30 June 2006
Six local authorities that could pave the way for major changes to the housing finance system have been named by ministers.
Three councils with arm's-length management organisations and three without will draw up business plans for the Department for Communities and Local Government to demonstrate the effects of leaving the housing subsidy system.
The trials will last up to nine months ahead of next year's Comprehensive Spending Review. They involve Carrick, Hounslow and Sheffield (all of which have three-star Almos) along with three excellent-rated councils – Warwick, Cambridge and Darlington.
The housing revenue account system is used to recycle money raised in rents among local authorities. Four out of five councils pay more into the system than they get out of it.
Last year, the Audit Commission described it as unsustainable because of the number of authorities that are transferring their homes to housing associations.
As things stand, Darlington will lose about £34m over 30 years. Having met the decent homes standard, it would be in a stronger position to borrow prudentially if it were not subsidising other authorities.
'The devil is in the detail but, on the face of it, it's something we are pleased to be involved with,' said Pauline Mitchell, Darlington's assistant director for housing.
A DCLG spokesman said it had selected councils to cover a range of circumstances, including different quality stock and housing market pressures.
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