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Efforts to reform the housing finance system came close to being shelved, it has emerged.

Earlier this week housing minister John Healey announced proposals to dismantle the housing revenue account subsidy system and devolve responsibility for housing finance to local authorities.

But Ian Doolittle, head of public sector housing at law firm Trowers & Hamlin, said attempts to reform the system came to close to being scrapped.

‘At one stage, despite all the effort that has gone into finding solutions, it looked as if reform would be put into the “too difficult” tray in Whitehall,’ he said.

‘Fortunately it has not and there now lies ahead the challenge of delivering what the minister calls a “radical dismantling” of the notorious system.’

In his statement announcing the reforms, Mr Healey said his intention was to publish a full consultation on the proposals before Parliament begins its summer break later this month.

He outlined the direction the proposals would take, indicating that local authorities will be allowed to keep revenues from the rent and sale of council properties. At the moment the money goes into a central pot, and is then redistributed by the Treasury.

Mr Healey also pledged support for arm’s-length management organisations in his statement, saying: ‘We see a strong future role for ALMOs which are valued by their tenants.’

Alison Inman, chair of the National Federation of ALMOs, said: ‘By freeing councils from the annual funding decisions in the current system, they will be able to plan long term and to improve the management of their homes, secure greater efficiencies and improve the quality of service.’