星空传媒

It was the small hours of Sunday morning. In a hotel in Brighton, hours before his speech at the Labour party conference, John Prescott was facing heavyweights from the trade union and local government worlds. He was desperate to stave off an impending anti-government vote. But this time the talk was not of strikes or pay but housing.

At this crunch meeting, trade unionists from the T&G, Unison, the GMB and representatives from the Local Government Association pressed for the government to give councils the cash to get their housing stock to the decent homes standard without resorting to transfer, arm鈥檚-length management or the PFI. They discussed the possibility of top councils getting money from the ALMO fund for the works, but also for a review of funding of council housing. Labour national policy forum member Daniel Zeichner, who proposed the motion, wanted to tweak the existing system of prudential borrowing to allow some councils with a small funding shortfall to borrow the necessary money.

An agreement was nearly reached 鈥� as Prescott later told the conference hall 鈥� but the talks stalled over the review timetable. The unions鈥� concern was that delay could lead to the review being quietly forgotten. As T&G deputy general secretary Jack Dromey said to the conference hall several hours later: 鈥淛ohn, we do not want to see, however, this matter of vital concern to tenants and council workers alike kicked into the Treasury long grass.鈥�

Prescott pledged to push on with the review; the delegates listened, but still three-quarters of them voted to condemn the government鈥檚 restriction of council housing funding to three sources. And a senior government source later confirmed the confusion over the review by stating: 鈥淧rescott made it very clear that there will be no fourth way. However the terms of the review and the scope of it are still being worked out.鈥�

So what will this mysterious review consist of? At present there seem to be two options. According to the government source, one of those is the proposal by the Local Government Information Unit and the Local Government Association. In a pamphlet published in June, the LGIU called for an investment allowance that councils could borrow against 鈥� and therefore increase 鈥� using the prudential borrowing framework. It says this allowance could be made up of money taken back from councils by government, such as surpluses from the Housing Revenue Account. They also want councils to be allowed to borrow against their major repairs allowances.

But the government says this money, which would have been spent on housing in other ways, would have to be replaced from somewhere, and that would force up public spending in an unacceptable way.

However, the LGA suggests that the cash for the allowance could be found from higher rents under rent restructuring.

The second possibility is that the review becomes part of the ODPM鈥檚 five-year strategic plan, set to be announced in November or December. The proposals in the plan would be consulted on after publication in a similar manner to the Communities Plan. It has been suggested that proposals to 鈥渓oosen up鈥� council housing finance could be included in the plan. However giving high-performing councils access to ALMO funds was ruled 鈥渦nlikely鈥� by one insider. There could be suggestions around the prudential framework but whether this would include an investment fund to borrow against was unknown.

However housing minister Keith Hill has hinted that he would look at stock transfer in small councils. But he would not go into detail about what the options might be.

At one stage it was thought that the council housing funding review could be included in the much wider Lyons review of council funding, announced in July. However this was ruled out by an ODPM insider.

Prescott and Hill are adamant that there will not be a 鈥渇ourth way鈥�, so what can this review achieve? Perhaps it rests on what constitutes a 鈥渇ourth way鈥�. Nobody expects all councils to be given extra funds before they have balloted tenants on the other options. And, as Hill said, there will always be a 鈥渕ajor element鈥� of stock transfer. But perhaps money could be found, for example by allowing some of the better-performing councils to borrow against repairs allowances or retain HRA surpluses. In political semantics maybe this would not be a 鈥渇ourth way鈥� but it would go some way to appeasing local authorities and tenants.

So perhaps it鈥檚 goodbye fourth way and hello option number 鈥渢hree and a half鈥�.