Tenants and councils concerned by HRA plans
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Local authorities and tenants have expressed concern about the government’s proposed reform of the council housing finance system.
Housing minister John Healey published plans yesterday setting out plans to scrap the current housing revenue account subsidy system, and allow councils to take greater control of housing finance.
There is widespread support for the general principle of allowing councils to become self financing, and scrap the current model where the Treasury redistributes funding, but anxiety about how it could be achieved.
The government’s refusal to write off £18 billion of housing debt, and proposals to redistribute this to local authorities, are a particular concern.
Councillor Phillipa Roe, cabinet member for housing at Westminster council, said: ‘The government’s proposals could potentially put us and other councils in a worse position because of how they are planning to distribute debt among local authorities.
‘For any proposed system to work we would need to have the headroom and resources to fund the long term investment needs of our housing stock, and it is not clear from the initial consultation proposals that this would be the case.’
Tenant activists were also worried by the proposals on debt.
Lesley Carty, a spokesperson for Defend Council Housing, said: ‘The government’s outright refusal that the Treasury should bear any responsibility for writing off debt ignores all the main issues.
‘They have been willing to write off all the debt for homes which transfer - based on actual costs of maintaining homes and estates, not a “national formula”, but now they want to discriminate against tenants who chose to stay with their council.
‘Council tenants and their landlords will not be bullied into accepting unsustainable levels of debt based on poverty standards. We will not accept anything less than fair funding to bring homes and estates up to genuinely decent standards, and maintain them for a sustainable future.’
The swift progress of the HRA plans is dependent on securing agreement from all 200 councils that have retained housing stock. If a voluntary agreement can be reached, the changes could go through under secondary legislation, and a framework be in place by next spring.
But if primary legislation is needed the government has said the changes are unlikely to be operational until 2012/13.
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Readers' comments (2)
Len White | 22/07/2009 11:50 pm
The headline says 'local authorities and tenants' are concerned - yet it turns out to be good old Westminster bleating on again and DCH saying £17bn of debt should be written off. The government's proposals are what most councils and tenants have been asking for - to be able to keep rents and capital receipts locally and to run their own affairs without detailed interference from central government.
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Martin Ballard | 23/07/2009 11:11 am
Out of the frying pan?
Just a couple of years ago my local council was bombarding me with glossy pro-stock transfer material and arranging coffee mornings for tenants with slick transfer detemined consultants. We were even given M&S vouchers for attending and lasting the course of one hour of lop-sided drivel. Sadly many LAs were panicked into stock transfer and the spectre of disrepair was used unashamedly to intimidate and frighten tenants into making the "right" decision.
I happen to have the capacity of memory and I vividly recall the tumbling stock transfer value assessed at the time using a convenient government formula which meant that the housing could be sold for peanuts - somewhere in the region of £2,500 per property (market value approx £160,000). Laughingly we discovered that according to council figures the garages were worth more than the houses (i.e. lower maintenance and the rental income stream). If £30 odd million was required at the time by the council to sell-off the housing with an extra £8 million or so surcharge to be directed to central government then why should the sums change in such a short space of time? - as I suspect it surely will under a £18 Billion debt shareout. At present my LA pays in about £14 million each year to the HRA therefore could clear the amount that was required for stock transfer purposes in just three years at that rate of creaming off rents.
Transferred tenants have to wait to discover whether their decision to move to a heavily debt-ridden situation was a good idea. The short term installation of a kitchen or bathroom does not indicate whether the model will be beneficial in the medium or long-term, we will just have to wait and see.
Tenants that chose to retain however must ensure, having waited and campaigned for so long, that any quick fix solution does not place them in an unsustainable situation in the long-term. It would be foolish to rush into a share of a large debt to hastily escape the punitive HRA system. The cash-strapped government seems to be merely trying to milk the LAs for one final bumper pay day therefore the LGA should hold out for the best possible deal.
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