“Navigating the Housing Budget Crisis: Challenges Facing Wealden District Council”

Years of financial pressure have compelled councils nationwide to cut back on the maintenance of council homes, cancel new building initiatives, and even divest from existing housing inventories.

Southwark Council has released today the findings of a survey involving 76 councils – including those that manage their own council homes. Collectively, these councils supervise over 870,000 council homes throughout the country.

The substantial report endorsed by 109 cross-party councils supplements this survey, presenting further proof of the extent of the crisis that council housing budgets are experiencing due to capped revenues, skyrocketing costs, and frequent changes in policy since 2010.

In total, the survey uncovered that 90% of council housing budgets are under financial duress, with many councils taking or anticipating the need to take significant measures or utilizing emergency funds to balance their accounts by 2029. For instance, 61% of councils have already cancelled, paused, or delayed housing construction projects, while over one-third have limited their repairs and maintenance of council homes.

Despite governmental actions – including reductions in Right to Buy discounts – the outlook is grim. To achieve balanced budgets ahead of the next general election, 71% of councils predict they will have to cancel, postpone, or delay existing projects, 68% foresee scaling back their total commitments to redevelop or construct new council homes, and 28% expect to sell off existing council homes to stay afloat. Even with these measures, 67% of councils express concern that they might not be able to establish a balanced budget.

Almost half of the councils informed Southwark that they have been compelled to utilize reserves – funds intended for emergencies – to meet ongoing expenses. More than a third indicated that these emergency funds would be depleted by the end of the current parliament. In responding to the anonymized survey, councils also noted ongoing discussions with the government regarding extraordinary financial assistance while fearing they could soon be unable to fulfill even their legal responsibilities.

Council leader Rachel Millward from Wealden District, representing the Alliance for Wealden (Green Party) and serving as the lead councillor for Community, Culture, and Communications, stated, “The shortage of suitable housing in Wealden significantly impacts our communities. As a council, we are determined to do everything within our power to tackle this issue while advocating with the government to unlock funding and legislative support so that we can achieve much more. Every resident in Wealden deserves a safe and secure home.”

The ‘Securing the Future of Council Housing’ report, signed by 109 councils across England, outlines various recommendations for the government aimed at preserving council housing. Councils are hoping that the Comprehensive Spending Review will encompass:

1. Establishing a new, sustainable HRA financial model: Revisiting the flawed 2012 Housing Revenue Account ‘self-financing’ agreement, reaffirming sustainable self-financing principles, ensuring a fair rent settlement, and addressing unmanageable debt.
2. Initiating a Green & Decent Homes Programme: Based on the success of the Decent Homes Programme, a long-term investment programme aimed at efficiently retrofitting and modernizing England’s social housing stock.
3. Providing adequate funding for new council homes: The successor to the Affordable Homes Programme should be adaptable, emphasize council homes, and accurately reflect the actual construction costs.

A critical element in resolving the flawed council housing budgets is to determine long-term rent levels. The government has suggested adjusting social rents to 1% above inflation for “a minimum of five years”. Nonetheless, the Local Government Association and councils throughout the country have communicated to the government that this proposal alone would not be enough to stabilize council housing budgets. Instead, councils are advocating for a long-term strategy to achieve ‘rent convergence’, whereby rents are determined based on property values and local earnings.

Councillor Daniel Manvell from Alliance for Wealden (Labour Party) and lead councillor for Housing, Benefits, and Revenues, remarked, “We aspire to construct more social housing in Wealden; however, frequent governmental policy shifts since 2010 hinder our ability to deliver the genuinely affordable homes our residents desire and require. We appreciate the modifications to Right to Buy that will protect our existing homes, but we need a fair and sustainable financial agreement from the government to provide us with the necessary latitude and assurance to invest in building more social homes.”