The real obstacle to council house building is the absence of government grant

Martin Wicks says that the key to a large scale council house building programme is central government grant, not borrowing.

Ever since Right to Buy was introduced the number of council homes has plummeted. The current government has provided little funding for councils to build homes through their housing revenue accounts. Since 2010 the number of council homes in England has fallen by 199,000. Grant from Homes England carries the obligation to charge “affordable rent” (up to 80% of market rents) rather than ‘social rent’ (i.e. a council rent).

Some councils have sought to build homes via private companies, owned by them or in partnership with other organisations, to substitute for the absence of grant for building council housing. For others it is a means of producing revenue stream for their General Funds by building homes for sale and/or for market rents. Some academics are proposing that councils should be able to “borrow against their assets” to build new homes. It is even suggested that a “municipal entrepreneurialism” is a means of avoiding austerity as well as house building.

It is the contention of the author that council tenants, housing activists, any supporters of council housing, need to campaign for central government grant to build homes through council housing revenue accounts. Without sufficient grant then councils cannot “return to large scale house building” which even the Tory majority Local Government Association says is necessary to address the housing crisis. Private council companies are no solution. Commercial investments can always fail. They risk turning from a source of funding into an absorber of it which will take funding away from council services. The pandemic has done just that, throwing some of them into a financial crisis.

Council housing is not part of the housing market. It is building for social need. So long as house building is dominated by speculative commodity production then the housing crisis cannot be resolved.

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