York council was given £1.2m to build affordable homes – but sent it back

More than £1.2 million earmarked for building affordable homes in York had to be sent back to government coffers because the council did not spend the money – as the city faces a housing crisis.

But a City of York Council spokesman says there are “restrictive rules” over how the cash can be spent – making it difficult for local authorities to use the money.

The £1,205,007 was collected through Right to Buy receipts – the scheme that allows council tenants to buy their council homes at a discount – with some of the money from the sale going towards helping local authorities build more houses.

But a Freedom of Information request by Cllr Michael Pavlovic reveals the council sent £1.2 million that could have been spent on building affordable homes back to the Ministry of Housing, Communities and Local Government in the past 15 months because it had not been spent.

Restrictive system

Tom Brittain, assistant director of housing at the council, said York has been pushing for the government to make it easier for local authorities to spend the cash – which has to be used within three years of being collected.

He said: “The rules on how receipts from Right to Buy sales can be used are restrictive.

“We have lobbied the government to allow greater flexibility on how councils can spend the money. It held a national consultation on this last year and we are waiting for the findings and outcome.”

“Those local authorities which still have council housing struggle to spend these receipts because of the restrictions attached, however our Right to Buy receipts are being used for our housing delivery programme which includes building 120 new homes for social rent and 120 homes for shared ownership.”

Cllr Pavlovic said:

• The right to buy system is restrictive, however the least you expect from an effective administration is to utilise the money the council gets from selling off its social housing to replace it with new social housing.

  Instead, York loses £1.2m of our money back to the Government at the same time as Liberal Democrats are saying we are inadequately funded.
  

Cllr Pavlovic said the lost money resulted from a Lib Dem-Conservative administration failing to plan for new social housing in its first three years in power, from 2015.

“The problem is £1.2m will be a drop in the ocean compared with what the council will lose in the years to come through a lack of focus and commitment to new, genuinely affordable housing that’s so desperately needed in York,” he added.

Housing crisis

The council itself admitted the city faces a “housing crisis” as part of a report prepared for senior councillors on plans to build more than 600 new homes at sites across the city during the next five years – with at least 40 per cent being affordable.

Speaking at a council meeting, Labour group leader Cllr Danny Myers said: “[The phrase] the largest housebuilding programme since the 1970s is used time and again to mislead residents about this administration’s plans.

Council leader Keith Aspden said: “If you want to use terms like out of order what’s out of order is the record of Labour when you were in administration and in charge of this council, when actually our levels of housebuilding slumped.”

A meeting in July heard the council lost half its homes to the Right to Buy.

The authority used to own about 14,000 homes but that number has dropped to about 7,500, a council meeting heard.

Residents who bought their former council houses in York and then sold them on made an average profit of £46,500 – according to data published in March.