Councils challenge CPA as government decides which housing strategies must be scrapped

They claim weak ratings for housing unfairly held back their overall scores. If any legal action is successful, it could scupper the entire CPA process, forcing the Audit Commission to repay the £6m it charged councils for the assessment. The news comes as the government government is set to tell councils whether their housing strategies are "fit for purpose" or must be scrapped and done again.

The new "fit for purpose" rating, part of the housing investment programme, will decide whether some councils must go back to the drawing board with their plans. The criteria used by regional government offices in their "fit for purpose" judgments include how well the strategy fits with other work by council and outside bodies, and progress towards the decent homes target.

Questions remain over how "fit for purpose" will square with the HIP ratings issued last week. Di Stirling-Chow, senior consultant with Pennington FMCS, said: "Fit for purpose is a chance for government offices to give clearer direction on the priorities. We wait to see how 'average' ratings will equate to fit for purpose."

Bradford gained its first "well above average" HIP rating, with a top housing CPA score and "good" overall verdict.

But the ratings produced puzzling results for others (see table). Coventry scored "well above average" as its HIP rating – confirming its Audit Commission rating of three out of four – but was judged "poor" overall in the CPA. Southwark's score was also contradictory: it got three out of four for its housing CPA, but only "below average" in the HIP.

The discrepancies between the HIP ratings and the CPA scores are due to the fact that overall CPA scores are influenced by ratings of other policy areas – such as education and health – and not just housing. HIP ratings only assess council's housing performance.

The problem for councils is that whereas HIP scores previously determined half of how much money councils get from the government for housing, the government has now switched to offering extra spending freedoms based on CPA results (12 December, page 7).

Salford is leading the legal charge against the Audit Commission, with plans for a judicial review over its poor housing inspection score. Bury, Torbay and Ealing could follow. All were judged "weak" or "poor".