More money to improve council housing

Property Management

ISSN: 0263-7472

Article publication date: 1 May 2000



(2000), "More money to improve council housing", Property Management, Vol. 18 No. 2.



Emerald Group Publishing Limited

Copyright © 2000, MCB UP Limited

More money to improve council housing

The Department for the Environment, Transport and the Regions has today published a draft "Housing revenue account subsidy and item 8 determinations for 9-000-2001" for consultation. Local housing authorities have been invited to respond by 14 December 1999.

Housing Revenue Account subsidy is distributed according to the Government's assessment of each English housing authority's relative spending needs on counoil housing. Subsidy is payable where this calculation shows a deficit between income and expenditure. Guideline rents are used to assess an authority's relative rent income, and allowance is made for expenditure on management and maintenanoe, rent rebates and loan charges.

In July 1998, following the Comprehensive Spending Review, Ministers announced their proposals for real terms guideline rent increases for the next three years. Average guideline rents should increase nationally by 2 per cent in real terms next year. The average national guideline rent is now £39.28 a week (up from £37.59, a rise of £1.69), and in London £49.36 (up from £47.63, a rise of £1.73). The attached tables show the guideline rent increases for individual housing authorities for next year (2000-2001).

Around £3.1 billion in England in 2000-2001 will be allocated as subsidy to support rent rebates and as subsidy for those authorities in deficit on their landlord functions. Less than 25 local authorities in 2000-2001 are expected to have such deficits on their landlord account. However, these represent about 20 per cent of council tenants. These authorities will receive around £500 million of subsidy to meet these deficits on their landlord functions, and £1 billion subsidy for rent rebates. The remaining £1.6 billion will go to authorities not in deficit on their landlord account but which require support for the cost of rent rebates to their tenants.

Management allowances and maintenance allowances (M&M) are used to distribute the total resources available within the subsidy calculation for M&M expenditure. They take account of the characteristics of the housing owned by individual authorities together with other factors which influence costs. Until 1999-2000 there was a single allowance covering both management and maintenance. Ministers decided to have separate allowances for 1999-2000 to aid transparency and enable them to target funds more effectively. They propose to retain the separate allowances for 2000-2001. The additional £67 million to spend on maintenance follows an increase of £52 million last year, and further increases are planned for next year.

The Item 8 determination sets out the amounts to be credited and debited to the Housing Revenue Account in respect of interest earned on capital resources and charges relating to HRA debt and other credit arrangements.

Following consultation, the Government has decided to introduce resource accounting into the HRA from 2001-2002 (DETR news release 602/22 June 1999). The change will put local authority housing on a more business-like footing, increasing transparency and enabling authorities to make better decisions about the use and maintenance of their housing assets. Local authorities will receive a new subsidy for major repairs to help meet the cost of keeping stock in good condition. Other changes will follow once the necessary legislative changes having been approved by Parliament.

The Government is making an extra £12 million available over the next two years to help councils and their tenants introduce new tenant participation compacts (DETR news release 597/23 june 1999).

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