Council house finance reforms announced

Housing Minister John Healey today published plans to 'dismantle' the current council housing finance formula and replace it with a 'devolved' system that will enable councils to keep all their rental income and gain the freedom to manage their housing to meet local needs.

The consultation on reforming the current Housing Revenue Account (HRA) subsidy system proposes a devolved self-financing model which removes the need to redistribute revenue nationally while continuing to ensure that all councils have sufficient resources.

Councils will finance their own business from their own rents and revenues, in exchange for a one-off allocation of housing debt.
By freeing councils from the annual funding decisions in the current system, councils will be able to plan long term and improve the quality of services to their tenants.
Councils currently provide around 2 million rented homes and, alongside, housing associations they provide decent, secure and affordable accommodation for over 8 million people.

John Healey said: "Over £33billionn has been invested in improving council and housing association homes since 1997 and by the end of next year we expect 95% of these homes to be warm and weather-proof. If we are to maintain these improvements for the long term then it is imperative to reform the system which finances council housing....The proposals I am publishing today will free councils from annual funding decisions so they can plan long term and improve the management of their homes, secure greater efficiencies and improve the quality of services to their tenants."