Council Housing: Subsidies – Parliamentary Written Answer

Lord Kennedy of Southwark: To ask Her Majesty’s Government what is the level of subsidy from the public purse provided for council housing. 

Baroness Williams of Trafford: Local housing authorities do not receive subsidy from the Exchequer; the Localism Act 2011 abolished Housing Revenue Account Subsidy. The Housing Revenue Account Self-Financing Determinations published in 2012 provided a once and for all settlement that allows local housing authorities in England to keep all their rental income in return for a rebalancing of housing debt.

Housing: Rents – Parliamentary Written Answer

David Mowat: To ask the Secretary of State for Communities and Local Government what consideration he has given to extending the timetable for rent convergence between local authority housing and registered social landlords beyond 2015-16.

Andrew Stunell: The Government have confirmed their intention to continue with the last Administration's policy of rent restructuring with convergence in 2015-16 and have no plans to change this.  Rental income assumptions underpin the local authority housing self-financing settlement, which begins on 1 April 2012. This initiative sees the end of the complex and unwieldy housing revenue account subsidy system and returns responsibility for social housing finance, including rents, to local communities.

Council to Double Spending On Housing

A council is set to invest nearly £5 million in housing as part of its 2012/2013 budget, following HRA reform. Despite now servicing a £95.4 million debt taken on to buy the houses from central government, Wokingham Borough Council says it will double its spending on its housing stock compared to last year. Historically, the council has had to pay some 44 per cent of its tenants’ rents to Central Government in the housing subsidy system, a total of £5.7 million in 2011/12. The interest payment for 2012/13 is estimated at £3.4 million – more than £2 million below the rent share paid to the Central Government the year before. Read more on 24dash.

Council Backs ALMO Opposition to Rent Rise

Newcastle Council has confirmed it is backing moves by its ALMO to oppose sharp rent increases for its tenants. At a council meeting members endorsed a letter sent to the CLG protesting about the 8.2 per cent rise faced by tenants in 2012/13. Newcastle feels rise is too high, but that the potential loss of income prevents it from setting a lower rate. The debt Newcastle is set to take on as a result of the reform of the housing revenue account subsidy system has been increased by £42 million to reflect the rent rise, so setting a lower rent could leave it out of pocket. Read more on the Newcastle on Tyne website.

Councils Slammed Over Knocking Down Homes to Dodge Debt

The chief executive of the charity Empty Homes says it is "appalling" local authorities are looking to knock down council houses as a way of dodging debt before they go self financing. Nottingham city council have identified nearly 1000, and Birmingham over 1200 homes that they have lined up for demolition. The tenants will be evicted and presumably put into temporary accommodation. What could possibly justify this huge upheaval of people and such a big loss of affordable homes? The shocking answer is - accounting reasons! The government has decided to allocate its own housing debt to councils as part of the scrapping of the HRA subsidy system. The unintended consequence is that councils are seeking to avoid the debt by demolishing houses. Each council house they own will attract around £12,000 of debt. Get rid of a 1000 houses and you avoid £12m debt. Read more on the Empty Homes website.

HRA Reformed...The Final Draft Subsidy Determination Workshop

HQN Event
Leeds 7/12/11
Straightforward, impartial and up-to-date advice, providing you with all you need to know about how the very last subsidy determination will impact on your financial planning approach, self-financing and asset strategy. Our experts will evaluate all the numbers and take you through the outcomes and the next steps, ready for the changes in 2012. Find booking details on the HQN website.

Councils to Demolish Homes to Cut HRA Debt

Councils will demolish thousands of homes to slash the amount of debt they take on under the imminent reform of the housing subsidy system. Some authorities have drawn up plans in a matter of months this year to knock down hundreds of homes for financial gain. Other councils have fast-tracked proposals. They have acted because of an in-built ‘demolition deadline’ in plans to scrap the housing revenue account. Under the system the majority of town halls in England will take on a share of the existing £21 billion national housing debt based on the number of properties they own. But stock set to be demolished before 2017 will not be included in the calculations - providing a sizeable financial incentive to demolish. It is understood the number of homes councils told the CLG they will demolish exceeded its expectations. Nottingham and Birmingham councils have drawn up some of the most eye-catching plans - proposing to flatten more than 2,000 homes between them. Read more on Inside Housing.

