SWINDON Council stands to gain millions of pounds a year to spend on council housing under plans to allow it to keep everything it collects from rent and sales.

Councils with their own housing stock are currently forced to hand all rent and 75 per cent of receipts from the sale of homes to central government.

The cash is then redistributed nationally in the form of an annual subsidy grant to local authorities according to “assumed need”.

The grant is supposed to enable councils to maintain existing properties and build new ones. However, Swindon Council is one of many authorities that ends up paying more to the Treasury than it receives back in subsidies.

Figures provided by the Department for Communities and Local Government (DCLG) show the council is losing out to the tune of millions of pounds every year.

For example, in 2008/9, it gave the Treasury £9.3m more than it received under the Housing Revenue Account system. By contrast, the London borough of Islington gained £58m.

Ministers now agree the system has failed to provide incentives or freedom for councils to address long-term housing needs in their areas, which has led to council waiting lists swelling over the past decade.

Under proposals launched this week by Housing Minister John Healey, councils would be freed from central government intervention and expected to maintain and expand stock from their own rents and revenues based on 30-year business plans, in exchange for a one-off allocation of housing debt.

Mr Healey said: “Dismantling the system of council housing finance will have far-reaching results.

“We want to replace it with a devolved system to provide more flexibility in finances, and transparency in the system. It will enable councils to plan for the long term, and meet local needs for housing.”

The publication of the plans, which are now subject to consultation, followed last month’s commitment from Prime Minister Gordon Brown for an extra £1.5bn nationally to boost the number of new homes for people to rent or buy to 110,000 in the next two years.

Swindon Council recently decide to postpone plans to transfer its housing stock to a housing association while it studies the implications of these changes.