Labour councils are overwhelmingly in favour of keeping rent subsidies for council tenants – even when they are on six figure salaries. I put in a Freedom of Information request to see responses to the Government's Pay to Stay consultation. This proposes that the rent subsidy, worth an average of £3,600 a year should not apply for the rich. Among the options are: those earning over £100,000 (as many as 6,000 tenants); or those earning over £60,000 (as many as 34,000 tenants); should pay the full market rent. These estimates relate to the combined earnings of couples who are renting. Another option would be for the subsidy to taper off, starting at a lower level, to avoid people being worse off following a pay rise.
At present, council tenants on above average earnings are getting a subsidy worth hundreds of millions of pounds from taxpayers, many of whom are on below average earnings. Why should we subsidise the rent of, for example, Bob Crow, the leader of the RMT who earns £145,000 a year? In Westminster City Council the rent subsidy is around £6,000 a year and there are 2,200 council tenants earning over £50,000 a year.
The first question in the Government's consultation was:
Do you agree with the principle that very high earners living in social housing should pay higher than social rents?
The overwhelming response from Conservative and Lib Dem councils was that the rich should not be subsidised by the poor. There are various views about thresholds and practicalities, but there was strong
support for the objective.
By contrast, the Labour councils were either hostile or dodged the question. The only excpetion I spotted was from Newcastle-under-Lyme. It said:
Yes we support the principle that very high earners living in social housing should pay higher than social rents, due to social housing being a limited resource. There are too many households with a greater need for social housing stock and we would support this proposal on grounds of fairness.
Here are some of the Labour councils defending subsidies for the rich in their response:
- Gateshead "No – as other factors need to be considered ie retaining well balanced, mixed communities." They also feared "the potential increase in the number of Right to Buy applications." Although that would mean the rich staying and helping with "well balanced, mixed communities."
- York. "No…We feel this is a distraction."
- Hackney. "Hackney Council owns some 22,700 social rented homes, managed by an ALMO (Hackney Homes). As you may know, Hackney is one of the most deprived local authority areas in the country. The most recent Hackney Housing Needs Survey, carried out by consultants in 2008, found that: the median household income of council tenants is £8,862, with 70 per cent in receipt of housing related benefit; only 0.6% of council tenant households were in a top band of £57,001 – £68,000." This is puzzling as it doesn't give the figures for those earning over £68,000. In any event when housing associations are included it seems quite likely that over £1 million a year is going on rent subsidies for higher rate taxpayers in Hackney alone.
- Lambeth. "Given that the numbers of very high income (£100,000+) households living in social housing is estimated to be between only 0.03 to 0.17% it is considered that the administrative costs of implementing the scheme would be greater than extra income." Revealing their hostility to home ownership they add: "High earners when faced with the prospects of much higher rents are likely to exercise their Right to Buy."
- Camden. "Higher income social housing tenants, for whom exercising the Right to Buy may be an option are positively encouraged to benefit from the sort of subsidy that these proposals suggest should not be available to tenants who continue to rent their homes. This area of policy is very much a distraction from the real issue – a lack of new affordable housing supply." This rather misses the point that the proceeds from the right to buy include a requirement to provide new homes for those stuck on the waiting list. Meanwhile Frank Dobson sits pretty with his university lecturer wife, and their joint income of over £100,000, as a council tenant with a rent subsidy of around £800 a week.
- Ealing. "lt is unclear how charging higher rents to higher income households would help to release homes for those in housing need. Indeed, there is a potential that such a scheme would encourage higher income tenants to make right to buy applications rather than pay higher rent charges, resulting in a net loss of housing stock." A comment which displays alarming ignorance of the required one for one replacement of housing under the right to buy scheme.
- Greenwich. "The proposal will reduce the ability of higher earners to save a deposit and enter the home ownership market by reducing their disposable income."
- Sheffield. "The Council does not agree that charging higher rents is the right solution to this perceived problem. "
- Southwark. "Increasing the rents for some households could push more tenants to exercise the right to buy thereby reducing the amount of badly needed affordable housing in the borough."
- Reading: "It is our view as an administration that this proposal undermines the principle of social housing as a public service and would in practice divide communities and undermine cohesion. We see this as effectively an additional tax on workers in social housing."
- Rotherham "believes charging high earning tenants more than social rent will encourage Right to Buy purchases; something which we would not welcome."
- Waltham Forest. "There is a contradiction in the government's argument that high earners should not receive the "subsidy” of social housing (ie the difference in cost between social and market rents), as one likely response ol high earners faced with a steep rent increase would be to take advantage of the generous subsidy of the right to buy legislation, thus removing their property from the social housing stock altogether."
- North East Derbyshire. "As a council we disagree with the overall principle of charging higher rents for higher earners."
- North Warwickshire. "I have been asked to inform you that the Council does not agree with the principle that very high earners living in social housing should pay higher rents than social rents."
- Norwich. "No, the council does not agree with this principle."
- Nottingham. "No. This is because differential rents based on income has never been a feature of English social housing."
- Newcastle. "Does not agree with the principle of means testing for social housing….People should have the homes they need and want, not be at the mercy of arbitrarily losing their homes because Government policy is failing." Losing their homes? Those who could easily afford to would simply be asked to pay the full rent.
Certainly there are practical matters to resolve. Should the onus be on tenants to disclose when their incomes are above a given threshold? They would be guilty of fraud if they failed to do so. That would create a very limited administrative burden on councils. Data sharing with the HMRC would be more effective although more onerous.
How many thresholds should there be with phased reduction in subsidy? The more you have, the easier to avoid making someone worse off with a pay rise, but the more complicated it is. These are not insurmountable problems. Those on Housing Benefit would obviously not need to be assessed for these purposes at all.
What is so striking is the virtual unanimity among Labour councils in opposing the rich helping the poor.
Conservative-run Swindon asked tenants and those on the waiting list what they thought and found a large majority supporting the Government plans. Offered different thresholds of when the higher rent should be applied 48% thought £60,000, 24% went for £80,000 and 11% said it should only be for those on over £100,000. None of the Labour councils undertook such a consultation.