Lib Dem councillor warns half a million could be ‘handed back to government’ if not spent on housing

A Lib Dem councillor has warned that Arun District Council could end up handing back half a million pounds to the government if it is not spent on social housing.

Friday, 3rd September 2021, 3:56 pm

James Walsh (Beach) , who was speaking during a meeting of the corporate policy and performance committee, said: “I would hate for this council – and future tenants – to lose any money that we have got from the sale of our previous investment in housing.”

ADC’s 2020/21 finances were discussed during the meeting and showed that £0.5 million ‘one-for-one’ receipts were available to spend.

The money came from the sale of local authority housing through the right to buy scheme. The scheme allows council housing tenants to buy the property they live in at a discount.

Arun District Council's headquarters

But local authorities can only use the receipts from such sales to buy or build new social housing. If they are not spent within five years, the funds must be handed back to central government.

Dr Walsh said: “It is very important [to note] that our share of the capital receipts can only be ours if we spend it on new social housing.

“I would like to suggest that this committee makes a strong recommendation to the appropriate committee that the housing revenue programme takes account of that and makes sure that we do spend all of that money on social housing and don’t return any of it to central government.”

A report to the committee said that spending the right to buy receipts will be a priority under the council’s housing revenue account business plan. Officers said the programme would be ‘a key factor’ in ensuring the receipts are spent before the five year deadline.

ADC chief executive Nigel Lynn was also present during the meeting and said he ‘could not think of an example in the last ten years’ when money had been handed back to central government.

Mr Lynn said: “That is always our intention anyway as officers… not to lose money, which is effectively what councillor Walsh is suggesting.

“I cannot think, certainly in the last ten years, when we have given money back.”

Members unanimously accepted Dr Walsh’s suggestion to ensure right to buy receipts are invested in social housing.

The right to buy scheme was introduced in 1980 to give council housing tenants an opportunity to become home owners. 

Between 2012 and 2020, more than 89,000 homes were sold under the scheme but councils were only able to replace around 27,000 properties during that time.

The government has since announced a number of changes to the way councils can spend right to buy receipts. In response to the coronavirus pandemic, the government extended the June 2020 spending deadline to the end of March 2021.

A consultation took place in 2018 which found that local authorities were struggling to spend receipts within the three year deadline. As a result, the cap on borrowing by local authorities to fund housing was removed.

From April 1 the government has allowed councils to spend receipts up to five years after they were received.  In addition to this, receipts from right to buy can now be used to fund shared ownership and first homes.

In order to encourage the building of new homes, a cap will be placed on housing acquired using right to buy receipts from 2022.