Dear Prime Minister and Chancellor,
We are cross-party councillors from all over England, and we are urging you to act now so that local authorities can build more council homes for social rent.
Social homes are vital national infrastructure. They reduce homelessness, ease pressure on local services, and give families the stability they need to thrive.
The housing charity Shelter is running a major research project, funded by IKEA, that demonstrates the impact clearly. Findings show that:
- within three months of moving into social housing, six in ten tenants reported improved mental health
- 45% of tenants said they were better able to pay their bills
- half of those previously in debt were now free of debt
Social homes do not just house people — they improve health, security and life chances.
But local authorities are being held back from building the social rent homes our communities need by Housing Revenue Account (HRA) debt that no longer reflects reality. The 2012 settlement left councils with around £31.8 billion of debt and, since then, things like rent cuts, higher Right to Buy discounts, new standards, and inflation have made the position far worse. Councils now must fund safety, decarbonisation, and existing stock investment, while still servicing debt that crowds out new building.
Research for Shelter by Savills finds that this debt puts a structural brake on delivery. It also shows that major debt reduction — with a full write-off if councils need to meet the cost of net zero policies — is needed to restore capacity.
It estimates that every £1 billion written off could unlock capacity to deliver around 8,900 council homes. If all the debt was written off, we could unlock investment for 284,000 homes nationally.
We urge you to write off the HRA debt to unlock a new generation of council homes for social rent.
Further measures that would unlock more social homes include:
- unlocking low-cost, long-term borrowing for councils, including improved access to cheaper Public Works Loan Board finance, more flexible repayment terms, and affordable refinancing options, so councils can combine grant funding with sustainable borrowing to build at scale
- reforming fiscal rules that currently discourage council housing investment and taking steps to devolve financial freedom to public corporations, including Housing Revenue Accounts, and unlocking low-interest government loans
- supporting councils to acquire land at prices that make social rent development viable, including strong government backing for the use of compulsory purchase powers without hope value and the legal and financial support needed to use those powers with confidence
- establishing dedicated funding and support for councils to acquire and convert empty homes into social rent homes, so acquisitions can complement new build and help councils bring homes back into use quickly in areas facing acute housing need
- backing a clear national mission for council housebuilding, with additional grant funding, stronger alignment between the Treasury and MHCLG, and a clear expectation that councils will be central partners in delivering the social rent homes needed to end homelessness and reduce housing poverty
Our councils are ready to build, and the need could not be clearer. But without action from the government, local ambition will continue to be held back by a broken financial framework that prevents councils from investing in the homes their communities need.
With the right measures, we can play a central role in delivering the social rent homes the country urgently needs.
Yours sincerely,
The undersigned