Boost for councils leaving HRA subsidy scheme

Speculation is growing that the government will make new efforts to boost housebuilding before the end of the year after the announcement of a £100m boost for council housing.

Chief secretary to the Treasury Danny Alexander told the Lib Dem conference in Birmingham that local authorities leaving the housing revenue account (HRA) subsidy system will receive a cut in interest rates equating to that figure.

Thanks to historic debts, Councils need to borrow £13bn in order to leave the HRA but lower rates will now be offered by the Public Works Loan Board.

Councils will also be able to keep income from rents, which is currently returned to government and then redistributed.

“I’ve listened to local authority concerns that this is a one-off transaction within the public sector and should be financed as such,” Alexander said.

“Let me put it simply - an extra £100m every year that councils can then reinvest in housing.”

Alexander, who was speaking on Sunday, also announced a £500m “growing places” fund to kickstart stalled infrastructure projects. He said the investment would allow schemes to progress which would deliver thousands of homes and jobs.