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Comments from The Association of Chartered Certified Accountants
October 2002

The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to comment on the Way Forward for Housing Capital Finance (the consultation paper). These comments have been prepared in consultation with members of the ACCA's Public Sector Technical Committee, a group of experienced accountants working in the public sector.

The Government's Code of Practice on Written Consultation states that, "Twelve weeks should be the standard minimum period for a consultation". Respondents for the current consultation exercise however, have been given only ten weeks. This is particularly significant as the consultation involves wide ranging proposals for reform the system of housing finance.

The government has estimated that there are 1.7 million social homes that fall short of the decent homes standard and another 1.6 million privately owned homes in the same condition (Local Government White Paper - December 2001). It has also been estimated that it would cost £19 billion to put right the backlog maintenance on council houses.

Given this situation all income from council housing should be re-invested in improving the quality of council housing stock. Similarly, any housing capital receipts, which are pooled nationally, should be ring-fenced to ensure they are all used to improve the nations housing stock.

The Housing White Paper recognised that there are currently four options for capital investment in the existing council stock, these being:

• improving directly managed stock
• establishing an Arms Length Management Organisation
• transfering the stock to a Registered Social Landlord (housing association)
  and
• the private finance initiative.

We believe that each of these approaches may have its merits in particular circumstances. For this reason and to maximise local choice and implementing the principal of what matters is what works, housing investment should not be limited to the particular legal form that the housing takes. In addition, the same conditions should apply to each of these four alternatives. For example, if the Government is prepared to write off local authority housing debt as part of the transfer to a Registered Social Landlord this source of funding should be made available to the other options. In addition, local authorities should be given the same rights to borrow for housing investment as is currently available to Registered Social Landlords.

As the consultation paper recognises, the current 75% set-aside rate for sales of council houses does not encourage the active management of that asset base. For this reason, the set aside rate should be reduced to at least 50% on condition that any expenditure is on improving the quality of the local council housing stock.

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