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Shapps unveils HRA replacement proposals 

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Details of new arrangements for financing council housing, including how the one-off sum councils must pay to quit the current housing revenue account (HRA) system will be calculated, have been published by ministers.   

The proposals, which are being put on the statute as part of the Localism Bill, include an explanation of how each council’s opening financial position will be determined and the process for implementing the reforms, which go live in April 2012.

Stock owning authorities will have to take their share of the forecast £21.643bn worth of debt in the current national HRA system, the Department for Communities & Local Government (DCLG) said.   

The document, Implementing self-financing of council housing, contains:

  • A model which applies the settlement methodology to local authority data to provide indicative figures per council
  • A user guide to accompany this model
  • A report on the model inputs, assumptions and outputs

The new approach will allow councils to retain the rental income they collect and replaces the HRA subsidy system, where councils are required to pay council rents back to Whitehall, which then decided how to re-distribute.

Councils will be required to buy their way out of the current system which will be achieved by a one-off “adjustment” to each council’s  housing debt after which councils will retain all the rental income they collect.

DCLG said the deal included an extra £500m per year for councils to spend on their housing stock and extra £116m funding for councils to pay for disabled adaptations to homes. 

In total, funding for management, maintenance, repairs and adaptations under the new approach will be 14% higher than under the current subsidy system, ministers said.

The Localism Bill, that begins its committee stage in the House of Commons today, includes measures to repeal the existing subsidy system.

Grant Shapps said: “By putting councils in control and making the decisions they take more transparent tenants and local tax payers will be better placed to hold their landlords to account.”

To read the document, click here: Implementing self-financing of council housing

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