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Proposed major changes to the way councils manage their housing finances have been announced by housing minister Hi...
Proposed major changes to the way councils manage their housing finances have been announced by housing minister Hilary Armstrong.

The proposals introduce resource accounting to the Housing Revenue Account and remove rent rebates from it. The aim is to make housing accounts easier to understand for both councils and tenants.

Launching a consultation document on resource accounting yesterday, Ms Armstrong said:

'This is not just some dry, technical accounting proposal. Local authority housing is a valuable asset and we want to ensure we get the best from it.

'These new-style accounts will show the value of housing, the cost of capital tied up in it, the expenditure needed to maintain it and the level of subsidy required to keep rents at below market levels.

'We want to encourage more efficient use of housing assets by helping authorities make better informed decisions. Making the housing revenue account easier to understand will help. It will also enable tenants to see more clearly how their housing is funded.

'Our consultation document sets out some of our ideas but now we want to hear what people think about our proposals.'

Moving to resource accounting brings the Housing Revenue Account (HRA) into line with the rest of central government's financial framework.

It will also:

- encourage more efficient use of housing assets

- increase the transparency of the HRA

- help councils plan housing strategy

- make housing consistent with councils' other revenue accounts

- put councils on a more business-like basis

Removing rent rebates from the HRA will leave the account as a true reflection of the cost of providing decent housing at below market rates.

This will give councils greater certainty about future funding and allow them to plan better for the years ahead. Councils will be able to carry forward to future years any unspent balances in the HRA.

The change will allow tenants to scrutinise more easily how their housing is being funded and encourage councils to adopt a more business-like approach to managing housing, including drawing up

detailed business plans which will be open to scrutiny.


1. Although there will be no new money for housing as a result of these changes, the comprehensive spending review announced an additional£3.6bn to tackle the backlog of maintenance and repair in council housing.

2. The CSR also said that new measures would be brought in to ensure resources are used to the best effect and the move to resource accounting is part of this.

3. The HRA is a statutory account which housing authorities are obliged to keep as a separate account within their General Fund to account for income and expenditure relating to their housing stock.

4. The consultation period will last until 19 March 1999 with an approximate date for full implementation of the results from 2001-02, depending on parliamentary time.

5. Authorities will be asked to prepare for this by carrying out valuations and preparing shadow accounts and business plans.

6. Copies of the consultation paper, 'A New Financial Framework for Local Authority Housing: Resource Accounting in the Housing Revenue Account', are available from Susan Deville on 0171 890 5562. The consultation paper can also be found on the DETR website at

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