Mixed messages as lines are drawn in grant feud

The feud over giving social housing grant directly to private developers has escalated as the government and MPs take up positions on opposite sides of the debate.

In Housing Today this week, housing minister Keith Hill gives a broad hint that the government is leaning towards including the controversial proposal in the Housing Bill that will be presented to parliament in the autumn.

His comments contrast starkly with those made on Tuesday by an influential select committee.

The proposal was initially aired in a government consultation paper released alongside the Draft Housing Bill in April.

Hill said: "We need all the time to be looking at new ways of doing things and new ways of delivery… If we think it's a good idea, then we'll consider putting it into the housing bill for the next session.

"I think you have to innovate and look at more ideas and look at more possibilities. I don't think registered social landlords should be too defensive about this.

"Where they're performing well, there is a vital and central role for them. But if we can do deals with private developers I think we need to experiment, see what the possibilities are and push the boat out a bit."

In its report on the draft bill, the Office of the Deputy Prime Minister select committee said the government should try other measures before paying development grant – which ran to £1.5bn in 2003/04 – to private housebuilders. "We recommend that the government considers ways to streamline and improve the effectiveness of registered social landlords before introducing any measures to pay social housing grant to private developers," the report said.

The MPs that made up the committee – chaired by Andrew Bennett, Labour MP for Denton and Reddish – cited evidence from the Chartered Institute of Housing which called the arguments used in the government's initial consultation paper "sketchy".

The CIH added that, although it supported the government's aim of building more homes for less money, it felt that "a whole load of reforms" could be introduced in order to improve the development performance of associations.

These included reforming the planning system, introducing standard house types for associations, modernising the grant-giving process to save money and reducing the amount of developing RSLs.

Meanwhile, the Housing Corporation has added further detail to its continuing shake-up of its development programme.

It has set aside £50m from the government's £300m Challenge Fund to be allocated to RSLs bidding to build on 85 sites put forward by regeneration quango English Partnerships. The work is a result of the closer working arrangement between the corporation and EP in the wake of the Communities Plan.

The principles of the £50m round – including long-term partnering agreements with the corporation – will be rolled out to all RSLs in the spending proposals for 2004/05 to be announced in September at the National Housing Federation conference.