CIH expresses concern over HRA u-turn

The Chartered Institute of Housing (CIH) has raised concerns over reform of the Housing Revenue Account (HRA) detailed in the Budget.

Grainia Long, chief executive of CIH, expressed worries over the government’s plans to re-examine the amount councils are allowed to borrow after 1 April because the impact on public sector debt might be greater than expected.

She said: “This will be a very upsetting scenario for councils who have made plans that start next week based on borrowing limits the government has previously promised.

“Ministers stated during the passage of the Localism Bill that once set these caps wouldn’t be changed. The statement made in the budget today may mean this promise is set to be broken and if so will severely disrupt council plans.”

Reform of HRA would, according to the Office of Budget Responsibility, increase public borrowing more than originally estimated.

“These are just estimates but if they do not change then the government has said it will take action to address the increase in public debt. This is very concerning and is a departure from the original commitment.”

In other areas of the budget, welfare reform was also a concern.

Grainia, continued: “What causes concern here is the move to put a cap on the additional costs of Universal Credit of up to £2.5 billion per year in the next spending review (in addition to the £2 billion in this spending review). Does this signal an acknowledgement by government of the complexity and likely unintended consequences of moving to a centralised system from a localised support system, which has been developed with a focus on advice and protecting the most vulnerable over a number of years?”

The budget also raised the possibility of further reforms across public spending and the welfare system in the next comprehensive spending review period – so the more departments ask for the more cuts in welfare we will see.

Grainia, added: “On a positive note, the promised consultation on the role that REITs can play in supporting the social housing sector is right up our street. Previous attempts by the housing sector have revealed the administrative and tax hurdles but also highlighted the absolute drive and appetite for new models of funding within our sector. We urge government to continue to work with us and our members on this without further delay.”