Labour has demanded immediate Right to Buy (RTB) reforms after figures obtained by The MJ revealed the amount councils lose to Whitehall under the regime.

Data obtained under the Freedom of Information (FOI) Act revealed that from £4.2bn of RTB receipts raised between 2012 and 2017 Whitehall deductions amounted to £875m – almost one-fifth of all monies.

While £90m was redistributed back into housing by the Ministry of Housing Communities and Local Government (MHCLG), the FOI responses indicate a substantial share of council RTB receipts was used to tackle public debt while councils struggled with declining housing stocks and soaring demand.

In a statement last year, then housing minister Gavin Barwell said that money was used to address the ‘deficit in the nation's finances'.

Councils that do not invest RTB receipts within a specified period are forced to hand unused cash back to the MHCLG for redistribution within local government.

Between 2012 and 2017, local authorities returned almost £90m to the department under this requirement.

In addition, councils that sit on their RTB receipts for too long are required to pay interest on the monies returned.

Currently, the Treasury charges authorities 4% on top of the base rate.

Over the last five years, that amounted to another £2m of council cash returned to Whitehall.

One senior councillor in London responsible for regeneration in their borough said authorities often struggled to reinvest RTB receipts quickly enough because the cost of new developments in the capital requires them to raise extra revenue first.

He said: ‘We're regularly under threat of being forced to return RTB monies, with interest.

'The punitive nature of the system is forcing us to rethink our housing policy because we could lose vital cash during continued austerity.'

Senior council sources warned the loss of cash left them unable to replenish stock, with figures suggesting just one social home is built for every three sold under RTB.

Labour's shadow housing secretary John Healey last week joined leader Jeremey Corbyn to announce a Labour Government would suspend RTB, permitting the policy only when councils planned to replace stock.

Scotland abolished the programme in 2016 and Wales will soon follow suit.

Mr Healey told The MJ that to kick-start more house-building Labour would also hand back to councils a year's worth of full RTB receipts.

He said: ‘It's unsustainable for communities to be losing homes through RTB at the current rate.

'Not only is this short-sighted housing policy it is bad value for public money.'

The MHCLG said any unspent RTB receipts returned to the ministry with interest are ‘not handed to Treasury, but is instead handed to Homes England or the Greater London Authority to be then redistributed to local authorities for one-for-one replacement'.