Social housing rents will rise by more than inflation over the next decade as part of UK government plans to boost affordable housebuilding and shore up the finances of struggling landlords.

Jack Simpson www.theguardian.com 

The chancellor, Rachel Reeves, is working on plans to introduce a 10-year formula to calculate social rent on homes that will result in rents increasing every year by the rate of the consumer prices index – which is now 2.2% – plus 1%, removing an existing cap on rises.

Reeves is expected to announce the plan at her first budget, on 30 October, alongside measures to raise taxes and cut spending.

The plan for social rent homes – those rented usually at 50% of market rate – will be welcomed by the councils and housing associations who are now facing a squeeze on their finances, which has put the brakes on housebuilding.

Bodies such as the National Housing Federation, which represents England’s housing associations, and the Local Government Association, the national membership body for local authorities in England and Wales, have lobbied for a 10-year rent settlement to give landlords more certainty over cashflows, and the confidence to invest in new stock.

The changes were designed to provide long-term certainty to landlords, a government source told the Financial Times, which first reported Reeves’s rent plan.

The deputy prime minister, Angela Rayner, has promised to achieve the biggest boost to affordable and social housing in a generation as part of a target of building 1.5m homes during this parliament.

Last month she outlined a series of housing policies to support this, including promises to soon provide “rent stability” and details of government investment.

In recent decades, councils have largely stopped large-scale housebuilding, with local authorities providing less than 2% of the new homes in the country for more than 40 years.

Housing associations, which now build the majority of social homes, have also put the brakes on development spending, instead investing in existing buildings after the Grenfell Tower fire and various scandals exposed the poor standards across their stock.

Last month, the Guardian revealed that housing associations started only 30,631 affordable homes in the 12 months to March 2014, down 22% on the year before.

The rent rise will mean consistently higher rates for some of the 3.8 million social rent households in England, who have been shielded from huge inflationary increases in recent years by government caps on rent rises.

However, this is also likely to add to the government’s housing benefit bill across the period as many social renters receive housing support.

Social landlords have seen policy repeatedly change under the previous government.

The Conservative-led coalition government initially set a 10-year rent settlement in 2012 that would lead to rents increasing by the rate of the retail prices index plus 0.5%. This was reversed in 2015 by the then chancellor, George Osborne, when he introduced an annual rent cut of 1% for four years in an attempt to reduce the housing benefit bill.

In 2020, the sector was given a five-year settlement of CPI plus 1%. However, the government later capped any increases at 7%, after the headline rate of inflation hit more than 11% in 2022.

According to the NHF, rents are now 15% lower in real terms than they were in 2015, while the cumulative rent cuts and caps have contributed to councils facing a £2.2bn black hole in housing budgets by 2028.

Andy Hulme, the chief executive of the housing association Hyde, said a long-term deal would play a critical role in attracting additional private sector investment to build more.

He added that the sector would need assurances that the government would stick to the plan, as it had been promised long-term settlements before and been let down.

A spokesperson from the Ministry of Housing, Communities and Local Government said: “Work is ongoing to fix the foundations of our housing and planning system and we will set out our plans at the next fiscal event.”

David Reed

Today [Wednesday] I met with Susan Davy, the CEO for South West Water, and the Chief Engineering Director. I called on SWW to bring forward planned infrastructure money and to get to work with upgrading our sewage network across #ExmouthandExeterEast.

I have also been clear that their communication with customers needs to improve asap. Only by getting straight to work and engaging properly with local people will trust start to rebuild in the community. I have been given assurances on both of these points, but as always, actions speak louder than words.

Susan Davy refused any interviews with ITV or BBC. Speaks volumes – Owl

To the BBC David Reed said:

“[I] Don’t have confidence [in South West Water] at the moment. But I do believe that they have the right intentions and I think that having spoken to them today they understand the issue, the anger that’s felt in the community and they’re willing to resolve that as quickly as possible.” 

In an ITV interview David Reed said he had asked SWW to bring forward investment. He reported that they (SWW) were conducting “a four week analysis across the whole network. They will then be very willing to bring forward that engineering fund to get on with the job.”

But haven’t we heard all this before? In January Simon Jupp wrote:

“During my visit last week, I challenged South West Water on the timescales for a permanent solution and repeated my calls to speed up plans for £38m investment in Exmouth. They can’t take our town for granted again.”

[See: Hesitation, repetition, deviation. – Is Simon Jupp waving or drowning?]

So, how does Exmouth’s MP meeting with Susan Davy compare to Bodmin’s?

Labour has no real plan to tackle the sewage crisis damaging Britain’s rivers, leading campaigner Feargal Sharkey has warned as he called for a “root and branch” review of water industry regulators.

Lucie Heath inews.co.uk

The punk rocker turned environmentalist told i the country needs a “clear, decisive strategy” to clean up its waterways, rather than “the confusing messaging” coming from ministers.

He announced plans to lead a mass rally in London in October – the March for Clean Water – to mark the end of Labour’s first 100 days in power and put pressure on the Chancellor in the lead-up to the Budget.

Sharkey will be joined by celebrities and environmental groups, including River Action, Surfers Against Sewage, British Rowing, the Wildlife Trusts and Chris Packham.

He campaigned for Labour in the run-up to the general election but is now calling for “leadership and urgency” from the Government to tackle sewage and other pollution – including agricultural run-off – in rivers, lakes and seas.

