§ Mr. Hannam
To ask the Secretary of State for the Environment when he will propose revisions to the housing revenue account subsidy determination of 21 December in response to requests by local authorities.
§ Mr. Michael Spicer
My Department is today sending to local housing authorities proposed amendments to the housing revenue account subsidy rules for 1990–91. These are designed to deal with questions put to us since the main rules were published on 21 December. They should reassure councils that rents next year can be kept within Government guidelines.
The new policy is designed to begin moving authorities towards a sensible patten of rents in which the rents of council housing broadly reflect the geographical variations in the value of property. The old system was a nonsense because we had to assume that rents would move by the same amount in every part of the country. None the less, we are not suggesting that council rents should reach market levels (except where these are low) and we will make sure that rents can stay within the reach of ordinary working people.
I know that many authorities have been doubtful about whether they can keep rent increases within our guidelines. I believe we have now removed the main outstanding problems, and that some of their worries have been unnecessary. I would urge councils to look closely at several aspects of the system that convey very considerable flexibility or help. Let me give a few examples.
Some authorities have been worried that they could no longer fund repairs and improvements from capital 183W receipts from the sale of council property. But genuine capitalised repairs are not precluded by section 40 of the 1989 Act.
Today's draft rules confirm our intention that subsidy will be paid on works that have been financed through deferred purchase or leasing schemes.
Councils can carry forward balances up to £150 a dwelling or £5 million. Authorities can also look for economies and efficiency savings.
We have also, today, confirmed a rule change that was prompted by the action of Wakefield council, on 9 January. Wakefield reduced its rent for the last seven weeks of this year from £17.82 to £1.70 a week, solely to gain an extra £5 million in 1990–91 from a recalculation of subsidy. We believe this was wrong and, after formal consultations with the council, have revised the rules so that the January change in rents will not alter its subsidy entitlement next year.
As a result of today's revised rules, I believe authorities should be able to hold rent increases broadly in line with guidelines. Some may be above, some below. The final decision rests with councils themselves, which must decide on the levels of income and expenditure they want to budget for.