By Neil Merrick
23 October 2009
Ministers are stepping up pressure on councils to accept controversial housing finance changes before the general election.
Speaking at a Local Government Association conference this week, housing minister John Healey promised to ‘have an offer on the table in the New Year’, based on local authorities agreeing to reallocate £18bn of historic debt among themselves.
He pledged to work on dismantling the housing revenue account system – under which rent receipts are pooled by the government and then redistributed – up until the election and beyond.
But he again dismissed any suggestion that the debt would be written off by the Treasury as demanded by the LGA and other organisations.
Healey also warned that without an agreement, primary legislation would be needed after the election.
‘The benefits will take longer to come,’ he told delegates in London on October 20. ‘If you want to see the end of the HRA subsidy system, then wake up and work with me.’
Some councils with little or no debt question why they should be required to take on debts built up by other authorities. There are also fears that sums initially demanded by the Department for Communities and Local Government will increase once the new system is under way.
But Healey insisted that no council would be burdened with debt it could not manage. ‘No minister would have an interest in putting a deal in place with a local authority that’s not sustainable,’ he said.
In theory, councils can already opt out of the subsidy system – but only with government agreement.
Mike Owen, executive director of Carrick Homes in Cornwall, asked if arm’s-length management organisations such as his might be allowed to leave before the election. ‘We’ve waited a long time for this,’ he said.
Healey told Public Finance that he was interested in the idea of ‘early movers’, based on existing legislation, and would investigate how this might work if there was no agreement among councils.
Consultations over the DCLG’s housing finance reforms close on October 27. Steve Partridge, director of financial policy at the Chartered Institute of Housing, said it was important that councils wishing to become self-financing were not saddled with unwieldy debts.
‘The lower the debt, the more self-financing the deal looks,’ he said.
Campaign group Defend Council Housing has joined those calling for the £18m debt to be written off. In a joint report with the Commons council housing group, published this week, it also called for more money to be invested in council house building.
23 October 2009
Ministers are stepping up pressure on councils to accept controversial housing finance changes before the general election.
Speaking at a Local Government Association conference this week, housing minister John Healey promised to ‘have an offer on the table in the New Year’, based on local authorities agreeing to reallocate £18bn of historic debt among themselves.
He pledged to work on dismantling the housing revenue account system – under which rent receipts are pooled by the government and then redistributed – up until the election and beyond.
But he again dismissed any suggestion that the debt would be written off by the Treasury as demanded by the LGA and other organisations.
Healey also warned that without an agreement, primary legislation would be needed after the election.
‘The benefits will take longer to come,’ he told delegates in London on October 20. ‘If you want to see the end of the HRA subsidy system, then wake up and work with me.’
Some councils with little or no debt question why they should be required to take on debts built up by other authorities. There are also fears that sums initially demanded by the Department for Communities and Local Government will increase once the new system is under way.
But Healey insisted that no council would be burdened with debt it could not manage. ‘No minister would have an interest in putting a deal in place with a local authority that’s not sustainable,’ he said.
In theory, councils can already opt out of the subsidy system – but only with government agreement.
Mike Owen, executive director of Carrick Homes in Cornwall, asked if arm’s-length management organisations such as his might be allowed to leave before the election. ‘We’ve waited a long time for this,’ he said.
Healey told Public Finance that he was interested in the idea of ‘early movers’, based on existing legislation, and would investigate how this might work if there was no agreement among councils.
Consultations over the DCLG’s housing finance reforms close on October 27. Steve Partridge, director of financial policy at the Chartered Institute of Housing, said it was important that councils wishing to become self-financing were not saddled with unwieldy debts.
‘The lower the debt, the more self-financing the deal looks,’ he said.
Campaign group Defend Council Housing has joined those calling for the £18m debt to be written off. In a joint report with the Commons council housing group, published this week, it also called for more money to be invested in council house building.
