Magazine article Public Finance

Councils 'Free to Leave' HRA System

Magazine article Public Finance

Councils 'Free to Leave' HRA System

Article excerpt

Local authorities are to be allowed to opt out of the housing revenue account system, ministers have confirmed.

The Housing and Regeneration Bill, published on November 16, gives the government powers to waive HRA payments by councils that show they can become self-financing after retaining all the money they raise in rents.

At present, about 80% of English a uthorities subsidise the others by paying more into the HRA system than they receive.

Two years ago, the Audit Commission described the system as unsustainable.

A Department for Communities and Local Government spokeswoman said ministers would announce shortly how authorities might enter into agreements to take their stock outside the HRA, but stressed it would be a matter of choice for individual councils.

Six councils, including three with arm's-length management organisations, are currently taking part in a DCLG pilot on operating outside the HRA

Rutti Lucas, a policy consultant at the Local Government Association, said councils should welcome the Bill as an important step towards reforming the housing finance system. …

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