Examination of Witnesses (Questions 240-245)
16 DECEMBER 2003
MR COLIN
MEECH, MR
ALAN WALTER
AND MS
EILEEN SHORT
Q240 Christine Russell: You are talking
here of what could happen.
Ms Short: No, I am not. I am talking
about what has happened.
Mr Meech: We asked a parliamentary
question to find out where stock transfers had taken place in
respect of the deprivation units. We found that transfers done
from January 1997 to July 2002, 38 stock transfers, took place
in authorities with a deprivation index of 158, which suggests
to us that most of the stock transfers are taking place in authorities
with very good stock because that retains a high capital receipt.
I have been present at a district council housing meeting where
the local council clearly took a decision to have a higher Decent
Homes Standard than was necessary. They agreed that they had the
capital resources in their housing revenue account to achieve
the Decent Homes Standards but they went for a "gold tap"
standard, they went for a higher standard, which meant they could
only use stock transfer, which meant they got capital receipt,
and we believe that was used to keep the council tax lower. So
you can actually see that most of the stock transfers since the
Labour Government came to power have taken place in shire and
district councils when we believe that was not necessary. The
inner city boroughs and the metropolitan areas which are struggling
with high debt because of the '60s and '70s, which are struggling
with high levels of deprivation, are unable to access stock transfers
because tenants will not accept it, and the deprivation is continuing
because the Government refuses to introduce options under the
prudential framework.
Q241 Christine Russell: You are not arguing
that once stock transfers take place then resources are spent
on properties that are perhaps in less need than others.
Mr Meech: I would not like to
say yes or no because I do not have the evidence in front of me.
Q242 Chairman: You are not giving us
an answer to that because you do not know.
Mr Meech: But—
Chairman: I am sorry, we are going to
have to move on because we are a bit short of time.
Q243 Mr Betts: Clearly one of the reasons
for stock transfers is to bring some extra funding in to improve
the state of housing. No one could question that as a general
objective. What is the answer if you do not have stock transfers?
You have to raise the money from somewhere. You were suggesting
borrowing against future rental stream was the way forward.
Mr Meech: As an organisation we have made several
representations, both through formal consultation machinery, through
our own instructions through the Labour Party and to ministers,
on why the option considered in the Way Forward for Housing Capital
Finance, the investment allowance—which "would provide
headroom within the HRA which an authority could use to take advantage
of the new prudential borrowing regime"—has not been
explored by any government in any real detail. We have done preliminary
figures that show, on a modest investment allowance as a subsidy
through the RHA in 2004-05, a modest allowance of £150 million
would yield about £2 billion worth of investment. We believe
this is the most sensible solution. It is the real solution. It
reinvests the money captured by the Treasury in the amount of
services that the Housing Revenue Account historically has maintained
and continuously maintained. We are not asking for new tax money,
we are not asking for new borrowing; we are asking for tenants'
legitimate rent money to be used effectively and efficiently for
the benefit of them, their communities and, just as importantly,
the taxpayer—because we have seen that the taxpayer has
been subsidising stock transfers and current borrowing regimes.
Q244 Mr Betts: In your memo you say this
revenue stream can be used to finance borrowing. Now you are saying
there will not be any increase in borrowing.
Mr Meech: I am saying there is
enough revenue money in the Treasury that they would not have
to include extra borrowing. The new subsidy, the investment allowance,
would not have to come from new borrowing or new government money.
It is already in the system. Yes, local authorities would be able
to do the borrowing, but that is what is being allowed under the
prudential framework.
Mr Walter: In terms of giving
councils level playing fields so that councils can borrow as other
types of landlords do, we have to ring-fence the national Housing
Revenue Account so the Government is not siphoning money out of
council housing. If we were to get Government also to put into
the pot the amount of public subsidy they are using to write off
overhanging debt to subsidise privatisation, then we would be
quids in. An example is the money that is made available for ALMOs.
For 20 years council tenants have been told, "There is no
money for council housing," and more recently it has been
"unless you use stock transfer." Now, suddenly, there
is extra money there for councils, for council housing, but only
if the councils set up an ALMO. If the money is there, why can
that money not be made available to the councils directly for
what tenants want?
Q245 Mr Betts: You state that "stock
transfer is inherently more costly than local authority retention
and renovation of council housing." Are there not inefficiencies
in local authority maintaining its stock?
Mr Meech: Part of the inefficiency
is to do with the lack of investment both in the infrastructure
and in the workforce. That is one of the real issues. Local authorities
have shown that where there are incentives they are performing.
That is what the ALMO issue is. There are incentives. This, again,
is apparently a stick approach. It is not a sensible approach.
It is not one conducive to the tenant sitting down with the local
authority and the workforce to discuss how best it can be achieved.
I would have thought Hammersmith and Fulham is a prime example:
the local authority and its tenants and its workforce sat down
and came out with a clear statement about what it wanted to do—and
it was a high performing authority, the best performing authority
in the country—and it was denied legitimate access to money
and had to go through the hoop again. And that has delayed the
investment in Hammersmith and Fulham.
Chairman: On that note, thank you very
much indeed.
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