Labour run local councils have abandoned the Welfare State as they choose to build housing which they let out at full private rent. As have Liberal Democrat run local councils and as you would expect Conservative run councils.
When it comes to the social housing model formerly and often still known as council housing that was created in the 1948 Welfare State to slay the giant of squalor we see all political parties abandoning it.
There is no such thing as genuinely affordable housing being built in the UK and that ideologically driven outcome which the Tories housing white paper now makes absolutely inevitable has massive economic ramifications for UK plc.
It will not only drive up house prices further, it will drive up the costs of food, electricity, gas, all other utilities, drive up wage demands and just about everything else including the welfare bill and taxes. In short it will affect everyone as housing costs, whether mortgage or rent, tend to be the highest expenditure item we have as households.
If you own your own home and have a regular, secure and well-paid job then that will be fine. For the vast majority of the country it will be the opposite and have horrific consequences.
Enough general opinion and I have titled this piece Barking mad council housing for private rent in Dagenham as I use the Labour run councils housing policy to illustrate for reasons that become obvious.
The above picture from the much vaunted Ford Motor Company machinists strike that led to (allegedly) equal pay for women was immortalised in the film Made In Dagenham. This struggle (and stylised film) is lauded by Trades Unions and the Labour party and all feminists and activists alike (rightly so) yet here we see the Labour-run London Borough of Barking and Dagenham wholly sell out the 1948 Welfare State!!
Dagenham also saw the first ever Thatcherite Right To Buy property have the keys handed over by Mrs Thatcher herself too!
London Borough of Barking & Dagenham (LBBD)
LBBD last year set up what is called a Local Housing Company (LHC) which is a local council setting up a private company to deliver non council housing as inside Housing explains in four sentences in an article here today:
1. Councils could reassess plans to build affordable rented homes through housing companies after the government said Right to Buy should apply to these homes.
2. The government’s Housing White Paper said where a council has placed a tenant in an affordable rented home they should have the right to buy this property.
3. Inside Housing understands the government has not decided the legal mechanism it could use to compel councils to sell company-owned homes through Right to Buy.
4. These companies are registered as private businesses, and sit off the council and national balance sheet as a result.
The Inside Housing article makes no mention of the obvious consequence of these points which I pointed out here on the day of the release of the Conservatives Housing White Paper which is that councils instead of developing new properties for the affordable rent model (up to 80% of full private rent) will go straight to ONLY developing private rented properties at 100% of the full private rent as these properties are NOT subject to the Right To Buy (RTB).
Let’s get back to Labour-run LBBD who have a policy of developing 42,500 new homes over 15 years or 2833 properties per year. These properties were going to be (a) for the affordable (sic) rent model AND note well that (b) they are being developed on what is called a Joint Vehicle with an institutional investor – which is code for they are going to the private market to get the funding to build, that (c) sentence 4 above allows a LHC to do because they “… are registered as private businesses, and sit off the council and national balance sheet as a result.”
Then we see Inside Housing give column inches to LBBD:
John East, strategic director for growth and homes at Barking and Dagenham Council, said applying Right to Buy to housing companies would “compromise our business model”. The council has built 621 affordable rented homes through its housing company, 200 are under construction and there are “thousands” in the pipeline, a spokesman said. More than a third of councils set up housing companies
Mr East added: “It’s one thing if tenants can exercise Right to Buy for homes built 60, 70 years ago where the debt has been paid off but it’s a completely different kettle of fish for new housing to be sold off.”
In short a moan from LBBD’s Strategic Director John East and a very obvious and deliberate omission. Simply convert these properties from the affordable rent model to the private rent model! Instead of charging the current typical £197 per week in affordable rent for a 3 bed AR property go straight to charging the full private rent of £246 per week! The council gets £49 more in rent per week which is £2550 more per year and over the 60 year life expectancy of a new build charge £153,000 more per property in rent.
Multiply that yearly £2550 by 2833 properties and that is a cool £7.22 million per year in extra revenue for the council and over the 60 year lifespan that becomes an additional revenue for the council by this back door circumvention of the Public Sector Borrowing Requirement a very chilling £433 million more in income!
NB – Those figures are additional to the already unaffordable affordable (sic) rent model. A typical 3 bed social rent in LBBD is around £135 per week and that will now increase to £246 or so per week which is an 82% increase in rental income for LBBD and an 82% increase in housing benefit, in this case LHA, paid by central government.
In the IH quote above is a hyperlink More than a third of councils set up housing companies from which the LBBD plan is detailed at the 2833 new homes per year and has details for 97 other local councils who have or are in the process of setting up these Local Housing Companies or LHCs. This is in the form of a basic excel spreadsheet as detailed below and hats off to Sophie Barnes at IH for the research but not the obvious post white paper analysis.
As you can some councils recently set these LHCs up and some councils are only (so far!) using them for very specific purposes such as Bracknell Forest and others like LBBD are very much hand-in-glove with the private financiers such as Broadland with NPS and Bromley with Mears. Go further down this table and you will see the likes of (Labour-run) Sheffield set up these LHC’s as far back as 2011 as did Tory-run Staffordshire Moorlands.
You will also see Eastbourne and Eastleigh that are Liberal Democrat-run local councils and noting that the Welfare State was a Liberal invention and sacred cow to all Lib Dems, yet they too are seeing councils deliver private rent and caring not a jot about the Welfare State principles.
You will also see local councils who do not have any council housing at all such as Liverpool and Sefton in Merseyside have also set up (Liverpool) and in the process of in Sefton LHCs in order for councils to become private landlords and build ONLY for private rent. That will add to the wholly private rent company called Bamboo Lettings in Wirral in Merseyside who let out former council housing stock for private rent and is another construct of housing associations Magenta (former Wirral council) and Torus (former council housing in Warrington and St Helens also in Merseyside.)
How many Labour and Lib Dem councillors have sold out their principles and who will doubtless adopt the Nuremberg defence of everyone else is doing it therefore so must we? Ah the smell of filthy lucre as principles and economic sense is abandoned in pursuit of balancing immediate term budgets and storing up far greater problems for decades to come is pungent an odious as hell!
How quickly will the 98 English local councils become all 340 or so of them that set up Local Housing Companies in order to shaft their local populace? Fairly quickly.
How quickly will all housing associations abandon the affordable (sic) rent model and replace it with the full market rent model? Extremely quickly.
How quickly will the private moneylenders be banging on the door of every social (sic) landlord and every local council to say why the hell are you limiting yourself to 80% of private rent levels when you can all go for the full 100%? Yesterday!
How quickly will the social housing model disappear altogether because of the Tories housing policy in their white paper issued last week? It already has.
RIP Welfare State … and history will show it’s central housing element was allowed to die by ALL politicians from ALL parties.