Forty councils in England built no social housing for five years due to cuts

Forty councils in England saw no social rent housing built in five years in the wake of government funding cuts, according to official figures analysed by the Observer.

Chaminda Jayanetti 

In 2010 the Conservative-led coalition slashed funding for subsidised housing by 60% and redirected the remaining money away from social rent and towards more expensive “affordable rent” housing.

The cuts took a few years to feed through, as councils and not-for-profit housing associations completed developments that used money provided under the previous Labour government.

But data published by the Department for Levelling Up, Housing and Communities (DLUHC) shows that 40 local authority areas neither built nor acquired (either via councils or housing associations) any new social rent housing units between 2016-17 and 2020-21, the most recent year for which figures are available.

These areas are scattered across England and include Peterborough, Luton, the Isle of Wight, Spelthorne in Surrey, and parts of Greater Manchester, as well as rural districts.

The coalition government also limited councils’ ability to borrow to build housing, further hitting supply. The figures do not account for the impact of policies such as right to buy in reducing the social rent stock.

Kate Henderson, chief executive of the National Housing Federation, which represents housing associations, said: “There is a chronic shortage of social homes in England. We know there are 4.2 million people in need of a social home across the country, and this is likely to increase rapidly as a result of the cost of living crisis we are facing.

“Housing associations are ambitious to build much-needed social rent homes at scale and pace. However, over the past decade, government grants have prioritised affordable home ownership and affordable rent. Social rented homes are much more expensive to deliver due to the lower rents charged, therefore most housing associations cannot afford to build these homes without access to specific funding.”

The DLUHC figures show that 122 local authority areas – more than a third of all councils in England – each saw under 20 social rent properties built or acquired over the five years. Many areas saw much more construction of housing at “affordable rent” levels – which can be set at up to 80% of market rents. Across England, affordable rented housing costs nearly 40% more than social rents, but this masks wide variations.

London has managed to build more social rent housing after negotiating a separate deal with the government recognising its higher housing costs. But even in the capital, Richmond added just 16 social rent units and 137 affordable rent units in five years; homes in Richmond let under the national affordable rent programme cost on average more than £200 a week, over 50% higher than local social rents. The council’s social housing waiting list has risen markedly in the last five years.

“Eighty per cent of an arbitrary market rent can be extremely high in many different places, so people who are in desperate need end up being insecure because they can’t afford it,” said Charlie Trew, head of policy at homelessness charity Shelter.

The government has now changed its funding programme to encourage more social rent housebuilding, and there are signs the rate of development is increasing – but funding is concentrated in areas where the difference between average social rents and private rents is at least £50 a week.

“The £50 rule flies in the face of ‘levelling up’,” said Trew. “Areas affected will be locked out of social rent funding until at least 2026. Prices will rise, low-income local people will be priced out, homelessness will grow.”

The DLUHC said: “We understand how important social housing is and the secretary of state has been very clear that we must build more social homes across the country.

“Our £11.5bn Affordable Homes Programme will help to deliver more of the genuinely affordable, quality homes this country needs and since 2010 we have built nearly 600,000 affordable homes in England, including 157,000 for social rent.”

Peterborough council said the low number of new social rented homes was due to government policy. Richmond, Dorset and Luton councils said they were developing new social rent homes. Spelthorne council said housing associations had failed to deliver enough social housing, and that the council had set up its own affordable housing firm in response.

Rishi Sunak hopes for £7bn warchest to spend before election

if his Chancellor’s brutal budget works…

Tory MPs have been told there is “hope on the horizon” provided Mr Hunt’s plan is a sucessful at slashing inflation by the middle of next year, while also filling a £55 billion blackhole in the nation’s coffers and shortening a predicted two year recession. 

Revealed: the £30bn cost of Liz Truss’s disastrous mini-budget

Liz Truss’s disastrous mini-budget cost the country a staggering £30bn – doubling the sum that the Treasury says will have to be raised by Jeremy Hunt this week in a huge programme of tax rises and spending cuts.

Toby Helm (Extract)

The independent Resolution Foundation calculates that the Truss government was responsible for about £30bn of the fiscal hole which the Treasury puts at £60bn, and which Hunt will have to tackle in the autumn statement on Thursday.

The thinktank also says the £30bn figure would have been far higher without the U-turns already taken by Hunt on the Truss plans.

The RF’s economists estimate that in her seven-week premiership £20bn was blown by Truss and her chancellor Kwasi Kwarteng on unfunded cuts to national insurance and stamp duty, with a further £10bn added by higher interest rates and government borrowing costs as the markets reacted with dismay to the former prime minister’s dash for growth.

