Reforms to council house financing heralds major building programme
The Chartered Institute of Housing (CIH) welcomes the announcement today (25 March) that the archaic and unfair council housing finance system is finally being dismantled in order to pave the way for a new council house building programme and improvements that will make a difference to the lives of millions of existing and future tenants.
The detail of the settlement for local authorities in England is yet to be fully examined, but CIH is confident that John Healey’s offer will be firm enough to allow councils to make better, more locally-based and longer-term decisions about the upkeep of existing homes as well as leading to the building of significant numbers of new homes in their areas.
CIH has campaigned for more than five years to see the Housing Revenue Account subsidy system replaced with a fairer system of self-financing and welcomes the Government’s commitment to allow councils in England to keep council house rents and proceeds from all sales to invest in building up to ten thousand new homes per year.
While CIH welcomes the long overdue commitment to new council house building, CIH cautions that if grant is not available to support the work, investment in new build will be limited significantly in the early years, given the restrictions on borrowing for local authorities that are still in place.
CIH also warns that the focus on new build must not be at the expense of investment in existing housing stock, completing the overdue Decent Homes programme and improving environmental efficiency.
Sarah Webb, CIH Chief Executive, said: "We are delighted at the Government’s clear commitment to new council house building and are also very pleased that our work to help shape a new self-financing future for councils has been taken on board. We are calling on the Government to honour its commitments to existing tenants and communities and also ensure that sufficient capital finance is available to get the existing council housing stock and estates up to a standard where they are all attractive places to live. Key elements of today’s announcements are subject to confirmation in the next Comprehensive Spending Review in the autumn."
CIH has also called for a review of borrowing for public housing as this could lead to more fundamental changes in enabling the full use of existing housing assets.
Steve Partridge, Director of Financial Policy at CIH concluded: "While we recognise that the Treasury wishes to control the level of councils’ borrowing, especially given the current spending pressures, we continue to call for future investment in council housing to be treated differently from other Government borrowing, in line with European rules. This would give councils the same freedom as housing associations to borrow to invest in what is one of the country’s greatest assets and an important legacy to the nation."
The Government’s announcement on 25 March can be found here http://www.communities.gov.uk/news/corporate/1519143
The Government consultation entitled Council Housing: A real future setting out detailed proposals for self-financing published on 25 March 2010 can be found here http://www.communities.gov.uk/publications/housing/housingreformresponse