Treasury Cuts Loan Rates To Aid Councils Moving To Self-Financing

Chief Secretary to the Treasury Danny Alexander has cut the interest rate offered to stock-holding councils to borrow cash from the Government-backed Public Works Loan Board (PWLB) in a bid to support their transition to self financing. Earlier this month, Wandsworth Council announced plans to snub the PWLB and issue a £250m bond to pay the debt it will inherit which is close to £500m. It said the rates available from the markets are better than the "higher interest rates" offered by the PWLB - which has been the traditional way councils have raised finances. Mr Alexander said yesterday: "To support local growth, I can today announce my decision to reduce the interest rate offered to local authorities by the Public Works Loan Board to finance the £13bn of debt needed to leave the Housing Revenue Account subsidy system. Read more on 24dash.

The Housing Revenue Account Subsidy 2011-2012

The Housing Revenue Account Subsidy and the Item 8 Credit and Item 8 Debit (General) Determinations 2011-2012 together with supporting papers and explanatory notes. In a letter to local authority officers, Ann Williams from DCLG outlined the following:
*Ministers have confirmed the proposals within the November consultation.
Inflation Factors
*In calculating formula rents and setting actual rents for tenants, authorities are reminded that “caps” on formula rents will increase by RPI + 1% where RPI is the all-items increase as at September of the preceding year. For 2011-2012, the September 2010 figure of 4.6% should be used for RPI. The same rate of 4.6% also applies for 2011-2012 to the limit on individual rent changes of RPI + 1/2% + £2.
*Ministers had decided to maintain the rent convergence policy and to use the existing formula to determine the average guideline rent increase for 2011-2012.
*The Determination is based on convergence within 5 years
Documents are only available online, download from the CLG website.

Calls To Lobby Against 6.8% Council Rent Increase

Westminster Labour councillors are calling on council leader Colin Barrow and Housing Cabinet member Philippa Roe to mount a campaign to reduce the proposed 6.8% rent increase for council tenants, announced by the Government last week. The figure was included in the housing revenue account draft subsidy settlement for 2011/12, which was released last week by the CLG. Read the full story on 24dash.

Council Tenants Face 6.8% Rent Hike

Council rents are set to rise by 6.8 per cent from April, prompting fears that tenants face a bleak new year. The figure emerged in the housing revenue account draft subsidy settlement for 2011/12, which was released last week by the CLG. Maintenance allowance for local authorities will increase by just 1.9 per cent. It is a higher increase than the 6.2 per cent rise originally proposed for 2009/10, which caused such a storm the government stepped in to reduce it. The rent increase is calculated by applying the retail price index inflation from the previous September (4.6 per cent), plus a convergence factor reflecting the number of years until rents reach the target level set by government (five years). The maintenance allowance is calculated using the forecast gross domestic product deflator for 2011/12, a measure of the UK’s buying habits and value of goods, which is currently 1.9 per cent. Read more on Inside Housing.

HRA Review Consultation

A consultation document on the Draft Housing Revenue Account Subsidy and the Draft Item 8 Credit and Item 8 Debit (General) Determinations 2011-2012 has been published. The closing date is 16 December 2010. Find all the relevant documents on the CLG website by clicking on the logo below.

Scrapping of HRA 'Provides More Secure Future for ALMOs'

The National Federation of ALMOs (NFA) has welcomed the Government's scrapping of the Housing Revenue Account subsidy for local authorities, adding that it provides a more 'secure future' for ALMOs across the country.  The decision represents a major victory for the NFA and follows a long campaign by the organisation for changes to the system of council house funding. The original idea for reform of the HRA system was proposed by the NFA in 2005 in a joint policy paper with the Chartered Institute of Housing and Housemark called ‘ALMOs – a new future for council housing’. Following housing minister Grant Shapps's announcement, plans for a new system will be introduced after the government’s comprehensive spending review in October that will “serve the needs of local communities without interference from Whitehall.” Read more on 24dash.

