Plaid Cymru MP Jonathan Edwards obtained confirmation recently that the UK Government had clawed back a total of £1 billion of housing revenue account surpluses from councils in Wales.
Under existing arrangements, all but one council in Wales loses out while the cash is redistributed to local authorities - mainly in London - who can't balance their Housing Revenue Accounts.
In response to a parliamentary question, the Prime Minister David Cameron agreed it was wrong to take money from councils in this way.
“In our relations with local government, at a difficult time in terms of budgets, we should be giving it money and taking away the ring-fencing and complications and all the different grants.
“We should say, ‘There’s the money. You’re democratically elected, you decide how that money is spent’.”
The change of heart was welcomed by Cllr Marc Jones, who leads the Plaid Cymru group on Wrexham Council. He said:
“Wrexham is the worst affected council in Wales - losing £11.3m last year that should have been spent on improving our council housing. It is clear from the comments by the Prime Minister, as well as those previously stated by the UK Government’s Housing Minister, that they believe the current system is unfair.
“We've been campaigning on this matter for the past year and I'm grateful to our newest Plaid MP Jonathan Edwards for taking this up so strongly in Parliament over the past few months. Wales and Wrexham in particular can't afford to be losing this amount of money, money that is desperately needed to make sure our local housing is up to standard.
“But words are useless without action. It's vital that the Conservative- Lib Dem Government take action to end this unfair system where money is shipped out of Wales.
“Under the past decade of rule by Labour, who clearly were happy with the system, Wales lost out on staggering amounts of money. I hope the Con-Dem coalition doesn't continue to treat Wales with such contempt. They must review the way the system is run at once."