“Fund it yourselves” was the clear message from communities secretary Sajid Javid to the Communities Select Committee and then again in response to an emergency question from John Healey last Thursday. Red Brick had already outlined the options available to the government to help authorities make their tower blocks safe, and before that we called on the government to foot the bill. Javid has now made it clear he has no intention of doing so.
Of course he found some warm words with which to give the impression he was bending over backwards to help. “What we will absolutely do with every local authority,” he said to the committee, “is work with them closely and make sure that, through that work with them and the financial assistance that we can provide and the financial flexibilities, they are able to pay for any essential works that they deem necessary.” But he went on to say “we are not planning grants” and that his assistance is limited to “financial flexibilities that can provide the funding.”
The options appear to be twofold. Either councils will be allowed to borrow more, if they would otherwise hit the borrowing caps that apply to their council housing finances. Or they will be allowed to make transfers from their General Funds, for example from reserves, to bolster their Housing Revenue Accounts. The latter could mean that council tenants are not burdened with extra costs, unless of course (as seems likely) such a transfer only covers part of the costs of fire prevention work, and some still has to be paid from rental income. The first option, relaxed borrowing caps, offers nothing to councils at all, except the ability to spend more of their tenants’ money. Either way, local people – whether just tenants or a combination of tenants and council taxpayers (which include tenants too, of course) – will be meeting the cost of the work, not central government. The “financial assistance that we can provide” turns out to be zilch.
These options are those foreseen by Red Brick in July. We said that, in all probability, the government would force councils to pay for remedial works from tenants’ rents, perhaps offering “help” in the form of looser borrowing caps or (we speculated) permission to raise rents. Even if extra subsidy were offered in the form of grant, we suggested that the government would simply take this from its existing capital programmes. In the event, it’s not even going that far.
Why is this important? Council housing accounts are already under severe pressure. A four-year period of compulsory rent cuts still has two years to run, arrears are shooting up as universal credit and other ‘welfare reforms’ are rolled out, right to buy continues apace and councils are still faced with the threat of having to sell off their highest value properties, even though this may well now not happen. Furthermore, councils have already been told there will be no more government money to keep houses at the Decent Homes Standard, even though a stubborn 15% of the stock has failed the standard over the last four years. If they divert money to post-Grenfell safety works, this will almost certainly be at the expense of their obligation to meet the DHS.
Furthermore, it is only a short time since the prime minister was promising a new generation of council houses. For the councils that have a significant volume of post-Grenfell work, the pressures on rental income that were already intense look set to get worse. Now that Sajid Javid has explained that his “flexibilities” will offer them no extra cash, the prime ministerial promise looks vacuous.