23 November 2007
Local authorities are to be allowed to opt out of the housing revenue account system, ministers have confirmed.
The Housing and Regeneration Bill, published on November 16, gives the government powers to waive HRA payments by councils that show they can become self-financing after retaining all the money they raise in rents.
At present, about 80% of English authorities subsidise the others by paying more into the HRA system than they receive.
Two years ago, the Audit Commission described the system as unsustainable.
A Department for Communities and Local Government spokeswoman said ministers would announce shortly how authorities might enter into agreements to take their stock outside the HRA, but stressed it would be a matter of choice for individual councils.
Six councils, including three with arm's-length management organisations, are currently taking part in a DCLG pilot on operating outside the HRA.
Ruth Lucas, a policy consultant at the Local Government Association, said councils should welcome the Bill as an important step towards reforming the housing finance system.
Merron Simpson, head of policy at the Chartered Institute of Housing, said ministers would have to decide how fast they wanted to reform the HRA system. 'They could be minded to move in a big way rather than just let councils trickle out,' she added.
But Defend Council Housing said the government had failed to provide councils with any long-term guarantees over how housing will be funded.
'This sounds more like a full-scale assault on – not warm words of support for – council housing,' said DCH chair Alan Walter.
The Bill also allows for the creation of the Homes and Communities Agency and a new stand-alone regulator – the Office for Tenants and Social Landlords – or, as the DCLG expects it to be known, Oftenant.
The National Housing Federation repeated its concerns over the scope the new regulator will have to intervene in the affairs of housing associations, and claimed that private developers would not face the same regulatory burden.
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