Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Explanatory Memorandum from the Department of the Environment, Transport and the Regions (EST 98A)

PART II—COMMENTARY ON THE SUPPLY ESTIMATES

CLASS VI, VOTE 1: HOUSING, CONSTRUCTION, REGENERATION, COUNTRYSIDE AND WILDLIFE, ENGLAND

  More details can be found in the Annual Report: chapters 3, 4, 5 and 6 and Tables A1, A9, A11, A14, A15, B1-B23 and C3:
Total Vote

£000

Final net provision 1996-977,621,723
Provision sought 1998-996,685,646
Change-936,077
Change (Per cent)-12 Per cent
Final net provision 1997-987,285,606
Provision sought 1998-996,685,646
Change-599,960
Change (Per cent)-8 Per cent

  Class VI Vote 1 has been formed by the merger of the former Class VI, Votes 1 and 2.

  Programmes which were part of the previous Housing and Construction Vote in both previous years are payments relating to the Housing Corporation, Housing Revenue Account Subsidy, the renewal of private sector housing, homelessness, housing management and mobility, gypsy sites, rent and leasehold services, research and publicity. The Estates Renewal Challenge Fund and payments to the Valuation Office for right to buy work were added in 1997-98.

  Programmes which were part of the previous Regeneration and Countryside and Wildlife Vote in both previous years are the Single Regeneration Budget, European Union agency payments, European Regional Development Fund projects not funded by or in advance of receipts, countryside and wildlife bodies and research and publicity.

  Changes in 1998-99, part from the merger, are the addition of: Rural Transport development fund grants from what is now Class VI, Vote 2; the New Deal for Communities; and ERDF projects not funded by or in advance of EC receipts for transport projects. However, there is a reduction in the SRB section following the Urban Development Corporations being wound up on the 31 March. No grant-in-aid is required to fund them for the subsequent non-operational period of three months.

  Individual Sections where the level of provision has changed significantly are:

Section B—Housing Corporation

£000

Final net provision 1996-971,109,802
Provision sought 1998-99734,660
Change-375,142
Change (Per cent)-34 Per cent
Final net provision 1997-98789,264
Provision sought 1998-99734,660
Change-54,604
Change (Per cent)-7 Per cent


Annual Report 1998—Chapter 3, paragraphs 3,20-3.24; Figures 3a and 3c; Tables B1 and C3

  The change of provision from 1996-97 was governed largely by pressure on housing programmes overall in order to meet government spending targets, as determined in 1996 PES settlement. The change from 1997-98 relates largely to reduced demand for tax relief grant as that is phased out.
Section C—Housing Revenue Account (HRA) subsidy

£000

Final net provision 1996-97679,779
Provision sought 1998-99589,180
Change-90,599
Change (Per cent)-13 Per cent
Final net provision 1997-98696,840
Provision sought 1998-99589,180
Change-107,660
Change (Per cent)-15 Per cent


Annual Report 1998—Chapter 3, paragraphs 3.25—3.28; figure 3d

  The fall in demand is due to a variety of factors affecting the overall claims submitted by local authorities. The main cause is an unexpected fall in long-term interest rates.

Section D—Other housing

£000

Final net provision 1996-9740,806
Provision sought 1998-9980,371
Change+39,565
Change (Per cent)+97 Per cent
Final net provision 1997-9843,172
Provision sought 1998-9980,371
Change+37,199
Change (Per cent)+86 Per cent


Annual Report—Chapter 3, paragraphs 3.18-3.19 and 3.31-3.38; Tables 3a and 3e

  1996-97 was the first year of the Estates Renewal Challenge Fund (ERCF). The ERCF increase from last year to 1998-99 (£26.778 million) partly reflects the general development of the programme, but also occurs as a greater proportion of the programme is paid in post-transfer dowries to the future landlords.

