Local authorities are to get a
further cash boost to improve the quality and management of their
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
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
He said the Government was meeting
its commitment to ensure local authorities had the resources they
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
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
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