Funding overhaul would deliver 300,000 homes
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The Local Government Association has said councils could build 309,000 homes in 10 years if they were given freedom from the existing housing finance system.
Margaret Eaton, chair of the LGA, told the Chartered Institute of Housing conference that councils could do much more if they were allowed to keep all of their rents. Councils currently give rent money to the government, which redistributes it through the subsidy system, known as the housing revenue account.
In a report published this week the LGA said that keeping their rents would enable councils to build many more homes, which would give the economy a £72.5 billion boost.
Ms Eaton said local areas should be given more choice to decide their own priorities and build council homes if they wanted to. ‘There are many different models and [councils] should have the right to decide what is right for them,’ she said.
Housing minister John Healey refused to reveal any further details of the changes he plans to make to the much maligned finance system. ‘I’ll do it soon and I’ll confirm the reforms that we want to make in that announcement,’ was all he would say.
He did promise councils greater responsibility for commissioning and developing homes. Local authorities can also expect ‘more scope to set allocations policies that better reflect local labour markets or local community needs’, he said.
Mr Healey distanced himself from the controversial idea floated last year by his predecessor Caroline Flint that new tenants should be made to sign contracts before getting a home, implying they could be evicted if they didn’t look for work.
‘Don’t mistake me, I don’t mean evicting people just because they won’t look for work,’ he added.
The LGA’s Places You Want to Live campaign demands
- Councils to be able to retain rents and the proceeds of any council house sales
- Councils to have the financial independence to invest in their housing stock and stimulate the local economy
- Historic ‘notional debt’ – which councils are currently spending £1.3 billion a year servicing – to be cancelled
- Councils to have the same freedom as other social housing providers to borrow money to invest in new homes
- The government to stop setting tenants’ rent and allow them to reflect local circumstances
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Readers' comments (3)
michaelbarratt | 16/06/2009 7:34 am
In the event of HRA reform and local authorities being allowed to keep their rental incomes it would be necessary in my view to ensure the following:
Future rental income would be ring fenced to ensure monies are used to maintain/improve existing council housing and to build more council homes and not used for political purposes to secure the votes of Middle England by reducing or freezing council tax.
Where a local authority is unable to use surpluses for building purposes due to a lack of available land then such monies should be passed to a central fund expressly established for the purposes of Nationally building more council houses.
There should be National housing association/council housing maintenance/ improvement standards that reflect reality e.g. 15-20 kitchens years and 30 year bathrooms lifetime cycles. Replacement of roofing and other building elements that encompasses pre-emption and the utilisation of economies of scale rather than an over reliance on responsive repairs and patchup.
In respect to local authorities, a halt to the discrimination against 'in house' direct labour and the reintroduction of direct labour works programmes to run alongside partnering contracts.
THe DCLG make financial restitution to those local authorities who have sustained financial 'black holes' in their housing finances due the the unfair application of 'assumed rent' surpluses.
DCLG forgive ailing local authorities' debts, and sufficient financial resources to place those 15% or so ailing authorities on a sound financial footing.
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Len White | 16/06/2009 9:52 am
The LGA's proposals are full of holes and I suspect this is just a political game so the Tory-led LGA can attack the government. Tenants should not be misled by a sloganising report. The chances of the government writing off housing debt, which means they would bear the £1.3b cost centrally, at present are nil, and that money would be much better used to build additional new social rented housing - which most members of the LGA don't want.
If all councils retain their rents, some will make huge surpluses and many will look to keep council tax down not build more homes, and others will have huge deficits -that's why the system redistributes money around the country. If councils also set rents, those with large deficits will have to double or treble theirs - but the LGA doesn't mention that. What do the large urban authorities - the ones with real deprivation - who depend on subsidy redistribution to make ends meet think about being stitched up by the LGA like this?
And beware Margaret Eaton's phrase 'whole neighbourhoods will be transformed' - as we learn from the example of the Tories in Hammersnith, this phrase really means 'we will redevelop council estates with far fewer social rented homes afterwards' - it is Shirley Porter without the illegality of targeting marginal seats.
If the LGA was really serious about council housing, they would challenge their members who campaign against any extra housebuilding at all and the new right councils who are happy to build houses - as long as they are not for people on low incomes.
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William Fitzosbert | 18/06/2009 1:59 am
Len White, your statement about the £1.3 billion debt is overshadowed by the HCA giving away £2.8 billion to Housing Associatons, with no rules or hope of repayment.
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