  Homelessness grants also contribute £5.564 million to the increase on this Section. It reflects an extension of the Rough Sleepers' Initiative to relieve homelessness beyond Central London, to which it was previously limited.
Section E—Construction

£000

Final net provision 1996-9726,542
Provision sought 1998-9923,110
Change-3,432
Change (Per cent)-13 Per cent
Final net provision 1997-9827,359
Provision sought 1998-9923,110
Change-4,249
Change (Per cent)-16 Per cent


Annual Report 1998—Chapter 4

  The reduction almost all relates to construction research and is due to the sale of the Building Research Establishment which carries out the majority of projects. The sale resulted in a change in payment method which meant that payments which would have been made in 1998-99 were brought forward to 1997-98.
Section G—Single Regeneration Budget grants in aid

£000

Final net provision 1996-97523,442
Provision sought 1998-99435,471
Change-87,971
Change (Per cent)-17 Per cent
Final net provision 1997-98549,690
Provision sought 1998-99435,471
Change-114,219
Change (Per cent)-21 Per cent


Annual Report 1998—Chapter 5, paragraphs 5.20-5.27; Figures 5a and 5h-5j; Tables B2-B19

  The fall in provision from the last two years to this year largely reflects the wind-up of the Urban Development Corporations. This accounts for £190 million of the fall between 1996-97 and 1997-98. But this is partially offset by an increase in grant in aid to the Urban Regeneration Agency (£57.006 million), to the Greenwich Millennium project (£28 million) and to the Docklands Light Railway (£33.33 million) in 1997-98; and the reduction of £168.711 million between 1997-98 and 1998-99 which was offset in part by increases in grant in aid to the Urban Regeneration Agency (£38.192 million), to the Greenwich Millennium project (£7 million) and to the Docklands Light Railway (£19.5 million).


Section H—Other regeneration

£000

Final net provision 1996-978,867
Provision sought 1998-9920,763
Change+11,896
Change (Per cent)+134 Per cent
Final net provision 1997-988,362
Provision sought 1998-9920,763
Change+12,401
Change (Per cent)+148 Per cent


Annual Report 1998—Chapter 5, paragraphs 5.39-5.40, 5.42, 5.47-5.49; Figures 5a and 5r

  The increase in 1998-99 is largely due to over £12 million being made available for a new grant regime—the New Deal for Communities.

Section M—ERDF projects not funded by or in advance of EC receipts

£000

Final net provision 1996-97493
Provision sought 1998-992,500
Change+2,007
Change (Per cent)+407 Per cent
Final net provision 1997-989,500
Provision sought 1998-992,500
Change-7,000
Change (Per cent)-74 Per cent


Annual Report 1998-Chapter 5, paragraphs 5.28-5.34; Figures 5k-5o

  The increase in provision from 1996-97 to 1998-99 reflects an increased number of projects where it is known that EC receipts will not be received or will only be received after expenditure is necessary. However, the reduction in provision between 1997-98 and 1998-99 is due to additional provision being taken at Winter Supplementary Estimates in 1997-98 to cover an unanticipated problem in the timing of the receipts from the EC.
Section N—HRAS (rent rebate element)

£000

Final net provision 1996-973,302,334
Provision sought 1998-992,948,498
Change-353,836
Change (Per cent)-11 Per cent
Final net provision 1997-983,148,277
Provision sought 1998-992,948,498
Change-199,779
Change (Per cent)-6 Per cent


Annual Report 1998—Chapter 3, paragraphs 3.25-3.28; Figures 3a and 3d

  Demand for the rent rebate element of HRAS is dependent on various economic factors, but the main factor is a greater than expected fall in rent rebate caseloads, possibly as a result of the upturn in the economy.
Section O—Private housing renewal specified capital grants

£000

Final net provision 1997-9868,781
Provision sought 1998-9960,918
Change-7,863
Change (Per cent)-11 Per cent


Annual Report 1998—Chapter 3, paragraphs 3.15-3.16; figure 3b

  The reduction in provision in 1998-99 is due in part to a rise in the number of claims by local authorities for mandatory Disabled Facilities Grant later in 1997-98 (extra provision was provided at the Spring Supplementary Estimate) though this extra demand may be repeated in 1998-99. The defective housing grants programme continues to be wound down and few eligible cases remain.


 
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Prepared 17 August 1998