The rest of the fiscal hole, the RF says, can be accounted for by unexpectedly bad economic conditions, which have meant lower growth and lower tax receipts to the Treasury.

The estimates of the cost of “Trussonomics” will intensify a bitter blame game now being played out at the top of the Tory party.

While many Conservative MPs will be angered by more tax rises, the chancellor is expected to make clear that he is, in large part, having to repair damage caused by the last occupant of No 10, who was backed by many rightwing Tory MPs.

Last week Kwarteng tried to excuse himself for some of the blame, saying he had told Truss to “slow down” and warned her that she would only survive for two months in Downing Street if she pressed ahead with her full tax-cutting agenda.In an interview with the Sunday Times, Hunt says Truss was right to want to grow the economy, but wrong to do so without making sure tax cuts were funded. “We’ve corrected those mistakes very quickly and, you know, I think we understand how it is very, very important that … alongside any plan you demonstrate that we’re a country that will pay its way,” he said.

Households paying £94 extra on energy bills due to regulator’s failure

Or is it the failure of the “market model”. (See also railways)

Consumers have been forced to pay almost £100 more for their gas and electricity due to Ofgem’s failure to regulate the energy supply market properly, a new report has found.

Andrew Woodcock

The report by the House of Commons Public Accounts Committee found that the collapse of 29 energy suppliers as prices spiked over the past year cost a total of £2.7bn – or an average £94 for every household in the country.

The government has already budgeted a further £1.9bn to keep Bulb Energy running, with the final cost to taxpayers unknown until the company is sold.

Between the autumn of 2021 and the summer of 2022, wholesale prices for gas and electricity soared to as much as 10 times their normal level. The surge in prices was unsustainable for a number of suppliers, whose charges to customers were capped by Ofgem.

But the PAC report found that problems in the energy supply market were evident as early as 2018, with Ofgem failing to “strike the right balance between promoting competition in the energy suppliers market and ensuring energy suppliers were financially resilient”.

Ofgem’s “failure to effectively regulate the energy supplier market” was exposed by the sharp rise in prices, which led to the collapse of companies providing power to four million households, which had to be transferred to surviving firms.

The committee found that Ofgem’s price cap was “providing only very limited protection to households from increases in the wholesale price of energy”, noting that the regulator believes prices could “get significantly worse through 2023”.

It said that the treatment of vulnerable customers, who already pay higher energy prices, was “unacceptable”.

PAC chair Dame Meg Hillier said: “It is true that global factors caused the unprecedented gas and electricity prices that have caused so many energy supplier failures over the last year, at such terrible cost to households, but the fact remains that we have regulators to set the framework to shore us up for the bad times.

“Problems in the energy supply market were apparent in 2018 – years before the unprecedented spike in prices that sparked the current crisis, and Ofgem was too slow to act.

“Households will pay dear, with the cost of bailouts added to [record-high] bills.

“The PAC wants to see a plan, within six months, for how government and Ofgem will put customers’ interests at the heart of a reformed energy market, driving the transition to net zero.”

The GMB union, which represents many workers in the energy industry, said that the market model had failed consumers.

National secretary Andy Prendergast said: “The government’s remorseless attempt to use the market to regulate energy has been a massive disaster that has left millions of responsible households worse off.

“In reality, the market may be the right solution when it comes to selling tins of beans but has been an abysmal failure when applied to energy. The simple fact is that energy is an essential service and needs to be treated as such.

“Rather than expect the public to pick between suppliers – many of whom appear to have been trading without the necessary capital to underwrite their commitments – people simply want a simple option that gives them the best price.

“Sadly, Ofgem appears to be a regulator that doesn’t regulate . As a result, households are picking up the bill for their costly failure.”

An Ofgem spokesperson said that many of the issues highlighted by the PAC had been covered by the independent report which it commissioned and published earlier this year and whose recommendations it is now implementing.

“The sheer scale and pace of this once-in-a-generation global energy price shock meant supplier failures were seen all over the world,” said the spokesperson. “However, the supplier of last resort scheme acted as a vital safety net for British consumers, ensuring they continued to receive energy when their supplier failed and kept their credit balances. This safety net inevitably incurred costs.

“Looking ahead to this winter, prices remain volatile, however the market is now in a much more resilient position, partly due to robust steps we’ve taken to reduce the risk of future supplier failures and to raise the bar on entry for new suppliers.”