Government should forgive councils’ £29bn housing debt, says Shelter

Shelter has urged the government to remove historic housing debt from council balance sheets to enable local authorities to deliver new homes.

The call-to-action comes as new analysis by the charity revealed it would take 119 years to clear existing social housing waiting lists in England at the country’s current speed of delivery.

This conclusion is based on government statistics showing that more than 1.3 million households were on social housing waiting lists last year but the average delivery rate of social rent homes by all providers over the last two years was only 11,259 per annum.

One of the reasons for this gap, Shelter said, is the “stranglehold” of £29bn worth of historic housing debt inherited by councils from central government in 2012 as part of a council house financing agreement.

The charity said the terms of this deal have been “repeatedly broken” by successive governments, using the example of councils being “forced” to sell off more homes through right to buy sales than they could afford to replace.

At the peak of social home delivery in 1967, 46% of all new homes built in England were for social rent and councils delivered almost all of them (97%). Shelter’s said the delivery of new social homes would need to ramp up to 90,000 a year for ten years to end the current housing crisis.

Sarah Elliott, chief executive of Shelter, said: “The government can - and must - fulfil its promise of a council housing revolution. Removing barriers like the unfair housing debt would help councils to get shovels in the ground and build at scale again.”