Housing rent cut hampers Stevenage Borough Council’s plans to pay off debts and build more homes

Sharon Taylor

Sharon Taylor - Credit: Archant

A £225 million black hole is opening up in Stevenage Borough Council’s finances, leaving the authority scratching its head about how it is going to balance the books.

Councillors say the government’s decision to force local authorities to cut annual rents on their council housing by one per cent will mean it will be £225m short of investment in a housing business plan it had mapped out for the next 30 years.

The plan includes paying back £200m loaned to the council in 2013 by the Public Works Board to buy back council housing which would otherwise have been sold off.

At a special council meeting on Tuesday, the Labour-run council’s leader Sharon Taylor tabled a motion calling on councillors to reject the rent cut and “condemn the interference of the government in the setting of rent levels for Stevenage Borough Council tenants.”

She said: “I am sure that in the short term the people of Stevenage will welcome the decrease in rents, but in the medium to long term the impact is severe.

“We had a 30-year programme to build 1,900 council houses but now we won’t be able to build the numbers of homes we want to, and our ability to maintain our council homes will be severely impaired.

“Our ability to deal with increasing numbers of homeless people will also be impaired. These are the unintended consequences of what the government is trying to do.”

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Ms Taylor said the council will look at renegotiating repayments of the £200m loan but that this could cost an extra £30m.

Councillor Phil Bibby, leader of the Conservative group, refused to support the motion and said it was ‘understandable’ the government is cutting rents so it can save on payments for housing benefit.

He said there are many examples of homes in Stevenage where new bathrooms and kitchens are put in unnecessarily, and recommended the council could simply “service the debt” by paying off minimum repayments instead of having to pay back the whole sum.

Councillors agreed to begin a complete review of the business plan in the coming weeks which will include renegotiating the loan and trying to find savings in other areas.

It comes as the council faces more government cuts to its annual budget and is being forced to consider raising its share of the council tax, as well as raising fees and charges to help balance the books.

The motion which calls on Chancellor of the Exchequer George Osborne to “enter into urgent discussions with local housing authorities to understand the impact of the action he has taken” was carried.