In defence of council housing

Argus title : A national treasure we must not lose

The 1945 Labour Government came to power on a manifesto which pledged to give “every family in this island…a good standard of accommodation.”

It built a council house system which – second only to Britain’s National Health Service – was to become the envy of the world.

Over the decades, successive governments accepted the principle that people on low incomes had a right to secure, affordable council housing of good standard, maintained by public officials and overseen by elected members accountable to voters.

The Thatcher government of the late 1980s changed all that. Thatcher’s genius was to realise that many working class people felt alienated by local councils. As part of her drive to privatise public services and sell off publicly-owned assets, she launched a 2 pronged attack on council housing.

She convinced voters that individual council tenants should have the right to buy their houses – at knock down prices. At the same time, she passed legislation designed to pressurise local authorities to sell off their rented council stock to housing associations – applying financial pressure to encourage the ‘right’ decision.

Thatcher stacked the deck against councils by refusing to let them spend the money received from sales of their property to build more houses or repair existing ones. The main alternative was to raise loans to invest in housing, repaying this through rent income as councils had always done – but Government now began squeezing the amount councils could borrow.

Under such pressure many local authorities voted to transfer their stock. However, many councils and tenants’ organisations resisted bravely – not least in Brighton, where tenants had seen some of the worst excesses of private slum landlords and treasured their council housing. Local tenants were rightly convinced that transfer would bring higher rents and, in many cases, worse conditions.

It was hoped that when Labour came to power in 1997, it would roll back legislation threatening council ownership. The new government had inherited a severe housing shortage. House prices and private rents were soaring and many low paid workers were finding it impossible to find somewhere to live – especially in places like Brighton & Hove.

However, Labour continued to prevent councils from using money generated by rents or house sales to fund repairs or building work (for example, in Brighton & Hove, of the £12.16 million the council received from house sales in 2003/04, it can use only £3.04 million to reinvest). And it extended the ‘right to buy’ by promising to allow tenants to buy homes rented from Registered Social Landlords (former housing associations).
Even worse, the government has stepped up the drive to encourage stock transfer (sell off). In the face of obvious tenant reluctance, it has been running an aggressive campaign to persuade councils and tenants to agree to transfer management or ownership of council housing stock.

The government is committed to ensure that by 2010 all rented council and housing association homes up to an agreed minimum standard, thus reaching the so-called ‘Decent Homes Standard’ (DHS). However, while it is prepared to subsidise private organisations to achieve this, it will not assist councils which opt to retain ownership and management of their own housing stock. This is despite the fact that it has been government restrictions on councils which have led to underinvestment and poor standards of repair.

The Office of the Deputy Prime Minister (ODPM), which is overseeing this initiative, is pressurising local tenants to accept one of three options: Stock transfer (a sell off to another owner); Private Finance Initiative (PFI) which would involve private profit-making companies in the management of the stock; and Arms Length Management (ALMO), an option which would allow councils – at least for a while – to retain ownership but not management control of housing services. This option is often called a ‘stepping stone to privatisation’.

An army of highly paid consultants has been deployed to persuade councillors, council officers and tenants, often by means of expensive publicity campaigns, that these three options are the only ones available.

There are persistent reports of bullying tactics and dirty tricks, such as calling ballots early – as well as ‘soft’ pressure such as hints to tenants’ representatives about future places for tenants on management boards.

Austin Mitchell M.P., Chair of the House of Commons Council Housing Group, has condemned “regular abuses of democracy to con council tenants into agreeing to the privatisation” and a “… strategy of bullying tenants into choosing alternatives they don’t want.”.

To the fury of many politicians, the so called ‘fourth option’ of stock being retained by councils with proper investment is not being put to tenants. Yet this is the financially prudent option and currently no less than 250 M.P.s support it.

Detailed financial calculations have revealed that the option of keeping the housing stock in-house and freeing capital receipts to pay for repairs makes better financial sense than the 3 options favoured by government

In 2004 1,100000 homes were in need of improvement to reach a decent standard. The estimated cost of repair (Housing Green Paper 2000) was £19 billion. Far from it being cheaper to involve private companies the National Audit Office (March 2003) and the Public Accounts Committee (July 2003) showed that the costs are greater than if stock is left in council ownership.

The NAO found the cost of transfer likely to increase the costs of improvement by £1300 per home over 10 years (the PAC later stated that this was an underestimate as other costs had not been taken into account). Transfers cost $435 a home in fees and charges.

The House of Commons Council Housing Group recently published a remarkable report based on a series of hearings around the country.It strongly criticises the direction taken by government and makes a passionate plea for a ‘level playing field’ for tenants. It recommends, amongst other things, that the government:

• Ensure that council rents are spent only on council homes
• ‘ring fence’ all money from the right to buy sales to improve and build new council housing
• Release all money saved from previous sales for the same purpose
• Create an Investment Allowance’ to allow councils to borrow to pay for repairs.

Despite this, the ODPM continues to state in the face of all opposition that “there is no 4th option”. In obvious frustration, Austin Mitchell said “Council housing is the cheapest, most accountable and most popular way to improve existing homes and build new ones. Council housing would pay for itself if only the government allowed it. The money is there. The capital receipts from “right to buy”, income from tenants’ rents, savings on housing benefit and public money now used to subsidise privatisation and lower public sector interest rates would easily fund an investment allowance freeing local councils to provide decent, affordable council homes….Councillors know this and want it yet. Yet they’re forced into feeling that they have no option but to go along with the latest ODPM dogma…”

His parliamentary working group is spearheading an increasingly popular campaign for the ‘4th Option’ to be put to tenants, supported by major trade unions like Amicus and Unison. Growing numbers of councils – such as Camden and Southampton – have opted to keep ownership with the council.

In March Brighton & Hove Council passed a resolution supporting the fourth option and calling on the government to provide direct investment. There were 46 votes in support across all parties, with 2 votes against and 2 abstentions.

Since then, the ODPM has written to the Council to restate its current mantra that “there will be no “fourth option” of direct additional funding”. The letter states bluntly “Where an authority can meet the target through its own resources, it may opt to retain its stock. We will not provide direct additional funding to authorities to meet the target.”

Thus tenants who vote to keep their stock will be punished by lack of government investment. At best this is bribery and, at worst, a gross abuse of power.

Despite 17 years of pressure more than half of local authorities still own their homes. The council housing they defend is a public asset worth well over £100 billion (ODPM August 2002). Rich pickings for a few, but homes to many more.

Next Thursday the Council will debate this issue again. Despite government bludgeoning, councillors should not retreat from the courageous and financially responsible position they have taken. They are not alone, for there is a growing national campaign to support direct investment.

Cllr Francis Tonks, who represents residents of the Moulsecoomb and Beveandean estates, says quietly “In the case of Brighton & Hove we think it likely that a majority of tenants, given the choice, would prefer to remain with the council rather than being forced to choose one of the other options currently available”.

Britain’s council housing is still a national treasure. In the face of profiteering, we should all stand together to defend it.

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