RATHER than proposing to increase the financial pressure on tenants with above-inflation rent increases, councils should be seeking the support of tenants in a campaign for the government to fund Housing Revenue Accounts (HRAs) sufficiently to maintain and improve existing homes.

Support for the government’s proposal for five years of above-inflation rent increases for council and housing association tenants is almost universal with housing associations and is even supported by some councils that have signed the document Securing the Future of Council Housing.

London councils are calling for 10 years of CPI plus 1 per cent. Clearly, councils are short of the funding they need to maintain and improve their homes. Yet above-inflation increases are, in our view, short-sighted and counter-productive. It will further impoverish already poor tenants who do not have their rent covered by housing benefit.

Evidence of the impact on council tenants of higher rents is to be found in government statistics on rent arrears. For England as a whole, in 2023-24 current tenant arrears reached £397,006,149. That is nearly double the £203 million in 2015-16.

Outstanding arrears of former tenants rose from £126m to £200m. This is despite the fact that for four of those eight years, there was a 1 per cent rent cut, each year. Arrears still rose in each of those four years. There will inevitably be a further increase in arrears in the current financial year 2024-25, since the maximum increase was 7.7 per cent, marking a two-year maximum increase of 14.7 per cent.

In London, where rents are much higher than the rest of the country, the statistics are extraordinary. Over the same timescale arrears more than doubled from £75m to £179m. Former tenant arrears rose from £46m to £88m.

While outside of London there are 10 councils where the arrears are more than 10 per cent of the rent roll (the rental income that councils would receive if all the rent was paid) in London there are 13 councils with more than 10 per cent. The worst ones are Newham with 15 per cent, Croydon with 17 per cent and Haringey with 25 per cent.

Given this context, what will be the consequence of five or 10 more years of above-inflation increases other than increasing arrears, putting more financial stress on more tenants? They are being penalised for the underfunding of HRAs which results from central government policy.

The Chartered Institute of Housing warned: “In theory, it would be possible to change rent policy to allow rents to increase faster and to a higher level — but there would be extra costs in terms of increased benefits payments and risks in terms of social rents beginning to approach or exceed market rents if this was pursued over an extended period.”

Securing the Future of Council Housing, supported by 109 councils, has warned that HRA finances are unsustainable. The extra 1 per cent a year only provides around £74m extra income — a negligible amount, which will have little impact on the financial crisis.

Instead of supporting above-inflation increases councils should focus on campaigning for the government to fund them sufficiently to maintain and renew their existing stock. What sense does it make to drive rents up to a level where more tenants won’t be able to afford them and councils will collect less and less of their rent? If a tenant cannot afford a council rent, what can they afford? Private-sector rents are way beyond their reach.

A recent survey by Southwark Council, answered by 76 councils, with more than 800,000 homes, reinforced their warning. It reported that “two-thirds of council housing budgets are on the brink of collapse,” and at risk of being unable to set a balanced budget by the next general election.

“Years of financial strain have forced councils across the country to reduce their maintenance of council homes, cancel new build projects and even sell off existing housing stock.”

While most council rents are way below housing benefit level, rents will be driven up to the point where the benefit does not cover the rent. This is already the case with some “affordable rent” levels.

The government has to face up to the question: will it allow the deterioration of existing council housing? Unless they address the demands of Securing the Future of Council Housing, then the living conditions of tenants will worsen. This is a future which we cannot accept. There can be no renaissance of council housing unless this problem is resolved.

Since April of last year, new consumer standards were introduced. To check whether councils are adhering to them, the Regulator of Social Housing has begun to carry out inspections of HRAs.

The results of these inspections underline a deepening crisis. They are showing some serious problems with the condition of existing stock and the work of councils. Out of 27 councils so far given grades, 15 of them have been graded C3, indicating “serious failures,” 2 C4, and “very serious failings.”

While the problems include poor management, the fact is that HRAs were underfunded from the outset of the “self-financing” system introduced in 2012. The financial position has deteriorated since then.

That’s why one of the demands of Securing the Future of Council Housing is for reopening the 2012 “debt settlement” — essentially they are calling for some debt write-off. (More than a billion pounds a year goes on debt service charges.)

Rather than proposing to increase the financial pressure on tenants with above-inflation rent increases, councils should be seeking the support of tenants in a campaign for the government to fund HRAs sufficiently to maintain and improve existing homes.

Even the New Labour government, which had a terrible housing policy (it opposed councils building council homes and prevented them from even applying for social housing grants until the 2008 financial crash) provided funding through the Major Repairs Allowance which modernised homes with double glazing, central heating and UPVC doors.

With more demands on councils, with an upgraded Decent Homes Standard due, and decarbonising housing urgently needed, this government needs to provide its equivalent of the Major Repairs Allowance.

Martin Wicks is secretary of the Labour Campaign for Council Housing.