Mr. Ted Fletcher
asked the Secretary of State for the Environment what progress has been made in his investigation of changes needed in the cost control system for local authority house building.
§ Mr. Freeson
My right hon. and learned Friend the Secretary of State for Wales and I have decided to make immediate changes in the present cost yardstick. 159W These are described in DOE Circular 61/75 (Welsh Office Circular 109/75), issued to local authorities in England and Wales on Monday.
The basic yardstick has been increased by 12 per cent. to take account of increases in tender prices for local authority schemes since yardstick levels were last adjusted in September last year. Regional variations reflect tendering experience in different areas.
In addition, we are introducing a new allowance of £250 per dwelling, subject to regional variation, for one-, two- or three-person dwellings. This is an important innovation which reflects the need, emphasised in DOE Circular 24/75 (Welsh Office Circular 42/75), to concentrate new housing on providing for smaller households.
The vast majority of council housing schemes will be able to proceed without difficulty within the new yardstick levels, but to deal with exceptional cases which may arise additional allowances may be authorised by the Department to deal with abnormal local market conditions. I am arranging for the level of tender prices to be reviewed quarterly in order to maintain the basic yardstick at a realistic level.
We have also been investigating fundamental changes in the cost yardstick system, and have now reached the stage
CHANGES FROM COMMAND NO. 5519 REVALUED Policy Changes Other Changes 1975–76 1976–77 1975–76 1976–77 £m. £m. £m. £m. SUBSIDIES Central Government … 111.0 97.4 312.9 359.8 Rate Fund contributions … 42.8 38.3 67.1 76.7 Rent rebates and allowances -10.3 -0.1 29.3 35.8 GROSS INVESTMENT New dwellings … 60.5 115.7 109.8 92.4 Land … -0.8 -0.2 56.4 58.4 Acquisition … 113.8 99.7 — — Other investment … — — -13.7 -14.0 IMPROVEMENT INVESTMENT … — — 71.5 58.8 OTHER HEADS … 12.9 9.4 219.4 423.9 329.9 360.2 852.7 1,091.8