Beckett slashes council housing rent increases in half

Published by Jon Land for 24dash.com in Housing

Housing Minister Margaret Beckett has today announced new support to help councils cut their planned rent increases for tenants in the current economic climate.

The average guideline rent increase for 2009/10 will be halved from 6.2 per cent to 3.1 per cent for local authority tenants, to encourage councils to reduce the amount tenants would have to pay for the coming year.

Mrs Beckett announced that the Government would make funding available to support local authorities to make the changes, and revise their rents for 2009/10 accordingly.

The changes to the guideline rent increase means tenants should see a marked drop in their proposed average rent increase for the coming year from around £4 per week to approximately just under £2.

Mrs Beckett said: “We are facing challenging economic times and it is right that this Government offers real help now to council tenants.

"We have listened to what councils and their tenants have said to us about the planned rent increases, and we are determined to help tenants get a fair and affordable deal.

“Ultimately, it is for each council to take up this offer of support, but I would expect them to ensure their tenants receive the full benefits.”

The Minister has already indicated that she will look again at the guideline rents for 2010-11 to ensure that council tenants continue to pay rents that are affordable and fair.

The guideline rents increase for 09/10 was set in September at a time of much higher inflation but the new guidelines will override this and support tenants during the current economic uncertainty, whilst making sure that local authorities still have the money to carry out essential repairs and maintenance

The Government is carrying out a wide-ranging review of the Housing Revenue Account led jointly by Communities and Local Government and the Treasury, looking at how it can provide the best and most effective system for local authorities to maintain and manage their housing stock. A report will be prepared for Ministers in the Spring, before going out to consultation.

The Department for Communities and Local Government said that it would take some time for applications for additional support to work through the system, so the reduced payments may not be in effect by the time the first bills hit doormats next month.

Mrs Beckett has already indicated that she will look again at the guideline rents for 2010-11 to ensure that council tenants continue to pay rents that are affordable and fair.

Councils make their own decisions on setting rent rises, but the increases are largely determined by the Government's annual housing subsidy to councils and the formal guideline rents published by the DCLG each autumn.

Westminster City Council in London, which spearheaded the campaign to get the Government to reconsider the guidelines for 2009/10, welcomed today's announcement.

Philippa Roe, Westminster's cabinet member for housing, said: "After months of vigorous campaigning to keep the pressure on the Government and the issue in the public eye, we are very pleased that Margaret Beckett has finally recognised that her department's proposals for a 6.2% rent rise were totally unacceptable when we are facing a severe economic crisis.

"If the rent rise had gone ahead, it would have hit those on fixed incomes such as pensioners and those just above the benefits threshold particularly hard just as Britain slides further into recession.

"However, this is nowhere near a long-term solution and we believe that it is the job of local councils to set local rents and not the Government's.

"We therefore would ultimately like to see the current rent-setting regime completely overhauled and replaced with a system that is far fairer and more transparent, and where the needs of local people are put first."

The chairman of the Local Government Association, Margaret Eaton, said: "Councils will be encouraged that the Government has listened to their concerns and decided that imposing large rent increases would be unfair on tenants in the current economic climate.

"It is pleasing that the Government has recognised people are feeling the pinch and will not be pushing through a 6% rise. This episode illustrates the glaring need to reform the way council housing is funded.

"One solution to the perennial problem of funding would be to allow councils to keep all the money their tenants pay in rent. The Treasury is set to take away £300 million in a single year from councils, and this is money that would be better spent locally providing the best possible housing for local people."

Sir Jeremy Beecham, Labour's leader in local government said: "This is great news for people and families across the country in local authority housing, worried about their household budgets.

"Labour councillors have been working hard to keep rents down for people during this tough time and help their incomes go further, and the Government reacted immediately to our concerns."

Sir Jeremy said that he had discussed the issue with a number of ministers, including Mrs Beckett, over the last month, as well as with Labour's ruling National Executive Committee and last weekend's National Policy Forum.

He said: "This is proof of a Labour Government listening to Labour councils on the ground and working together to get the job done."

Councillor Will Brooks Cabinet Member for Housing in Ealing, West London, said: “Ealing was one of the first local authorities in the country to call on the Government to re-think its hike in council tenants’ rents.
 
“We expressed our concern about our tenants ability to pay with the country in recession and so decided to use our own funds to keep the rents well below the government's proposed increase.

"We are pleased the government has finally seen sense on this issue even if this decision has come at the 11th-hour. 

“In Ealing as in other areas of the country rent bills for council tenants went out this week.

"Before we can let them know what their new rents will be we need to see the detail of the proposal to understand exactly how much money is on offer.”

Newham’s elected mayor Sir Robin Wales welcomed the Government’s decision.

He said: “Newham has many council tenants, and we have already frozen Council Tax to help them. The borough has played an important role lobbying ministers to look again at the level of rent increase.
 
“I applaud the Government for the way it has listened to our concerns. I’m pleased councils have had their voices heard and that housing minister Margaret Beckett has taken exceptional action to help council tenants this year.

“The Government knows that council tenants are being hit hard by the recession. They are not fat cat bankers with multi-million pound pensions to rely on; these are real people who, when times are hard, look to councils and the Government to give them a helping hand.”

Liberal Democrat Shadow Housing Minister, Sarah Teather said: “This announcement ignores the fact that the Government continues to claw back rent receipts from councils.

"If local authorities were allowed to hold on to this money in the first place, tenants could already be paying lower rents.

“It is high time that ministers abolished this unfair ‘tenants tax’. With the extra money, councils could also start to build the extra social houses this country so desperately needs.” 

Defend Council Housing chair, Alan Walter, said: "It's good to see a Minister that listens and this is a step in the right direction.

"But this announcement still means that government will be making a big profit from council tenants in 2009/10 and that's just not acceptable."

"The 'robbery' has to stop once and for all. The government's review must accept that every penny of our rents is spent on the management, maintenance, repair and improvement of council homes."

"The scam of continuing to charge tenants to support a historic debt that should have been paid off several times over is outrageous. We don't have a financial interest in the assett and they've had more than enough receipts to pay it off years ago!"