Moves that could see an extra £600m released are being made to make stock transfer more attractive in the wake of last week's draft Local Government Bill, which set what some believe are unnecessarily high standards for extra borrowing powers (see below).
First, the department confirmed this week it is considering lowering the threshold that arm's-length management organisations must reach to draw extra government subsidy. Ministers hope to make an announcement after next month's comprehensive spending review.
Also, the department is understood to have ruled out asking for more cash to help councils that want to "stay put". Instead, it is pressing the Treasury to fund partial transfers through dowry payments and council debt write-off. Full transfers for a small number of councils could be helped by the government covering debt redemption penalties.
And the government has admitted that up to a quarter of English councils could fail to meet the 2010 decent homes standard. Last week ODPM housing director Michael Gahagan said the target was "pretty stretching".
The Treasury has demanded results in exchange for cash and will not willingly see standards eroded.
In talks with the Treasury, the ODPM is understood to have given assurances that it is on course for its interim 2004 target. It is believed to have emphasised the "striving for improvement" side of the Audit Commission ratings that are a prerequisite for arm's-length funds; the number of "stars" required could be reduced from three to two.
But moves to get the worst housing improved through stock transfer also need a boost. The programme has stalled with Birmingham's "no" vote and a lack of large urban transfers in the programme.
It is estimated that 11 metropolitan councils owning 500,000 homes cannot currently transfer because of negative valuations and breakage costs. Others, including Nottingham, are calling for new funding options.
The National Housing Federation, the Chartered Institute of Housing and the Local Government Association have called for subsidy totalling £600m to ease transfer over the next three years.
NHF projects director Stephen Duckworth said: "Transfers that result from good options studies with full resident involvement should be able to go ahead. We are very keen to see the necessary financial encouragements."
What the draft Bill means to you
The draft Local Government Bill, published last week, takes forward legislative aspects from the local government white paper that came out in December. Its proposals include:- top-performing councils to be given the freedom to borrow to pay for major projects such as new buildings or infrastructure, “provided they can afford to service the debt”
- councils to have the option to scrap 50% council tax discount on second homes or long-term empty properties
- councils to get powers to set up improvement schemes with businesses
- credit approvals to be scrappedM
- the council tax benefit subsidy limitation for housing benefit – better known as the “daylight robbery tax” – to be scrapped
- the Housing Revenue Account to become a straightforward landlord account with a clear statutory basis for requiring councils to prepare business plans
- provisions for paying HRA subsidy to be broadened and changed to reflect rent reform.
Source
Housing Today
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