Prescott: we’ll look again at housing finance

Deputy prime minister John Prescott has promised a review of financing for council housing after Labour party conference delegates defied the government and voted for a “fourth option” for local authority housing.

About three quarters of the audience voted for a proposal that tenants will not be “financially disadvantaged” if they wish to remain with the council and funds for stock transfer will be “equally available to councils”.

At the end of the debate, a frustrated-looking Prescott said: “The public financing of housing does not treat local authorities on a level playing field and I want to see that changed and I promised I would do that and look at an inquiry into it.”

The scope of the review and the people who will chair are it as yet unknown. The idea of a review is believed to have come about in late-night talks before the vote.

A senior government source said: “To be honest we are still trying to get clear what precisely has been said. But my understanding of what may happen is that this review will be a response to… [proposed] changes that could be made in local government finance without adversely impacting on the public sector finances.

“Prescott made it very clear that there will be no fourth way. However the terms of the review and the scope of it are still being worked out. This is a political matter and we are trying to catch up as to what is on the table.”

Many fourth way campaigners welcomed the concession, though some dismissed it as a sop. Others doubted that the review would actually take place.

At present, local authorities can only use stock transfer, the PFI or arm’s-length management to reach the decent homes standard. The “fourth way” would involve borrowing or extra funds. The government has argued against this because it would have to raise public sector borrowing in order to find the money needed.

Pressure for a fourth way has built since tenants in top- performing Camden council voted against an ALMO in January. The campaign has been given weight by the backing of unions Unison, Amicus, the TGWU and the GMB, as well as the Local Government Association.

But John Perry, policy adviser to the Chartered Institute of Housing, said a performance standard was needed if a fourth funding option was introduced. He said: “They cannot have a fourth way without a performance standard because then they may as well throw the spending on transfers and ALMOs out of the window. We expect it just to be for people like [three-star] Camden, and not Birmingham where they have no stars for the repairs services.”