§ Lord Westbury
asked Her Majesty's Government:
What arrangements they propose for the financial management by local authorities of their arrears of rents and other income.
The Minister of State, Department of the Environment (The Earl of Caithness)
The Local Government and Housing Bill provides that from 1st April 1990 local authorities will be able to cover their arrears of rents and other income by borrowing for six months after the end of the year in which the arrears arose. Having carefully considered the representations of the local authority associations, my right honourable friends the Secretary of State for the Environment and the Secretary of State for 729WA Wales now propose to extend this period to 12 months, but thereafter authorities must make provision in their budgets for any arrears remaining outstanding. We also propose that housing rent arrears will fall within the ring-fenced housing revenue account, and hence if not collected within the 12-month period will have to be paid for by the other tenants.
For the transition we propose that housing rent arrears outstanding at 31st March 1990 should be dealt with outside the ring-fenced HRA and hence if uncollected will be a charge on community chargepayers. We recognise that if these arrangements were immediately applied in full to those few authorities which have irresponsibly allowed their arrears to escalate to very high levels, this could put very great burdens on their chargepayers. Accordingly, we are also proposing that an authority with high outstanding arrears at 31st March 1990 may apply to my right honourable friends to enable them to spread over three to five years any budgetary provision for writing off these arrears.
We intend to bring forward appropriate amendments to the Local Government and Housing Bill to give effect to these proposals. It is each authority's responsibility to collect efficiently the sums due to it. We believe that our proposals, including the transitional arrangements, are fair to housing tenants and chargepayers, and will mean that in future authorities in both England and Wales have greater incentives for efficient collection of their income.