Boroughs in the capital city risk bursting their budgets over the next three years if they don’t reduce their council house spending by over £240m, a new report warns.
It’s crunch time. A new report from London Councils titled Crunch point for London council housing finance reveals boroughs in the capital city need to reduce their spending on council houses by £246m.
Published just this morning (Thursday 15th May), the report outlined the major cutbacks are needed as a result of national policy failing to increase social rent in line with inflation – a problem that has been especially apparent since the cost-of-living began to bite in 2021.
Against this backdrop, researchers have warned boroughs are ‘not in a position to maintain spending in real terms’ on their council housing stock, despite the ‘urgent need for investment’ in priorities such as improving housing conditions and building new homes.
To give context, figures released at the beginning of the year found 336,366 households were on London local authority waiting lists for social housing in 2024. What’s more, Sadiq Khan has recently announced plans to build on some of London’s green belt land because of the ongoing homelessness crisis.
‘We have reached crunch point for London’s council housing finances,’ Cllr Grace Williams, London Councils’ Executive Member for Housing and Regeneration, said. ‘Boroughs are frustrated that at a time when we want to invest in our council housing and build new social homes, the grim reality is that many will need to make deep cutbacks.
‘We are dealing with fast-rising costs but also the legacy of years of government underinvestment and budget squeezes.’
Other key points highlighted within the report include:
- The capital contains a greater amount of tower blocks and other forms of high-density council housing compared to the rest of the country.
- London local authorities own and let around 390,000 social homes – housing more than one in 10 London households.
With an aim to introduce positive change, London Councils are now calling on the government to re-introduce social rent convergence – a policy that was implemented between 2002 and 2015 which established a national rent formula that considered local incomes and property values.
Meanwhile the cross-party group are also lobbying for a 10-year settlement with rent increases tagged to a cost performance index (CPI) plus 1%, as well as action to reduce local authorities’ housing revenue account (HRA) debts.
‘Boroughs play an essential role in modernising older properties and building the new affordable homes Londoners are crying out for,’ Cllr Williams continued. ‘A better future for London’s council housing is possible but it requires national policy decisions that give us secure and sustainable finances.
‘A better future for London’s council housing is possible but it requires national policy decisions that give us secure and sustainable finances.’
A link to the full report, which was delivered in partnership with London Housing Directors’ Group and Society of London Treasurers, can be accessed here.
Photo by Benjamin Elliott via UnSplash
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