Freedom at last

For far too long the way social housing is managed has been controlled, not by councils and communities, but by central government. Landlords have used their very best efforts to meet the varying needs of their tenants - but with their hands tied by Whitehall red tape.

The 4 million people living in council housing deserve better. This coalition government is committed to genuine action, to a complete overhaul. So, a new devolved system can put councils firmly in the driving seat, with the financial freedom they need to make the best long-term decisions about their housing.

That’s why within the myriad of freedoms and new powers in the Localism Bill there are changes that will give landlords the ability to offer new tenants flexible tenancies. This will give them the help they need when they need it, rather than the ‘one-size-fits-all’ approach of the past which left 5 million people languishing on waiting lists for years.

Ending uncertainty

The Localism Bill will also end the housing revenue account subsidy system, a centralised approach which left councils uncertain what funding they would get from one year to the next and unable to take key decisions about their housing stock.

The HRA system requires local authorities to pay their council house rents to Whitehall, which then decides how best to redistribute it back to councils. It is no longer fit for purpose.

Instead, under Localism Bill reforms, councils will keep the rents. In return for this greater freedom, some councils will take on additional housing debt, but others will see a reduction in their debt levels. We have ensured that no council will take on debt that is not sustainable for the long term.

We have worked closely with stock-owning local authorities, tenant organisations, the Local Government Association, the Chartered Institute of Housing and the Chartered Institute of Public Finance and Accountancy to make sure these plans best reflect the needs of all involved. In addition, there have been two public consultations - in which the vast majority of responses showed strong support for these proposals.

On the right track

With the Localism Bill having recently passed the House of Lords committee stage and cross-party backing for these reforms, we are on track to scrap the HRA system once and for all.

Subject to royal assent for the bill, the new devolved system will be in place by the start of the next financial year. From April, councils will benefit from the ability to plan effectively the management and maintenance of their housing as they will know how much income they will have to do so. They will also be able, for the first time, to undertake proper asset management - ensuring they get the best from their stock and can offer their tenants the best accommodation to their tenants as a result.

We’ve also provided extra funding. Last year, I confirmed an extra £116 million per year for councils to pay for disabled adaptations to homes. This will make a huge difference to thousands of people across the country - in many cases ensuring they can continue to live independent lives. And we’ve allocated an extra £500 million a year to councils across the country to spend on their housing stock.

So I want to see councils looking forward and preparing for this transition - and for how they will use the new powers and freedoms they will have as a result.

Councils are not alone in this - far from being stranded, we have taken steps to ensure this transfer of power from Whitehall to town halls goes as smoothly as possible.

That’s why in February I published details of this new financial deal, so councils could see for themselves how the system will operate. It included details of how each council’s opening financial position will be determined so they could start to plan for the new system.

Get ready

Most recently, I published further details of the reforms and the timetable for implementing them in the report Self-financing: planning the transition. I would urge all councils to look at it and to start making preparations now.

In November, I’ll publish a new consultation on the financial starting position for councils, with the final determinations due to be published in January - in plenty of time for the start of the new system of council housing finance.

The case for reform is clear. With millions of people on waiting lists, as housing minister it’s my job to make sure social landlords up and down the country have the freedom they need to best serve their tenants.

Social housing can offer more than just a roof over people’s heads - it can provide a stepping stone to wider opportunities to better people’s lives. I want to know that this valuable and precious resource is being managed most effectively - and that means locally. And that’s why scrapping the failed HRA system is so important.

Grant Shapps is minister for housing and MP for Welwyn Hatfield