Listen hard, and you will hear the sound of number-crunching among councils across England. Strangely enough, this is not due to the massive cuts in public expenditure being demanded by government, but rather the result of accountants mulling over the terms under which their local authorities are likely to leave the national housing finance system in just over a year's time.
To explain briefly, 171 English authorities that still own council homes are currently part of the housing revenue account (HRA) subsidy system and pool their rent income and other receipts. The government redistributes the money among councils, with any that is left over being gratefully claimed by the Treasury.
Labour spent the best part of 10 years deliberating over how to reform, or most likely scrap, this system. In March last year, less than two months before the general election, it finally came up with firm proposals and presented councils with figures showing how they would fare if they kept their own money following a one-off resettlement of historic debt between themselves and the government.
Thankfully, the coalition government agreed in principle to continue this process, with 2012/13 identified as the year in which the HRA subsidy system would disappear. It has taken another few months for the new government to revise last year's figures but, in spite of the tough economic climate, it appears on the face of it that any extra pain for councils will not be too great.
The Department for Communities and Local Government has come up with a valuation figure for each local authority's housing stock based upon the rent income it can expect to raise over the next 30 years and how much it is likely to need to spend on maintaining its properties. Other factors have also been built in, including a projected loss of homes (and rent income) due to right to buy (RTB) sales.
Prior to D-day in April 2012, this valuation figure will be compared with the notional debt each council is in theory paying off under the current system. Providing the valuation figure is higher, the council will make a one-off payment to the government. If it is lower, mainly because the council has larger historic debt and is in a weaker position to maintain its housing, money will flow the other way.
According to this week's figures, a total of £19bn will change hands in order to get what is called 'self-financing' underway. The government, meanwhile, will accrue £6.7bn more from councils than it hands out - £1.8bn more than was forecast last March.
The vast majority of councils (136) will either take on new debt or add to their existing debt. But in the long run, they may consider it is a price worth paying to avoid having to continue pooling rent receipts. There are still obstacles to overcome. Councils are angry that the new government plans to continue clawing back 75% of receipts from RTB sales. They are also concerned about caps on borrowing and the possibility that the debt resettlement may be reopened in the future.
But on the whole, it seems to be full steam ahead. Whereas Labour was offering councils the opportunity to leave the HRA subsidy system, the coalition government has gone as far as drafting legislation to abolish it and included this in the Localism Bill.
From April 2012, councils will be out on their own so far as housing finance is concerned. Whether that means that the big hand of central government is finally lifted from local authorities remains to be seen.
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