Housing (Hansard, 17 December 1992)

§ Sir George Young

I am today announcing a number of decisions about the provision of resources for housing in 1993–94.

Today, I am informing local housing authorities of their housing investment programme—HIP—allocations for 1993–94, some £1.9 billion in total.

These HIP allocations will support the investment programmes of local authorities which, as we have already announced, will receive a major boost for the remainder of 1992–93 and in 1993–94 and later years, as a result of the Government's decision to allow local authorities to spend virtually all of the capital receipts which they receive in the period from 13 November 1992 to 31 December 1993. Some £1 billion of additional housing capital expenditure should take place over the period 1992–93 to 1994–95 as a result of this change, which is being supported by the new capital partnership programme announced by my right hon. and learned Friend the Secretary of State for the Environment.

Of the HIP allocations that I am today announcing, some £1,380 million are general purpose allocations, or housing "annual capital guidelines". In July, I confirmed to local authorities that 40 per cent. of these would be distributed on the basis of a statistical assessment of local housing needs, leaving 60 per cent. to be allocated on a discretionary basis in relation to published criteria. The primary criterion has been the efficiency and effectiveness of local authorities in making use of capital resources to meet housing needs, and discretion has also been exercised significantly in relation to needs and other factors not adequately reflected in the statistical assessment. My regional offices have carefully considered the strategy statements submitted by each local housing authority, and their bids, and Ministers have reached their decisions on the allocations in the light of the advice provided by regional controllers.

The picture emerging from this process demonstrates very clearly the success of the new developments in the Government's housing policies, introduced over the past two years. The performance of local authorities across the country has improved substantially, both in their role as landlords of nearly 4 million council houses, and in the encouraging development of the enabling role of authorities. This has been accompanied by substantial changes in their perception of the broad and vital role in encouraging the private sector. Welcome new efforts have also been made to produce housing strategies and plans which are more accessible and to involve housing interests, tenants and residents in their preparation. In addition, the measures that we have taken this year to draw together the local authority HIP process, with the approved development programme—ADP—process of the Housing Corporation has got off to a good start. This has assisted in establishing coherent local housing strategies, and in demonstrating the considerable scope for effective 508W co-ordination of the very large sums which Government are investing in local housing needs, through the programmes of local authorities and housing associations.

Arising from the assessments of performance, we have again been able to direct resources to a greater degree to local authorities who are best able to make use of them, while withholding resources to some degree from authorities where significant improvements still need to be made. I am glad to be able to publish today the names of the authorities who are the best performers in each region under the HIP process. All other authorities will have the assessment of their performance and proposals conveyed to them, partly in letters which are being sent out today from the Department's regional offices, and more fully in the discussions which will continue to take place in the continuous cycle of the HIP process. I am glad that many of the local authorities who were identified as the worst performers last year have made significant improvements in their performance and proposals, and I hope that it is encouraging to them that these improvements can be recognised through the allocations that I am announcing today. It is essential that, even where improvements are being made, better performance is sustained, and that proposals for greater progress are delivered. We shall return to this in future HIP rounds. Those authorities who are average performers should also look to do better, so that overall the standards of local authorities as landlords and enablers will continue to rise.

A further £370 million has been allocated for private sector renewal and housing defects, in the form of "specified capital grant", to assist councils with their expenditure in these areas. Taking account of local authorities' greater access to usable capital receipts, we propose to reduce the rate of Exchequer contribution from 75 to 60 per cent., so that the above allocations will support a higher total expenditure on private sector renewal and housing defects nationally than in the current year. The Department is consulting authorities on this proposed change. As with the annual capital guideline allocations, 40 per cent. of these resources have been distributed on a statistical assessment of local needs and 60 per cent. on a discretionary basis.

I am depositing tables in the Library of the House showing the 1992–93 allocation to each authority of the annual capital guideline and of specified capital grant. Together, these comprise the HIP allocations. I am also depositing a list of the names of authorities in each region who have been assessed as the best performers.

We have conducted a consultation exercise, over the last few months, into the future development of the HIP process. I am grateful for the many responses to this exercise on a range of issues relating to the strategies and programmes of local housing authorities. I shall be making an announcement early in the new year on our conclusions to this exercise, which will be followed by proposed working arrangements to ensure the timely launch of the HIP round for 1993.

