Lambeth Council is looking for a ￡40 million bailout. (Image: Getty)
Labour-run Lambeth Council is begging the Government for a ￡40 million bailout after "severe maladministration" of its social housing.
Since 2017, the local authority has been forced to pay over ￡16 million in compensation to council house tenants for poor homes and services.
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Now it says it needs "emergency" money due to a significant lack of funds in its housing division, blaming the previous government for cutting social rents and costly new building and fire safety regulations following the Grenfell disaster.
The council needs to balance the books for its Housing Revenue Account (HRA), which records the costs and revenue from running Lambeth's housing. It has a separate budget from the rest of the council and cannot run at a loss.
The Ministry of Housing, Communities and Local Government has not yet responded to the council's request, but without the ￡40 million, the HRA will not be able to have a balanced budget this year.
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The council blamed the previous Government for cuts to social rents. (Image: Getty)
A HRA report put to the council's Cabinet in January said the ￡40 million bailout was "critical" and asked for assistance through "capitalisation direction", which treats short-term revenue costs as capital investment costs, Southwark News reports.
This comes after the Housing Ombudsman accused the council of "severe maladministration" of housing in 2023, such as not handling complaints appropriately and delays for repairs.
The Local Government Ombudsman said the council's complaints department was ill-managed and underfunded, and while there were some improvements, there were "still too many residents receiving an unacceptable service".
Lambeth Council is home to the second largest number of social housing in London, with 23,600 social rents and more high-rise blocks than most other local authorities.
Freedom of Information requests also uncovered a further ￡7.2 million spent on legal fees so far this financial year, The Times reports.
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Councillor Danny Adilypour, responsible for the borough’s social housing, said the deficit stands at over ￡33 million a year.
He said: "The council is committed to making sure council housing is up to as high a standard as possible, is repaired promptly when needed and meets the needs of residents. But we’ve been working with one arm tied behind our backs.
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"The previous government-imposed caps and limits on our rental income, but without providing extra funding to make up the gap, which of course means there’s not enough money available to do all of the work on our estates that we know we need to."
The council said that its housing sector was on an "improvement journey", which it remained committed to despite the high demand for social housing amid declining Government funding.
Lambeth Council has been contacted for comment.