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What does 2015 hold for councils with housing? Matthew Warburton - 08/01/2015

Crystal_300Much 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 not.

 

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 housing.

 

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 landlords.

 

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 services.

 

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 troubled households.

 

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.

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