Council house building on a “major scale” will become possible under plans that housing minister John Healey was due to unveil this week, in a move likely to be welcomed by council housing campaigners and unions.
A Government source indicated that the plans would allow a fivefold increase in building of council housing. 2,000 council houses were built last year, the largest figure since Labour came to power, and ministers expect this rise to 10,000 by 2012.
“It’s about getting council house building back at the heart of housebuilding”, they said. “Council house building has evidently got beyond the party political. There’s a recognition that councils should be building on a major scale.” Almost 1.8 million households are on housing waiting lists.
The proposals mean that the housing revenue account system, which has funded council housing until now, will be scrapped entirely. Instead, councils will be allowed to keep the whole of their revenue from council house rents and sales, and they will be forced to spend the majority on housing. The Government expects the new system to fully fund itself.
Until now, the Treasury has taken in all rent revenue and kept a share before paying councils back in subsidies. Pressure group Defend Council Housing has estimated that the difference last year amounted to £1.83 billion.
The new system marks a significant change from the policies of Mr Healey’s predecessor Margaret Beckett. Under proposals she announced in January 2009, councils were allowed to keep all rent and sales revenues, but only from newly built housing.
