HOUSING RENT: ELIMINATION OF ARREARS (Hansard, 20 July 1989)

The Minister of State, Department of the Environment (The Earl of Caithness)

It is the responsibility of all local authorities to collect efficiently the rents due to them, and most authorities do just this. But a number of authorities have irresponsibly allowed their rent arrears to rise to very high levels.

The Government consider that failure to collect rent due is wholly unacceptable, inevitably putting an unfair burden on others. Rent rebates are available for tenants on low incomes who might otherwise have difficulty in paying their rents. High arrears result from authorities' poor management and from tenants unjustifiably failing to meet their obligations.

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At present the burden of any uncollected rent can fall on either ratepayers or tenants, or both, as the authority chooses. Under the proposals for the ring-fenced housing revenue account (HRA) in the Local Government and Housing Bill, authorities will from 1st April 1990 not be allowed to use community chargepayers' money to meet their housing costs. So if in future authorities fail in their duty to collect the rents due, the cost, like any other housing cost, will have to be borne on the HRA and will reflect itself in levels of rents or service. This will put councils in the same position as any other landlord, or as any other business, where the costs of bad debts have to be met by cutting back on the service they provide or increasing the charges to their customers. This is a significant change from the present system, and it would have been unfair in earlier days, when council tenants were effectively locked into dependency on their landlords. But council tenants are no longer captive customers. As well as the right to buy, the new tenants' choice scheme gives them the chance to transfer their custom elsewhere, to people who can provide a better service.

We also recognise that it would have been grossly unfair on those tenants who do pay their rents if at the outset of the new system, they were faced with having to make good other tenants' arrears which had accumulated under the existing system. We therefore announced on 26th June that, exceptionally, the cost of any arrears outstanding at 31st March 1990, which councils do not manage to collect should be met not from the ring-fenced HRA but from the community charge. We are also proposing that in the case of authorities with the worst arrears the cost on the community charge could be spread over three to five years. This will enable every council to start off its new HRA with a clean slate, while still providing an effective incentive to authorities to collect outstanding arrears. We hope tenants and council managers alike will strive to eradicate the irresponsibility which has allowed arrears in the past to build up to intolerable levels.