The last bastion of council housing

In Cardiff, the local authority replaced eight prefabs on the 1000-home Gabalfa Estate with new council properties. In neighbouring Newport, however, eight estates of 550 prefabs are being transferred to Newport Housing Trust. The association will redevelop the homes by the end of 2005.

In England, transferring a council's entire stock to a registered social landlord might seem unremarkable, despite the political tussles that sometimes ensue. But along the strip of Labour-controlled councils that border the Severn estuary, such action is seen as a betrayal of political principle. In Newport, the council agreed to the transfer on condition that the stock be handed to a small, specifically created, local RSL.

Is this transfer the first sign of a breach in the municipal ranks? Faced with the need to upgrade crumbling 1960s estates, councils such as Newport are being forced to reconsider their principles. No costs have ever been calculated for installing new central heating and windows and improving landscaping, but the figure could be as high as £2bn, according to Welsh Assembly deputy housing minister Peter Black. It is for this reason that the Welsh assembly, reluctant to pay out the large sums needed for estate improvements, is keen on transfer. Indeed, with assembly elections due on 1 May, stock transfer is likely to be one of the key issues.

Back in Cardiff, however, the local authority is still building and running its own houses. It is planning to build 100 homes in the next five years; 18 have been completed since 1999. It is expected that new double-glazing, or energy-efficient single-glazing, will be installed in all council homes by the end of winter. In the past year, the council built only eight homes – all on the Gabalfa Estate. This year, it will demolish a street in Butetown, the city's old docklands area.

Russell Goodway, Cardiff's lord mayor and council leader, grew up in a council home and is a passionate advocate of municipal housing. "We want to manage social housing," he says. "I'm not impressed with some of the housing associations that operate in this city. I think we care for our tenants better than they do. If public money goes into housing association stock, then why not into local authority stock?"

Linda Thorne, Cardiff's deputy mayor, argues that central government has "missed the picture". She feels that tenants are less concerned about stock condition that the policymakers believe."Councillors very rarely have people come into their surgeries saying: 'My house has not got a modern kitchen.' They will come to us with neighbour nuisance problems and stock transfer doesn't answer that. Very often, housing associations are prepared to borrow to invest in the properties but are not prepared to look at the social issues on the estates."

In his opposition to what he sees as the downgrading of the council housing sector, Goodway is supported by some of his political opponents. The Welsh Local Government Association, which represents the 22 county and county borough authorities, is seeking to boost the importance of housing to the different parties by issuing its own manifesto.

Putting Our House in Order, which will be published later this month, includes an attack on stock transfer. It states: "The WLGA calls upon the assembly to rethink the whole principle of stock transfer, and honour the contract made with local authority tenants who, when they signed their tenancy agreement, believed that their landlord, the council, had a duty and the ability to keep their home in good repair and equipped to modern standards."

The report continues: "The dogmatic insistence of governments that local authorities will not be allowed to borrow money needed to carry out the repairs has seen Welsh council housing slide into rapid decline." The WLGA says any decision to transfer stock should be made by councils and their tenants together.

The sometimes-tense relationship between RSLs and councils is demonstrated by the fact that the two sectors have only recently held their first talks. Howard John, director of the Welsh Federation of Housing Associations, says: "We have just held our first national meeting between chief executives of housing associations and council chief housing officers; that was a significant breakthrough." Senior housing association officials have referred to the need for a "generation change" among councillors, with the arrival of new faces who are more willing to accept that the future of social housing lies with housing associations.

But the Newport example of transfer shows that the pro-transfer lobby is gathering pace. Critics point out that money invested in council housing would be put to better use by RSLs, who could double the cash using private finance. That is the argument pushed by the assembly itself, as well as by the Welsh Labour Party in its preparatory documentation for May's election manifesto.

Evidence of the assembly's pro-transfer stance came in a research report from May 2001. Tenants' Views of Social Rented Housing includes strong criticism of council landlords. It found estates in decline, leading to low morale among tenants; good housing management as the exception rather than the rule; and seriously worsening conditions, leading to talk of moving out.

"It may be that tenants have low expectations of their landlord and the service that will be offered to them," says the report. "They are critical, but they do not expect to find anything better elsewhere. They perceive their landlord as being unresponsive, and they see that greater participation in tenants' or other organisations will change the way that things are done." This is what persuaded Newport to choose transfer.

Wales' largest transfer so far is in Bridgend, where Valleys to Coast Housing will take on some 6500 homes. About £290m needs to be spent on upgrades over the next 30 years. Tenants agreed to transfer last November with work due to start this summer.

Peter Black, the assembly's deputy housing minister and Liberal Democrat member for South Wales West, says conflicting demands on local authority funds will drive more councils down the transfer path: "That council [Bridgend] went for stock transfer because they did not possess an annual maintenance programme because they had spent so much money on building swimming pools."

In its pre-transfer publicity, Bridgend council admitted: "If tenants' homes stay with the council, the standards of homes and services would not stay the same as they are now. The stark reality is that the council no longer has the money to carry out all the repairs and improvements that the homes need, to maintain current levels of service, or plan for future investment."

Given this position, why has the assembly not insisted that more local authorities go down the transfer route? Council sources say communities minister Edwina Hart and her boss Rhodri Morgan may be willing to give councils a long leash on the grounds that the centre can easily keep a hold on the peripheries in a small country like Wales.

Indeed, Hart has been emphasising that stock transfer is merely one of the options available to councils – the assembly is pushing community mutual models as a more acceptable alternative.

Under the model, ownership of a council's housing is transferred to a tenant organisation, which has the status of a housing association. Control is split three ways between councillors, tenants and independents.

Boards of mutual housing organisations comprise elected tenants, local authority nominees and representatives of local businesses and community organisations.

The Welsh Federation of Housing Associations, which helped to develop the model, believes that the mutual approach ensures that ownership of homes rests primarily with those who live in them.

Hart says: "This is a model which gives far greater responsibility and ownership to tenants. The only shareholders in the transferred organisation would be the tenants. Not only is the business conducted for the benefit of the community, it is also owned by the community. This provides a sense of ownership and encourages tenant participation and involvement."

No council has yet made use of what the assembly has described as "a uniquely Welsh solution" to the problem of stock transfer. Bridgend, though, has gone for a hybrid mixture of community mutual and housing company, feeling that to adopt a not-for-profit mutual method would be more acceptable than straight stock transfer.

Although the assembly is talking up the community mutual model, by keeping a stranglehold on the annual budget allocation for council house repair, perhaps its tactic is to give councils so little cash that they will realise transfer is the only way forward.

There is another issue that may force Welsh councils to follow their English counterparts and transfer their stock – this spring, the assembly will introduce legislation ordering every local authority to prepare a business plan. This will outline how they will improve their stock to meet the Welsh housing quality standard by 2012.

Astonishingly, this will be the first time that each council will know the scale of the task it faces. Black praises these business plans for providing a "comprehensive picture of the condition of council housing stock, and enabling councils to focus their resources and consider new ways of securing funding".

But that £2bn repairs figure still looms large on the horizon.

When every council is presented with its own repair bill, far higher than expected, it probably won't be long before other councils with poor stock, such as Swansea and authorities in the southern valleys, decide to join the transfer trail.