§ Mr. David MartinTo ask the Secretary of State for the Environment, whether he has plans to change the financial arrangements for short-term leases acquired by local authorities.
§ Sir George Young[pursuant to his answer, 3 May 1991 c. 337.]: My Department issued a consultation paper on 3 May 1991 proposing new accounting arrangements for houses and flats leased by local authorities from housing associations and private owners, and used as temporary accommodation for the homeless. I have carefully considered the responses to that consultation paper, and have now reached conclusions.
The main proposal was that leases acquired by local housing authorities after 31 March 1992 for a term of less than three years should be accounted for outside the housing revenue account. This would put them on a common financial footing with other property used by housing authorities as temporary accommodation for families accepted for housing under the homelessness legislation. I confirm that we intend to make a direction under section 74(3)(d) of the Local Government and Housing Act 1989 to this effect. My right hon. Friend the Secretary of State accordingly has taken account of local authority expenditure on new short-term leases in making his proposals, also announced today, on total standard spending and aggregate external finance for 1992–93.
Many respondents to the consultation paper argued that the normal mechanisms for the distribution of revenue support grant would not focus resources sufficiently towards the relatively small number of authorities with heavy recourse to leasing. The consequence could be a heavy additional burden on the community charge for those authorities next year. My hon. Friend the Minister for Local Government and I have given careful consideration to this argument. We have concluded that a specific grant should be available on a limited basis and for a limited period of more than three years to ease the transition to the new financial arrangements for those authorities worst affected. We shall announce details for the proposed grant arrangements shortly, and shall be seeking the views of the local authority associations on those proposals.
Respondents to the consultation document argued for an extension of the rule that exempt leases from the 527W requirement for credit cover if they are under three years. We have no immediate plans to change the capital finance rules, but will look further at this question.
Respondents to the consultation document also expressed concern about the rent subsidy arrangements for short-term leases. My right hon. Friend the Secretary of State for Social Security will be reviewing the current rent rebate threshold subsidy arrangements alongside housing benefit subsidy arrangements in general later in the year.