Funding block: New Labour imposes financial constraints on councils that prevent them from using rent revenue to directly invest in housing stock.
“From a figure of around 200 homeless before stock transfer, I’m led to believe there are now around 2,000 homeless in the city,” says Brynley Sidaway, a Labour councillor from Sunderland City Council.
Brynley was addressing around 150 council tenants and housing workers in Tony Blair’s consituency of Sedgefield on Friday of last week.
The meeting had been called to discuss Sedgefield Borough Council’s proposals to sell off its housing stock to Sunderland Housing Group (SHG), formed when Sunderland sold off its council housing in 2001.
Now SHG wants to expand by snapping up council housing from neighbouring boroughs such as Sedgefield. But SHG’s track record in Sunderland hardly recommends them.
The company promised to build 4,000 new homes in Sunderland in the first five years. Four years later, only 26 were built, of which only 11 were available for rent.
Two Labour councillors in Sedgefield have also come out against the plans to transfer the property to SHG.
Christine Potts, the second Sedgefield councillor, agrees. “I opposed stock transfer from day one and I have seen nothing that has changed my opinion on the subject,” she said.
Sedgefield council can easily meet the government’s decent home standard, according to figures from its own stock appraisal study in 2003.
It has £47 million to spend on improvements over and above the minimum standard set by the government. And a stock options survey carried out in May 2003 found that 96 percent of respondents wanted to remain council tenants.
Housing associations and the government use many misleading arguments to persuade and cajole council tenants into agreeing to stock transfers.
One trick is to claim that tenants will have the same rights under their new landlords as they have under the council.
This is not the case. Council tenants enjoy what is known as “secured tenancy”, which provides certain legal rights against the threat of eviction.
Housing association tenants, in contrast, only have “assured tenancies”. It is easier to evict assured tenants than secure tenants. Many housing associations promise that they will not use their extra eviction powers and will treat tenants as if they were secured tenants. But these promises simply cannot be trusted.
Alan Walters from Defend Council Housing says, “The fact is that one in six evictions by housing associations use the powers that they have under assured tenancies — powers that councils can’t use.
Another false argument used to promote stock transfer is that councils wouldn’t otherwise be able to afford improvements needed to reach the decent homes standard.
Councils raise around £6 billion in rents nationally. The government lets them to keep £1.5 billion for major repairs and £3.1 billion for management and maintenance. That leaves a gap of £1.4 billion.
Since 1990 the government has imposed a “negative subsidy” on council housing revenues—in other words, they take money away. Transferred landlords have no such penalty, allowing them to keep all their rents.
Moreover, most stock transfers would not be financially viable without the government writing off all overhanging debt before the stock transfer.
In 2003-4 the government budgeted £800 million on writing off such debt. That compares to a total annual fund of £832 million available for investment in council homes across Britain. If the money used to write off this debt was channelled into council housing, councils could almost double their maintenance and building programmes.
More and more tenants are rejecting the government’s plans for housing. In St Albans 96 percent of tenants voted to stay with the council in the biggest no vote yet to a housing stock transfer. In Tower Hamlets, east London, the council has been forced to hold public debates with the local Defend Council Housing group. The response to the two debates held so far has been great, with over 100 tenants attending each.
The House of Commons council housing group is holding an inquiry session from 12 noon to 4pm on Tuesday 8 March. Tenants, trade unionists and councillors should come to parliament and tell MPs why they want the “fourth option” of direct investment in council housing.