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Local authorities have urged the UK government to “wake the sleeping giant of housebuilding” by allowing councils to boost the supply of social homes, calling for a one-off funding injection and restrictions on the Right to Buy programme.
A report backed by 100 council landlords said £644mn was needed upfront to allow cash-starved authorities in England to clear maintenance backlogs and start building, which they argued would be critical to achieving Labour’s target of 1.5mn new homes under this parliament.
It also called for the suspension of the Right to Buy scheme, which since the 1980s has allowed council tenants to buy their homes at a substantial discount, on new builds.
“To deliver 1.5mn new homes in the next five years, it is time to wake the sleeping giant of housebuilding and take councils off the bench,” the report, released on Monday, said.
Labour has made housebuilding central to its delivery agenda and swiftly announced the reimposition of local targets, scrapped last year by the previous Conservative government, after taking office.
New home building fell sharply in the UK last year, according to data from the Office for National Statistics this week. The number of houses completed in the year to March dropped by 13 per cent, underscoring the challenge faced by Labour in meeting its goal.
Contributors to the report, commissioned by Southwark council, include Rose Grayson, formerly a policy manager at the charity Shelter and now an adviser to housing minister Matthew Pennycook.
“The last time England was building 300,000 homes a year, in the late 1960s, councils made up around half of the total supply,” said the report, adding that local authorities had not provided more than 2 per cent of new homes for over four decades.
Labour is yet to clarify what proportion of its overall 1.5mn goal will be new social homes, or what investment will be made available to increase its supply. There are about 1.3mn people on England’s social housing waiting lists.
The report argued that in order for the 164 councils that still own their own stock to get building, historic funding squeezes would need to be addressed.
Councils legally have to ringfence their rental income within Housing Revenue Accounts, which are then used to cover maintenance costs and raise borrowing to build more homes.
However, instability in government-decided rental settlements over the past 12 years has made such financing difficult, the research found.
The report accused previous Conservative ministers of not “honouring” a long-term rental agreement announced in 2012 and instead cutting or capping rents from 2016 onwards.
Local authorities had also faced higher borrowing costs, rising maintenance backlogs and the cost of new regulatory requirements arising from the 2017 Grenfell Tower disaster and the death of Awaab Ishak, a toddler who died due to mould in his Rochdale council house.
“The result is that councils face a £2.2bn budget ‘black hole’ by 2028, a hole that must be filled if councils are to meet their obligations — let alone contribute to new housing supply,” it said.
The report noted that between 1946 and 1980, 126,000 new social homes were built a year. It had been more than three decades, it said, since that number had hit 10,000 a year, while more than twice that was sold off under Right to Buy.
It called for greater restrictions over the sale of homes to tenants, including suspending the Right to Buy on new build properties. Ministers have already promised a review of the policy.
The report comes ahead of an October budget in which the government has warned tough choices will be needed on public finances. However a meeting between 20 councils and deputy prime minister Angela Rayner, in July, was said to have been so positive that a further 80 authorities signed up to its recommendations.
The Ministry of Housing, Communities and Local Government said it was “working at pace to reverse the continued decline in the number of social rent homes” and that the government had “already given councils
more flexibility to use Right to Buy receipts to deliver more social housing”.
“We have made clear we will give councils and housing associations the stability they need and will set out further details at the next spending review,” it added.