He called the Environment Agency “shambolic” and “hopeless” and urged Environment Secretary Steve Reed to “fire the board of both Ofwat and the Environment Agency”.

Sharkey added: “The simple fact of the matter is I see nothing so far that is actually showing anything resembling a strategy and a cohesive plan to deal with either the sewage crisis, the environmental crisis, the agricultural farmyard pollution or indeed the overabstraction of chalk streams.”

Charles Watson, chair and founder of River Action, which is co-ordinating the march, agreed that Labour’s plans “do not nearly go far enough to deal with the scale of the problem they have inherited”.

Labour has announced a number of policies to tackle the sewage crisis, including restrictions on bonuses for chief executives, and refunds for customers when water companies fail to spend their allotted infrastructure funding.

Ministers have also pledged to introduce a Water Bill within the next year, which will bring in automatic fines for water companies and criminal sanctions for bosses that oversee serious pollution.

However, the Government is yet to indicate whether it will increase spending to tackle water quality, for example through increased funding for the Environment Agency or for farmers to tackle agricultural pollution.

Sharkey said he was hearing a “confusing message” from ministers, with the Department for Environment, Food and Rural Affairs (Defra) promising to restrict water boss bonuses, while the Treasury has refused to reintroduce caps on banker bonuses.

He argued that restrictions on bonuses are unlikely to work “because when they did that in the City 10 years ago, everybody just doubled their salaries”.

Sharkey wants Steve Reed to announce a “root and branch” review of water company regulators Ofwat and the Environment Agency, which he said had “utterly failed both consumers and the environment”.

An independent commission should be appointed to carry out the review and report back to Parliament within the next six months, Sharkey said.

The water industry’s economic regulator, Ofwat, is responsible for making decisions on how much companies should invest in their infrastructure and how much customer bills can increase by to fund this work.

Water firms have been accused of not investing enough in their networks over a period of decades, resulting in a deluge of sewage being spilled into lakes, rivers and seas. Ofwat has been criticised for allowing this underinvestment to happen.

In response to growing public outrage over the sewage crisis, water companies have proposed investing £105bn in their infrastructure over the next five years, but have said they will need to increase bills by up to 73 per cent in order to do so.

Ofwat has provisionally approved smaller, but still significant, bill rises, that will see customer bills rise by an average of £94 over the next five years.

Sharkey said it was “outrageous” that water companies were being allowed to increase bills by this amount, and accused Ofwat of “dithering around, incapable of acting and protecting the public interest”.

He said the Government should step in and “freeze” bill increases until an independent review of the industry is carried out.

The Environment Agency is responsible for enforcing environmental laws, but the department’s funding has been dramatically cut in recent years.

Earlier this year, i revealed a significant reduction in the number of pollution events being attended by the EA, with the watchdog failing to visit 90 per cent of incidents in 2022.

“The Environment Agency we know has proved itself to be completely and utterly hopeless. It is just utterly shambolic and incapable of enforcing even existing environmental law,” Sharkey said.

Although Labour has announced a number of policies to tackle the sewage crisis, Sharkey said more needs to be done.

“We need to tear the whole thing down and start all over again. I don’t think there’s any point pretending that is not what’s going to have to happen,” he said.

i is also calling on the Government to go further, by signing up to a five-point manifesto to Save Britain’s Rivers. It calls on ministers to overhaul Ofwat and provide more funding for the Environment Agency to allow it to do its job properly.

Some of Labour’s pledges to date align with i‘s manifesto, including plans to introduce tougher fines and restrict bonuses. However, the Government is yet to meet all i‘s demands, including increased funding for the regulator and farmers.

Campaigners on the March for Clean Water are calling on the Government to back up its words with cash.

BBC Springwatch presenter and environmentalist, Chris Packham, will be joining the protest.

He told i: “I’m sick of being ripped off, fobbed off, lied to and poisoned by greedy rich bastards, inept regulators and lazy governments. Let’s spill out of the rivers and on to the streets and put the shits up them.”

Mr Watson said: “The initial noises coming out of our new Government regarding cleaning up our filthy waterways, whilst encouraging, do not nearly go far enough to deal with the scale of the problem they have inherited.

“Nothing short of wholescale reform of our failed regulatory system and comprehensive strategies to address all major sources of pollution, including sewage discharges and agricultural run-off, will suffice.”

A Department for Environment, Food and Rural Affairs spokesperson said: “We share the public’s anger on this issue and have taken immediate steps to reverse the tide on the unacceptable destruction of our waterways.

“Our Water Bill will include new powers to ban bonuses and bring criminal charges against law breakers. This is just the first step in our wider reform of the sector.

“This Government will never look the other way while water companies pump record levels of sewage into our rivers, lakes and seas.”

When is Feargal Sharkey’s March for Clean Water?

On 26 October, Feargal Sharkey will lead the March for Clean Water. It will bring together charities, environmentalists, and other organisations linked to the UKs waters.

They will include British Rowing, British Canoeing, Greenpeace, the RSPB, The Women’s Institute, The Wildlife Trusts, the Rivers Trust and River Action.

The rally will mark Labour’s first 100 days in power and take place days before Rachel Reeves is due to deliver her first Budget.

The campaigners are calling on the Government to announce the following:

• A root and branch review of the regulation and the water industry. Sharkey says an independent commission must immediately be appointed to overhaul Ofwat and the Environment Agency;
• A plan to address the continuous illegal dumping of raw sewage by water companies;
• A full set of solutions to end all other major sources of water pollution, including agricultural waste and chemicals.