16 May 2003
Plans to build thousands of affordable homes remain at risk in spite of a government pledge to smooth over the abolition of a major grant scheme.
A last-minute decision by the Office of the Deputy Prime Minister to scrap local authority social housing grant (LASHG) last month has left councils and housing associations in a state of confusion.
Even councils receiving transitional funding in 2003/04 claim this will not guarantee they can continue paying associations to build new homes.
Under LASHG, councils paid housing associations, or registered social landlords, to build homes and then reclaimed the money from the Housing Corporation. Ministers wanted to abolish LASHG before creating regional boards, which will fund all social housing from next April.
This year, some RSLs are being funded directly by the corporation while others are continuing to rely on councils to pay them grants. In March, the ODPM announced it was providing transitional funding to support new housing worth £550m in 2003/04.
RSLs must submit bids by the end of June with building to start by the end of January 2004. According to the Local Government Association, this still leaves schemes in the pipeline that will not be completed before the regional boards come into operation.
The LGA is writing to housing minister Lord Rooker, requesting a further two years' transitional funding. 'Authorities may be reluctant to fund schemes this year that are likely to be a resource commitment for future years,' said Gwyneth Taylor, LGA programme manager for housing.
Neil Griffiths, National Housing Federation research policy officer, said RSLs were concerned that schemes already approved might not now go ahead. 'It could be hugely costly to members that have signed contracts to buy land,' he said.
An ODPM spokesman said ministers were monitoring the situation but it was unlikely the government would provide additional funding.
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