Local Authority Housing (Hansard, 23 May 2000)

§ Mr. Raynsford

My right hon. Friend the Minister for Local Government and the Regions announced on 22 June 1999,Official Report, column 337W, that the Government intended to proceed with their proposals for the introduction of a new financial framework for local authority housing. Our Housing Green Paper "Quality and Choice: A Decent Home for All" repeated that commitment. The new financial framework will place authorities' accounts on a more businesslike footing and encourage more efficient investment in the stock. Together with Best Value, it will help ensure that local authority housing assets are managed in a way which will ensure that the resources which have been and will continue to be invested in them provide good-quality homes which reflect tenants' wishes and needs.

Our intention remains to introduce the new financial framework from 1 April 2001 with the exception of removing rent rebates from the HRA where primary legislation is needed. We are providing resources through HRA subsidy to help authorities with initial costs. Over recent months we have undertaken consultation on a number of detailed aspects of the new system and my officials have continued to work closely with local government and others. Significant progress has been 439W made and my officials are today writing to local authorities with detailed material on various aspects of the change. The material is also being made available in the Library of the House and will shortly be available on the Department's website.

We have consulted on four particular topics since my right hon. Friend's announcement of 22 June. On stock valuation, we are today publishing the final version of the guidance. There was general support for the approach proposed based on the identification and valuation of beacon properties. The final version of the guidance reflects a number of detailed comments made in response to consultation. It will help authorities in preparing the valuations which will be necessary for the new-style accounts.

On business planning, there has been a general welcome for the concept. We will be publishing final guidance taking account of comments made in response to consultation in June; authorities will be expected to produce initial business plans by 31 October.

On the methodology for calculating the Major Repairs Allowance, we have carefully considered the comments made and are sending authorities a detailed list of our responses. We have made some adjustments to the assumptions underpinning the calculations as a result of the consultation process. The Major Repairs Allowance will be part of HRA subsidy from April 2001, and will form part of our normal consultation on subsidy later this year. All this material, and the guidance on shadow accounts which the Chartered Institute of Public Finance and Accountancy expect to be issuing in June, will help authorities prepare for the new regime.

On removal of rent rebates from the HRA, there was general support for the principle involved. The majority of respondents agreed that it was right to regard local authority housing as a national programme and that assumed surpluses in authorities' housing accounts should be retained within housing and redistributed through a pooling mechanism. Some authorities in negative subsidy have expressed particular concerns about the impact of the new system, and the Under-Secretary of State, my hon. Friend the Member for Sunderland, South (Mr. Mullin), announced on 4 April 2000, Official Report, column 810, that we would introduce transitional arrangements for authorities in negative subsidy from 2001. We will be consulting on the details of the transitional measures.

I am grateful for the positive and helpful contribution that local authorities have made to the development of these important proposals. I hope that they will approach their implementation in the same way.