§ Mr. WatersonTo ask the Secretary of State for the Environment what are his proposals for paying tax relief grant to non-charitable housing associations in 1997–98 and future years. [5866]
§ Mr. CurryWe published a consultation paper on 31 July setting out our proposals for the progressive reduction in tax relief grant payments to non-charitable housing associations. Eighty-eight responses were received.
Many associations said they needed more time to plan how to respond to the progressive reduction of tax relief grant and to effect any necessary changes. I accept this concern and recognise that associations need adequate time to accomplish a smooth change. I therefore propose that we continue to pay tax relief grant claims at the current norm of 100 per cent. during 1997–98 in respect of associations' tax liabilities up to and including 1996–97.
Another theme of the responses was that associations would appreciate a degree of certainty about future rates of payment. While I should not wish unreasonably to restrict future discretion in this matter, it seems to me helpful to give a clear steer to associations as to our future plans so that they can make appropriate arrangements. I therefore plan that in future years payments will be on a sliding scale. In 1998–99, in respect of tax liabilities during 1997–98, we plan to pay 75 per cent. of the first £50,000 of eligible claims, then 50 per cent. of the rest. In 1999–2000, in respect of tax liabilities during 1998–99, we plan to pay 50 per cent. of the first £25,000 of eligible claims, then 25 per cent. of the rest.
The Government believe that public resources for social housing should be allocated directly towards meeting priority needs in ways which produce good value for money. The Government are not convinced that the continued availability of tax relief grant would help achieve this. We therefore remain committed to its abolition when an appropriate legislative opportunity arises. In the meantime, although the statutory discretion to pay tax relief grant will remain, the Government would normally expect that, following the planned reductions outlined, associations will take steps to manage without tax relief grant payments.