Why isn’t the council building more homes?
In 2014, Labour took control of Croydon Council from the Conservatives. Next year, both parties will again be fighting to secure the reins of power.
Last time, there was dispute over whether both parties had presented manifestos to the voters. Labour had the more detailed document, entitled ‘Ambitious for Croydon’, pledging what it would do on a wide range of topics. It won the election, winning 40 councillors to we Conservatives’ 30.
Over the last decade, the demand for more housing in Croydon has exponentially grown. What did our current council administration promise to do if they got into power?
Well, for a start, it pledged to build more council homes:
“Labour is committed to the principle of council housing for local people. We will provide new council homes and seek to replace the worst of the borough’s housing stock, making vibrant places in which to live, with tenancies guaranteed for existing residents”. Page 10 of Labour’s 2014 manifesto.
Naturally, this commitment was appealing to many of us. Residents up and down the borough would have not unreasonably thought this meant that if we lent them our votes, Labour would continue to build more council houses.
At the time that the Conservatives lost control of the Council in 2014, data shows us they had managed to deliver 105 new council homes. A further 41 were in development, and over 100 more were in the pipeline. Not bad progress at all.
Fast forward to spring 2017, and Labour has been in power for over three years. How many council homes has the Labour council built? How much progress has it made on one of their key manifesto pledges?
None. Zero. Zilch.
On 27th February 2017, councillor Lynne Hale, Conservative spokesperson for housing, asked councillor Alison Butler, the Labour cabinet member whose responsibility is housing about what was happening. Had there been a change in policy? Why had no council homes been built?
Councillor Butler confirmed that the council will completely close down the Council House Building Scheme. No more council homes will be built.
At the time, councillor Tim Pollard, Leader of the Conservative Councillors in Croydon, said: “We need new homes. The now destroyed housing department was making a very positive contribution to increasing the supply, alleviating some of the pressures of the housing crisis in Croydon.”
How did Labour respond? Well, on 19th June 2017, councillor Butler announced that Labour had decided to create a Limited Liability Partnership (LLP) with the goal of providing provide affordable housing to the borough.
Looking into the small print, under this scheme it seems eligible residents will end up paying 65% of the typical private rent – on the face of it this sounds like a great move. If, for example, you have a two-bedroom privately rented flat in Croydon at £1,380 per month, this LLP would mean the rental cost is reduced to £900.
But (and it’s a big but!) tenants in council housing pay even less – around 40% of the market rate. With the same example of a two-bed flat, a council tenant would pay just £552 rent per month.
So why isn’t the Labour administration choosing the option that would levy cheaper rents on our residents? Why aren’t they building more council houses and charging less to those who need financial support the most?
To set the LLP up, the council has to take on debt of around £61 million. This debt, debt that is serviced using our council tax, will be lent to the LLP alongside another £25 million from the council’s rainy-day reserves built up from right-to-buy receipts.
In order to try and bring down this spiralling high amount of debt, the LLP will forward sell its income from incoming rents to an investment fund. Simply put, this scheme by Croydon Council will produce no income as the incoming rents will be paying back the debt it previously took on. Speaking as a resident, I’d rather see the taxpayer cash reinvested in more council-owned housing stock. Instead the Labour administration has chosen to use this money to prop up its housing scheme, a scheme that charges the poorest in our borough more than it needs to.
Croydon Council doesn’t need to do this. Labour does not need to take on yet more debt in what are extremely uncertain times in the housing market. The age-old perception that Labour borrows like mad today and leave shocking levels of debt to be paid back by the next generation is not being dissipated by this decision.
The council’s decisions to date spell the end of right-to-buy in Croydon. Tenants seeking to buy their own council houses, to achieve the British dream of owning one’s own home, are doing so. But Croydon Council isn’t replenishing the stock. Instead it’s choosing to use the money it gets from right-to-buy sales and to prop up its not-so-affordable rented homes scheme.
For me, this is personal. My family has directly benefited from right-to-buy. It’s allowed me and many thousands like me from disadvantaged backgrounds to benefit from domestic security. I will be forever be grateful for the life chances that stem from my right-to-buy experience. That Croydon Labour is stopping aspirational hard-working Croydon residents from having the right to buy their homes is nothing short of a scandal.
Labour has broken its manifesto pledge to build more council homes. The party is using our taxes to service a debt that isn’t needed or helpful. It is charging poorer residents higher rents than it needs to. It’s not allowing them the chance to improve their lives, stifling social mobility.
Why is Croydon Labour being allowed to get away with it?