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Written Ministerial Statements

Tuesday 30 June 2009


UK and IMF 2007 and 2008

The Chancellor of the Exchequer (Mr. Alistair Darling): I am today publishing the ninth report to Parliament on UK operations at the IMF “The UK and the IMF 2007 and 2009”—Responding to global economic challenges”. Copies have been deposited in the Libraries of both Houses.

Communities and Local Government


The Minister for Housing (John Healey): I intend to publish a consultation document before the summer recess on reform of council housing finance. My intention is to dismantle the housing revenue account subsidy system and replace it with a devolved system of responsibility and funding. However, I can confirm to the House today the principles on which this will be based.

I want to provide more flexibility in finances and more transparency in the operation of the system. I want to devolve control from central to local government. And, in return, I want to increase local responsibility and accountability for long-term planning, asset management, and for meeting the housing needs of local people. The current system makes this difficult to achieve.

On 12 December 2007, my predecessor as Housing Minister announced to the House a review of council housing finance to be led jointly by my Department and the Treasury. Its purpose was to identify options for a sustainable, long-term system for financing council housing that would be fair to both tenants and taxpayers.

The review has been conducted with a wide range of interested and expert organisations through meetings and workshops, calls for evidence, focus groups and questionnaires. Research and analysis were commissioned internally and from external experts.

There is a clear rationale for the current redistributive housing revenue account subsidy system. Councils have different spending needs and different capacities to raise income. Without redistribution, some councils would have to charge higher rents or deliver lower quality services. By redistributing money, all councils should be able to deliver a similar level of service while charging a similar level of rent.

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However, there are significant drawbacks in a national system for financing council housing and in the relationship it creates between central and local government.

Our consultation following this review will propose a devolved self-financing alternative to the current system. This would remove the need to redistribute revenue nationally, while continuing to ensure that all councils had sufficient resources. With these reforms, councils would finance their own businesses from their own rents, in exchange for a one-off redistribution of housing debt. By freeing councils from the annual funding decisions in the current system, this will enable councils to plan long-term and to improve the management of their homes, secure greater efficiencies and improve the quality of service to their tenants.

This would provide councils with a financial framework in which they could plan and manage for the long-term in the same way we expect of other social housing providers. It would give councils a greater capacity and more freedom to respond to local needs and, in doing so, increase their responsibility and accountability to local tenants and residents.

Change on this scale is complex and will require primary legislation. The consultation will set out how moving to a self-financing system will require an adjustment of debt levels for most authorities. At present around £17 billion of housing debt with annual servicing costs of around £l.1 billion is spread across the 202 councils in the system. The self-financing model would enable each council to manage directly and fund their own debt.

In addition to revenue redistribution, councils are currently required to pay Government different proportions of the receipts from right to buy sales and sales of other HRA assets. There is a strong case for allowing councils to retain all of their capital receipts which could give councils the ability to develop a comprehensive strategy to maintain, improve and develop their housing. The consultation document will therefore set out proposals to end the pooling of all housing capital receipts.

I want to see councils building and commissioning more of the new homes that people need in their area. We are therefore taking immediate steps to support this role for local authorities, based on the same principles I am setting out for our long-term reforms.

For the first time, councils can now access the same capital subsidy through the social housing grant that is provided to housing associations for new affordable homes. Decisions on the first council schemes to be funded in this way will be confirmed in September.

At the Budget, we announced £100 million to fund some 900 new council homes. Yesterday, in his Housing Pledge, the Prime Minister announced a further £1.5 billion to build an extra 20,000 affordable and energy efficient homes, increasing the scale of the programme for the next two years to a £2.1 billion investment for 110,000 new affordable homes. This includes a four-fold increase in our plans for new council homes. Together, these changes will enable councils to become once again significant providers of new housing, with further flexibility to do more, where councils can act rapidly and offer good value for money.

We want to maximise our efforts behind building of new affordable homes. So I can also confirm that we are closing the open market homebuy scheme to new applicants
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and in future our low cost home ownership programme will be directed to schemes which support new build homes.

Tenants and council tax payers expect to see their services delivered with the very best value for money. I want to ensure that our reforms to the council housing finance system have strong incentives for improving efficiency, which will benefit councils and their tenants

We remain committed to completing our comprehensive decent homes programme and to maintaining this standard. The reforms I propose will safeguard this commitment. Capital funding will be provided to support this. We also intend to complete improvements required to common areas of estates and will ensure that there is sufficient funding in the system to maintain them in the future.

Our aim in setting up the self-financing system is to ensure that it delivers the investment needed to sustain and maintain the existing stock of council homes.

In the future within this self-financing system, local authorities may also wish to borrow to fund investment. Government are currently considering whether and how any local flexibilities for new investment could be reconciled with the need to ensure that the overall fiscal position for Government is not undermined.

The benefits delivered by arm’s length management organisations that manage council housing services should not be affected by a change in the system for financing council housing. We see a strong future role for ALMOs which are valued by their tenants. We would expect ALMOs to continue to develop their housing management capacity and to look for opportunities to extend the range of services they offer, including to other landlords, where this would improve efficiency and effectiveness.

Transferring to a housing association should also remain an option that council tenants can choose. There are potential benefits from bringing in a not-for-profit body with access to private finance to own and manage the homes. However, there should be equity in the terms of public funding whether they are transferred or retained in the future under self-financing. The value placed on the stock in a self-financing agreement and a transfer deal will be based on delivering the same standards of service at a comparable cost.

