Ministerial Statement on transferring council-owned housing stock and self-financing

General

In his Ministerial Statement of 16 December (Hansard Column 135WS), the Minster for Housing invited views on the proposed changes to the Housing Stock Transfer programme. He said that he expected to receive representations by 15 January 2010. CIPFA’s Local Authority Housing Panel comprises representatives from a broad range of local authorities and Arms Length Management Organisations (ALMOs) as well as from a number of national organisations and the views below represent those of the Panel as a whole.

CIPFA very much welcomes the Government’s proposals to dismantle the existing Housing Finance system and to replace it with a new system based on self-financing. CIPFA sees this as a major opportunity to reshape the whole sector of local authority housing and is strongly supportive of the proposed moves to enable far greater local decision-making and flexibility with resources.

However, there is, clearly, much work to be done on clarifying just what the proposals mean at the level of the individual local authority and on spelling out the details of implementation. CIPFA contributed substantially to the Governments’ work-streams during the long process of the HRA Subsidy Review itself and we are keen to offer our financial and technical expertise to assist the Government Departments on the further detailed work required, alongside other appropriate organisations.

CIPFA sees self-financing as a clear alternative to large-scale stock transfer. With respect to the Minister’s statement on stock transfer, a difficulty arises where the government now appears to be changing the rules – having previously provided funding for stock transfers to go ahead on the basis of funding in addition to decent homes, what is now proposed is rather a ‘level playing field’. In CIPFA’s view, this raises two important issues:

• There is not yet sufficient detail on the government’s proposals for future stock transfers: Will they require the tenanted market value to be calculated on the basis of spending at the level of management, maintenance and major repairs allowances plus investment to decent homes? Or will this only be a requirement if the authority requires financial support? How will differences in local authority and housing association finance be treated – for example, the different positions on VAT?
  
• Councils and their tenants are now in a position where the detailed implications of stock retention and stock transfer are both unknown. This makes for obvious difficulties when it comes to taking informed decisions about which option to choose.

In the light of our comments above, CIPFA suggests that the Government should set out as soon as possible, in detail, how it sees stock transfers being financed in future.