By Lesley Lodge, CIPFA Finance and Policy Manager
CIPFA experts specialise in supporting the public sector. Our involvement in the recent changes to the housing finance system, with the implementation of self-financing, is an example of how our unique knowledge and expert guidance can help public sector organisations prepare and cope with a legislative change.
Over ten years ago the then Office of the Deputy Prime Minister, CIPFA and a number of other expert stakeholders were the first to discuss what was to become self-financing for local authorities housing finance . The remit that came from that discussion was to design the best possible replacement for the local authority housing finance system – starting from a blank sheet of paper. When finally introduced last year, self-financing therefore represented a huge change in local authority housing finance in England.
On its introduction, the whole system of the housing subsidy grant – with its complex pooling, redistribution formula and yearly announcements - was replaced overnight. The result of this transformation was that councils could now retain their rental income streams and plan their repairs, maintenance and any new build over a thirty year period. To establish a fair starting point, a one-off settlement took place where £28bn changed hands as councils either paid to or received from central government large sums of money aimed at settling authorities’ housing debt positions onto a fair basis.
Implementing such a transformation took years of planning. In 2008, working groups were set up and regular meetings were held on a formal review between CIPFA, the Department for Local Government and Communities (DCLG) and other stakeholders. Gradually, over the following years, CIPFA’s contribution into this work moved from the wider conceptual input to focussing on scenario building, through considering the implications of initial detailed modelling to advising on the practical ‘nuts and bolts’ of implication. The path to self-financing was by no means an easy one, and even shortly before the final implementation date CIPFA was involved in discussions with the Public Works Loan Board and Treasury ministers to try and iron out specific problems around the settlement itself.
Now in 2013, CIPFA continues to work with the DCLG and other stakeholders on the issues surrounding self-financing, and in particular on issues around valuing and depreciating housing assets during and after self-financing’s five year transitional period. CIPFA is also involved, through several channels, in providing guidance and answers to on-going queries about self-financing and its impact. CIPFA’s expert in-house teams in our policy and technical department and housing networks are relatively small in number, yet CIPFA is able to draw on a considerable and wide range of expert practitioners.
The Housing Panel, for example, has 24 members, with a further 10 who attend by invitation for specific topics, and who contribute their expertise and practical knowledge. Members represent a range of local authorities and Arms-Length Management Organisations (ALMOs) of differing sizes and from different UK regions, including representatives from the DLCG, the Chartered Institute of Housing (CIH) and the Homes and Communities Agency, as well as independents with specialist knowledge. The panel’s particular strengths lie in drafting guidance on housing finance and commenting on draft government legislation, whether formally – through responding to government consultations - or through less formal discussions with government officials when draft regulations and policy changes are first conceived.
From that first suggestion of reform through its inception and introduction, CIPFA has been heavily involved in the creation, interpretation and implementation of self-financing. As an organisation at the heart of local government we understand the value of self-financing as well as the challenges that it presents to local authorities.
CIPFA’s comprehensive expertise in, and understanding of, self-financing is now demonstrated in three new products available for public sector professionals providing specific guidance on self-financing for local authorities:
- Housing Finance under Self Financing – provides the latest guidance on local authority housing finance in the new system including recent changes and government announcements. It replaces and fully revises two previous CIPFA guides: An Introductory Guide to Housing Finance and The Guide to Housing Self-financing.
- Sustainable council housing relies on effective governance, financial and business planning. To support authorities in establishing principles and arrangements for these, CIPFA and the CIH produced the free Voluntary Code for a Self-financed HRA.
- And to accompany the new voluntary code, CIPFA developed a unique ‘on the spot’ HRA Self-financing Performance Toolkit to help local authorities to get an accurate picture of their current performance against the principles in the code.
Find the full details of all three new products.
For any more information about our policy and technical work then please email publications@cipfa.org.