Stuart Macdonald
‘If we don’t get a deal on housing revenue account reform soon, a child will die due to the poor state of some housing in our borough which we cannot afford to do anything about.’
Debt deal must be done
Share
These were the stark terms in which a London councillor this week framed his desire for a deal to be struck between more than 200 councils and the government on the dismantling of the reviled HRA. The concern, for him and many of his council landlord peers, is that they are hamstrung by collectively having to service £18 billion worth of housing debt. Current subsidy rules mean they have no way of handling this and ensuring high quality housing stock.
Housing minister John Healey is expected to publish proposals addressing this problem in the next few weeks (page 2). However, they will come three months after consultation on this issue closed. The general election is expected on 6 May and, failing that, must take place in June at the latest. In this context Mr Healey has called for councils to do a deal on the thorny issue of debt redistribution, otherwise primary legislation will be required, delaying reform until at least 2012.
This leaves chief housing officers facing an impossible task. Even if Mr Healey is able to conjure up a deal dotted with sweeteners, sceptical councillors in town halls that have no housing debt, but are part of the HRA, are likely to be tough to convince in such a short time. Once future repairs costs have been factored in, the costs of debt redistribution are likely to be more than many authorities pay currently. A deal seems unlikely and it’s unknown what the Conservatives would do.
There is, however, light at the end of the tunnel. The Local Government Association’s decision to drop its call for the £18 billion to be written off should encourage its members that compromise is the best route. Doing a deal on debt would at least allow councils to become masters of their own destiny. A possible path for life post-HRA was plotted this week by the London borough of Southwark and the Local Government Information Unit. This report suggests that councils could refinance their debt and free up resources to invest in dilapidated stock. Before making a decision on Mr Healey’s offer, councils must consider whether a better deal is likely any time soon.
Have your say
You must sign in to make a comment