New proposals allowing local authorities greater freedom to manage their housing assets could release up to £70m each year for the provision of affordable housing.

New proposals allowing local authorities greater freedom to manage their housing assets could release up to £70m each year for the provision of affordable housing.

A new consultation on regulations is proposing to enable councils to replace inefficient housing with modern dwellings better suited to the needs of today's tenants.

Housing Minister Jeff Rooker said: "We expect local authorities to warmly welcome the new flexibility afforded them. This will encourage authorities to dispose of vacant land, surplus or inefficient properties, as well as encouraging them to provide more affordable housing."

The consultation will be carried out with local authorities and housing organisations as well as members of the public.

Local housing authorities have been invited to respond by 12 December.

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Local authorities are to get a further cash boost to improve the quality and management of their council homes.

Councils in England will receive £3.86 billion in Government subsidy next year (2003-2004), including extra cash to spend on housing management and maintenance.

This represents an average cash increase of 8.1 per cent for management and 5.7 per cent for maintenance, amounting to about £63 per dwelling.

Housing Minister, Jeff Rooker, said the additional resources, through the Housing Revenue Account (HRA), would enable councils to tackle urgent repairs and make a real improvement in tenants' quality of life.

"We are combating years of under-investment in the fabric of council stock. This is the fifth significant increase in allowances, following years of stagnation."

He added that he hoped councils would use some of the increase to tackle anti-social behaviour.

"The Prime Minister has stated his personal commitment to fighting anti-social behaviour. Local Authorities, as social landlords, are essential in winning this battle. This cash increase will boost their efforts in tackling this blight through imaginative prevention, enforcement and rehabilitation initiatives."

The Government has also announced it is going ahead with the changes to HRA subsidy consulted on over the summer.

The Minister said the changes would ensure an authority that followed Government policy for social rents and protected tenants from large rent rises, would not be worse off, particularly with proposals for service charges.

"Councils are to be given discretion as to what services to charge for, but to further protect tenants, the proposals strongly discourage councils from applying service charges for essential fabric costs such as for communal lifts."

He said the Government was meeting its commitment to ensure local authorities had the resources they need.


2. Housing Revenue Account (HRA) subsidy is distributed according to the Government's assessment of each English housing authority's relative spending needs on council 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 maintenance (M&M), the Major Repairs Allowance (MRA), rent rebates and debt charges.

3. The additional £63 per dwelling this year follows an increase of £67 per dwelling in M&M allowances last year.

4. Management allowances and maintenance allowances 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. Details of the proposed maintenance allowances and management allowances for each housing authority for 2003-2004 are attached. The allowances have been 'damped' so that big decreases have been scaled back. This reduces the risk of big rent increases due to changes in allowances. Damping has limited any falls in allowances to 2 per cent cash per dwelling in 2003-2004 as compared to 2002-2003.

5. Local authorities will set their actual rents in January/February 2003 taking account of how much subsidy they will get. The assumptions in the subsidy calculation are that rents will change by 3.5 per cent cash - that is the 1 per cent real increase assumed in SR2000 plus inflation as measured by the GDP deflator - on top of a step towards the national rents formula.

6. We expect that the average national guideline rent will now be £45.53 a week (up from £43.32 a rise of £2.21), and in London £57.11 (up from £54.15, a rise of £2.96). The attached tables show the guideline and limit rents for individual housing authorities for next year (2003-2004). The changes in actual rents may be different and depend on the decision yet to be taken by local authorities. Guideline rents are used to calculate the subsidy for an authority; limit rents are the level up to which rent rebate subsidy is paid; actual rents may be different again.

7. Around £3.97 billion in England in 2003-2004 will be allocated as subsidy to support rent rebates and as subsidy for those authorities in deficit on their landlord functions.

8. 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.

9. The Administration Determination sets out how and when subsidy will be paid. The main change proposed is to bring forward the deadline of the auditor certified claim for 2002/2003 and future years from 21 January to 31 December. This is necessary given a scheduled upgrade of our IT systems in February 2004, and to bring HRA subsidy claim deadlines into line with those for other claims involving housing benefit.

10. In December 2000, Ministers announced their proposals for a major restructuring of local authority rents, to make them fairer and more transparent. In June 2002, they made proposals for changes to the HRA subsidy system to support the policy on rent restructuring. The consultation on these subsidy changes ended on 9 September 2002.

November 11, 2002