THE Government is set to hand Sheffield Council a £1.1 billion lifeline which will almost wipe clear housing debts the authority was set to accrue over the next 30 years.
The plans, set to be approved before the end of the year, will leave the council with a bill of £217 million instead of £1.3bn.
A third of the remaining debt could be covered by cracking down on rent avoidance - set to cost Sheffield Council £2.8m next year.
Rent dodgers will cost the council £84m over 30 years.
The Government is ending the current system of funding for council housing, where large cities like Sheffield subsidise other smaller authorities’ housing costs.
Housing officer Emma Thomas said in a report to Sheffield Council’s cabinet, being discussed today, the new proposals would allow councils to keep all their rents.
They are set to be approved as part of the Government’s Localism Bill, expected to be passed by Parliament before the end of the year.
She revealed that under the Government’s plans, £567.24m of debt relating to the current Decent Homes programme would be written off, and the council would have much more funding from rents.
Lynn Harrison, a committee member on Scraithwood Tenants’ and Residents’ Association, in the north of the city, said: “It sounds a good idea to ensure there is enough money for housing in future years - as long as the income from rents is kept for spending on council houses alone.
“In the past, the council has had money but spent it on everything but housing and the properties went into disrepair which has cost a lot of money to put right.”
Sheffield Council cabinet member for housing Coun Harry Harpham said: “One of the problems that we are continuing to lobby the Government about is the fact that under this new system there will still be a black hole in the housing budget of around £217 million over the next 30 years.
“If the Government does not address this problem the council will have to bring forward proposals in the near future to deal with this shortfall in funding.”
Sheffield Hallam MP and Deputy Prime Minister Nick Clegg said: “The Coalition Government believes in localism and handing Sheffield Council full control of housing revenue will lead to better homes in Sheffield. It will enable better long term asset management and more transparency and accountability of landlords to tenants.”