Subsidy streams are mismatched
Government plans to merge decent homes money into local area agreements could run aground because the funding streams are incompatible, housing finance experts have warned.
A Treasury report into value for money published earlier this month said the scope of the decent homes programme could be increased if it was incorporated into the agreements (Inside Housing, 21 July).
But housing finance advisors this week described the proposals as a ‘window dressing' dodge, which sidestepped the need to reform the housing revenue account system.
John Perry, policy advisor at the Chartered Institute of Housing, said the way housing money was distributed to local authorities would make it difficult to absorb the funding stream into local area agreements.
‘Most HRA subsidy is cash redistributed from one authority to another,' he said. ‘How would this work within a local area agreement?'
Capital funding for new homes would also be difficult to pool because social housing grant was scheme specific, he added.
Perry called on the government to outline how it expected the proposal to work in practice.
Secretary of state Ruth Kelly has indicated that she wants to see councils, housing associations, arm's-length management organisations and tenants take greater control over local housing decisions through the use of local area agreements.
But Steve Partridge, director of Housing Quality Network, said if housing funds were pooled councils would have to prove they were being spent for the benefit of tenants and residents.
‘So much of the decent homes funding comes from tenants' rents,' he said.
‘The whole thing with local area agreements is that they de-ringfence pots of money for spending on a holistic approach to local services.
‘If I was a tenant I would pay my rent and expect it to be spent on council housing rather than something else,' he said.
Jeff Zitron, chair of Tribal's communities group, said he was unsure if adding housing funding to the agreements was the most constructive thing the government could be doing.
‘In terms of producing more homes and better quality homes putting together funding streams isn't really one of the key issues,' he said.
It was more important to deal with the rigid and arbitrary nature of the existing HRA system, he added.
‘I have to say that they are trying to resolve a second order issue, which is co-ordinating the funding streams,
before they have sorted out the first order [issues],' Zitron said.
‘I think this is window dressing to avoid really taking on the challenges of restructuring HRA finance.
‘The messages are there that that is what needs to be done. Co-ordinating different funding streams would then be much easier.'
The move towards merging the funding streams is being examined by the Department for Communities and Local Government as part of its work towards the 2007 comprehensive spending review.