The government has announced that it will allow local councils to borrow more £1 billion to build new council houses. Not a penny of this will be available to Shropshire.
This is yet another blow delivered by Westminster. Most housing developments in our county do not pay affordable housing contributions after ministers decreed that small developments should be exempt from the levee. Now it is using a statistical trick to bar us from accessing funds to build new council housing.
Shropshire needs 6,000 additional affordable houses to bring it up to the national average provision. That would all but wipe out the county’s housing waiting list. But rural areas like ours are not on the government’s radar.
Building new council homes makes hard business and good social sense. As rents come in, more council homes can be built, bringing more rents in. When people have a decent home, they are healthier and happier.
For decades, council house building has been constrained by the Treasury’s unwillingness to allow councils to borrow against their existing housing stock. At the same time, governments of all political persuasion have forced councils and housing associations to sell homes under the Right to Buy scheme. Housing associations have been selling off their older homes to concentrate on more modern stock.
Yesterday’s government announcement permits local authorities to borrow to build new council homes. The move was welcomed by the Local Government Association. But, as the Guardian points out, most of the money is heading south.
This is because of an arbitrary rule only allows councils to access extra borrowing if there is a £50 a week gap between private sector and social rents. This is no more than a statistical trick. On other social housing issues, such as the new “affordable rent” set at 80% of market rates, the government works on percentages. But the choice of using a fixed differential suits ministers’ wishes to concentrate financing in the areas where they have the most to gain politically.
The average private rent in the South East is £370 a week. That means this scheme will kick in where social rents are 14% lower than private rents. Here in Shropshire, the weekly private rent is £136. The £50 trigger means that social rents must be 36% lower before the government will consider allowing Shropshire Council to borrow for council housing under this scheme.
Shropshire is a county of high employment but low wages. This means that social and council housing is vitally important in our county. Only 12.8% of our homes are affordable compared to 17.2% across the rest of the country. That 4.4% gap means that we have 6,180 fewer social homes than we would have if we stepped up to the national average. That would almost clear the waiting list.
Since the creation of the unitary council in 2009, there has been an average of 6,800 people registered on the waiting list for social housing. But the social housing stock has increased by only 135 a year. At that rate, it will take half a century to clear the waiting list.
We have had a long term deficit of social housing in our county. It has been hovering at around 13% of housing stock between 2009. We need build our way out of the deficit.
I don’t take the argument that rural areas are less needy than urban areas or those in the South East. Areas like ours also desperately need houses that people can afford. We need to prioritise social house building. But the government’s eyes are as always on London and the South East.