Local authorities in London urged to trim budgets on municipal housing provision
In a bid to tackle the ongoing crisis in council housing finance in London, a comprehensive report has been unveiled, offering several potential solutions. The report, delivered in partnership with the London Housing Directors' Group and Society of London Treasurers, outlines key strategies focusing on funding reform, capacity building, and partnership between government and councils.
The report underscores the importance of government funding reflecting London's high needs, deprivation, and service costs. London Councils are calling for new funding formulas that better capture homelessness pressures, deprivation linked to housing costs, and demand for children’s services. They emphasize the need for London to receive a fair share of the £39 billion national affordable housing pot announced in the Spending Review.
To boost council housebuilding capacity, the government has launched a £12 million Council Housebuilding Skills & Capacity Programme for 2025/26. This initiative aims to upskill existing local government workforces and recruit new qualified professionals such as surveyors and project managers, thereby strengthening councils’ ability to deliver new homes.
Reforms will also allow councils to indefinitely retain and combine Right to Buy receipts with grant funding for affordable housing, accelerating council homebuilding delivery. The government plans a 10-year, £39 billion Social and Affordable Homes Programme, which includes up to £11.7 billion for London through the Greater London Authority. This programme aims to rebuild sector borrowing capacity, establish stable regulation, and reinforce council housebuilding.
Recognizing that ending the housing crisis requires sustained, collaborative effort over many years, the government stresses a renewed partnership with councils and housing providers to build at scale. Boroughs are crucial in modernizing older properties and building new affordable homes in London, as stated by Cllr Williams.
The cross-party group is also advocating for action to reduce local authorities' housing revenue account (HRA) debts and lobbying for a 10-year settlement with rent increases tied to a cost performance index (CPI) plus 1%. London's council housing's future is seen as possible with national policy decisions that provide secure and sustainable finances, according to Cllr Williams.
The proposed solutions, if implemented, could ensure a sustainable delivery of council housing in London, thereby addressing the financial instability and reduced ability of boroughs to meet housing needs. For more details, the report can be accessed here.
- The report urges the government to consider a policy that reflects London's high needs and service costs when distributing funds from the £39 billion national affordable housing pot, ensuring a fair share for London Councils.
- To enhance council housebuilding capacity, the government's proposed reforms allow councils to indefinitely retain and combine Right to Buy receipts with grant funding for affordable housing, facilitating faster delivery of council homes.
- In an effort to secure stable finance for London's council housing, the cross-party group is advocating for action to reduce local authorities' housing revenue account debts and a 10-year settlement with rent increases linked to the cost performance index (CPI) plus 1%.
