PrintNew local government housing plans build for the future, CIPFA says
Wednesday’s call from the Housing Minister, Yvette Cooper MP, to review the housing subsidy system has been welcomed by the Chartered Institute of Public Finance and Accountancy (CIPFA) as a much-needed reassessment of a system which has clearly outlived its usefulness.
Subsidy settlements for local authorities have for some time now been affected by short term movements in public expenditure planning, and suffer from an inherent degree of unpredictability which stems from the extremely complex system of formulae for redistribution in CIPFA’s view.
CIPFA’s Chief Executive, Steve Freer said:
“This is move could give tenants and local authorities greater control over the funding of local authority housing. It marks a shift away from central control and towards local decision-making and is welcomed in the context of the wider priority to encourage place shaping and focus on the needs of the local community.”
Hopefully this initiative will also act as a catalyst to stimulate a much needed increase in the supply of new, affordable housing.
The provision in the Housing and Regeneration Bill – clause 269, Exclusions from subsidy arrangements – which could facilitate the self-financing of local authority housing could lead to:
- More effective local decision making in allocating rental income between different areas of service (eg between housing management, day to day maintenance and investment in major repairs).
- More effective active asset management and estate transformation – the current unpredictable nature of subsidy resource allocations mitigates against the development of effective asset management strategies and long term decisions about the better use of assets.
- An increase in the supply of new affordable housing - because currently there are powerful disincentives to the development of new housing within the Housing Revenue Account subsidy system, through the pooling of rents and receipts from Right to Buy disposals.
CIPFA has worked with the department for Communities and Local Government and a number of other groups to look at the issues that have arisen as six Arms Length Management Organisations (ALMO) and local authorities have tested the implications of coming out of the subsidy system.
CIPFA has developed an analysis model to assist with interpreting what the HRA subsidy determination really means, enabling authorities to better understand how their slice of the determination is constructed and most importantly, how this compares over time and with others. For more information, please visit www.cipfastats.net.