Association to pick up the bill? - Behind the headlines (From Stroud News and Journal)

Association to pick up the bill? - Behind the headlines

The proposed shake up of the district council's housing stock is probably the biggest issue the local authority has had to deal with in years. Yet many tenants are still confused about the process and want a straight explanation about why the administration wants to make the change and how they will be affected. Sam Bond investigated.

THE council claims it needs to transfer its housing stock to a housing association because, quite simply, it is running out of money.

This makes it more difficult to keep the houses in good repair. There are three main reasons why the council's housing services department has found itself strapped for cash.

First, almost half the rent raised from council houses gets ploughed back into paying housing benefit.

Each year the government expects the council to use more of the rent raised on housing benefit.

If a housing association were to take over the properties tenants would still have the same entitlement to housing benefit but the Government would pay 95 per cent of the housing benefit itself, leaving the district council to pick up a bill of just five per cent.

Proposed changes to the way rents are collected across the country would also leave the council out of pocket if it keeps hold of its houses.

The national rent restructuring will create its winners and losers and council officers calculate Stroud could find itself losing over £200,000 a year in Government subsidies.

The final problem stems from the right to buy scheme.

Council tenants who have been renting their homes for three years or more are given the option of buying the property from the council at a greatly reduced rate.

Unsurprisingly, many tenants, particularly those in the better houses, have taken advantage of this opportunity over the years.

The council must use three quarters of the money raised by the sales to pay off old debts and the rest is used to try to replace the houses that are sold.

This has led to a steadily shrinking number of houses owned by the council.

And as the housing stock shrinks, so does the rent coming in to the council.

But the cost of maintenance and repairs does not go down at the same rate, due to economies of scale.

This means that keeping hold of council houses becomes less and less cost effective for the authority.

If the transfer went ahead tenants would still have the right to buy but the money would not be swallowed up by debts but shared between the association and the district council.

Safeguards would be put in place to make sure the association operated within strict guidelines and provided a reasonable level of social housing across the district.

It would be run on a not for profit basis and the district council would still decide who was entitled to live in the properties.

IN FAVOUR

THE council's cabinet member with responsibility for housing, John Jeffries, said the transfer should be welcomed by tenants, not feared.

Cllr Jeffries said it was not a party political issue and over 150 authorities of all political persuasions had already gone through with similar transfers across the country.

He said the administration was not trying to rush the process but once the problems had been identified it was simply good management to try to sort it out.

He was confident the figures were accurate and said it was hard to dispute the housing service was not in financial trouble. The transfer would solve those difficulties and secure better housing for the tenants.

"We're talking about a positive change here," he said. "What we're looking to do is secure the housing service at at least the standard we have got at this time.

"We can't do that as a local authority. "But a housing association could."

AGAINST

LABOUR councillors have expressed concerns that the transfer process is being rushed through and tenants are not being given enough time to consider their options.

Some believe the transfer may not be necessary at all. Cllr Hilary Fowles said the administration had discounted the council's other options far too quickly in a rush to see the transfer through.

It was, in her opinion, looking to force a ballot far too quickly without giving tenants a chance to find out more.

"I'm not convinced it's the best idea at the moment," she said. "Tenants need to be properly consulted and given more time to make up their own minds.

"And they are only being given one option to vote on when there are alternatives."

She also said she was not entirely convinced by the administration's figures and wondered if the cash crisis was as immediate as it was being presented.

"We have significant worries about the assumptions that are being put into the business plan," she said.

"Some of the figures seem to have been plucked out of the air." She said the Labour group was not ideologically opposed to transferring ownership of the council's housing stock but needed more convincing that it was right course of action for the tenants.

If the administration was convinced it was making the right decision, she said, it should take more time to persuade sceptical tenants and councillors to take them along with them.

RALLY FOR HOMES

COUNCIL tenants and Labour councillors headed off to London last Wednesday to take part in a national rally about the council house crisis.

More than 20 people represented the district at the demonstration, where they met with Stroud MP David Drew to discuss their concerns.

Mr Drew told the tenants of his concerns that Stroud District Council was rushing into a sell-off when there were alternatives. "This is premature," he said.

"We have time to make a more considered decision." The £500,000 price tag for organising the tenants ballot was also criticised by many.

Cllr John Fowles, the Labour group's deputy housing spokesman said: "Consultation, not consultants was the message from tenants."

LOOMING PENSION CRISIS BLAMED

GREEN Party councillor Toby Green believes the administration would not be in such a hurry if there were not a pension crisis looming on the horizon.

Like many large organisations Stroud District Council is suffering from the recent slump in the pensions market and could soon be feeling the pinch.

"The facts are the council has an £8 million shortfall on its pension fund," said Cllr Green.

"There's going to come a point where some of the difference will have to be made up from the council's own finances.

"If one looks at the medium term financial plan it becomes quite clear that unless the council gets an influx of money from somewhere it is going to be stumped.

"It doesn't take an Einstein to work out what's going on." He did acknowledge that even without the pension issue keeping hold of the housing stock raised problems, however.

"We're between the devil and the deep blue sea," he said. "And it's no secret that we can't continue with things the way they are."

"But this all just seems very convenient timing."