Housing Minister
John Healey today unveiled plans to dismantle the current council
housing finance system and replace it with a clearer, more
transparent system that puts councils firmly in control and better
able to respond to the needs of local tenants and residents.
Mr Healey also challenged councils to work with him and his
ministerial colleagues to make these radical reforms through
detailed work together. There has been wide and strong support for
local self financing, particularly in local government.
Today’s consultation on reforming the current Housing Revenue
Account (HRA) subsidy system was published alongside radical new
proposals to strengthen local democracy announced by Communities
Secretary John Denham.
The proposals for a devolved self-financing alternative to the
current system removes the need to redistribute revenue nationally
whilst continuing to ensure that all councils have sufficient
resources. Councils will finance their own business from their own
rents and revenues, in exchange for a one-off allocation of
housing debt.
By freeing councils from the annual funding decisions in the
current system, councils will be able to plan long term and
improve the quality of services to their tenants. It will give
councils greater capacity and freedom to respond to local needs
and, in doing so, increase their responsibility and accountability
to local tenants and residents.
Councils currently provide around 2 million rented homes and,
alongside, housing associations they provide decent, secure and
affordable accommodation for over 8 million people.
Today’s proposals follow last month’s Housing Pledge by the Prime
Minister – an extra £1.5 billion to boost the number of new homes
for people to rent or buy to 110,000 in the next two years: this
is a fourfold increase in plans for new council homes. The
consultation seeks views on a wide range of council housing issues
including the following:
• Dismantling the current Housing Revenue subsidy system and
replacing it with a fairer, more transparent system that will give
councils greater independence and freedom to manage their housing
resources.
• Increasing local responsibility and accountability for
councils, giving them the opportunity to think and act more
strategically in the longer term when managing their assets and
meeting the housing needs of local people.
• Allowing local councils to keep all the rental income from
tenants as well as any proceeds from Right to Buy sales that can
be reinvested locally.
John Healey said:
“Over £33 billion has been invested in improving council and
housing association homes since 1997 and by the end of next year
we expect 95% of these homes to be warm and weather-proof. If we
are to maintain these improvements for the long term then it is
imperative to reform the system which finances council housing.
“The proposals I am publishing today will free councils from
annual funding decisions so they can plan long term and improve
the management of their homes, secure greater efficiencies and
improve the quality of services to their tenants.
“The challenge now is whether local government is ready to work
with me and Ministerial colleagues to make these radical reforms
through detailed work together.”
Under the proposals, councils will be freed from the national
Housing Revenue Account subsidy system which redistributes
resources between local authorities based on need. This system has
allowed little incentive or freedom for councils to plan long term
for housing need in their area or to deliver more efficient
services.
Under the proposed self-financing system, councils will be freed
from central government intervention; they will be able to
generate sufficient income to sustain their stock; and will have
to produce thirty year business plans. The consultation also
proposes continuation of the Decent Homes Standard.
With greater freedom comes greater responsibility, so the TSA
will in future play a major role in ensuring that local
authorities are seeking efficiency and value for money in their
service delivery, providing greater openness on costs, and making
sure that every penny of tenants’ and taxpayers’ money is spent well.
Notes to Editors
Reform of Council Housing Finance is published today and can be
found at: http://www.communities.gov.uk/publications/housing/councilhousingconsultation
Contacts:
Communities Local Government
NDS.CLG@coi.gsi.gov.uk
Sarah Southerton
Phone: 020 7944 3042 Out of hours 020 7944 5945
press.office@communities.gsi.gov.uk