HC Deb 24 February 1984 vol 54 cc670-1W
Mr. John Fraser

asked the Secretary of State for the Environment if his estimated cost of £10 million in 1984–85 for England of the cost to public funds of his proposal to give discount to tenants of charitable housing associations to enable them to buy houses on the open market will be deducted from the public funds which would otherwise be made available to the housing association movement for construction and rehabilitation.

Sir George Young

The estimated cost of the new scheme was taken into account when the Housing Corporation's gross programme of £687 million and cash limit of £617 million were set for 1984–85.

Mr. Hawksley

asked the Secretary of State for the Environment if he has decided how the grant redemption funds of registered housing associations are to be used in 1984–85; and if he will make a statement.

Mr. Gow

Following my written reply to my hon. Friend on Wednesday 27 July 1983 at column 473 about almshouse charities and associations specialising in the provision and management of hostels, my right hon. Friend the Secretary of State for the Environment has decided that for the forthcoming financial year, 1984–85, sums appearing in the grant redemption funds of other registered housing associations will also be used in the first instance to offset revenue deficits assessed and approved by his Department. Associations will be expected to pay the remaining sums with interest to the Secretary of State.

Cooper and Lybrand Report Comment
1. The MCCs provide a mix of services which have been subject to higher cost inflation than those of other authorities over the period 1978–79 and 1983–84. The White Paper cannot be described as misleading because it quotes the comparison both in cash terms and in volume terms (paragraph 1.14), as urged by Cooper and Lybrand. They acknowledge in their report that this presentation still shows higher growth in the MCCs than elsewhere (though this point does not figure in their summary of conclusions).
2. The MCCs' experience higher needs for their services than other authorities. Recognition of the particular needs of the MCCs is given in the grant related expenditure assessments. Nevertheless, the MCCs have consistently spent high in relation to their GREs in comparison with other authorities.
3. The MCCs' expenditure has been more adversely affected by factors largely outside their control over the period 1978–79 to 1983–84. Here the report seeks to explain rather than deny the high spending by the MCCs. The White Paper already acknowledges the emphasis given by the Government to spending on the police and shows that, even discounting that, the volume growth by the MCCs on other services has been 12 per cent, against all for other authorities.
4. The MCCs have been relatively adversely affected by the Government's policies on local authority block grants and expenditure targets. The report fails to prove the case that there is any systematic bias against the MCCs in the GREs. Indeed, over the last four years the increase in their GREs compares very favourably with increases for other classes of authorities. Targets for the MCCs have each year taken account of their previous year's spending. The MCCs ignored those targets, and the ratepayers paid the penalty.
5. Local authorities generally — but not the MCCs — substantially reduced their accumulated balances in order to hold down rate increases in 1983–84. Balances can affect the figures only in the short term. The White Paper claimed no more than that "the high level of spending has had inevitable consequences for the ratepayers of these areas" Higher expenditure inevitably means higher rates in the long run.