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Anyone looking for any more things in favour of freeing local authorities from the housing revenue account can find another five billion of them in the detailed consultation just published by the government.
That’s the net benefit of self-financing envisaged over the next 30 years by the impact assessment of the review of council housing. According to the assessment total costs would be £12.3bn plus any cost of rescuing failing local authorities.
However, the benefits are estimated at £17.4bn. That’s made up of £5.2bn efficiency savings from the ability to plan for the long term and optimise the cycle of repairs and replacements planned over 30 years plus £12.2bn from maintaining homes to the Decent Homes standard and saving the need for a large separate capital programme.
And the benefits could be even higher than that. The £12.2bn figure is based on the assumption that a new Decent Homes programme will be needed in 30 years time. If there are more homes to work on, or greater expectations of what a decent home should be, then the benefit will be even greater. In addition, it was impossible to monetise the benefits to health, work and education opportunities for tenants and their families and of councils’ greater ability to build rent-generating new homes.
Freedom for council housing, which is seen as part of much wider freedom for local government, seems so obvious now that it’s easy to forget all those years when ministers were insisting there was no fourth option. All that detailed research and spadework seems to have finally paid off with a case to convince the Treasury.
Not that it will all be plain sailing from here - breaking free of a complex system was never going to be anything but complex, as anyone can see from the incredibly detailed consultation and research published by Communities and Local Government yesterday.
Experts say the key problem remains the distribution of debt. The consultation proposes a one-off redistribution and argues that even debt-free authorities will benefit over time but it’s not at all clear that they will be persuaded to see it that way. If councils can agree among themselves, John Healey has said the change can be introduced quickly; if not, what will be the attitude of a new and probably Conservative government?
And then there is the law of unintended consequences? Could the new settlement end up with cash leaking out of housing rather than flowing into it? That possibility seems to be in mind with the proposed ring-fencing for housing of the 75% of capital receipts that currently go to central government.
What will it do to stock transfer? Will it really become become a thing of the past, as some experts have claimed, or might the detail give even more encouragement to some councils? Even if ownership is not affected, might self-financing also make contracting out of housing services more likely in the name of even more efficiency?
All of those questions and more that are certain to emerge will be keeping plenty of people busy until the consultation ends in October.
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Readers' comments (2)
martin haddelsey | 22/07/2009 3:01 pm
I have a number of questions: what is the difference between having to repay the historic debt of other local authorities, and losing surplus to the HRA? Sure, under the proposals you would keep your surplus, but only to spend it on servicing someone's else's debt, which is essentially the system we have now. The only apparent benefit therefore seems to be the 5 billion of 'efficiency savings' because of the ability to 'plan for the long term'. But would LAs really be able to predict their income (and therefore spending) anymore accurately beyond a three year period than they can now? If not, then the vaunted benefits vanish into thin air. And how much additional cash will actually be available for the construction of new homes? The 75% of RTB capital receipts paid to the Treasury may well be ring fenced for housing, but will it remain in the Treasury's hands? If so, that raises the possibility that it will form part of future SHG payments to...RSLs. Local authorities can hardly embark on an ambitious house-building programme on the basis of predicted efficiency savings, the risk would be too great. And they would still be unable to access private finance, unlike RSLs. So let's not sound the death knell of stock transfer just yet...at least until we've heard George Osborne's views on the subject...
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Lesley Carty | 22/07/2009 5:37 pm
Seen in the context of the robbery from tenants rent accounts, £12.3 billion is derisory.
The projected robbery over 30 years is over £22 billion.... and that's the projected outright robbery or surplus - not taking debt into account as well (a conservative estimate based on PQ answer 155558 19.06.08)
The government isn't going to get away with a settlement that means it effectively gets to keep a surplus of more than £10 billion!
£12.3 billion is a significant breakthrough for our determined campaign over many years for the fourth option of direct investment; it's real money on the table which will translate into real doors and windows and roofs and kitchens for tenants. But tenants and councils won't accept a settlement which isn't going to deliver decent homes and estates for the long term.
The door is opening and now more than ever we need a strong united campaign to push it all the way.
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