Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by Waverley Borough Council (LGB 01)


  This letter is Waverley Borough Council's representation on [clause 10(1)(a)(ii)] of the draft Local Government Bill relating to the "pooling" of a proportion of housing capital receipts by debt free local authorities, as detailed in the explanatory notes to the Bill and the text of the White Paper, Strong Local Leadership—Quality Public Services.

  1.  Providing affordable homes for the residents of Waverley is a key objective of Waverley Borough Council. For many years we have provided affordable homes within the constraints of the local government finance system through local housing associations. This has been extremely challenging given the Government's capital receipt set-aside rules and the level of local house prices. The average price for all houses in the Borough in December 2000 was £220,317 and this has risen dramatically since that time. With recent price increases, a very modest family home now costs £190,000. This is well beyond the reach of teachers, police officers, nurses and other key workers.

  2.  In addition to "key workers" , there is a huge need for affordable housing in the Borough:

    —  In March 2002, there are over 1,300 families and single people on the Council's Housing needs Register

    —  Over 580 households already living in Council or housing association homes are looking to transfer to another home

    —  Each year some 400 households approach the Council as homeless or at risk of becoming homeless and are living in temporary accommodation

    —  At any one time there are 130 households who are homeless and living in temporary accommodation

    —  Over the last year only 370 council properties became available and of these 159, or 49 per cent, were one-bedroom flats which are designated for people over 50 or the retired

  3.  To maximise the investment in affordable housing and improvements to the standard of its council houses, the Council focussed its financial strategy on achieving a debt-free position. By adopting sound financial management over a number of years, this position was achieved at the start of 2001-02. However, the priority that the Council placed on this policy was at the expense of other potential capital schemes in the Borough but the benefit of using 100 per cent of the capital receipts was a goal worth pursuing. New long-term borrowing was avoided for many years, despite receiving borrowing approvals and, in the four years leading to the achievement of debt free status, the amount of borrowing foregone amounted to £4.2 million. It appears now that the anticipated benefits of this prudent approach will not materialise.

  4.  Being debt free has allowed us to allocate £3.2 million for 64 new affordable homes in 2001-02 and 2002-03, as well as increasing spending on the essential backlog of repairs on Waverley's council homes.

  5.  In spite of this initial success and the potential to build on this in the future we were advised in the White Paper, Strong Local Leadership of the Government's intention that debt-free authorities should not be exempt from the requirement to contribute a proportion of their HRA receipts to a re-distributive pool. In the explanatory notes to the draft Bill, it is stated that spending power can be redistributed to authorities in areas with a greater need for new housing investment. As I have set out, there is clearly a significant need for new housing investment in Waverley. This proposal will dramatically reduce this, and many other Councils' ability to provide affordable new homes and decent well maintained Council homes.

  6.  If the Government proposal is adopted, the result will be that local authorities like Waverley will have to find alternative funds through additional local taxation. Because a significant number of Waverley's residents are only slightly above benefit levels, the result of this increased taxation will be highly regressive.

David Harmer

Leader of the Council

21 June 2002

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