We need a fair deal

After campaigning long and hard for a fairer housing finance system, it is encouraging to see this finally moving closer in the shape of self-financing proposals set out in the recent Localism Bill. As positive as this is, stock-retained councils are seeking answers to a number of crucial questions as the government finalises details of the revised housing revenue account settlement.

The first question will, of course, be the level of debt councils have to take on to leave the HRA. The Association of Retained Council Housing supported the deal offered in the previous government’s prospectus. And while we are eager for self-financing to go ahead, councils’ business plans will not be sustainable if levels of debt allocated now prove prohibitive. The cost of borrowing from the Public Works Loans Board is increasing and we need to be clear of the impact of that.

Other related questions include the way in which management and maintenance allowance and major repairs allowance will affect authorities in different parts of the country. Will stock-retainers, which have been starved of resources for decades, have sufficient funds to cope with repairs backlogs on existing properties?

And will they be able to build new homes? ARCH has lobbied for stock-retainers to have opportunities to build, and properties being completed all over the UK - thanks to local authority new build grants and prudential borrowing - show they can deliver high quality, environmentally friendly homes at good value for money in a tight time frame.

We hope new arrangements will give councils sufficient resources and freedoms to borrow and build to meet growing need for affordable homes. Stock-retainers are also seeking clarification on whether borrowing for building over the past two years will be added to the debt cap, and how the government will enforce this.

ARCH believes it is critical that right to buy receipts are kept locally. Sales may have dwindled lately, but the ability to control our assets and use receipts locally represents a serious point of principle that we will pursue.

Finally, HRA reform does not exist in isolation. Links to other policies must be considered and the housing benefit cap needs to be reconciled with proposals for rent increases.

ARCH is delighted that member authorities Wandsworth and Cornwall, together with Stockport, are hoping to be pathfinders for self-financing arrangements from April. This should help to resolve teething issues and instill confidence across the sector.

While we are only too familiar with the challenges and risks a new system will throw our way in the short-term, this should yield sufficient long-term benefits to make it worthwhile.

The next few months could spell either success or disaster for stock-retainers. Until we have answers to these fundamental questions, we won’t know whether the new deal really does mean the fairer future we have sought.

Paul Price is treasurer for ARCH and head of housing at Tendring Council