HOUSING REVENUE ACCOUNT SUBSIDY DETERMINATIONS (Hansard, 19 December 1990)

§ The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch)

The Housing Revenue Account Subsidy determinations for 1991/92 have been made today. They cover the assumptions the Government will make about rents and management and maintenance and other rules governing the calculation of each authority's subsidy entitlement. We are placing copies of the determinations in the Library.

The determinations also confirm, with modifications, the new rules for subsidy on short-term leasing 53WA that were proposed in October. Local authorities have increasingly taken private houses and flats on short-term leases to provide temporary refuge for the homeless. The Government had not proposed to discontinue this. On the contrary we want to ensure that the rules regulating councils' entitlement to subsidy on this activity leave them with the flexibility they need, and we have therefore had extensive consultations with local authorities and their representatives. In response to their views we have had a fresh look at the rules proposed in October and we are today announcing two modifications.

The first is a proposal designed to help those authorities which are worried by the numbers of short-term leases approaching the end of their terms. To assist them with renewal or replacement, the rent they pay from 1st April next would be subsidisable up to a cash limit for each authority. The total national cost would be up to £25 million, to be found by a transfer from the Estate Action programme. We are putting this forward today as a proposal for consultation, and the Department of the Environment is inviting responses from authorities by 19th January.

The second modification (on which we have already consulted) recognises that short-term leases are not necessarily appropriate in the permanent housing account. They may be used for the same purpose as licensed accommodation and bed and breakfast provision, both of which are financed from the general fund with underlying assistance from Revenue Support Grant. The Department of the Environment is prepared to give authorities special directions to take named leases outside the housing account, and we are today telling authorities of the criteria that must be met if they wish to apply. Leases taken outside the housing account will benefit from the same rent rebate subsidy arrangements as my right honourable friend the Secretary of State for Social Security will be introducing for rebates for tenants in bed and breakfast or licensed accommodation.

On the subsidy allowances for management and maintenance expenditure, we are introducing a system that targets allowances on those authorities with the greatest problems in maintaining their estates. We have decided to introduce this targeting slightly more quickly than was proposed in October, through a larger redistribution of resources from authorities with the least needs to those in greatest need. As a 54WA result about 40 rather than 20 authorities will receive higher increases in allowances. Overall the level of allowances will be increased in order to maintain them at this year's levels in real terms.

For rent guidelines my right honourable friend the Secretary of State for the Environment confirms the proposals for an average rent increase of 2 per cent. above the allowance for inflation. This means an average increase of £1.85 over the guideline rents which applied this year, ranging from £1.38 to £2.50 in individuals councils. It is for each council to determine its actual rent level and how much to spend on management and maintenance of stock.

My right honourable friend the Secretary of State for the Environment also confirms the proposal to reduce the allowance for the rent lost on empty properties to a flat rate of 2 per cent. of dwellings.