The Chartered institute of Housing (CIH) has campaigned since 2005 for the national Housing Revenue Account to be scrapped and has welcomed the announcement by Housing Minister John Healey as a major victory.

CIH Chief Executive Sarah Webb said: "We are delighted that the government has responded so positively to our calls to abandon this archaic and unfair system which has done nothing to help councils deliver quality services or plan their budgets over several years.

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"A new system that lets local authorities in England keep council house rents and proceeds from all sales could lead to councils building thousands of new homes rather than the 520 that were built last year. When councils become self-financing rather than relying on an opaque system of subsidies they will be able to make better and more locally-based decisions about the upkeep of existing homes and the building of new homes in their area.

"However, if councils are to manage their own housing stock to the best advantage of local people, they will need new skills in long-term business planning. We know that councils are ready to take on this challenge and as the professional body for people involved in housing and communities, we will do all we can to support them."

(CD/JM)