Housing Revenue Account consultation closes with councils debt offer
HRA deal moves closer
Several groups of local authorities would be willing to take on a share of national housing debt in an overhaul of the council housing finance system.
The Association of Retained Council Housing, whose members are 56 of the 202 councils which manage their own housing stock, said it would be willing to negotiate a settlement with the government to ensure councils’ business plans remained viable.
And umbrella group London Councils said it is interested in London authorities taking an early opt-out from the system and piloting any self-financing regime.
Both organisations were responding to the government consultation on the abolition of the housing revenue account subsidy system, whereby some councils with surpluses in their HRAs end up subsidising councils in debt. The consultation ended on Tuesday.
ARCH said it would be willing to negotiate with the government on the basis that the £18 billion of HRA debt would be redistributed among all councils which still manage their homes.
But it said an £8 billion backlog of repairs should be met by giving councils a 10 per cent increase on their management and maintenance allowance, and a 43 per cent increase on the major repairs allowance they receive from central government. It said the £5 billion needed to fund adaptations should also be knocked off the debt.
Meanwhile tenants from Barking and Dagenham council went to Downing Street to petition the government to let their council leave the HRA system as soon as possible. The petition, which is on number 10’s website until 29 November, has 285 signatures.
But councils in the Campaign for Fair and Local Housing Finance said it would be ‘wrong’ for low debt and debt-free councils to be ‘forced into a position of indebtedness’.
The price of freedom
£18 billion
Amount of debt in HRA system
£14k to £15k
Average debt per property according to a model for ARCH’s 56 members
£5.7k to £28k
Amount the average debt per property could vary between, depending on the redistribution formula used
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Readers' comments (2)
Len White | 30/10/2009 0:16 am
The Campaign for Fair and Local Housing Finance, or the Conservative Party by another name, cannot have it both ways. They wanted an end to the old subsidy system and they've got that. They wanted to keep their own rents locally, and they've got that. They wanted to keep capital receipts locally, and they've got that. Now they find another reason to oppose the government's proposals. They are already paying for 'other people's' debt through the subsidy system, so nothing will change apart from the debt will be on their books. George Osborne will not write off debt but campaigning through this front organisation makes it possible to appear to be in favour of debt write-off when in fact they're against it.
Council tenants should be aware - these people will throw away the best chance for real reform we've had for many years just to be able to attack the govenrment and appear to be on tenants' side. There are genuine issues left to resolve but they have to be debated positively by landlords and tenants engaging with the government, not just shouting loudly from the wilds of Waverley.
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michael barratt council tenant | 30/10/2009 10:51 am
Council tenants are between ‘a rock and a hard place’ when the comparison is made between Tory and Labour towards council housing. Since the policies of both parties do not augur well for the future of secure tenancies and the institution of council housing. The Liberal Democrats in my opinion fail to clearly present their vision of the future of council housing although the Party’s apparent acceptance of historical debt as a National liability is a step in the right direction. Undermining of the viability of one council housing stock by Central government appropriation of rigged ‘assumed rent surplus’ to give the money to an unviable local authority with the result that both communities become unviable seems an ill thought-out if not malevolent policy. I comfort myself with the thought that one should not always attribute to malice that which can be alternatively explained by stupidity.
While local authorities thrash things out with central government and council tenants stand on the sideline without a say perhaps the Government could take urgent ameliorating action and return some of the appropriated monies taken as ‘assumed surplus rental income’, a not fit for purpose policy that has undermined previously perfectly viable local authority housing stocks. Perhaps central government could in the interim return some of the £50 million over the last five years the Government has appropriated from my local authority (Crawley Council) as assumed surplus rent to make good the £23+million the Town Hall has apparently been forced to slashed from the minimum sum its consultants said was necessary to maintain our community’s stock in a minimum state of repair over the same period.
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