Wandsworth is in a housing crisis – and the council’s just made it worse. Private rents in this leafy south London borough are up 14 per cent in a year. The average income of a homebuyer is now more than £100,000.
Most young people know they have no chance of a council flat and no hope of owning their own home.
Looking to buy? This parking space in Battersea went for £70,000, this garage in Tooting can be yours for £315,000 and this former council flat in the ward I represent costs £550,000.
Homelessness is on the rise and the bedroom tax is hurting 2,000 local families.
The council should be working hard to help people move up the housing ladder. Instead it has just decided to cut 45 roles from the housing department. These job losses run from all the trainees right up to the director of housing. The cuts are as stupid as they are unnecessary: stupid because frontline homelessness specialists are lost just as they are needed the most, unnecessary because Wandsworth’s housing finances are projected to have a staggering £1,800m surplus.
The real reason for the cuts takes us into the murky world of housing finance – the next scandal waiting to happen.
Housing services are not paid for from council tax, or from central government money – they are funded by people who live in council housing. Wandsworth’s council tenants pay the highest rents in the country. Thanks to this, Wandsworth’s housing revenue account has that projected £1,800m surplus. HRA money has a legal ringfence around it to ensure it is spent on housing. Recent reforms mean local councils now have full control over their HRA finances.
So why isn’t Wandsworth hiring new staff and developing affordable housing if it has vast financial muscle? Like all councils, Wandsworth has had to make difficult choices about cuts and it has made £80m of savings since 2010 and needs to find an extra £20m by 2015. It collects less than £50m in council tax each year – enough to fund less than 10 per cent of its spending. By comparison, it collects over £25m in parking charges and more than £100m in council rents.
In a council meeting last week I spoke of my concern that ‘Some councils seem to think the answer to their problems is a massive transfer of tenants’ rent money to fund their other activities.
‘The housing department exists to provide housing services – it is not a piggy-bank for the council.’
The temptation to use rent money for political ends has been felt across the country. Many councils look to shift burdens onto the HRA – examples include costs linked to libraries, welfare reform staff, street lighting, community centres and car parks. It has been reported that last month four councils went further and raided their housing budgets for a total of £35m to fund other services. These HRA transfers are being investigated by the government which on October 1 closed the loophole that enabled them. Graham Liddell, an auditor with Grant Thornton, warns that hijacking the HRA is dangerous: ‘This risks taking us back to the 1980s when political dogma led to the general fund and HRA being raided to support either tenants or taxpayers as politics suited.’
Wandsworth is a very political council and is not afraid to use its housing department for political ends. The council acted with indecent haste after the Clapham Junction riots to threaten a (completely innocent) woman with eviction. The threat was later lifted, but not before the council got its front-page headline in the Daily Mail.
Council staff have told me they fear their jobs are being sacrificed to pay for the traditional pre-election rent cut. In February I commissioned a professional analyst to analyse council rents over the past 20 years. The conclusion was that Wandsworth does indeed set rents by elections, not by economics – with rent increases at less than half the government guideline in the year before local elections and more than double the guideline in the first year after local elections.
Council housing departments exists to provide housing services and to develop affordable homes, not to be a piggy-bank for councils.
Money paid in rents and charges should be spent on housing. Councillors who think otherwise are not being fair to the hard-working low-income families who pay the rent each week.
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Simon Hogg is a Labour councillor in the London borough of Wandsworth. He writes about housing at simonhoggblogs.com and tweets @CllrSimonHogg