Election '97: Council switch set to continue

The Conservatives plan to continue slashing the number of council homes, with the aim of encouraging more than half the remaining council tenants to transfer their homes to new non-profitmaking landlords.

The transfers have been going on for nearly 10 years with housing associations taking over council homes along with their tenants. But so far only 240,000 homes have been transferred in England.

The manifesto target of more than half implies at least 1.7 million more council homes being transferred. The housing moved out of local authority control to date has been easier to shift, because it has mostly been in suburban locations rather than in decaying inner cities.

''Transferring half may be achievable in the long term, but I doubt it could be done within 10 years,'' said John Perry, director of policy at the Chartered Institute of Housing.

Transfers, which have to be voted for by the tenants before they can go ahead, are now seen by both Conservative and much of Labour as the key way of getting private finance to fund the extensive repairs and renovation thousands of run-down council estates need. The backlog is put at about pounds 20bn.

As part of the public sector, councils are under strict spending controls and are denied these funds. But once transferred to not-for-profit organisations, such as housing associations and the new Local Housing Companies, money can be borrowed from the private sector. The estates usually have some asset value against which to raise the loan, which can be paid back with the tenants' rents - although these are increasingly state financed through housing benefit.

Housing experts said the question raised was how much state-funded collateral would be needed to persuade the private sector to invest in improving the worst of inner city estates which have a negative asset value - and whether this government money would be forthcoming.