Brian Reilly
Councils may want to be self-financing, but not at any cost
The price of freedom
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Some furious number crunching is going on as councils work out what a reformed housing finance system might mean to them.
The Association of Retained Council Housing supports the principle of self-financing models allowing greater local freedom and control proposed in the government’s consultation on the housing revenue account.
When ARCH members came together on 5 October to discuss their response to the consultation, they gave clear signals that they wish to work together and with central government to reach an agreement. Questions remain, however, over the method for reallocating debt to local authorities.
ARCH commissioned Consult CIH to create models which allowed estimates of debt allocations to be calculated for 56 ARCH and Association for Public Service Excellence members, according to various scenarios.
The models showed that, on the basis of the proposals in the consultation paper, the average debt of participating authorities might be £14,000 to £15,000 per property. They also showed a large variation between the highest amount, at £28,000 per property, and the lowest at £5,700. What is obvious is that the way in which the formula is shaped and debt calculated is critical if self-financing proposals are to work. Rent convergence, interest rates, the level of uplift in allowances and capital grants are all vital elements.
Self-financing is still a viable option but swift clarification on these variables is required so that the debate necessary to achieve consensus can begin in earnest.
ARCH is now working towards a solution that will give councils the freedom that they need, but this must be at a price they can afford.
Brian Reilly is deputy director of housing at Wandsworth Council and executive board member at ARCH
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