Treasury 'cash grab' to hit council homes, says LGA

Local authorities say that they should be able to keep the money as part of the ending of the Housing Revenue Account subsidy system, where all council house rents are paid to the Treasury and then redistributed. Under the Localism Bill, council landlords will be able to keep all their rental income from next April, while paying off a proportion of the housing debt in a 30-year self-financing business plan.

The LGA is urging the House of Lords, which is currently examining the Bill, to allow councils to keep receipts from sales too, which amounted to almost £5bn in the past six years. Councils also want peers to help provide ‘a truly self-financing system for social housing’ by voting against plans to limit the amount of money councils can borrow to build new homes. The Bill proposes to prevent councils from borrowing more than the housing debt they will take on when the new system is introduced.

Gary Porter, chair of the LGA’s housing and environment board, said that without these changes a ‘golden opportunity’ to create a self-financing system would be missed.

‘Peers should overturn Treasury plans to hoard the bulk of revenue from the sale of council homes. Instead, local authorities should be allowed to keep 100% of the money to improve properties for current tenants and build new houses for those who need them. Failure to deliver could lead to thousands fewer council homes being built.

‘The government’s movement toward a self-financing model is undoubtedly good news. But we clearly need a more wholehearted pursuit of the principle from all departments. Similarly, placing restrictions on how much councils can borrow to build new houses runs contrary to the government’s broader intent of devolving greater freedom to local areas.’