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5 Mar 2003 : Column 869—continued
Mr. Raynsford: I can happily give the hon. Gentleman the assurance that the policy will be kept under review. Obviously, we keep all policies under review. Our firm view, however, is that the right way forward is that which I have set out, and that is the way in which we intend to proceed.
The requirement in new clause 7 for annual reports on the operation of clause 90 and its effects on local authority rents would achieve no substantive benefit but it would impose an unnecessary administrative burden. Housing revenue account subsidy has operated as a redistributive system for more than a decade. Like other things, it dates back to the previous Government, as it was introduced by the Local Government and Housing Act 1989. It therefore seems doubly bizarre that the Conservatives are now changing the position that they adopted when in government. Redistribution has been achieved up to now by offsetting assumed housing revenue account surpluses against rent rebates. That depended, however, on housing benefit being included in the HRA, which was highly controversial and deeply unpopular with many tenants.
In response, we took a decision to remove housing benefit from the housing revenue account, but after rent rebates are removed from the HRA, the old redistribution system will not be possible, so the new, more transparent mechanism in clause 90 is needed. For
the vast majority of authorities, the clause will simply replicate the outcome of the current redistribution mechanism. The only authorities whose resources will be affected are the 18 English housing authorities that currently have an assumed HRA surplus greater than their expenditure on rent rebates.I have mentioned the figure of 18, so I now owe an apology to the hon. Member for Runnymede and Weybridge. He suggested that there were 34 debt-free authorities, but I intervened to suggest that the figure might be 18. I apologise—I was incorrect, because I was thinking of the other group. In fact, the number of debt-free authorities with housing stock is 35. I hope that that puts the record straight.
The authorities that have an assumed HRA surplus greater than their expenditure on rent rebates are currently required to transfer the excess to their general funds, thereby effecting a transfer from council tenants to general council tax payers. In future, subject to transitional arrangements, these amounts will be pooled, thus stopping the current subsidy of council tax by council tenants. That subsidy has caused considerable anger to council tenants.
Assumed HRA surpluses and deficits for the purposes of clause 90 are calculated on the basis of assumptions about an authority's rent levels and expenditure on its stock. Contrary to the views expressed by Conservative Members, there is no link between an assumed HRA surplus and good performance or political make-up. Local authorities that had the good fortune of low investment needs and, therefore, little debt while being able to command high rents have tended to end up in assumed surplus. Likewise, deficits generally occur when investment needs and, therefore, debt levels, are higher than can be funded from reasonable rents however efficient the council is and however well it manages its affairs.
The proportion of authorities rated excellent and good by the Audit Commission under the comprehensive performance assessment is about 50 per cent. for all three main political parties. Similarly, comparable proportions of both deficit and surplus authorities equally achieve good or excellent ratings. I stress that list in case the Opposition parties are tempted to indulge in any mischief making on this point. In addition, there will be no adverse impact on council rent payers. Clause 90 will not make any difference to council rents for any authority, as we have now put in place a national framework for affordable social rents based upon the size, location and condition of properties.
The new clause is not necessary because totals of HRA surpluses collected and HRA subsidy paid to authorities in deficit will be approved by Parliament as part of our request for resources. The figures will also be recorded in the annual accounts of the Office of the Deputy Prime Minister and be open to scrutiny by both Parliament and the National Audit Office. Additionally, the start of consultation on the annual general determination of HRA subsidy has always been announced in the House and the papers made available. Copies of the final determination of HRA subsidy are also made available to the House. That will continue. There is therefore no need for the further report suggested by the new clause.
Mr. Andrew Turner: The Minister suggested that the provision would have no effect on rent levels. However,
will he confirm that the framework that he is proposing involves guidance, will not be mandatory on local authorities and that an authority, such as Sunderland, that has a large HRA surplus could use the surplus to subsidise rents? Or will the framework be more mandatory and will authorities such as Sunderland not be allowed to retain the surplus to subsidise rents?
