I wrote the following article for Roof Magazine in November 2004
LABOUR CONFERENCE BACKS FOURTH OPTION FOR COUNCIL HOUSING
Last January, in the aftermath of the rejection of stock transfer by tenants in Birmingham and the vote of Camden’s tenants against the proposal to set up an ALMO, the Housing Minister, Keith Hill, was grilled by the ODPM Select Committee on the Government promise to bring all social housing up to the decent homes standard by 2010. Hill was clear that there were only three options for local authorities like Birmingham and Camden that need additional resources to bring their housing stock up to standard. They would either have to revisit the two options rejected by their tenants or look to bid for funding under the Private Finance Initiative, a cumbersome scheme allocated resources insignificant in comparison with the repair bills they faced. “There will be no so-called fourth way. The Cavalry will not come over the hill with alternatives” the Minister told MPs before going on to liken the situation of tenants who voted against changing the ownership or management of their homes to that of an individual tenant who refuses to have work carried out to their property. In effect the Minister was blaming the tenants for their councils’ inability to fund the necessary repairs and improvements!
In its report published in May, the ODPM Committee condemned the Government’s ‘dogmatic pursuit’ of privatising council housing as unjustified and denying tenants real choice. The Committee recommended that councils be granted wider rights to borrow prudentially against rental income streams and a new investment allowance. This was an idea first floated by the Government as part of the 2002 ‘blue skies’ review of housing finance but then abandoned because, according to Hill’s evidence to the Committee, “there were simply no takers”. In fact many councils had responded positively to the idea.
The weaknesses in Government policy were also exposed in reports from the National Audit Office and the Public Accounts Committee. They showed that housing transfers are more expensive (an additional cost of £1300 per dwelling) than equivalent local authority repair and renovation. These reports also challenged Government claims that transferring ownership or management resulted in a substantial increase in tenant satisfaction and participation.
Despite such overwhelming evidence that stock transfer is poor value for money, the Government stuck to its line that the ‘fourth option’ of resources being allocated for direct investment by local authorities was a non-starter.
But a week is a long time in politics. As a result of a vote at this year’s Labour Party Conference, the Government is being forced to think again. Delegates voted 8 to 1 in support of a motion committing Labour to ensure that tenants will not be financially disadvantaged if they wish their homes to remain with the local authority and demanding that funds available for stock transfer should be equally available to councils. A vote of such overwhelming magnitude should ensure that it automatically becomes Party policy. However, in the past, this has not stopped the Government from ignoring previous Conference decisions it didn’t like such as those on the restoration of the link between the state pension and earnings and on a review of the private finance initiative. This time it may be different. In an unsuccessful attempt to get the vote deferred, the Deputy Prime Minister acknowledged that public financing of housing does not treat local authorities on a level playing field. He said this should change and promised an inquiry. He also agreed that authorities should be able to bid for funds for new build.
The Government must not be allowed to wriggle out of these commitments. That’s why the pressure for the ‘fourth option’ must be kept up. The signs are good. The Local Government Association is backing the idea of an investment allowance and 126 MPs, 99 of them Labour, have now supported a parliamentary motion backing investment and choice for council tenants. The Commons’ Council Housing Group has asked for an urgent meeting with the DPM to urge him to tell local authorities to put stock option appraisals on hold until after the promised inquiry has been completed. There should also be a moratorium on councils completing stock transfers or embarking on the costly business of setting up ALMOs and PFIs until the new funding options are in place.