Reform deal could see the major repairs allowance rise by 5 per cent
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.
At a private meeting with local authority and government officials last week, Inside Housing has learned PWC said the MRA should go up on average by just over 29 per cent. The consultation had suggested a 24 per cent increase. That would mean councils receiving an average £873 payment per home instead of £825.
Any shift could be important in creating a deal which is financially attractive enough for a broad range of councils to sign up to.
PWC’s proposals were welcomed by several local authority figures.
One said: ‘It [the MRA increase] is going in the right direction. I am hopeful of a sensible offer. We will have to see what it looks like for individual councils and whether enough people will be prepared to sign up.’
Every authority would get an rise in its total MRA and management and maintenance allowances under the proposals. Most would get between 10 and 16 per cent. A few, which currently receive transitional protection on their M&M payments, would get an increase below 10 per cent.
PWC told the meeting it was not possible to calculate how to fund the backlog of repairs through the housing revenue account subsidy settlement as the data on the backlog used for the consultation is not broken down to local authority level.
The CLG is understood to have said that it could not commit future governments or spending reviews to funding the backlog. But several housing figures suggested the government should look at grant from existing housing funding without increasing the debt redistributed to councils.
The Local Government Association has lobbied for the repairs backlog not to be redistributed as debt through the settlement but dealt with through another mechanism, such as a grant.
Meanwhile the Chartered Institute of Public Finance and Accountancy has been commissioned look at how councils could account for the redistributed HRA debt and ensure transparency.
A spokesperson for CLG said: ‘We said when we consulted in July that we would involve housing experts and practitioners to ensure the best solution is put in place. We are doing exactly that and we expect to make an announcement on council housing finance reform in the next few weeks.’
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Readers' comments (2)
peter | 12/02/2010 11:36 am
Nice carrot if it happens but I wonder what the stick will be?
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FINGERS | 12/02/2010 4:35 pm
Nice carrot if it happens but I wonder what the stick will be?
Peter the stick may be the amount of underlying debt that local authorities will have to pick up. Some LAs that are in negative subsidy will have to accept some of the debt onto their HRA and there may be naturally reluctance from them to do that.
On a more positive slant it will allow self financing with a 30 year business plan that will no doubt in the long run benefit both the LAs and the tenants.
I am submitting for your consideration some questions that all tenants may wish to have answered as they talk to their local elected members for it is they that will finally accept or reject the offer when it comes.
1. There must be transparency of the allocation of debt calculation. For example, are the figures notional or actual / are premia charges included / prior overhanging debt relief (written off on previous stock transfers)?
2. The strengthening of the HRA ring fence must include a high level of tenant control – with core services set nationally and transparently and non-core services decided locally by tenants.
3. How much Capital Grant would be immediately available? How would this be accessed by Local authorities, i.e. would access depend on performance (like a 2 star rating)?
4. Will there be a requirement for all authorities to undertake an up to date Stock Condition Survey (based on a pre defined formula / consistent brief) – so backlog work / investment needs etc. can be accurately assessed?
5. Will there be future certainty over rent levels?
6. What constraints / flexibility would there be on affordable borrowing?
7. HRA debt needs to be ring fenced from general fund debt for transparency and to allow the new HRA debt to enjoy the benefit of current low interest rates
8. 100 % of capital receipts should be retained locally – this should be ring fenced to HRA / or new build (i.e. NOT allowing 25% to be spent on general fund expenses).
9. There is no mention of tenant involvement or consultation. It is important to know if / how / when and by whom this is to happen since it is imperative to any offer.
10. When or if this procedure is accepted, where is the programme to take the potential for tenant empowerment?
11. As above, where is the programme for training Officers and Councillors in long term planning?
12. Concern is expressed about the ‘light touch approach’ of the Tenant Services Authority who will in effect be the monitoring agency of the councils if the offers are accepted.
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