Mr. Raynsford: The hon. Gentleman is getting a little confused. The purpose of the rent restructuring framework is to ensure broad consistency across the country that will take account of the size and attraction of particular properties. It will also take account of the local housing market in different areas. The aim is to do that over time, because we cannot make sharp adjustments to issues that impact on the viability of housing organisations and people's budgets. The programme is being phased in over 10 years, and it is designed to ensure that there is a more coherent framework of rents across the country.
New clause 16 relates to the Government's policy of ensuring that all social housing is decent by 2010, and in particular the contribution that the transfer of local authority housing to registered social landlords makes towards that. The policy was set out in the housing statement, "The Way Forward for Housing" published in December 2000 and reaffirmed last month in the plan for building sustainable communities that was announced by my right hon. Friend the Deputy Prime Minister. The new clause would require the Secretary of State to report to Parliament annually on two matters. The first would be the amount of any payments made, or likely to be made, under clauses 40 and 41. Those payments are in respect of overhanging debt that may arise when an authority transfers its housing to a registered social landlord. The second would be the effect of such payments on the rents of those properties that are being transferred.
Clauses 40 and 41 allow the Secretary of State to assist one or more English local housing authorities to meet debt liabilities through a direct payment either to the public works loans commissioners or to the local authority on the condition that it is transferred to a non-PWLC lender. They confer similar powers on the National Assembly for Wales in relation to the debts of Welsh authorities. The policy driver for clauses 40 and 41 is assisting individual authorities that transfer their housing stock to a registered social landlord and need assistance to meet outstanding housing debt liabilities when the receipt is insufficient to cover them.
The amendments appear to suggest that something is not being disclosed in relation to those payments—or perhaps there is a belief that we are giving favourable treatment to authorities that transfer their housing stock and for which we make an overhanging debt payment. Neither is the case. All authorities are treated on a fair basis. It is for a local authority to choose whether it wishes to retain or transfer its stock based on a rigorous option appraisal involving tenants and other stakeholders.
If an authority or its tenants choose to retain their stock, the Government, through the housing revenue account subsidy, continue to ensure that a local authority can meet the cost of servicing its housing attributable debt. In other words, HRA subsidy continues. However, when a local authority transfers all
its housing stock, it is inappropriate and, frankly, stupid for it to remain in receipt of ongoing housing revenue account subsidy. That is nonsensical. In such cases, we make an overhanging debt payment. Different authorities are not treated differently. Those that keep their stock continue to get subsidy; those that have no stock no longer get subsidy and the overhanging debt is written off. We do not select the authorities; that is the result of local choice that is possible because the Government have made a commitment to make housing transfer and a decent home available to all tenants.When the payment is made, it is common practice for the Office of the Deputy Prime Minister to include reference to both the payment and its amount in the press notice accompanying the housing transfer. Once a transfer takes place, details of it, including the number of dwellings, the sale price, private finance and overhanging debt payment, are also included on the website and are freely available from the ODPM. Overhanging debt payments were originally recorded in the Treasury's annual accounts, but from 2002–03 they will be recorded in the annual accounts of the ODPM and reported to Parliament through that route. So payments are open to the scrutiny of Parliament and the National Audit Office.
New clause 16 would also require that the effect of an overhanging debt payment on the rents of the transferred stock should be reported. That again misses the point of the Government's rent restructuring policy, which was introduced after much consultation, and the justifications for it have been set out many times. In consenting to all housing transfers, it is a condition that the new landlord will have determined rents in line with rent restructuring policy and methodology and will meet the 2012 target. How that is delivered will have been part of the development of the transfer proposal on which tenants will have voted. Whether or not there is to be an overhanging debt payment will not have an impact on that process.
Whether the transfer is of all, or only part, of an authority's housing stock, the delivery of restructured rents by 2012 across all social housing remains the priority. So where there is a partial transfer with overhanging debt, it is our intention that there should be no impact from the transfer on the rents of those tenants who remain with the authority. Therefore, a report to Parliament on the impact of the overhanging debt payments on rents would be nugatory because in all cases there would be nothing to report. I hope that the hon. Member for Runnymede and Weybridge will not press the new clause to a Division.
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