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Opinion: Councils eye up the HRA - but not for housing

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Opinion: Councils eye up the HRA - but not for housing

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Published by Max Salsbury for 24dash.com in Housing and also in Local Government

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By Alistair McIntosh, chief executive, Housing Quality Network

It’s like watching two dogs argue over who gets to keep the juicy bone. The big bad council wolf always wants more than its fair share of the rents than the plucky housing department terrier. This ding dong has been going on forever. But it’s just got a lot tougher.

Councils are under the cosh. The money is running out. We will see a council soon that has more councillors than officers. When they try to get extra cash they run into problems. The courts have stopped councils from doing well out of licensing schemes. Eric Pickles wants an end to the fines that are part and parcel of what he calls the war on the motorist.

There is only one place left for councils to look for money. That’s right – the HRA is in the firing line. And the grass does look a lot greener. By the standards of anything else the HRA is in tip top shape. Why not take a few bob out of here to prop up the rest of the council? There is supposed to be some sort of a ring fence around the money but it doesn’t really work. I think that the cable thieves made off with it years ago.

Some of the councils are taking this a step further. They see how much money associations have, so are asking them to stump up for services the council used to pay for. What can you do? We’re all in this together. A new report by HouseMark says that there are times when it makes sense to help the council out. I agree with this, up to a point.

The councils are in a bad way. They took £40 million out of the HRA last year. We don’t know how much of this will be spent on anything to do with housing. I think the need to get the money out of the HRA is so great that it could do a lot of damage.

Most of the councils and ALMOs I see are finely poised. They are doing a great job on a shoe string. I’m not at all sure that they can take many more cuts.

Can we learn from others that have been in a fix like this? Do you ever read The Guardian? It is losing tons of money. But they did a very smart thing. The Guardian might want us to cycle about but they saw that cars were a bigger market. The world stops for ‘Top Gear’. So they went out and bought Auto Trader. And they treated it just like a housing department. The Guardian used some of the profits to keep itself going. But they also spent money to ensure Auto Trader became the best in its field. When the time was right they did a sort of stock transfer. They got £600m for selling off their share of it. The Guardian is safe.

What is to stop us doing the same thing? Looking at things in a short term way is our big problem. The councils will want to take cash out whenever there is a crisis somewhere else. If that’s not bad enough the government wants you to sell off the best homes. I think the correct name for this is asset stripping. On top of this we have welfare reform.

Now, I am not saying that stock transfer is always the right answer. I know that it is not on in many places because the debts are greater than the value of the homes. What I am saying is this. We need to run council housing on sound lines. Is it moral to take money from the HRA and spend it on something else? I don’t know. It is foolish to use the HRA as a cash cow to sort out today’s crisis. We could be on a slippery slope. Is it really true that you can have too much money in the HRA? It costs a lot to manage and maintain homes. We need to learn from the past. For a long time we did not spend enough on council housing. It left us with a huge catch up bill for decent homes and knocking down and rebuilding estates. We should be building up surpluses.

If the council says to the tenants – show me the money, the tenants should say to the council – show me the long-term plan.

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