By Richard Johnstone | 25 June 2013
The Housing Revenue Account subsidy system is to be scrapped in Wales and councils put on a par with their English counterparts and made self-financing in terms of housing, the Treasury announced today.
Currently, the 11 authorities in Wales that have retained responsibility for council housing send the rents they receive to the Treasury, where they are then redistributed based on maintenance costs, as well as used to service historic housing debt. Overall, the current system results in authorities returning £73m annually to Whitehall.
A similar scheme operated in England until April 2012, when councils exited the centrally controlled mechanism.
Under the English reforms, authorities took on a share of the historic housing debt from central government and in exchange were allowed to retain local rents. However, the scheme has since been criticised by the Local Government Association for imposing a cap on housing-related borrowing on authorities, which has left them unable to boost housebuilding.
Chief Secretary to the Treasury Danny Alexander said today’s announcement would ‘provide Welsh local authorities with the flexibility they need to manage their own housing revenue’. He added that, following negotiations with the Welsh Government, the changes would not require any additional public funds.
Ministers in Cardiff also welcomed the move, saying the ‘historic agreement’ would help councils ensure their homes met the Welsh Housing Quality Standard.
Finance Minister Jane Hutt said the existing system was ‘complex’.
She added: ‘I would like to thank the chief secretary to the Treasury for his support in securing this agreement which will enable Welsh local authorities with housing stock to become self-financing and retain all of their rental income.’
