Councils to build outside HRA within four years
Local authorities could be freed to fund house building programmes outof their own pockets within four years, a paper published as part ofthe spending review has revealed.
The Communities and Local Government department document says thatministers could allow councils to leave the housing revenue accountsystem by the end of the 2008/11 review period. Their ties to the HRAregime are a major factor holding them back from financing new buildprogrammes.
The announcement comes in a week that the housing minister said she wasconsidering putting legislation into the Queen's Speech that wouldfree councils from the HRA.
The CLG paper says that if local authority landlords' explorationof leaving the HRA proved beneficial 'ministers may wish to allowsome authorities to become self financing over the CSR07period'.
Ms Cooper told MPs this week that she was considering whetherlegislation was needed to 'tweak' the HRA to enablecouncils tobuild directly.
'We're looking at whether or not we can change the way thehousing revenueaccount works more generally, so that it's easierfor councils to build without having to go through [arm's-lengthmanagement organisations] or special venture vehicles,'she told theCommunities and Local Government select committee.
'We're looking at whether there's alegislative change to bemade.'We're looking at that legislation being announced in theQueen's Speech.'
The housing minister said she was 'very attracted' to theoption of making council housing departments self-financing by enablingthem to opt out of the housing revenue account. But she warned itcouldcreate winners and losers.
'I think it's very attractive that local authorities should beable to take theirown decisions,' she said. 'The downsideandcomplexity of all of this is the nature ofthe housing revenueaccount's distribution element.'
Defend Council Housing chair Alan Walter welcomed Ms Cooper'sannouncement. 'I don't think anybody can see any reason not toallow local authorities to build homes,' he said.
'What we need is political will, not special purpose vehicles.'Steve Partridge, executive director of the Housing Quality Network,said he was encouraged that Ms Cooper said shewas attracted by theprinciple of making councils self-financing. 'The wider politicalcontext is about diversifying the options,with more flexibility forlocal authorities,' he said.
John Perry, policy advisor at the Chartered Institute of Housing, said:'It would give people more comfort Ithink, if they did it throughlegislation, because it would make it more difficult for futuregovernments to change things around again. It's probably thepreferred route.'
Mike Owen, executive director of Carrick Housing, an ALMO which is oneof six councils and ALMOs selected to pilot self-financing, said:'We're really pleased that Yvette Cooper is supportive of thisand we look forward in the next 18 months to managing ourfinances.'