Sarah Newton MP has secured a 10 Minute Rule Motion to introduce a Bill into Parliament on 8th December that would enable Cornwall Council, the London Borough of Wandsworth and Stockport Metropolitan Council to be pathfinders in a radical reform of council housing.
The Coalition Government agreed to end the redistributive system of financing council housing in England. Currently, councils are required to pay the council house rents and the majority of receipts from the sale of land and homes to Whitehall, where it is then decided how best to redistribute the funds back to local authorities - known as the Housing Revenue Account subsidy system.
In October, Grant Shapps the Housing Minister committed to changing the rules so councils will be able to keep all the rents and sales receipts that they collect. In return for these greater freedoms, some councils would be required to take on additional housing debt - but no council will take on a level of debt that is not sustainable for the long term.
Details will be introduced in the Localism Bill before Christmas to enable the new system to start in 2012. Sarah Newton has been working with Mike Owen of Cornwall Council to develop the pathfinders and comments:
“By working through the very complex and detailed processes that are required to transform authorities in this way, valuable lessons will be learned to minimise the risks of unforeseen problems when the legislative deal is done for the whole sector and 160 plus authorities exit in 2012.”
An agreement would need to be signed on a voluntary basis between each of the authorities involved and the government.
Grant Shapps said:
"For far too long councils have been left hamstrung in their efforts to meet the housing needs of their residents by a council house finance system that is outdated and no longer fit for purpose. The Housing Revenue Account subsidy is in urgent need of reform.
"That's why I can confirm that we intend to scrap the current system, and instead replace it with something more transparent that will serve the needs of local communities without interference from Whitehall.
"Subject to the Comprehensive Spending Review we will offer councils the opportunity to keep the rents they collect and the receipts from any house or land sales. This is a key step to transfer powers to councils and communities, so they are free to improve their local services in a way that best meets the needs of local people."
Housing Minister Grant Shapps said that the Government is committed to giving councils more financial freedom to deliver a better deal for the 4 million people living in council housing.
Describing the current system of council house finance as a mess Mr Shapps said the Coalition Government would review the unfair Housing Revenue Account subsidy system. The Minister said he wanted to see a more transparent system that devolved more power to councils to better meet the housing needs of the communities they serve.
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