Spend on existing homes, says Armstrong

23 Jul 98
Local government minister Hilary Armstrong has urged councils to refurbish rather than build new homes with the new money from the Comprehensive Spending Review.

24 July 1998

The review has given councils £3.6bn over the next three years from capital receipts to improve an estimated 1.5 million council homes. And there is a new initiative, the New Deal for Communities, targeting £800m at the country's most deprived neighbourhoods. A fourth round of the single regeneration budget has also been announced, providing an additional £2.3bn over the next three years.

Giving more detail of the spending review, Ms Armstrong admitted this week: 'It's not a spending bonanza. We've seen bonanzas in the past which have become nightmares. We want to see the money delivering long-term, sustainable improvement.'

The minister said that she wanted councils to use their receipts to get to grips with a £10bn disrepair backlog. Refurbishment was the priority because so many authorities, particularly in the north of England, had hard-to-let and empty stock.

She revealed that housing's capital funding would be merged into a single stream from 2000, combining the housing investment programme and renovation grants. And councils would be consulted on switching to resource accounting. Council rents would be allowed to rise in real terms by 1% next year and 2% for the following two years, she said. This would free an additional £350m for investment because of the reduced cost of housing benefit rebates.

Ms Armstrong was downbeat about arm's length local housing companies. Their spending would remain inside the Public Sector Borrowing Requirement, she said. 'If they want to be outside the PSBR they will have to work with a Registered Social Landlord,' she added.

As expected, the Estates Renewal Challenge Fund has been scrapped. If councils wish to transfer stock with a negative valuation, they will have to use their housing investment programme allocation or cash from the New Deal for Communities.

The fate of housing benefit awaits the result of the forthcoming benefits review and more detail on the New Deal for Communities is expected in the next few weeks.

Ms Armstrong promised action on inefficient departments under a new housing inspectorate. Paul Jenks, chairman

of the Local Government Association's housing committee, welcomed the announcements. 'Housing could easily have been pushed out by education and health,' he said. 'But this is a major investment.'


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