Audit Commission recommends scrapping central repair fund so efficient councils gain more control over spending

Local authorities could have an extra £630m to spend on repairs to meet the 2010 decent homes standard if the ODPM heeds the call of local government watchdog the Audit Commission.

In Financing Council Housing, a report launched on Wednesday, the commission brands the system of distributing local authority rental income “perverse” and says it should be overhauled to give good councils more freedom to manage their own housing services.

Under the proposals, high-performing authorities would no longer have to chip in to a central maintenance fund that helps more indebted authorities. The good councils that would be exempted from making a contribution would be able to invest the money saved, estimated at £630m, in providing a better service for tenants and, where necessary, meeting the decent homes standard.

If the ODPM adopted these recommendations, it would have far-reaching implications for the repair and maintenance of council housing, as good councils would be able to spend more and many indebted councils would no longer be able to rely on what was, in effect, a subsidy.

Stuart Black, chief executive of Mears, the largest repair and maintenance firm in the social housing sector with 2500 staff, said: “There is no doubt that the government has allowed local authorities to spend a lot of money on repairs and maintenance since coming to power. But this improved standard need to be maintained and allowing councils to spend some of this £630m on maintenance would obviously be welcome.”

The report has been timed to stimulate debate at this week’s Chartered Institute of Housing annual conference in Harrogate, North Yorkshire.

One council delegate said: “The report makes for interesting reading – particularly the passage on decent homes. But I’d be surprised if the government went down this route as it would give us too much of a free rein.”

The government has been quick to distance itself from the recommendations. An ODPM spokesperson said: “The commission is raising some important issues about the subsidy system for council housing, which deserve debate, but it would be wrong to say that the current system cannot continue.”