Housing Minister Grant Shapps has fired the starting gun on a council housing revolution that for the first time puts councils and communities in control - allowing them to make long term plans to offer a better deal to England's four million council tenants.

Under this new localist approach councils will have the tools and incentives to more effectively manage their housing stock over the long term, they will be free to make their own decisions about housing assets and through greater transparency tenants and local taxpayers will be better placed to hold their landlord to account.

The Minister published details of the new financial deal for council housing - a key measure of the Localism Bill currently before Parliament. This includes a detailed description of how each council's opening financial position will be determined and the process for implementing these reforms in April 2012. By providing councils with clarity on funding for the future they can now begin detailed preparations on how they plan to better meet the housing needs of their communities over the long term.

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This new approach, developed in partnership with local government, will bring an end to the Housing Revenue Account subsidy system where councils were required to pay council rents to Whitehall which decided how to redistribute it meaning they had no certainty about future income, no ability to plan long term and little incentive to be more efficient.

The new self-financing approach puts councils firmly in control with the tools and incentives they need to manage their housing stock over the long term rather than on a year by year basis. This will be achieved by a one-off adjustment to each council's housing debt after which councils will retain all the rental income they collect. And they will be free to make decisions about their housing assets without first having to get permission from Ministers in Whitehall.

Mr Shapps said: "This deal brings to an end a centralised system which meant councils didn't know what funding they would get for housing from one year to the next and were unable to take key decisions about their housing stock. It prevented them from delivering the best possible services for their tenants in the most efficient way.

"I am setting councils free to better meet the needs of their tenants. Today I am outlining these new freedoms as well as how each council's opening financial position will be calculated. By giving them clarity on their future revenue and the freedom they have to decide what is best in their local area they can now start preparing for this council house revolution that will begin next year. They now have the tools and incentives to radically overhaul the housing services they provide and deliver better value for money."

(CD)