25 October 2002
Crucial parts of government plans for housing finance need to go back to the drawing board, according to the Local Government Association.
In the consultation paper, The way forward for housing capital finance, ministers promised to simplify the system of funding council housing and indicated that some local authorities would be given freedom to borrow money in the same way as housing associations.
But the LGA response, published on October 19, said any extra flexibility for councils seemed a long way off and, in the short term, it was more concerned about proposals to pool housing capital receipts and scrap local authority social housing grant.
The LGA opposes the pooling scheme, under which money from debt-free councils would transfer to less well-off areas. At the least, it said, councils need more information on how it would work.
Another issue is the local authority social housing grant system. Under the scheme, councils lend money to registered social landlords and then have the loan repaid to them by the Housing Corporation.
If the grant were abolished, it would be replaced by new grants that would be paid directly to RSLs by councils, or by an expanded approved development programme, overseen by the corporation.
The LGA points out that rural councils make heavy use of the grant scheme because they have limited resources of their own. Without it, housing would have to compete for money with other council services.
PFoct2002
