Social housing facing cuts as Croydon Council struggles to plug £481m funding hole

Home-building could be scaled back and repairs to the council's existing stock delayed in a bid to plug the huge financial hole.

It comes after Chancellor George Osborne announced a yearly one per cent reduction in social rents in his July budget in a bid to cut the Government's housing benefit bill. 

Council bosses had anticipated an increase in rental income but must now strip back spending planned for the next three decades.

Councillor Alison Butler, cabinet member for homes, regeneration and planning, said: "There was no pre-announcement that this was going to happen. 

"At the moment we are trying to pull together right across the board where we can look at reductions. It is mainly our services to tenants and the upkeep of our council stock."

The council has compiled seven options for savings, including refinancing its debts and cutting spending on upgrades to homes.

It could postpone repairs, hike the £111.54 service charged paid by tenants and slash expenditure on housing management.

A reduction on the £29.9m spending in new builds - expected to fund 100 homes over the next four years - is also under consideration.

Coun Butler said: ""It will probably be a small reduction in each of those rather than taking a big chunk out of one. 

"We will keep our housing at a good quality, but in the future what it means is you may have to wait another year before your kitchen gets replaced. It may mean we don't paint the outside of buildings so often, it may be if you have to redo a block of flats that that gets delayed.

"But also it could mean the community services around youth, around old people, tenancy relations, helping people to get into jobs and so on."

Council tenants are to be consulted on which areas should be prioritised for spending cuts.

The authority's 30-year business plan had been drawn up on the expectation of a one per cent annual rise in social rent income on top of inflation.

Instead it will now lose more than £3m a year, leaving its budget £481m below the £3.47bn anticipated.

But Coun Tim Pollard, leader of the Conservative opposition group, described the council's complaints as "disingenuous" and told them to "stop moaning and get on with it."

He said: "The Government has determined social rents for as long as I've been a councillor; it goes up, it goes down.

"[The council] benefit when the Government puts it up above inflation and they don't benefit when it goes down. You flex your business plan, stop moaning and get on with it. 

"This very disingenuous of them, frankly."

Alison Butler said the council had been taken by surprise by the rent reduction, but Tim Pollard accused of her of being "disingenuous"

Coun Pollard added: "If you're a tenant you're probably sitting there thinking you're quite pleased your rent is going down slightly."

A Department for Communities and Local Government spokesman said: "Social housing rent has risen by 20 per cent since 2010, more than double the increase in the private sector.

"Lowering social rents will help protect social tenants from rising housing costs, while ensuring fairness for taxpayers.

"The housing association sector is in a robust financial position, having made a surplus of £2.4bn last year, and we are confident they will be able to find the necessary efficiencies."