Better late than never, credit must go to housing minister John Healey and his departmental team for grasping the nettle and delivering a proposed package in which few councils have so far found an unexpected sting.
So what now? As we reveal this week, preliminary analysis by legal firm Trowers & Hamlins shows there are some clear winners and losers from Mr Healey’s £25 billion offer. The political cynic would point to the fact that nine of the 10 councils with the largest debt increases are Conservative-run — including Tory shadow housing minister Grant Shapps’s own Welwyn Hatfield at number five. However, serveral larger landlords — Sheffield (42,000 homes), Leeds (58,000) and Newcastle (29,300) — will benefit to the tune of more than £1.4 billion. So can a deal be done?
According to consultation responses received by Mr Healey’s department last year, more than two-thirds of councils back the idea of a deal on debt in principle. This is an encouraging starting point. Although the numbers are still being crunched by individual authorities, the offer of an 11 per cent average increase in management and maintenance allowances is a significant sweetener. There are, of course, downsides: an additional £3.6 billion of debt to enable the Treasury to balance the books; the £25.1 billion cap on future local authority borrowing; the eleventh-hour addition of a requirement to build 10,000 council homes a year by 2015; and the exclusion from the proposals of measures to address the estimated £6 billion backlog of repairs.
Despite this, the majority of landlords seem to feel that these hurdles can be negotiated. There will be those — such as Waverley Council — that will find the proposed additional debt burden unacceptable for a traditionally low-debt authority. This is understandable. It therefore seems likely a deal — new government permitting — will have to be struck for the many and a different approach taken for the few. As a result, a diminished HRA could be around for a number of years yet.
Have your say
You must sign in to make a comment
Readers' comments (3)
Michael Read | 01/04/2010 5:16 pm
A month before the election explains all.
Is any Conservative council going to accept the debt of an incompetent Labour one? That's a tough one.
Unsuitable or offensive? Report this comment
Len White | 01/04/2010 8:57 pm
This is a bit confused. You simply cannot say who the winners and losers will be just on the basis of the debt figure - which will be spread over many years. The councils who complained most about the old regime, including Waverley, did so on the basis of the fact that a large share of their rental income went to cross-subsidise councils in higher cost areas. For decades council housing has been a national service which is locally adminstered, so costs were shared across ths system as a whole. To end the system, and devolve it to local areas, which everyone said they wanted, the costs have to be shared out on a permanent basis. That is what the apportionment of debt is about. Waverley will take on extra debt but keep all its rents - instead of losing half its rents to redistribution. They may be much better off in the long run because of this - and in future any savings or efficiencies made locally will be kept locally.
You also have to ask why some councils have low debt. For some, it's because they failed miserably to build new council homes when that option was available - anybody could have low debt by not doing anything, and most of those with high debt have it because they wanted to build homes for the people - to their credit. Others have low debt because they sold a lot of council homes and paid off debt rather than building. Again their low debt position is nothing to do with their virtue - as they would have us believe - it was just an accident of history and good luck.
The deal on the table is the best available and secures the future of council housing. Hopefully when councils stop politicking - as the Tory LGA has been doing for months now - and the election is over, a sensible agreement will be reached. In ten years time, this will be seen as the historic turning point for council housing, and a great legacy for John Healey's time as Housing Minister.
Unsuitable or offensive? Report this comment
Michael Read | 06/04/2010 11:57 am
Pilling up debt to levels where the debtor runs the risk of default. And this wrecklessness is to be counted as virtuous, according to Mr White?
This destructive formula, the Brownian notion, has been road-tested on the UK economy for the past 13 years. We're deep in the pooh.
Even the claimed virtue was dodgy. Just as immigration has been used to "stuff multiculturism down Tory throats", according to Blair's speech writer, so too has council housing been used to gerrymander the electoral system.
Lady Porter had a lot to learn from Mad Madge aka Margaret Hodge at the London Borough of Islington.
Islington is £860m in the hole. More than 50% of the housing is public sector. The education system would meet the approval of Verwoerd: pure black input/output. All the whites, including the kids of the local Labour MP, have scarpered to the white 'burbs or private schools. Some diversity there. Start talking community cohesion.
Good old Mr White. A genuine coommissar of a Russian tractor plant circa 1955. "Comrades, the good news. We've been our targets this year with 10m units. The bad news. None of them work".
Unsuitable or offensive? Report this comment