A voluntary code of conduct for local authority self-financing of housing could be established in a bid to prevent regulation by central government.
The LGA, the Chartered Institute of Housing and other bodies are examining the option of self-regulation after councils took on more than £20bn in debt to take control of the Housing Revenue Account from government.
The transfer meant the 136 authorities involved could use rental income to raise further debt to fund housing policies. This led the Office for Budget Responsibility to increase its forecast for public sector borrowing, causing the Treasury in turn to warn it would intervene if this increase came to fruition.
CIH director of policy and development Steve Partridge said a voluntary code of conduct for the self-financing of housing might stave off any additional centrally set controls on council borrowing.
“We want to say to government that we know how to look after ourselves and deliver a growing housing sector. That would allay any potential issues about imposing any form of regulation or additional forms of control,” he said.
Mr Partridge said self-regulation would be more about “peer support” than a return to the inspections of the Audit Commission.
A steering group including representatives of the LGA, the CIH, the National Federation of ALMOs, the Chartered Institute of Public Finance & Accountancy and the Association of Retained Council Housing are to report on whether a code is needed, and what its scope would be, later in the year.