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Housing Revenue Account

Volume 493: debated on Tuesday 2 June 2009

Since the launch of the joint review of council housing finance with the Treasury in March 2008, we have received position papers from key organisations in the sector, approximately 45 written submissions in response to our call for evidence, papers from a number of housing experts and four petitions. We have also received direct representations in face-to-face meetings with housing representative bodies, local authorities and trade unions.

Despite our pledge to get councils building again, they are doing so at a rate of only about 200 homes a year, although registered social landlords are completing something like 20,000, suggesting a continuing bias against local authorities providing decent, affordable, accountable new homes for rent. Will my right hon. Friend grasp this once-in-a-generation opportunity to reform seriously flawed housing revenue accounts by announcing a self-financing system in which councils can keep their own rents, reinvest surpluses in existing and new stock and have the same freedom as housing associations to access grants and loans for much-needed new developments?

I entirely share my hon. Friend’s concern about the barriers that had been put in the way of local government’s freedom to provide housing for its local communities by the Conservatives when they were last in government. I can assure him, however, that we are in the last stages of removing those barriers and that local authorities will be able to bid for grant. They will have the special opportunity that was made available to them in the Budget of accessing funds reserved for local authorities, but they will also have an opportunity to bid for social grant on the same basis as housing associations and other bodies.

Back in January, the Prime Minister said that he would

“put aside any of the barriers that stand in the way of”

local authorities providing more housing. The right hon. Lady has mentioned the money announced in the Budget, but that equates to only three homes per authority. Is it not time to acknowledge that the real barrier is the housing revenue account subsidy? Why are the results of the review so overdue? In the current economic climate, surely what we need is swift action, rather than further delay.

As I pointed out a moment ago to my hon. Friend the Member for North-West Leicestershire (David Taylor), we are removing the last of the barriers that obstruct local authorities. I share what I deduce to be the hon. Lady’s hope, which I hope in turn is shared across the House, that local authorities of every political shade will take advantage of this opportunity to begin greater construction. I also understand her point about the structure of the housing revenue account. The review has not, actually, been massively delayed—we had hoped that it would report in the spring, and we now hope that it will do so this summer—but I fully recognise that there are many criticisms of the present system and that they have a great deal of validity. While I very much hope that we will be able to come forward with radical proposals for change that will attract support across the parties, I am conscious of the unwarrantable precedent of the poll tax, whereby it was thought that anything would be better than the then system. Unless we can come up with anything better than the present system, we may have to tinker with that.

I am sure that my right hon. Friend will be aware of the uncertain feelings that managers of arm’s length management organisations are experiencing at the moment. Since the stock is still owned by councils, will she please tell the House when it will be announced that those ALMOs are going to have a certain future ahead of them?

I cannot put a date on the particular concerns that my hon. Friend raises and I recognise, of course, that there are, sadly, a plethora of uncertainties about some of these issues. We will certainly do our best to resolve them as speedily as possible, and if it is helpful, I will write to him if any further information becomes available.

Last year, the Communities and Local Government Select Committee reported:

“The national Housing Revenue Account system creates uncertainty and resentment and does not reward best practice.”

We are now 18 months into the Government’s review of the HRA. When can we expect a conclusion to the review—one that is fair, that supports local autonomy and that will increase the provision of much-needed social housing across the whole country?

It is not 18 months, but never mind. I told the House a few moments ago that we hope to publish some proposals this summer. I fully recognise the justified criticisms of the present system, particularly the volatility and the unfairness, but I view with slight cynicism some of the criticisms we have heard from some Conservative local authorities, which were perfectly happy with the surpluses built up—four and more times the size of last year’s—when the Conservative Government were in power. We will put that aside and welcome their conversion to a better approach.