The Rt Hon Sajid Javid MP 

Chancellor of the Exchequer 

HM Treasury 

1 Horse Guards Road 

London  

SW1A 2HQ 

Date: 29th August 2019

Dear Sajid,

Housing and the spending review

I am writing to urge you to put housing at the heart of the forthcoming Spending Review and to invest in radical housing policies that will begin to turn around 30 years of failure. 

Social Housing

Social housing, including a mass programme of zero carbon council housing, must be at the heart of the Spending Review.  As you will be aware, Shelter have made it clear that three million new social homes must be built in England over 20 years to address the crisis.  Younger families in particular face a lifetime in expensive and insecure private renting when what they need is access to secure and affordable social housing.

Schemes like Help to Buy are not within reach of huge numbers of families and have served to exacerbate not ameliorate the crisis. The National Audit Office have found that Help to Buy supported many people who simply did not need the money and also helped inflate property prices even further. It is scandalous that of the 211,000 buyers who used the scheme to the end of 2018 only 37% wouldn’t have otherwise been able to afford a home, and that almost 20% of beneficiaries weren’t first-time buyers. The billions wasted on Help to Buy should have gone into addressing the chronic under-supply of social housing. 

The lifting of the ‘borrowing cap,’ which stopped Councils from borrowing against their assets to build desperately needed housing, has been welcome.  The next step must be to securing adequate funding and resourcing for local government to deliver the homes that are needed. Councils of all political colours are already severely overstretched due to the on-going programme of brutal central Government funding cuts since 2010.   

The National Audit Office have made clear that there has been a 49.1% real-terms reduction in government funding for English local authorities between 2010-11 and 2017-18.  Meanwhile, the Local Government Association (LGA) has identified that local services face a funding gap of £7.8 billion by 2024/25.  This funding gap already stands at £3.9 billion for 2019/20. The LGA pointed out in their Budget submission that funding pressures facing adult and children’s social care, as well as homelessness and public health, are particularly severe.  These gaps must be filled if councils are to be at the forefront of the mass programme of social housing that we need.  I urge you to restore council budgets so that all local authorities are fully funded and resourced to tackle both the causes and the symptoms of the housing crisis.

Housing Crisis in Brighton Pavilion and Local Housing Allowance rates 

Homelessness is a major concern in Brighton Pavilion and has reached shocking levels in the last 10 years, with the price of owning and renting a home a significant contributory factor. House of Commons Library graphs show in stark form the chronic distortion and sky-high house prices that make life so incredibly and unnecessarily difficult for people in the city (and elsewhere) who just want a decent, secure, affordable home.   

Renting in the private rented sector is perilous and households, including many with children are being pushed into temporary accommodation (TA).  This problem is particularly acute in Brighton and Hove.  Based on the latest available data for the end of December 2018, there were 83,700 households in England in TA on that date, of which 61,740 were households with children.  Brighton and Hove Council had 1,571 households in TA, of which 1,011 were households with children.  Comparing Brighton and Hove with England by looking at the number of households in TA per 1,000 households living in the area. Brighton and Hove had a rate of 12.4 households in TA per 1,000 in the population, well over 3 times higher than the overall England rate of 3.6. 

In addition, people who rely on benefits to help meet unaffordable housing costs frequently face housing discrimination.  Government austerity also means that many people who end up find it incredibly difficult to move into secure accommodation because the rehabilitation and medical support they need is not available. 

Given that so many people are forced into the expensive private rented sector, it is critical that Local Housing Allowance (LHA) rates fairly reflect the costs of  housing. Losing a private tenancy is currently one of the most common causes of homelessness in the UK and has been the leading cause in England for the past six years.  Until there are enough truly affordable homes built, LHA is the best measure that can help keep people in their homes.  I therefore urge you to end the freeze on the Local Housing Allowance, and ensure low income families will be able to cover the true cost of their rent. Raising investment in LHA rates to cover at least the cheapest third of private rents (the 30th percentile) would help avoid people falling into arrears and debt - and ultimately - the threat of homelessness.  

Increasing investment in LHA rates has other benefits too. It will help councils and other public agencies deliver immediate reductions in the levels of homelessness across the country. It will also reduce severe pressures on homelessness services and spending on expensive temporary accommodation, which is currently costing councils nearly £1bn a year.

Community Housing

I also urge you to extend the Community Housing Fund (CHF).  I have been following the progress of the scheme, and as you may be aware, in just the first six months after it was launched, Homes England received applications that could deliver more than 3,500 homes. I know from discussions with those in the sector that the Ministry for Housing, Communities and Local Government conducted research over the summer which revealed a potential pipeline of 16,600 homes if the fund is extended.

However, I am concerned that the Fund is only open for bids until this December, meaning many groups will be unable to secure the capital funding required to deliver affordable homes.  Were this to happen, communities across the country would be let down.  It would also represent a waste of valuable government investment in developing a funding pipeline, and investment in the innovative community housebuilding market.

As you may know, the funding window in London, where the Fund is administered by the GLA, is open until March 2023. It is not right that Homes England has a much shorter deadline.

I urge you to extend the Community Housing Fund to at least March 2023.  Previous responses from Ministers have indicated that a decision will be made in the Spending Review.  It is vital that a decision is made, both to provide medium term certainty to encourage more groups to develop projects, and so help to build more homes.  Moreover, and critically, the DHCLG, Local Government and Homes England need to be given the time to extend the Fund before it closes to bids in December.

I should be grateful for your response to this letter and I urge you to use the spending review to take the radical steps I have outlined above, in order to genuinely tackle the country’s housing emergency.

Best wishes,