was obliged to charge “affordable rent” (up to 80% of market rents), convert social rent homes into “affordable rent” and could sell off voids (empty homes) on the market. What conditions will Labour attach to bids? We don’t know yet.
However, if councils can bid for money to build homes to sell on the market, and there are no obligations on the number of council homes they have to build, then what you expect Tory councils to build?
To clarify exactly what Labour’s policy is we have asked this question of John Healey’s office:
Will Labour’s policy enable councils to
a) use grant to build homes for sale on the market?
b) will they be able to use their own HRA resources, including borrowing from the Public Works Loans Board, to build homes for sale on the market?
c) or will the ban on councils using HRA to build for market sale be reinstated by Labour?
We would hope that the answer would be point c. If it isn’t then this would be a retrograde step of some significance.
We’ll report on the response we get in due course. In the meantime I am writing a detailed analysis of the housing section of Labour’s Manifesto and its Mini-Housing Manifesto which will be published in due course.
June 30th 2017