Headlines: October 13th, 1997

Local authorities are being given the freedom to spend money accumulated from the sale of council houses over the past 7 years. Housing Minister Hilary Armstrong stressed that the Government intends the new money to be used to meet local needs and priorities.Currently local authorities must set aside 75% of receipts from council house sales and this has produced a cash mountain of £5b. Legislation is being introduced to allow these funds to be released progressively. £174m will be available in the current year and £610m in 1998/99.

Ms Armstrong said: “The clear message from the past is that putting local authorities in a rigid straitjacket when they spend money benefits nobody – not central Government, not local councils and, most importantly, not tenants. That is why we will be allowing local authorities maximum flexibility in deciding how to spend these much-needed resources.”

The money will be used for housing and housing-associated regeneration works and targeted on poor housing and poor health. Local authorities are being encouraged to be imaginative and innovative in their approach. As well as providing for physical improvements and new developments, the money can be used to help reduce crime and vandalism on estates and improve the employment prospects of tenants. The initiative is part of the Government’s overall strategy to combat social exclusion and support the Welfare to Work programme.

So that funds can be targeted at areas where there is the greatest need for housing investment, a mechanism is being introduced to guide the release of capital. Without this mechanism, capital rich authorities with low levels of need would be in an advantageous position compared to capital poor authorities with high levels of need.