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Several groups of local authorities would be willing to take on a share of national housing debt in an overhaul of the council housing finance system.

The Association of Retained Council Housing, whose members are 56 of the 202 councils which manage their own housing stock, said it would be willing to negotiate a settlement with the government to ensure councils’ business plans remained viable.

And umbrella group London Councils said it is interested in London authorities taking an early opt-out from the system and piloting any self-financing regime.

Both organisations were responding to the government consultation on the abolition of the housing revenue account subsidy system, whereby some councils with surpluses in their HRAs end up subsidising councils in debt. The consultation ended on Tuesday.

ARCH said it would be willing to negotiate with the government on the basis that the £18 billion of HRA debt would be redistributed among all councils which still manage their homes.

But it said an £8 billion backlog of repairs should be met by giving councils a 10 per cent increase on their management and maintenance allowance, and a 43 per cent increase on the major repairs allowance they receive from central government. It said the £5 billion needed to fund adaptations should also be knocked off the debt.

Meanwhile tenants from Barking and Dagenham council went to Downing Street to petition the government to let their council leave the HRA system as soon as possible. The petition, which is on number 10’s website until 29 November, has 285 signatures.

But councils in the Campaign for Fair and Local Housing Finance said it would be ‘wrong’ for low debt and debt-free councils to be ‘forced into a position of indebtedness’.