§ Mr. Campbell-Savoursasked the Secretary of State for the Environment to what extent reductions in interest rates influence the allocation of funds by his Department to local authorities.
§ Mr. KingLoan charges are one component of relevant expenditure for rate support grant purposes. They are treated as variable items, and the total of grants is adjusted to take account of variations due to movements in interest rates. For 1982–83 interest rates have fallen below the level assumed in the rate support grant settlement. We are consulting local government on grant reductions to reflect that.
§ Mr. Campbell-Savoursasked the Secretary of State for the Environment whether, when a reduction in interest rates payable by local authorities occurs, he will take steps to reduce rents paid by local authority tenants.
§ Sir George YoungDecisions on rent levels are a matter for individual housing authorities in the light of their own particular financial circumstances. It is, however, relevant to note that Exchequer subsidy increases or decreases according to whether authorities' pool rates of interest increase or decrease. Changes in interest rates are therefore generally unlikely to have a material effect on the housing revenue account balance of authorities still entitled to Exchequer subsidy.