§ Mr. McNamaraTo ask the Secretary of State for the Environment, Transport and the Regions (1) what proposals he has to reimburse local authorities in full for current and future rent rebate expenditure; [115387]
(2) for what reasons the housing revenue subsidy paid to local authorities is less than the rent rebate expenditure borne by local authorities; [115402]
(3) for what reason local authorities' rent rebate expenditure is not reimbursed on the same basis as expenditure on rent allowances for private sector and association tenants; [115403]
(4) what funding will be available to ensure that there is no further clawback of local authority rent income by central Government; [115428]
(5) if the existing gap between rent rebate expenditure and housing subsidy will be funded in full without a corresponding fall in money available for council housing. [115427]
§ Mr. MullinThere are two parts to housing subsidy: housing element and rent rebate element. Most authorities show a surplus on their housing element—that is their assumed rental income covers assumed costs. Where there is a surplus on housing element for an authority, we reduce the size of the rent rebate element by an equivalent amount.
Other than in those cases where rent rebate subsidy limitation applies, local authorities are fully reimbursed for rent rebate expenditure. The effect of limitation is that 21W if an authority increases its average rent above the limit rent level, it receives additional rental income only from those tenants not receiving rent rebate.
This accounting arrangement reflects the different subsidy provisions which apply to different tenures. Local authority rents are generally lower than housing association or private sector rents, so it is not the case that council tenants are treated less favourably than other tenants. We intend to replace the current system with one that is easier to understand and which will avoid offsetting one expenditure stream against another and avoid the present confusion. The necessary legislation will be introduced as soon as parliamentary time permits.
We are currently consulting on the detail of our proposals on how to structure and operate a new system for redistributing resources under resource accounting. We have also announced that the proposed major repairs allowance (MRA) will be introduced from April 2001 to meet the cost of keeping housing stock in good condition. We expect that there will be fewer surpluses when the MRA is introduced and that will itself ease concerns about the system.
No decisions have yet been taken on the level of funding that will be available. This will form part of the discussions in the forthcoming spending review.