Local councils in Wales are set to benefit from changes to the housing system, which will allow them to invest more into council homes.
Announced by the Welsh Government, the changes relate to the Housing Revenue Account Subsidy (HRAS), which for many years has led to substantial revenue transfers being made from local authorities in Wales to HM Treasury.
Following a lengthy and complex negotiation with HM Treasury, the Welsh Government has announced changes to the current punitive system from April 2014 onwards for the 11 local councils in Wales that have retained their social housing stock.
Changes to the HRAS will also provide the much needed financial flexibility that local government in Wales has campaigned for, and will allow for more strategic and long term investments into Wales’ social housing stock as councils work to achieve the Welsh Housing Quality Standard (WHQS).
Launched in 2002 by the Welsh Government, the WHQS sets an ambitious minimum standard for social landlords to improve the quality of social housing in Wales. The new standards target areas such as the provision of modern kitchens and bathrooms, effective and efficient heating systems, levels of safety and security as well as the general state of housing repair.
For some local councils these changes will mean increased investment in bringing council homes up to standard, while for other councils that have already invested in this area it will mean much greater financial flexibility to plan how the demand for affordable homes and social housing can be met by councils in Wales.
Councillor Dyfed Edwards (Gwynedd), WLGA Spokesperson for Housing said:
“The WLGA warmly welcomes the changes to the HRAS announced by the Welsh Government, which means that after many years of campaigning by local government, Wales has been released from a complex and punitive funding system that saw Welsh local authorities with social housing stock having to pay around £73million annually into the UK Treasury. This diverted a huge amount of rental income away from investment in council homes. The changes being made to this system are good news for council tenants in Wales and good news for councils who will at long last be able to plan and invest in their homes with certainty.”
Cllr Aaron Shotton (Flintshire), WLGA Finance Spokesperson said:
“We have been campaigning for many years for the freedom to invest all of our rents in our council homes, and I am delighted at the news that Welsh Government Ministers have successfully negotiated this difficult and complex financial settlement with HM Treasury. While we understand that the UK Treasury has insisted on a cap on borrowing by local councils, we are hopeful that this cap will still provide the financial flexibility required by local councils to deliver significant investment into Wales’ social housing stock over the next 30 years.”