Plans to pool capital receipts 'jeopardise affordable housing'

As many as 30 local authorities will have to shelve affordable-home developments if the government goes ahead with plans to reform the capital receipts regime.

Debt-free councils still in control of their stock have warned that affordable housing will lose out if changes outlined in a consultation paper on housing finance go ahead.

Among the 30 such councils is Winchester, which fears it will have to cancel plans to develop 200 affordable homes a year if the money from right-to-buy sales is pooled.

The warning comes as the deadline for comments on the paper lapses tomorrow.

The Way Forward for Housing Capital Finance, published by the Office of the Deputy Prime Minister in August, proposed a new pooling regime for capital receipts that would deny debt-free councils the freedom to spend income from right-to-buy sales.

The paper also outlined alterations to social housing grant, which would prevent debt-free local authorities "recycling" money granted to registered social landlords. Such councils are currently free to choose how they spend their repayments from the Housing Corporation.

Bob Merrett, Winchester council's director of health and housing, said of the proposed changes: "Through a national pooling system, we would lose out to authorities in areas that are judged to be more deprived than us."

Winchester council cleared its debt earlier this year to support the development of affordable homes. The council scheduled an annual investment programme of £5m, aiming to deliver 200 affordable houses each year. If the new rules are introduced, Winchester's investment could fall to just £1m per year.

Local Government Association programme manager Gwyneth Taylor said: "The intention is to redistribute capital receipts to those areas where the need is greatest."

The LGA executive met earlier this week to finalise its response to the ODPM paper.