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- Yvette Cooper and Caroline Flint launch the review of the Housing Revenue Account Subsidy system
Yvette Cooper and Caroline Flint launch the review of the Housing Revenue Account Subsidy system
| Published | 10 March 2008 |
|---|
Yvette Cooper, Chief Secretary to the Treasury, and Caroline Flint, Minister for Housing and Planning, formally launched the review of the Housing Revenue Account Subsidy system today.
Yvette Cooper, when she herself was Minister for Housing and Planning, announced the review in December 2007 as part of a wide ranging package of measures designed both to deliver the new homes the country needs, plus making existing homes fit for the 21st Century.
The review was launched today at the House of Commons before an invited group of key stakeholders. It will build on the work of the pilots we have conducted with six local authorities which looked at the costs and benefits of councils operating outside the Housing Revenue Account subsidy system. A report of this work is published today.
It will consider evidence about the need to spend on management, maintenance and repairs. It will consider rent policy, including the relationship between council rents and rents set by other social housing providers. It will also consider how the self-financing model developed in the pilot exercise would fit with the aims of the review and, if it is consistent with these, how it could be implemented. And it will consider whether the rules which govern the operation of the HRA need to be changed in order to fit with a new system of financing.
The review commenced with a constructive debate on the draft terms of reference and, to take the work forward, the Ministers announced that the Chartered Institute of Housing would be hosting a number of expert workshops on the main themes of the review to gather evidence to inform the review.
Caroline Flint said;
"The Housing Revenue Account Subsidy system is very complex and I know that people are unhappy with it because of its seeming unfairness and lack of transparency. I want the system to work so that it delivers for tenants and local authorities - and to get it right in the long term. This review, with the active engagement of key stakeholders, is essential to that. I also welcome the work of the Self-Financing Group, which will contribute significantly to the review."
Yvette Cooper said;
"This Government has invested £20bn since 1997 in making social homes decent. This is an important review to help make sure that investment delivers value for money and can be sustained into the future."
The review will be carried out jointly by officials from HM Treasury and Communities and Local Government, with extensive stakeholder engagement and is expected to report to Ministers in spring 2009.
Communities and Local Government is also today publishing the summary of findings of a project set up to examine the costs, benefits and practicalities of allowing some councils to operate outside the national HRA subsidy system.
It found that this approach could potentially improve asset management and deliver greater efficiencies. The evidence from this project will be considered by the HRA Subsidy Review, and further work will be done as part of the Review to develop and test this model. In particular, before Government implemented a self-financing model it would have to ensure that it was fair to all councils, including those which might remain within a national finance system and rely on support from it.
Notes to editors
1. All local housing authorities that own more than 50 council houses have to manage receipts and expenditure related to those houses within a Housing Revenue Account (HRA).
2. All such authorities are part of the HRA Subsidy system. The HRA Subsidy system does two things. It captures housing surpluses from those authorities that have assumed revenues from their council housing that exceed their assumed costs (surplus authorities) and provides housing subsidy to those authorities that are assumed to need it to run their council housing. The captured surpluses are used to fund subsidies to those authorities that need them (deficit authorities), and any shortfall is made up by the Exchequer.
3. Self-financing of council housing services: Summary of findings of a modelling exercise is on the Communities and Local Government website at: www.communities.gov.uk/publications/housing/selffinancingservices.
4. Six local authorities - three with ALMOs and three without ALMOs - worked up model business plans to show the costs and benefits of self-financing. The six LAs and ALMOs were: Sheffield City Council and Sheffield Homes; the London Borough of Hounslow and Hounslow Homes; Carrick District Council and Carrick Housing; Cambridge City Council; Darlington Borough Council; Warwick District Council. A contact group of experts and practitioners reviewed the modelling work and provided additional advice on key aspects such as accounting treatment and legal issues. The report is the product of these two groups.
5. Provisions in the Housing & Regeneration Bill will allow local authorities across the country by agreement with the Secretary of State to be excluded from (or hold certain properties outside) the HRA Subsidy system.
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