£200m tenant tax is scandalous

Liberal Democrat Shadow Housing Minister Lembit Opik has obtained figures which show that the Government is planning to keep nearly £200m of council tenants’ rent this year.

Every year, the Treasury decides how much local authorities need to spend on new homes and maintaining council houses. Those it deems to take more in rent than they need to spend pay a ‘negative subsidy’ to the Treasury, which is then redistributed to authorities in greater need.

However, this year the Treasury is collecting £195,816,938 more than it is redistributing. This extra money will remain with the exchequer and will not be spent on council housing.

Yesterday, Lembit said:

"It is scandalous that when council tenants are finding it harder and harder to make ends meet, the Government is pocketing £200m of their rent.

"After the 10p tax debacle, higher road tax on older cars and now a massive tenant tax, it’s clear that this is a Government that is prepared to take from those who can least afford it just to balance its own books.

"The tax on tenants is preventing councils from investing in their housing stock, and crucially, building new homes for the 1.67 million families on social housing waiting lists. It’s time to scrap the tenant tax."

The predicted surplus of nearly £200m was revealed in a Parliamentary
answer, which is available here.

This negative subsidy reduces the amount of investment that local
authorities can make in their housing, both on repairs and on building
new social homes to rent. Local authorities have been forced to sell
houses in order to raise the funds for vital improvements because of this
negative subsidy.

2008/09 is the first year since 2000/01 that the Treasury has made a
surplus from negative subisidies, as revealed here.

2008/09 figures for negative subsidies broken down by local authority
are available here.

The above figures are for England only, but the same thing has been happening in Wales. Neath Port Talbot council, for instance, has been the "beneficiary" of negative subsidy. This all makes the forthcoming Neath Port Talbot councillors' seminar on the Welsh Housing Quality Standard even more interesting.