Brighton and Hove council needs £70 million to upgrade its council homes - money it says it doesn't have. Adam Trimingham reports on the burning issue facing tenants and councillors.

COUNCIL housing is not what it was. Until 20 years ago, it was almost the only form of social housing.

However, the Tories, under Margaret Thatcher and John Major, made big changes which Tony Blair's Labour Government has done little to reverse.

The right to buy scheme enabled tenants to buy homes at big discounts. In Brighton and Hove alone, more than 5,000 homes were sold.

Councils can no longer build new homes and new social housing is provided by associations.

Management of more than 500,000 council houses and flats across Britain has been transferred to associations.

The assumption behind these moves has been that councils are inefficient at running their stock - and this may have been true in some large cities.

But there are signs the pendulum is swinging back towards council housing. In Birmingham, Britain's second largest city, tenants voted decisively against a stock transfer.

Now Brighton and Hove is considering the future of its council houses and flats and it is clear there will be a campaign to resist any moves to transfer the stock.

Earlier this year the council commissioned consultants HACAS Chapman Hendry to look at options for the future of its housing.

If the council carries on running the stock itself, it will have trouble finding the cash to meet the Government's housing targets.

The experts say it needs to find £70 million to meet the new Decent Homes Standard by the year 2010. The authority does not have the money.

Councillors have now decided to commission a new survey of its housing stock to get details of its condition and the exact cost of improving it.

The council have the option of setting up a wholly-owned company to manage the stock and handle investments while retaining ownership. This is called an arm's-length management organisation.

Under this option, the organisation might be able to bid for cash for improvements which would not be available to the council.

The board of this organisation would consist of tenants and community representatives.

Transferring the stock to a housing association is a route being followed by many other councils, including some in Sussex.

The council could transfer part or all its stock to either a new association or an existing one. One possibility might be to do it within the East Brighton New Deal area.

The Government would have to write off the debt on the stock and it is not certain this would happen.

The council could also use a private finance initiative programme to enter into a contract with a private sector firm, which would invest in the stock and manage it.

Consultants say this usually applies to schemes of fewer than 2,500 homes and would only apply to part of the city stock.

They looked at doing it for 900 homes in high-rise flats and concluded: "The cost would make it uncompetitive."

All this has sent alarm bells ringing among many of the council's tenants, who generally would rather remain with the council.

They think any other system would lead to less influence by tenants on management, less security and higher rents.

A motion unanimously agreed at a tenants' conference earlier this year called on the council to have a fair vote on any future change of ownership or management.

The housing management committee was told that would not be lawful and the point has now been delayed for legal advice.

Ruth Arundell of Defend Council Housing in Brighton and Hove said: "What we want is a commitment to a fair vote on any option affecting the ownership or management of our homes.

"We will continue to work with the council and with members of all parties to ensure tenants obtain adequate information and a fair vote when the time for a decision comes."

Whatever happens, it is now clear that no decision will be made until after the elections in May 2003, when control of the council could change.

Labour councillor Pat Murphy said the political climate was changing and in future it might be possible for the Government to give financial help to councils which wished to retain control of their stock.

He is hoping in the future there will be a revival of council housing, which has been in the doldrums for many years.

Already the Government is considering ending the right to buy, which has led to many of the best homes being sold.

Coun Murphy is also hoping councils will be given greater powers of compulsory purchase, so they could buy up properties owned by slum landlords such as Mohammed Raja and Nicholas Hoogstraten.

He said: "I would also like to see councils being able to build housing again."

In the meantime, he said any ballot of Brighton and Hove tenants would be likely to back continued council control.

He said: "It is the safest, most secure and cheapest form of housing for tenants."