Changes to the complex housing revenue account could lead to the biggest shake-up in local government finance since the demise of the poll tax. But, there are serious concerns, says Robert Beiley.
Housing professionals and their finance colleagues will, by now, be carefully considering their response to the previous government's ‘prospectus' on the reform of the housing revenue account (HRA) subsidy system – Council housing: A real future, published in March 2010, with a consultation closing date of 6 July.
The prospectus contemplates what is, arguably, the biggest change to local government finance since the demise of the poll tax.
Readers will be aware of the deficiencies of the current HRA subsidy system. It is widely acknowledged that it gives too little freedom to local housing authorities to plan and improve their services. The alternative in the prospectus turns on the redistribution of the large amount of debt currently being serviced through the reallocation of rental income.
The proposal is that local authorities be ‘given' debt to service themselves, at a level they deem to be affordable. This is not a paper exercise. Local authorities will either be taking on real debt or – in fewer cases – getting the money to repay existing debt.
Indeed, the prospectus suggests that not only should the income and expenditure in the HRA be ring- fenced but this new HRA debt should be as well. Hence the very close attention these proposals are now receiving. On publication, the basis of reform was generally welcomed by housing professionals. Yet, as councils have grappled with the details, it seems not all see the prospectus as the panacea to the financing of their housing service which the initial welcome indicated might have been the case.
