Jun 26th 2018, 20:36
Blog 26th June 2018
In this week’s blog, I refer to: Ministry for Housing, Communities & Local Government; Greater London Authority; the Borrowing Cap; Homes England; London Councils; Enfield Borough Council; Universal Credit; Department for Work & Pensions; National Audit Office; Service Charges; Local Government; Housing; Seminars and Training.
The Ministry for Housing, Communities & Local Government has finally announced how it intends to raise the housing revenue account borrowing cap by a total of up to £1billion in areas of high affordability pressure for local authorities that are ready to start building new homes.
Local authorities in England outside London will be able to bid for increases in their caps from 2019 to 2020, up to a total of £500million by the end of 2021 to 2022. The government states that the programme will help to deliver an increase in council housebuilding. A separate programme of £500million will operate in London with the Greater London Authority expected to announce how this will work soon. Of the total, £400million will be available in 2019/20, £300million in 2020/21 and £300million in 2021/22.
A prospectus inviting eligible local authorities to bid for additional borrowing under this programme was launched today, along with instructions to local authorities about the bidding parameters. The deadline for submitting bids is 5pm on Friday 7th September 2018.
However, the new borrowing flexibility for new council homes will be limited to areas where private rents are at least £50 a week more than social rents and the government has identified the 168 local authorities that meet this criterion. Councils will be able to use social housing grant, capital receipts and prudential borrowing to fund the new build. New homes will have to be social, affordable or shared ownership. The scheme cannot be used to fund housing that will be held by a local housing company, joint venture or other arms’ length vehicle.
Bids will be assessed for value for money, deliverability and affordability and the bids that attract the highest scores will be prioritised.
The Ministry for Housing, Communities & Local Government has also announced an increase of £1,670million in the social and affordable housing programme for England outside London that follows the additional funding that was provided for London in March 2018.
I intend to write a briefing paper on these initiatives that should be available soon. Subscribers to the AWICS Information Service will be notified as soon as it is published.
Homes England released some interesting statistics last week. During 2017/18, they provided direct financial funding for 42,652 homes of which only 17,159 were affordable homes and a mere 1,409 social homes. The number of social and affordable homes was a reduction of 19.5% when compared with 2016/17 and the lowest since current records began in 2009/10. However, this should not come as a surprise as the intention of the Ministry for Housing, Communities & Local Government is to focus its diminished housing budgets on an attempt to arrest the decline in home ownership. In 2017/18, Homes England supported 14,747 homes for sale or rent at market value and 9,184 homes for affordable home-ownership or shared ownership.
One question that occurs to me is: “Why do homes that are to be sold or let at market value need public subsidy at all?” Surely if a developer is to sell at market value or a landlord is to let at market value they shouldn’t need a gratuitous subsidy. In my view, private businesses should rely on their enterprise and not on state handouts. I think that this part of the programme should be discontinued.
At the end of 2017, there were 79,000 households in temporary accommodation in England of which 54,000 were in London. According to ‘London Councils’ the boroughs spent £663million on temporary accommodation in 2014/15 and this is likely to have increased since then. Enfield Borough Council has already started to address the problem through a Local Housing Company – ‘Enfield Housing Gateway Limited’ and now ‘London Councils’ is proposing to extend the concept by creating a Local Housing Company that would provide an alternative to private temporary accommodation across London. The Company is to be piloted by ten borough councils and will procure homes from private landlords to be used for temporary accommodation at a reasonable rent rather than the high rents currently paid for nightly accommodation. The scheme is to be supported by £39million over three years from the Flexible Homelessness Support Grant.
Universal Credit started to be rolled out in 2010, with an intended completion date of October 2017, but this date has now been put back to March 2023. Since 2010, the Department for Work & Pensions has spent £1.9billion on the programme, including £1.3billion on new information technology. However, the National Audit Office published a report last month that concludes that:
“Both we, and the department, doubt it will ever be possible for the department to measure whether the economic goal of increasing employment has been achieved. This, the extended timescales and the cost of running Universal Credit compared to the benefits it replaces cause us to conclude that the project is not value for money now, and that its future value for money is unproven.”
This week I am presenting an in-house session on ‘All You Want to Know about Service Charges in Social Housing’ to a Housing Association in Northeast England. I am looking forward to meeting the people there. This is a very popular in-house session and I have several sessions booked for housing associations and local authorities over the summer and the autumn.
Our next seminar will be on ‘Developments in Local Authority Housing Finance’ and will be held in Leeds on 10th July. It is proving popular, but we still have a few places available.
This seminar looks in depth at current developments in local authority housing finance in England – especially the implications of the policies of the government, the public finances, rent policy, welfare reform including universal credit, issues around the reinvigorated ‘right to buy’, changes to the funding of supported housing including the proposed sheltered housing rent and locally administered budgets for short-term accommodation, the implementation of the homelessness reduction act, the flexible homelessness reduction grant, the affordable housing programme, local housing companies (what they can offer, how to establish them and how to set one up) and new development. It will also refer to today’s announcements about funding social and affordable housing and the ‘borrowing cap’.
This will be followed by seminars in London on: