Wandsworth To Trial Overhaul Of Housing Finance System

Stopping monies raised in rents & "right to buy" sales being sent to the Government

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The council is winning its argument to stop £23m of council tenants’ rents being diverted to other parts of the country. It will be one of three councils, and the only one in London, that will act as test cases.

A private members bill is due to go to the House of Commons on December 8 calling for Wandsworth, Cornwall and Stockport councils to be freed from the Housing Revenue Account subsidy system.

The current system means that councils must hand over to the government some of the money they receive in rents together with most of the income from right to buy sales to existing tenants.

Some of this money is then redistributed to other councils to spend on housing services in their area, with an increasing amount each year leaving the national housing system altogether and being used to fund other government spending priorities. Wandsworth has consistently lobbied against what it sees as an unfair system that penalises councils that budget carefully and take good care of their housing stock and which effectively levies a ‘tax on tenants’.

The coalition government has already agreed to change the rules and allow councils to keep all the rents they collect. This is part of its political agenda to enable decisions about spending to be made locally, rather than by central government. Details will be introduced in the Localism Bill before Christmas to enable the new funding system to start in 2012

The private members bill secured by Truro and Falmouth MP Sarah Newton aims to free Wandsworth and the other two councils early from the subsidy system so they can be used as test cases to help prepare for the changes nationally. 

An agreement will be signed on a voluntary basis between each of the three authorities and the government. The full details of this voluntary deal will not be known until the new year and any acceptance of the deal will require full council approval.

The council’s housing spokesman Cllr Guy Senior said:
“We are gratified that Wandsworth has been chosen as one of three authorities to lead the way on this. By being in at the start we can help set the agenda for the rest of the country.

“We have been arguing for years that this patently unfair system penalises efficient councils and stops us from reacting to local issues and concerns. Now we can spend the income from our housing stock on improving homes for local people,

“These changes will also be a key part of our new Wandsworth Challenge programme of service provision, based on local decision making and engagement with the whole community to meet local needs.”

December 6, 2010