Much depends on the
outcome of the General Election due in less than four months time,
which remains more uncertain than any other in recent decades.
Councils need to be ready to respond flexibly to whatever
government emerges. However, while the political complexion of the
next government is hard to guess, many of its policies are
The Conservatives would look for
further cuts in public spending to reduce the deficit, but are
committed to protecting health spending to fend off the charge that
they want to undermine the NHS. Labour is nervous of committing to
substantial increases in public spending for fear of doubts that
they can be trusted with stewardship of the national economy. The
gap between them is not so large. Neither sees votes in promising a
big increase in public spending on local government or
Councils therefore need to work on the
assumption that central government support for General Fund
services will continue to be cut to the point where most councils
should expect to become "self -financing" in relation to General
Fund as well as HRA housing services.
At best, there might be additional help
targeted on social care to ease the pressure on NHS services.
HRA-borne services cannot expect to remain immune from sustained
drastic pressure on the General Fund.
Some post-May scenarios would see
reform or abolition of the bedroom tax. But the roll-out of
Universal Credit, which is a bigger challenge for councils, looks
set to continue, even if there is uncertainty about the timetable
and some of the detailed arrangements - including those for direct
payment of the housing element to councils and other
While this prospect holds a hugely
challenging environment for councils, there is truth in the cliché
that every challenge is an opportunity. As with HRA self-financing,
the prospect of managing without government grant drives a shift in
focus from getting the most from the annual finance settlement to a
radical re-think of local spending needs and priorities,
opportunities for innovation and greater efficiency and new sources
of local revenue.
None of this is new for councils - the
writing has been on the wall for most of the last decade. But
recognizing that the pressure will not relent - the cavalry are not
going to come riding over the hill in May - provides a renewed
impetus for imagination and innovation.
The impact on housing already includes
the decision by around 60 councils to look at provision of market
rented housing through arms-length companies both as a way of
meeting local housing need and a source of General Fund revenue.
Future developments look likely to include a fresh and more
positive look at the potential of the HRA and HRA-borne
Most councils will already have looked
at traditional - and sometimes indefensible - ways of shifting
spending from the General Fund to the HRA, such as the reallocation
of central overheads. But there is a limit to what can be achieved
in this way without violating the principles underlying the HRA
ring fence. However, there may be scope for looking again at the
role of housing management in the broader context of personal
services focused to a substantial degree on deprived, vulnerable or
Welfare reform has been influential in
driving a more personal, differentiated focus for social landlords.
Taking this further could see housing playing a bigger role in
prevention or early intervention in issues which, left untouched,
would have major implications for spending on health, or education
or policing. If so, investing effort in reshaping HRA services
could play a major part in relieving pressure on general fund or
other services funded from local taxation.