20 February 2004
Birmingham is planning to take advantage of the new prudential borrowing rules to raise an extra £15m for housing renovations.
The council suffered a major setback two years ago when tenants voted against a stock transfer that would have led to major improvements to its 80,000 properties.
But the new borrowing powers, allowing councils to borrow against future income from April 1, will permit it to spend nearly £55m on meeting the decent homes standard in 2004/05 – up from £40m this year.
The council has set aside £1.6m next year to pay for the loan. It can afford the repayments because, under rent restructuring, weekly rents are being raised by £2.50 from October.
Interim housing manager Michael Irvine said most of the new money would be spent on 'thermal comforts', including double glazing. About 20,000 homes lack central heating.
Birmingham's overall housing budget is being increased by 11% to nearly £161m. The loan, Irvine added, will fill a gap between existing resources and the capacity of the council and local construction firms to deliver further improvements.
Following the ballot, an independent commission recommended that the council's homes be managed by up to 35 tenant management organisations (TMOs). Two pathfinder TMOs are already up and running.
Irvine pointed out that, even with prudential borrowing, the council will not be able to raise as much as a housing association could following a transfer. 'We're borrowing against income rather than our asset base as a housing association would do. It's not a level playing field,' he said.
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