By Louise Dunne – Lead Advisor, CIPFA Housing Network
If you ever had cause to use the old HRA Manual the chances are you will not have forgotten it.
A beast of a tome, the HRA Manual guided many trainee housing accountants, as well as more experienced ones, through the everyday quagmire of HRA accounting under the much derided subsidy system.
Today under the self-financing system, the manual’s popularity and importance may appear to be diminishing. Yet I suspect it will be around for many years to come, mainly due to the fact that it remains so useful.
With the self-financing system having now replaced the frustrating annual subsidy review, housing professionals and housing accountants are free to plan their rental income and debt repayments according to a 30 year plan. However, with freedom and local flexibilities, comes responsibility. And as recent trading activities between the HRA and general fund have demonstrated, ‘freedom of choice’ can indeed be interpreted in a variety of very different ways and indeed such “trading” has been heavily criticised.
Meanwhile, the downgrading of responsibility for housing to a junior ministerial role in the Government’s recent reshuffle raises questions about their priorities. Indeed, only 18 months after the introduction of self-financing you could be forgiven for cynicism about the government’s commitment to solving the housing crisis. Some would argue that self-financing, coupled with the Help to Buy scheme and a recovering economy, will help to address the housing crisis. However these policies in no way address the serious questions that still need to be tackled around the imbalances in the demand and supply of housing across all sectors, indeed these questions are possibly this country’s greatest challenge.
Certainly for HRA landlords, the future does not look that bright. The repeated insistence by the Government that they will maintain the debt cap will, almost certainly, prevent many authorities from actually building new homes – as CIPFA’s new Chief Executive, Rob Whiteman, recently highlighted in a Public Finance blog.
CIPFA and the CIH have been consulting with the sector over the past 18 months to develop a Voluntary Code of Practice for the Self-financed HRA. Its aim is to fill the regulatory gap with regard to financial viability and governance, and provide an opportunity through ‘self-regulation’ and voluntary sign up, for local housing authorities to demonstrate unequivocally that they can indeed be trusted to manage their own affairs.
The launch of this code today marks the beginning of ‘localism’ at its best – with ‘regulation’ for the sector, by the sector.
Dr Louise Dunne is CIPFA’s Lead Housing Advisor.