We will continue to work with councils whose tenants have voted for transfer and councils who are currently developing transfer proposals to bring these to completion. Future transfer proposals will not gain any financial support beyond what would be provided under self-financing.

A number of councils have been developing proposals to establish Local Housing Companies (LHCs) that combine public land and private finance to deliver new mixed tenure housing. Current market conditions create difficulties in taking the next steps, and the consultation document will confirm how we will assist the establishment of viable LHCs as quickly as possible. In future, self-financing will provide another option for councils who want to put their land and income into schemes to deliver new housing.

Responses to the review showed strong support for a more devolved approach to financing council housing.

A fully self-financing locally devolved system cannot be implemented in a single step but I want to move as rapidly as possible to put these reforms in place and the consultation document will set out my proposed timetable.

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However, there are steps we can take without delay. So I am announcing that from today we will exclude all new build council housing from the HRA subsidy system which means that councils will retain in full the rent and capital receipts from these homes.

I will work with all those with an interest in improving the system to make sure that these plans for reform are robust and deliverable.

Energy and Climate Change

Health and Safety Executive's Nuclear Directorate (Restructuring)

The Parliamentary Under-Secretary of State for Energy and Climate Change (Mr. David Kidney): My noble Friend the Minister of State for Energy and Climate Change today made the following statement:

Environment, Food and Rural Affairs

Dairy Farmers of Britain

The Secretary of State for Environment, Food and Rural Affairs (Hilary Benn): I wish to update the House on recent developments related to Dairy Farmers of Britain.

I informed the House in my written statement of 9 June 2009, Official Report, column 31WS, that on 3 June PricewaterhouseCoopers had been appointed as receivers and managers of Dairy Farmers of Britain Ltd (DFoB). In the debate on Food, Farming and the
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Environment on 18 June 2009, Official Report, column 480, I reported that new buyers had been found for 96 per cent. of the milk, leaving fewer than 200 of the 1,800 farmers affected yet to find an alternative milk buyer. A further 47 farmers secured new buyers before the end of last week.

Throughout this time DEFRA officials and the Regional Development Agencies have worked closely with the receiver, the DFoB Members Council and with many other parties whether those affected or those offering support. All parties have worked to find new buyers for all the remaining farmers as quickly as possible.

On 26 June the receiver and Milk Link announced that all 143 farmers who were on short-term rolling contracts with the receiver at that time were being offered a contract with Milk Link. This would be for a three-month rolling contract paying a standard litre price of 18.45 pence per litre. Some farmers started to sign up to these contracts over the weekend.

I welcome this initiative by Milk Link which, by making use of economies of scale and Milk Link’s existing infrastructure, has enabled them to offer these farmers significantly more than the 10p per litre being offered by the receiver, although whether that price is commercially viable for individual farmers is a matter for them to determine. DEFRA will continue to work with other parties to ensure affected farmers know how to access advice, including advice funded by the Rural Development Agencies through the Rural Development Programme England (RDPE) where appropriate.

I would like again to pay tribute to the hard work of the many individuals and organisations who have contributed to ensuring that no milk has been thrown away since the collapse of DFoB and that all farmer members of DFoB have now been offered a contract with a new milk buyer.

I will update the House as necessary.

Marine and Fisheries Agency (Annual Report and Accounts)

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Huw Irranca-Davies): The 2008-09 annual report and accounts for the Marine and Fisheries Agency will be laid before Parliament today.

Home Department

Identity and Passport Service

The Secretary of State for the Home Department (Alan Johnson): I am pleased to announce today the next steps in the implementation of the National Identity Service. This started with the introduction of identity cards for foreign nationals in November 2008 and will continue later this year with the introduction of the first identity cards for British citizens including the roll out of voluntary identity cards at a fee of £30 to people living in the Greater Manchester area.

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There will be significant benefits to individuals from holding an identity card which will become the most convenient, secure and affordable way of asserting identity in everyday life. Identity cards will also be valid for travel throughout Europe in place of a British passport.

I have reviewed the plans for introducing identity cards to the wider public and have decided to accelerate the roll out of cards by extending the initial coverage from Greater Manchester to other locations in the North-West early next year. Anyone resident first in Greater Manchester and then in the wider areas to be specified will be entitled to apply for an identity card. Initially this will be through Identity and Passport Service Offices based in central Manchester and at Manchester airport.

Precise arrangements for the extension of the roll-out are being developed, but will include the extension of identity card enrolment to other Identity and Passport Service offices in North-West England. There will be a particular focus on issuing identity cards at a fee of £30 to those who will most benefit, particularly young people.

The Government are committed to providing real help now to people in these difficult economic times. Those over 75 are particularly affected and as a consequence the Government will also be looking at options which could allow pensioners aged 75 and over to receive an identity card free of charge. These identity cards will assist in asserting identity and will enable travel throughout Europe.

The Government already have arrangements in hand for the production of identity cards. Later this year, and subject to the normal procurement processes, a further contract will be signed to cover production of cards for the medium term. We are currently engaged in negotiations to ensure the best value for money. We now have a much clearer view of our costs in the future as we have entered into 10-year contracts to upgrade the Identity and Passport Service’s application and enrolment system and build and run the database that will support passports and identity cards.

At the same time, we will continue to look at ways of reducing costs across both passport and identity card work. A further “Cost Report” on the estimated costs of the identity cards scheme over the next 10 years will be made to Parliament in the autumn. However, the expectation is that the costs specifically relating to identity cards will be less than the 30 per cent. of the total costs of the National Identity Scheme previously estimated.

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