Shapps Rules Out Early 'Voluntary' Exit from HRA System

Housing minister Grant Shapps has ruled out the opportunity for some local authorities to leave the Housing Revenue Account (HRA) subsidy system 'voluntarily' next April.  A number of local authorities had been enthusiastic about the chance to exit the system - where councils are required to pay council house rents and the majority of receipts from any sales of land or homes to Whitehall - next April.  However, he said today that the reforms could only be achieved through primary legislation. The new freedoms will be contained in the Localism Bill. A statement from Communities and Local Government said 'the minister is therefore ruling out a voluntary deal ahead of securing the powers in the Localism Bill'.  His plans to scrap the HRA subsidy system - thereby allowing councils to keep all the rents and sales receipts they collect - has been warmly welcomed by the Chartered Institute of Housing (CIH).  Read more on 24dash.

Councils to Keep Rent Receipts as Shapps Scraps HRA

Council house rents in England should be kept by local authorities and not gathered up by Whitehall, Housing Minister Grant Shapps has said.  Under new Government proposals, councils will keep all the rents and sales receipts they collect. But in return for this "greater freedom", some councils will take on additional housing debt.  Currently, the Housing Revenue Account subsidy system requires councils to pay council house rents and the majority of receipts from any land or home sales to Whitehall. Ministers then decide how best to redistribute the money back to councils.  Mr Shapps said: "The HRA subsidy is in urgent need of reform. That's why I can confirm that we intend to scrap the current system, and instead replace it with something more transparent that will serve the needs of local communities without interference from Whitehall.  Subject to the Comprehensive Spending Review (CSR), we will offer councils the opportunity to keep the rents they collect and the receipts from any house or land sales.”  Details of the new system will be announced as part of the CSR on October 20.  Read more on 24dash.

Council Housing: Finance - PWA

Austin Mitchell: To ask the Secretary of State for Communities and Local Government if he will bring forward proposals to permit local authorities which retain their housing stock to retain (a) rent revenues and (b) Right to Buy proceeds from that stock for the purposes of funding regeneration or new build projects.
Andrew Stunell: The Government are committed to reviewing the unfair Housing Revenue Account subsidy system. As part of this review we will consider responses to the consultation on a devolved council housing finance system that closed on 6 July. The consultation included proposals for local authorities to retain rents and right to buy receipts.

Revealed: HRA Winners & Losers

Five councils would take on more than £1.5 billion worth of additional debt between them under government plans to revamp the entire housing finance system. Wandsworth, Barking and Dagenham, Birmingham, Dudley and Welwyn Hatfield would take on £1.6 billion of additional debt, according to preliminary analysis of the proposals by law firm Trowers & Hamlins. Welwyn Hatfield is the constituency of Conservative shadow housing minister Grant Shapps. Under the plans, the existing £25 billion local authority debt will be redistributed among all councils in the subsidy system. Read the full story on the Inside Housing website.

Council House Finance

John Healey MP (Minister for Housing) has released a statement on council house financing in which he announces dismantling the HRA subsidy system, replacing it with a devolved system of responsibility and funding for council housing. Under this, councils will finance their own housing from their own rents, in exchange for a one-off redistribution of housing debt to make the settlement financially neutral between central and local government. The reform will guarantee tenants whose homes have been upgraded through the Decent Homes programme that their homes will be maintained at least to this standard for the future. Read the Minister’s full statement on the CLG website.

Reform Of HRA Subsidy System Announcement - PWA

Jacqui Lait MP (Conservative, Beckenham): When does the Government expect to publish further proposals on reform of the Housing Revenue Account subsidy system?

John Healey MP (Minister for Housing): In the consultation paper in July, I proposed a devolved system of responsibility and funding for council housing. On 16 December I announced that the responses show strong support for the principle of self-financing. I intend to make a further announcement in the next few weeks which will describe the progress we have made on self-financing, set-out more details of my proposals and provide a summary of responses to the consultation.

Government Chews Over HRA Sweetener

Councils could get a much bigger pay-out for major repair work as part of a deal to free them from the current housing finance system. Pricewaterhouse Coopers, the consultancy advising the government on housing finance reform, has recommended major repairs allowance should jump more than 5 per cent from the figure stated in the government’s consultation document, published last year. Read the full story on the Inside Housing website.