The estate action budget for 1993–94 will be £356 million. Of this, some £113 million will be available for new schemes, the remainder being for schemes already under way. Local authorities are today being notified of the outcome of their bids for resources for new schemes next year, as well as of the resources being provided for continuing schemes. The tables in the Library show the latest position on the distribution of these resources between authorities.

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The number of new schemes in next year's programme is at present 166. I am placing a list of these in the Library. Final approval will depend on confirmation of the extent to which authorities are able to contribute to overall scheme costs by using capital receipts freed-up as a result of the Secretary of State's announcement on the capital partnership programme. So far, it has been possible to increase the number of new schemes in the programme by almost 20 per cent. as a result of the capital partnership initiative.

Turning to the revenue expenditure of local housing authorities, I have today made the housing revenue account subsidy determination for 1993–94. I am placing copies of the determinations in the Library.

On subsidy allowances for management and maintenance, I confirm the proposals to increase allowances by 3.75 per cent.—1 per cent. in real terms—overall and to continue to distribute the increase through a system of targeted allowances reflecting authorities' relative need to spend.

For rent guidelines, I am confirming the proposal for an average increase in guidelines of 7.75 per cent.—5 per cent. in real terms. This will result in an average increase in guideline rents of £2.12 per week over those which apply this year, with a range of between £1.50 and £3 for individual councils, bringing the national average guideline rent to £29.40. Responsibility for setting actual rents, however, remains with individual local authorities. Housing benefit will normally meet the whole of any rent increase for the 70 per cent. of tenants receiving it.

We have already announced that £597 million more than originally planned will be made available to the Housing Corporation this year to boost the housing market. This has increased the estimated output from the corporation's approved development programme this year from 47,000 completions to 65,000 completions. The implementation of this programme is proceeding satisfactorily and we are confident that the resources will be spent in full. Over the next three years, the ADP is expected to provide a further 154,000 homes for rent or shared-ownership. Lower interest rates and competitive prices, as well as the increased contribution which we hope to obtain from the private sector, should enable us to maintain the programme at a lower cost to the taxpayer than previously projected.

In view of the importance of housing association rehabilitation projects to inner city regeneration and as a contribution to making the best use of existing stock, I have asked that the corporation should aim to maintain the proportion of such projects at 18 per cent. of new approvals for rent next year, pending completion of the Department's research into this subject.

Decisions on ADP allocations and local authority HIP allocations are now taken within a co-ordinated framework. Local authorities, the Housing Corporation and local housing associations have co-operated closely in preparing local programmes as part of a single housing strategy, and we have been able to consider the two programmes in parallel in taking decisions about the distribution of HIP resources. The tables in the Library also show indicative new ADP allocations for each local authority area for schemes to be approved in 1993–94, which are used for planning purposes, together with the full-life value of housing association schemes under way at 510W 1 April 1993. Final ADP allocations will be announced in February next year. In future, the two processes will run to a common timetable.

These various allocations, combined with the measures on the use of capital receipts, continue the Government's commitment to social housing investment within a coherent framework involving local authorities, housing associations and the private sector. They also sustain the intention of helping the most neglected council estates. Local authorities should continue the encouraging improvements that they have made over the past year in response to our policies and, in particular, to improve further the standards of their management and the efforts that they make to draw the resources of the private sector into meeting housing needs.

Housing Resources Announcement—17 December 1992

List of those local housing authorities in each region of the Department of the Environment assessed as the best within the HIP process.

Northern

Blyth
Derwentside
Hartlepool
Langbaurgh-on-Tees
Newcastle upon Tyne

Yorkshire and Humberside

Kingston upon Hull
York

East Midlands

Derby
Newark and Sherwood

South East

Brighton
Eastbourne
New Forest
Portsmouth
Southampton

South West

Bath
Mendip
Taunton Deane

West Midlands

Birmingham
The Wrekin

Eastern

Cambridge
Chelmsford
Colchester
Milton Keynes

London

Croydon
Kensington and Chelsea
Newham
Westminster

North West

Bolton
Rochdale

Merseyside

Knowsley