Call to give councils control of Affordable Housing Grant

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

The Government should allocate a single Affordable Housing Grant (AHG) to councils to spend on both house building and rent subsidy in a bid to ensure decent, secure and affordable homes for all, a new report recommends.

Published by the Institute for Public Policy Research (IPPR), the paper urges a move away from housing benefit as a national entitlement, instead letting councils balance the twin needs of building new homes and providing cash support to those on low incomes.

However, it warns the plans would require a huge additional upfront investment in new house building – something which hasn’t been forthcoming for 30 years.

The central focus of the paper is a fundamental rebalancing of public expenditure from subsidising rents to building homes.

It highlights that in the late 1970s, four fifths of housing spending went into supply with just a fifth channeled through rent subsidies.

In the current spending round, however, due to a mix of income inequality, the labour market and explicit government policy, £4.5bn is being spent on house building grants, but £94bn on housing benefit.

Under the plans local councils would have to set up an affordable housing panel to include representatives from the council, housing associations in the area, private landlords and private and social tenants.

This panel would be responsible for agreeing the overall affordable housing strategy including house building, rent subsidy, private rented sector interventions, planning rules, land use and allocations.

The report says: “A key decision would be how councils balance the need to support people who need help with immediate housing costs against investing in improvements to local housing provision of various kinds. Both are about meeting need, but the latter has the potential to reduce cost pressures over time.”

It suggests ways the panel could work, by striking deals with private and social landlords to build homes to rent and buy; creating a local housing benefit scheme; working with landlords to ensure security, low rents and improved management; bringing empty homes back into use and tackling worklessness.  

The report says: “Housing benefit does play a role in indirectly subsidising capital investment, by providing investors with some certainty of rental income. However, channeling resources in this way does not maximise the supply impact nor is it possible to strategically direct such investment for the public benefit. Under the affordable housing grant scheme, local councils would have a significant level of resources, backed by the government, to bring to the table in negotiations with housing associations and private developers.”