Councils call for 'fair' reform to house subsidy scheme

Talks to overhaul a scheme which subsidises the upkeep of council homes should result in a "fairer" system, local government leaders say.

Welsh councils paid £73m into a central fund in the last financial year.

The money was raised from rent on council homes and from the sale of land or housing.

The Treasury and Welsh government are negotiating about reforming the housing revenue account (HRA) after it was scrapped in England.

The money is paid by councils to the Treasury and reallocated to help authorities maintain their housing stock.

The subsidy is paid according to need, so councils with homes in a poor state benefit the most.

In April last year the scheme was scrapped in England. In return, English councils took on a share of the national housing debt, estimated at around £25bn.

It meant English authorities took full control of how they spend their income from housing.

The changes did not apply in Wales, leaving the 11 Welsh councils that still own their housing stock continuing to pay into the HRA.

It is understood talks between the Welsh government and Treasury on overhauling the system centre on the amount of debt that Welsh councils will have to take on.

Opposition parties in the assembly have previously voiced concern about the scheme, saying up to a billion pounds has been paid in which could have been directly spent on improving housing in Wales.

A recent report by the assembly's public accounts committee found Wales' social housing stock of around 221,000 homes was failing to meet minimum standards.

Eleven councils have transferred control of all their housing stock to housing associations.

The other 11 that still own stock and which pay into the HRA are Flintshire, Vale of Glamorgan, Caerphilly, Swansea, Wrexham, Cardiff, Carmarthenshire, Denbighshire, Anglesey, Pembrokeshire and Powys.

In a statement the Welsh Local Government Association (WLGA) said: "The WLGA has supported the reform of the HRA system in Wales for some time and hopes that the ongoing negotiations between Welsh government and HM Treasury will lead to a fairer system being developed for Wales."

Community Housing Cymru, which represents housing associations, said it also supported reform.

Chief executive Nick Bennett said: "The reform wouldn't just stop a 'negative subsidy' to HM Treasury.

"I hope it would also be accompanied by borrowing powers for local authorities that would allow investment in Welsh housing stock - particularly in local authorities which have decided not to transfer stock to housing associations."

The Welsh government spokesperson said it was committed to achieving "the best possible outcome for Wales".