TOWN halls will finally be "set free" to build tens of thousands of new council homes after 20 years of frustration, the Government pledged last night.
New rules to allow local councils to keep the rents and receipts from their housing stock – in order to borrow cash for major building programmes – will be revealed within days.
And some authorities will be allowed to enjoy the new freedoms from later this year – if they win the race to build some of the first 3,500 council homes to be built.
The shake-up offers hope to almost 73,000 families in Merseyside and Cheshire, who are on the fast-lengthening waiting lists for a council or housing association home.
The black-spots are Sefton – where a staggering 17.9% of households are on the waiting list – followed by Warrington (14.3%), Chester (11.4%) and Wirral (11.1%).
Now the 20-year system, under which all rents from council homes and income from right-to-buy sales goes to the Treasury for redistributing from a central pot, will be scrapped.
The move has long been demanded by Labour MPs, who are embarrassed by the huge rise in homeless families and fear the crisis fuels support for the BNP.
The change is crucial, because town halls that retain their income will have substantial funds against which they can borrow money – in order to build more homes.
Housing minister John Healey told MPs: "I want to get rid of this system, to set them [local councils] free.
"At the moment, councils can say 'We are hamstrung by central government and by the system of financing here'.
"It prevents the willing from doing what's needed and gives an alibi to the unwilling who have no intention of doing what's needed in their area, to meet housing needs."
Councils across England are already applying to the Department for Communities and Local Government (DCLG) for a slice of £350m set aside for the first 3,500 council homes.
Yesterday, Mr Healey told the communities select committee that the successful town halls would be the first to keep the rents they received, because the system would be scrapped immediately for newly-built homes.
Ministers will insist on councils avoiding past mistakes, by building small clusters of 30 to 40 homes – instead of large estates.
