Examination of Witness (Questions 231-239)|
TUESDAY 9 JULY 2002
231. Can I welcome you to the Committee for
our second session this afternoon. Could you introduce yourself
for the record.
(Mr Perry) I am John Perry, Policy Director
of the Chartered Institute of Housing.
232. Do you want to say anything by way of introduction
or are you happy for us to go straight into questions?
(Mr Perry) Just a sentence. It occurred to me that
you are probably asking me to say whether the Local Government
Bill does what it says on the tin. I think in general it does
what it says on the tin; the only problem is that a lot of what
is said on the tin is hidden by the label, and perhaps you would
want to ask me about that later.
Chairman: That is all you wanted to say by way
of introduction? Clive Betts?
233. We had a campaign from tenants' associations
around the country over what they call "Daylight Robbery"
and in the legislation is a proposal to separate out the payment
of housing benefit for council tenants from the Housing Revenue
Account. Is that really going to cure the problem?
(Mr Perry) The problem with the Daylight Robbery campaign
was that it was difficult to see what their ultimate objective
was. Certainly the Bill achieves what might be called an interim
objective, the thing they were campaigning about, which is the
separating out of housing benefit payments. What I think they
may have wanted is that local authorities got the full benefit
of the rents and the housing benefit payments and there was no
redistribution mechanism. Of course, under the Bill there will
still be a significant redistribution mechanism although it is
perhaps not as wide-ranging as it used to be before more local
authorities came into the positive subsidy net because of the
introduction of the major repairs allowance a short time ago.
234. So it does meet one of the objectives,
but it still does not necessarily benefit the authority concerned
because of the redistribution system?
(Mr Perry) Exactly.
235. Would you like to see that changed?
(Mr Perry) There is a difficult choice to be made
for housing. You can either argue for more subsidy, and with subsidy
probably comes more controls, or more freedom and more autonomy,
which probably means less subsidy. It is very difficult to decide
at this juncture which of these routes to go down. I was in discussion
with London housing directors this morning and I think they find
it difficult given the particular problems of London. I think
I would tend to favour measures that gave local authorities more
autonomy, but whenever we look at that we need to balance that
against the subsidy requirement and therefore the continued requirement
to be tied to the Treasury's purse strings.
236. Can I move to another perceived unfairness
in the current arrangementswhere if a local authority is
proposing to transfer its stock, then the "overhanging"
debt would be written off. Indeed, there is a suggestion they
may go further and write off some redemption balances as well,
which has been the problem stopping some transfers taking place.
Is it fair that the tenants who democratically vote to stay with
the local authority have the responsibility of paying off the
historic debt themselves?
(Mr Perry) Again, it is not quite as simple as that.
The specific measure that they may adopt, the paying off of the
breakage costs as well as the principal of the debtmeans
bringing England into line with Wales and Scotland where that
is already happening. On the general issue it is not as simple
as that because in England the subsidy system gets in the way
of all rational thinking about local authority housing, including
the debt issue, because debt is taken account of in the subsidy
calculation. It is difficult to say within the overall subsidy
calculation whether debt is fully subsidised. I would think it
is not fully subsidised. There is no doubt that if debt were taken
away from local authorities, there would also be a substantial
loss of at least part of their subsidy. It is much easier to think
about these issues if you are north of the border in Scotland.
In the case of the Glasgow transfer, Glasgow tenants were specifically
paying £20-odd a week towards Glasgow's debt. There was no
doubt about that and it was a very clear case if they went for
transfer that £20 could be used for improvement. Unfortunately,
you cannot make that simple equation for Sheffield or a similar
large British city.
237. In many of the cases transfer is going
ahead because of the perceived financial advantage, presumably
because authorities are saying that the writing off of the debt
is worth more to them than the subsidy on the debt in the current
(Mr Perry) I think that is true. As I tried to set
out in the paper, I think that transfer is really a bid by authorities
to get a range of financial freedoms but, undoubtedly, clearing
the debt is one of them.
238. You call it a "perverse incentive"
for authorities who generate surplus rental income that the surplus
will be transferred to other authorities which cannot generate
enough. Is that not a nonsense that we ought to be trying to look
at in this Bill and get rid of?
(Mr Perry) I think that was a CIPFA's evidence, strictly
239. Do you agree with CIPFA?
(Mr Perry) Not entirely, I must admit. It is not something
that has been introduced by the present Bill. The existing housing
finance system basically shifts subsidy around according to formulae.
We can rail against the formulae and certainly, for example, the
basis of calculating the management and maintenance allowance
is very old and very inadequate, but the shifting around is already
inherent in the system and the Bill really just changes the goalposts
a bit and says we are going to shift things around in a different
way, but there is probably as much shifting around after the Bill
as before the Bill.