Moving from benefits to bricks is a great step forward – and makes social rent more vital than ever

Ed Miliband’s announcement that a Labour Government will invest in building new affordable homes, rather than allow rising rents to push up the housing benefit bill, is a very welcome commitment to the principle that we should move from benefits to bricks.

This argument is particularly powerful in areas with high housing costs like Islington. With private rents rising by 10% a year – and at levels well above the government’s housing benefit caps in most cases – we have been building new council and social housing as fast as we can.

These new homes provide genuinely-affordable, decent, and secure housing for people in our borough, and they avoid Islington becoming a ghetto for the rich. The new homes enable people to avoid expensive private rented housing that many people might need support from housing benefit to afford; this is Ed Miliband’s principle in action.

It’s hard to quantify the savings exactly, but as a very rough estimate, here goes. Since 2010, Islington has built around 1,000 new homes for social rent. If all these homes had been for market rent rather than social rent, the total rent charged to tenants would have been around £9million a year higher.

If they’d all been for market rent, residents receiving housing benefit would have needed more, and many people not currently receiving housing benefit would have had to ask for support to meet the much higher rents. So a large portion of the £9 million increase would have been met by housing benefit – substantially pushing up Islington’s annual private sector housing benefit bill of around £40million.

Our new affordable housing has avoided this happening – and a crucial point here is that the new homes have been let for social rent. They have not been let for the government’s misleadingly-named ‘affordable rent’, which the government introduced three years ago to largely replace social housing. Under the policy, councils and housing associations can charge ‘affordable rents’ up to 80% of the market rate.

Such increases would be devastating in Islington, where social rents average around 30% of market rate. And so alongside all our new council housing being for social rent, we have a firm planning policy demanding social rent – and no ‘affordable rent’ – in any new developments in the borough. We are locked in battle with Mayor of London over our policy but so far it seems to be working.

For many reasons, social rent is vital for Islington’s future – and it’s vital in places like ours if new homes are going to help reduce the housing benefit bill. If new homes were instead let for ‘affordable rents’ near market levels, we would not see a significant decline in the housing benefit bill in such high-cost areas.

In terms of the earlier calculation, if our 1,000 new homes had been let for near-market ‘affordable rents’, the total rent charged to tenants could have risen by up to £6million – of which a large portion would likely have been met by raising housing benefit.

The party’s commitment to investing in new affordable homes is a great step forward. The historic record shows that we need public investment, with councils leading the way, to build the number of homes Britain needs. And if we are going to make sure we build the sort of homes that people need – at rents that people can afford, and that help bring down the housing benefit bill in high-cost areas – social rent is more vital than ever.

James Murray is Executive Member for Housing & Development on Islington Council