Newham seeking 10 per cent council tax rise due to housing problems
Newham Council are looking to increase council tax by 9.99 per cent from April as cost pressures intensify.
The authority are blaming housing for much of the problem with costs for providing temporary and emergency housing rising fast due to a lack of social housing. A further £32 million in cuts is proposed.
A possible 9.99 per cent increase was discussed and agreed at a recent Cabinet meeting pending government approval.
The borough has been a focal point for much of what’s wrong with housing in London and beyond for many years. Many former council homes sold under right to buy are now let privately.
Tax
A previous study into privately let homes in the borough showed as many as half of the borough’s 27,000 landlords were not declaring revenue.
Mind you, neither was a London Labour MP who is currently Chief Secretary for the Treasury and was let off her “administrative oversite” in 2024.
Newham’s Mayor was quick to blame the Conservative’s record on housing without mentioning Labour are persisting with many of those very same policies.
Additional funding for new council and social homes announced in the Labour Budget was just £500 million above previous Tory levels under the Affordable Housing Programme. A rate that barely keeps up with rising construction inflation costs and will provide just 1,000 new homes across all of London at most, when the total number of households in emergency and temporary housing in the capital rose by 1,400 to 68,807 last year alone.
Newham have more than 3,000 households in temporary and emergency housing. Over the Thames, Greenwich council have 2,000 households in such housing which includes hotels – a number which has risen sharply in recent years – while Lewisham have nearly 3,000.
The issue has an element of unreality about it. Dozens of examples abound including Greenwich Council selling off Riverside House in Woolwich town centre cheaply in recent years.
This week approval for conversion to a hotel is expected to be approved. Meanwhile Greenwich now has so many homeless households it’s housing people in hotels at vast cost. London Councils state that over the past two years there’s been a 662% increase in families placed by London boroughs in B&Bs.
Funding
Labour’s £500m funding will at most see 5,000 extra social homes across the UK. It’s estimated the country needs 90,000 built per year and without that costs to councils and taxpayers will continue to rise exponentially as housing is provided via private landlords at high cost.
Rents are rising 9.1 per cent annually across the UK and 11 per cent in London according to the Office for National Statistics.
According to a recent study the UK now spends £31.5bn annually (in 2021/22) on housing benefit owing to a lack of truly affordable housing. An additional £1.4bn is spent in London alone on emergency and temporary housing last year.
Both figures are almost certainly substantially higher now yet government still refuses to fund a substantial programme of low cost housing. In the meantime councils are on the brink, government costs are spiralling and councils like Newham are seeking ten per cent council tax increases.
Right to Buy is being restricted but not removed – and that will probably see just 5,000 homes retained nationally given recent sales levels.
Other measures announced by the new government in late 2024 such as public funds being used for land remediation to enable the private sector to build (and profit) was merely the latest stage of an already existing Tory policy.
Where money is being spent
Compounding the problem is that out of minimal funding from central government for “affordable” housing, much has been spent buying existing homes at high cost rather than being used to build new social or council homes and and in turn provide a net increase in housing stock as demand increases.
This policy of buying existing properties also puts private renters at risk of eviction and in turn placed at risk of homelessness. A policy to help homeless households is in turn putting others at risk of homelessness.
So not only is there inadequate funding for social housing, what is there is is often not even being used to build new homes.
Other problems locally in Newham are stalled sites such as one beside the Woolwich ferry which has sat in limbo half-finished for years after a contractor collapsed.
Newham is a fine microcosm of 40 years of housing policy failure under all parties that have resided in Westminster. While they snipe at each other, residents will pay the price.
And with housing problems far from restricted to Newham, many other councils are on the brink with residents set to face substantial council tax increases in years to come. One wonders what it will take for this government to ditch 40 years of failed policy and fund a mass programme of new truly affordable housing.
In terms of the 10 per cent tax increase the council state it is “unlikely to be determined until late February 2025 and that we should consider setting a “reserve” date for Full Council early in March, the arrangements for which are in hand.”
Will Newham be allowed to raise the council tax over the 5% threshold? I thought that special permission had to be sought.
They are requesting permission from central govt. We’ve seen similar at other boroughs in financial difficulties
Your average person paying the price for government failings again. This will also impact new homes being built in the area. After all what buyer wants to move somewhere with council tax rising at this level and in an economic shambles?
Yep council tax is a *far* less fair tax to fund services than income tax, for example, but housing costs are falling ever more on those on low and average incomes.