LaLabour should end above-inflation rent increases

UK

Labour Hub Editors

Labour should end above-inflation rent increases

 

August 21, 2024

Yesterday’s report in the Financial Times that Rachel Reeves is proposing to continue with the Tory government rent formula for the next ten years is a cause for concern, says the Labour Campaign for Council Housing. The formula, based on the Consumer Prices Index +1% means above-inflation rent increases for council and housing association tenants for the next decade. 

The idea that this will boost house building is risible. In 2022-23, rent income for all councils in England with a housing revenue account was estimated to be £7.3 billion. An extra 1% rent increase above inflation would raise a paltry £73 million. 

Council housing revenue accounts are grossly under-funded, so much so that 20 Councils in their report, “Securing the Future of Council Housing”, call for £12 billion over the next five years just to bring those homes not at the Decent Homes Standard, up to it. They warn that, “Unless something is done soon, most council landlords will struggle to maintain their existing homes adequately or meet huge new demands to improve them, let alone build new homes for social rent.” 

For tenants who don’t receive housing benefit, or only have part of their rent paid by it, this would be a disastrous decision – an increase in rent of 10% above inflation over a decade. It would hit the working poor especially hard. At the same time it would drive up the housing benefit bill.

Martin Wicks, Secretary of the Campaign, said: “We need to press the government not to introduce a decade of above-inflation rent increases, but, on the contrary, to abandon the Tory rent formula of CPI+1%. 

“There is no substitute for the government funding housing revenue accounts sufficiently to maintain and improve their existing homes, which, if it is serious about global warming, need retro-fitting and decarbonising. You cannot have ‘a council housing revolution’ without a big increase in central government grant.

“Squeezing more money out of already poor tenants, will not resolve the funding crisis of housing revenue accounts. You cannot have a council housing renaissance if existing council homes deteriorate because of a shortage of funding.

“Rachel Reeves says Labour faces ‘the worst economic inheritance since 1945’. Yet, if Aneurin Bevan could increase grant for building council homes threefold and launch the NHS, in economic conditions far worse than they are today, then this government can find the necessary funding if it is a political priority.”