Stock transfer alone will not be enough to meet government policy to ensure all council housing is of a decent standard by 2010, DTLR secretary Stephen Byers has admitted.
A range of funding options, including increased borrowing against rental income powers for councils, is needed to reflect the different challenges in different areas, Byers told MPs during a parliamentary debate last week. "Tailor-made" solutions were necessary, the minister explained.

Byers' remarks signal the growing disillusionment in the government with the policy of using transfer to address under-investment in council housing.

Previously, it was assumed by ministers that transferring 200,000 council homes a year would ensure sufficient investment to meet the 10-year target.

But the minister's comments may indicate that target is set to be dropped.

"I do not stand in dogmatic opposition to council housing, but believe that there should be genuine choice," Byers told the Commons.

"That means that we must consider new forms of funding. We have the housing stock transfer, the private finance initiative, and arm's-length management organisations, to which we must pay greater attention."

It is likely last month's shock rejection of transfer by Birmingham council's tenants has prompted the change of emphasis in Whitehall.

Arm's-length management allows greater investment in housing without transfer, but is still viewed as "back door privatisation" by anti-transfer campaigners and trade unions.

Byers also said that councils would soon have the freedom to borrow against rental income.

"We shall have the new capital borrowing powers if we get the legislation into this year's Queen's Speech," he explained. "Therefore, a range of options will be open to individual authorities."

Mike Wilkinson, joint head of the DTLR's local authority finance division, said last month that the decision to relax borrowing rules was a "back of the envelope calcu-lation" following the Birmingham "no" vote.

Source

Housing Today