Treasury offers struggling councils £1bn for negative-value transfers

It is understood that Paul Boateng, the chief secretary to the Treasury, has ordered that enough funds be made available to help those councils that will not be able to meet the decent homes standard because their stock has a negative value.

A senior Whitehall source said: “The whole point of the regime is to undo the blockages that currently exist and make sure the changes that are needed are done that can be done in no other way.

“Overall, the funds available will be enough to do the gap funding that is needed – but only in the most intractable cases who have no other option.”

A negative-value situation occurs when a council’s stock is worth less than the amount that needs to be invested to bring it up to the decent homes standard.

Experts had warned that the current gap funding pot of £180m would be swallowed up by one or two local authorities and that it needed to be increased to at least £500m (HT 16 July 2004, page 8).

The ODPM hinted at an increase in the size of the pot in a letter to councils last month (HT 28 January, page 11).

Joanne Kelsall, stock transfer policy officer at the National Housing Federation, said: “It’s fantastic that there will be an increase, but we need more information on how the funding will be spread over the 10 years.

“We are currently working with the ODPM with regard to our members’ concerns about the bureaucratic application process.”

Chris Worby, assistant director of housing at Islington council, said: “We’re a bit miffed that the increase didn’t come earlier because we have had to sell off some stock to raise funds. However, it clearly helps to give another option.”

The Ocean estate in Stepney, east London, has been allocated £30m of gap funding to fund a partial transfer scheme that will regenerate about 1600 homes.

The cash will help fund the £300m Ocean Housing Masterplan, developed by New Deal for Communities, Tower Hamlets council and Sanctuary Housing Association. The plan will refurbish more than 600 existing homes and provide 700 new homes for sale.

Meanwhile, 38 councils have bid for ODPM cash in the latest round of funding for arm’s-length management organisations, private finance initiatives or transfer to housing associations (“Bidding for cash”, left).