Labour Housing Minister John Healey today offered councils a far reaching new deal giving them the freedom to fund and run their council homes, without central Government subsidy.
In announcing the deal, Mr Healey set out plans to dismantle the current (HRA subsidy) system of funding council housing in 177 local authority areas.
The deal will release at least ten per cent more money in every council for maintaining and managing their homes. And it will create the funding capacity to build over 10,000 new council homes a year.
Above all it will mean 4 million people living in 1.8 million homes will get better homes and better housing services from their council.
Tenants whose homes have been upgraded through the Government's Decent Homes programme will have the guarantee that their homes will be funded and maintained to this standard for the future, backed by the new national regulator - the Tenant Services Authority.
Under this new self-financing system councils will keep all the rent they collect from their homes and all the receipts from any sales of houses or land. Not a single penny will go to Whitehall and not a single penny will subsidise other councils as the current system dictates. In return councils will accept a share of an additional £3.65bn debt. No council will take on a level of debt that is not sustainable for the long term.
This is also a good deal for central government by removing the complex annual round of cross-subsidy decisions, making the funding system clearer and fairer. It also devolves from Whitehall the funding, management and standards of council housing in future to elected local councils.
Local Government has long criticised the HRA subsidy system and long called for reform. These proposals dismantle the current system and sets up a new devolved self-financing settlement.
John Healey said:
"This is a once and for all settlement between central and local government. It will bring council house funding up to date - replacing a system which was introduced before the Second World War. Councils will get the freedom to fund and run their council homes, without central Government subsidy. Not a single penny from rents or sales will go to Whitehall and not a single penny will subsidise other councils as the current system dictates. This is an opportunity for radical change which will allow councils to do much more to provide better services and better meet the needs of local people."