The Tories have placed a ticking time-bomb under the finances of social housing in England.
New rules mean that tenants, social landlords and workers will suffer while central government saves a fortune in benefit payments.
Chancellor Osborne recently announced that social housing rents would be reduced from current levels by 1% per annum each year for four years beginning in April 2016.
This is seemingly good news for social housing tenants but:
- 70% of social housing tenants are in receipt of Housing Benefit. They will not see a penny of the rent reduction. It is the Department for Work and Pensions that will gain.
- A significant proportion of social tenants who do not receive Housing Benefit do receive Working Tax Credit, which the Government intends to slash in April. For a great many working social tenants, this loss will far outweigh an average rent saving of around £5.50 per week.
- For social housing tenants with an annual household income greater than £30,000, the Government wants to increase their rent to “market/near market” levels – estimated to be a rent rise of around £70 per week.
Osborne’s sudden change in the rules is disastrous for the financial situation of social landlords – both housing associations and local authorities with retained council housing - who stand to lose some £9.7billion in rental income. The impact is that:
- Plans for building more social housing are being scaled back. At least 25,000 planned new-build social homes are unlikely to be built with some commentators predicting the longer term consequences could be ten times that.
- It will be harder for local authorities to retain and add to their council house stock.
- Non-essential maintenance and replacement programmes are being pared back.
- Social landlords are cutting hundreds of jobs. This is devastating for our members and the loss of experienced and skilled staff will reduce the capacity for effective management and maintenance of a large-scale social housing stock.
By reducing the resources of the social housing sector, Osborne is making us more reliant on the private rented sector. There are already more people in private rented accommodation than in social housing and it is private landlords who are the main recipients of Housing Benefit subsidy. The average private rent in England is now £816 per month, some 40% higher than the average social rent.
Osborne’s policies will not produce the amount of high-quality, affordable social housing that we need. His reforms are not designed to help tenants but to undermine social housing. UNISON will be campaigning with partner organisations in the coming months to highlight the growing crisis in housing.
An excellent extended article on the Government’s housing reforms by John Lewis, UNISON North West Lead for Local Government, is available here.