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Guildford Liberal Democrats

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The truth about the housing money Guildford had to give back to the government

February 19, 2021 2:25 PM

In the run up to this May's elections, the local Conservative party has been making misleading claims about £2.3 million of money received from the sale of council house taxes under Right To Buy which had to be returned to the government after it couldn't be spent within a three year deadline.

The Liberal Democrat/R4GV coalition at Guildford Borough Council has now issued this statement to set the record straight about what has happened:

"Having to return over £2 million to Westminster, funds received from sales made under their controversial Right To Buy policy, clearly deserves explanation. The fact that Executive Councillors were unaware of the scale of the issue until Cllr Manning's (Conservative) intervention at last week's Budget Meeting also requires detailed investigation.

"However, ex-Cllr Brooker's (Conservative) contribution to this debate is confusing as over half this money (£1.2 million plus interest) was returned in 2019 due to inaction when he was Lead Member for Housing under the Conservative administration.

"There are clearly fundamental and longstanding problems with the Council's reporting around this issue and as a consequence funds that could have been spent on housing were not, and we apologise unreservedly on behalf of the Council. We assume a similar apology will be forthcoming from the local Conservatives for their actions (or lack of) prior to the last election.

"The Right to Buy policy is complex and spending the returns is not as simple as it sounds. We can only use the receipts for a maximum of 30% of a new purchase or development, so of the £2mn we returned we would have needed to add around £4.5mn of funding from other sources to actually unlock spending it.

"It is perhaps important to point out that we have received over £50 million of funding from the Housing Infrastructure Fund for the Weyside Urban Village, agreed under this administration. We also expect further contributions in the future. In no way does this excuse the issue of returning this money but it's clear we have received more from the Government than we have paid back to support our house building programme.

"We will ensure that our procedures are reviewed immediately such that we can manage this appropriately in the future. We have always said that the Council under this administration will be open and honest about its shortcomings and we will work hard to continually improve ourselves."

A separate statement from the Managing Director of Guildford Borough Council states:

"Since 2012, councils have been able to keep all of their right-to-buy income providing it is spent on new affordable housing or related transaction costs within three years.

"As an incentive to replace housing lost through right-to-buy, the government ask for unused RTB income within the three-year period to be repaid at an interest rate of 4.75%. This is income from the sale of houses not council tax collected from residents.

"Our right-to-buy income and expenditure is closely monitored and included in the budget. We have identified new-build housing schemes and properties to acquire to spend the income on, but in the past two years it was not possible to spend all of the income without building more new houses than we were able to as part of our existing programme.

"This is because we are allowed to fund only 30% of any replacement housing from the RTB Income.

"We have to fund the remaining 70% of the cost of replacement housing ourselves. For 2019/20 we had to pay back £1,993,537 income with £387,910 interest as we were unable to spend it.

"But we would have had to have spent a further £6.6 million on replacement housing to have avoided that.

"During 2020-21, we have been granted an extension to the time period within which RTB receipts can be spent but we anticipate there is still a risk we may need to return more receipts to government.

"We are finding the time frame of three years within which we need to spend the money is difficult given that it typically takes one to two years to design a scheme and obtain planning permission and building consent for it.

"We are sorry we have not been able to spend the money within the timeframe despite our best intentions and we are doing what we can to mitigate this loss.

"But we are not alone. There is national concern that replacement housing is not being built fast enough and the Local Government Association has recommended to government that they could help with this by extending the time limit to spend the income from three to five years.

"The LGA continues to argue for councils to have maximum flexibilities to build; for instance the freedom to borrow against its housing assets, retain 100 per cent of receipts generated from all sales, and set rules such as discounts in line with local pressures. The government has not yet published the findings of its 2018 consultation on the subject.

"We are sorry we were unable to build new homes faster to spend the income but we aren't alone and other councils also struggle to do this.

"To be more transparent with the monitoring of this issue, and to ensure the financial position is reported clearly and transparently, we will revise the information we include on the housing revenue account in our regular financial reports to our corporate governance and standards committee.

"We regret that our housing development programme has not progressed at the pace we had intended but, having already built new affordable houses at Ladymead, Southway and Great Goodwin Drive since 2019, we are working hard to ensure more new housing can be built as quickly as possible."

Housing Construction