'Subsidies’ that aren’t: axing affordable housing

By Savi Hensman
May 20, 2012

According to news reports, the UK government plans to stop ‘subsidising’ social housing for households in England with an income of more than £60,000, who will be expected to pay the full market rent. Many people will agree: why should taxpayers contribute to the rent of better-off families in such homes? Except that they do not.

The public subsidy for council and housing association homes is around £122 million a year, the Department for Communities and Local Government (CLG) apparently claims. But the official figures show the opposite – from council housing at least, the state nets a profit.

According to a House of Commons Library paper on ‘The reform of Housing Revenue Account subsidy’, published in August 2011, “Local authorities with housing stock are required to record all income and expenditure in relation to these dwellings in their Housing Revenue Account (HRA)... Where assumed costs exceed assumed income, the authority is deemed to be ‘in deficit’ and will receive a Housing Element subsidy equal to the assumed shortfall. Where assumed revenues exceed assumed costs the authority is deemed to be ‘in surplus’. Housing Element surpluses are transferred to CLG where they are pooled and paid to deficit authorities... In the last financial year the Treasury paid out £113.2 million less in HRA subsidy than it received from those authorities contributing to the scheme.”

According to an Inside Housing article published in 2008, “By 2022/23 the tenant tax would be worth a staggering £894 million every year. Under the current system the Treasury could use rents to subsidise government spending on other areas such as education, health and defence.”

The government and certain newspapers claim that council housing is ‘subsidised’ because it costs less than often exorbitant private rents, as if housing should be treated as a purely money-making opportunity, devoid of social value. This is rather like claiming that libraries are extremely expensive because so much money could be made by using the buildings as casinos instead.

It might be thought that forcing better-off tenants to pay the full market rent or quit will give worse-off families more chance of getting affordable housing, but it is questionable whether this will be the overall effect, at least in large swathes of England. For instance, according to the home.co.uk website, in the inner-city borough where I live (one of the poorest nationally), the median rent for a three-bedroom property (suitable for, say, a couple with a teenage son and daughter) is £2,383 per month, i.e. about £28,600 per annum.

If such a family were in council accommodation, both parents were in paid work and a promotion or extra overtime briefly pushed their total income to £60,000, then one was made redundant – a common experience at present – they could end up homeless. It is possible this could also be triggered if an adult relative needing extra support, for instance a frail elderly parent, moved in with them.

The government wants to push up rents for new social housing to 80 per cent of market rents, more than the entire income of many families. So homes emptied of tenants by such means might no longer be affordable, in the usual sense of the word.

Once the principle was established, the £60,000 limit might later drop to £50,000 or less, clearing out even more inner-city residents.

The government has already driven many of the poorest families from certain areas through housing benefit and other welfare cuts, unjustly branding them as ‘scroungers’ to justify such measures. It apparently now intends to push out some middle-income households e.g. containing ‘key workers’ such as teachers and nurses. Those who use terms such as ‘subsidy’ to achieve this could be regarded as creative in their approach to the English language; or it might be said, in the words of Psalm 35:

they do not speak peace,
but against those who are quiet in the land
they devise words of deceit.


(c) Savi Hensman is a respected commentator on social, political, welfare and religious issues. An Ekklesia associate, she works in the care and equalities sector.

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