Housing Minister John Healey unveiled plans to dismantle the current council housing finance system and replace it with a clearer, more transparent system that aims to put councils firmly in control and better able to respond to the needs of local residents.
The consultation on reforming the current Housing Revenue Account (HRA) subsidy system was published alongside 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 should be able to plan long term and improve the quality of services to their tenants. The aim is to 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.
Consultation on the proposals will seek views on a wide range of council housing issues including the following:
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.
The Government announced the release of funding to build 11,200 new homes, regenerate ten of the most deprived areas of the country and creating 20,000 jobs in the building industry.
This follows from the Prime Minister’s commitment - set out in Building Britain's Future - to invest an extra £1.5 billion towards building a total of 110,000 new affordable homes over the next two years. The announcement by Housing Minister John Healey included a major £1.7 billion cash boost for ten local authorities in six regions under the housing private finance initiative (PFI), that will allow them to deliver 4,500 new or improved council homes, as well as 1,600 new affordable rented homes.
The Minister also announced that in the last month through the Homes and Communities Agency he has released over £300 million to 50 Housing Associations across 119 local authority areas, to build a further 5,100 affordable homes.
He further announced the allocation of £35 million to help regenerate almost 700 homes across 11 urban areas through the Housing Market Renewal Pathfinders programme.
Taken together, the funding PFI and affordable housing funding will help to create around 20,000 building jobs.
In a further boost to housing, Mr Healey confirmed that there have been more than 300 bids from developers for the Government's new Kickstart fund - first announced in the Budget and now topped up to £1 billion - to unlock stalled private sector developments. The Homes and Communities Agency is currently assessing bids and the successful projects will be announced later this month.
He also confirmed the Government has so far received expressions of interest from more than 70 local authorities across the country for the new council house building fund - now topped up to more than £350 million. The first successful bids for this will be announced in September.
