Communities and Local Government CommitteeSupplementary written submission from the Department for Communities and Local Government
Financing of New Housing Supply
When I appeared before your Committee on Monday 30 January, I promised to write to the Committee with more details about our reforms which will replace Housing Revenue Account subsidy with a devolved system for financing council housing from April. As I said to the Committee, this is a very important reform which will involve £19 billion of payments between central and local government. It is also a particularly complex deal, but one which will deliver a much simpler, more transparent and locally accountable system.
The Committee was interested in how the deal affected councils with large amounts of historic debt which arose from house building programmes dating back several decades. The principle of self-financing is that councils should have a level of debt which can be serviced from their income after meeting their running costs. Many councils with large amounts of historic debt will therefore get a part of this paid off by Government. But the self-financing settlement does not specifically target historic debt; it simply adjusts the level of debt in each council to a level that is affordable locally. Where a council has transferred its entire housing stock to a housing association, the housing debt will have been settled at the time of the transfer. Councils without stock will not be involved in the self-financing settlement.
The Committee was also interested in the headroom that councils would have to borrow under self-financing. The reform creates a new cap on the amount of housing debt for each council. This is necessary to ensure our reforms support the Government’s priority of tackling the deficit. However, most councils will have some headroom to borrow under this cap. The amount of headroom will depend on the level of prudential borrowing for housing undertaken by the council prior to self-financing.
I also told the Committee about the extra money all councils would have to spend on managing, maintaining and repairing their homes under self-financing. There is an average 15% increase in money to spend on homes and services compared to the funding provided through the subsidy system.
I attach a table which shows for each council:
the one-off payment each council will make to, or receive from, Government in order to adjust its current housing debt to a level it can finance locally from its rents;
the increase in funding for management, maintenance and repairs;
a forecast of the headroom each council will have to increase borrowing under self-financing.
Full details of our reforms can be found on the Department’s website at:
www.communities.gov.uk/housing/socialhousing/councilhousingselffinance
I hope that the Committee find this information helpful but please do let me know if you require any further information on this, or other issues raised, during my oral evidence session.
HOUSING REVENUE ACCOUNT REFORM: KEY DATA
|
Local authority |
Payment to Government (a negative figure indicates a payment from Government) |
Potential borrowing headroom |
Increase in funding for management, maintenance & repairs |
|
Adur |
51,185 |
0 |
13.9% |
|
Arun |
70,902 |
8,386 |
13.2% |
|
Ashfield |
−9,353 |
2,866 |
12.5% |
|
Ashford |
113,713 |
2,043 |
15.8% |
|
Babergh |
83,647 |
0 |
15.7% |
|
Barking |
265,912 |
6,695 |
19.0% |
|
Barnet |
102,580 |
38,704 |
16.8% |
|
Barnsley |
22,030 |
10,146 |
13.6% |
|
Barrow |
17,089 |
9,942 |
8.3% |
|
Basildon |
51,551 |
3,002 |
14.1% |
|
Bassetlaw |
26,863 |
10,328 |
13.9% |
|
Birmingham |
336,087 |
0 |
13.7% |
|
Blackpool |
−41,523 |
19,226 |
8.8% |
|
Bolsover |
94,386 |
11,452 |
13.5% |
|
Bournemouth |
42,488 |
11,629 |
16.1% |
|
Brent |
−198,000 |
58,866 |
17.2% |
|
Brentwood |
64,166 |
0 |
12.0% |
|
Brighton & Hove |
18,081 |
24,594 |
14.8% |
|
Bristol |
45,489 |
12,471 |
17.6% |
|
Broxtowe |
66,446 |
8,504 |
10.4% |
|
Bury |
78,253 |
16,699 |
12.9% |
|
Cambridge |
213,572 |
16,091 |
13.3% |
|
Camden |
−42,006 |
86,677 |
14.5% |
|
Cannock Chase |
59,245 |
3,023 |
14.6% |
|
Canterbury |
96,828 |
7,594 |
13.9% |
|
Castle Point |
36,451 |
3,089 |
12.1% |
|
Central Beds UA |
164,995 |
7,739 |
13.9% |
|
Charnwood |
79,190 |
9,580 |
11.6% |
|
Cheltenham |
27,414 |
6,717 |
17.9% |
|
Cheshire West UA |
90,591 |
10,733 |
14.3% |
|
Chesterfield |
116,949 |
12,932 |
14.0% |
|
City of London |
10,912 |
2,947 |
13.4% |
|
City of York |
121,550 |
5,626 |
13.2% |
|
Colchester |
73,694 |
15,698 |
11.9% |
|
Corby |
70,646 |
0 |
13.3% |
|
Cornwall UA |
82,185 |
14,979 |
18.5% |
|
Crawley |
260,325 |
3,577 |
14.1% |
|
Croydon |
223,126 |
23,187 |
17.2% |
|
Dacorum |
354,015 |
8,115 |
14.8% |
|
Darlington |
33,300 |
0 |
8.0% |
|
Dartford |
86,953 |
2,789 |
14.4% |
|
Derby |
28,164 |
0 |
13.9% |
|
Doncaster |
−59,769 |
27,669 |
13.7% |
|
Dover |
90,473 |
5,272 |
14.6% |
|
Dudley |
335,608 |
0 |
15.6% |
|
Durham UA |
52,891 |
18,445 |
12.6% |
|
Ealing |
−203,039 |
50,311 |
16.3% |
|
East Devon |
84,376 |
2,838 |
18.6% |
|
East Riding |
208,082 |
19,931 |
10.6% |
|
Eastbourne |
−30,482 |
5,922 |
14.7% |
|
Enfield |
28,789 |
38,441 |
16.7% |
|
Epping Forest |
185,456 |
31,882 |
13.5% |
|
Exeter |
56,884 |
0 |
17.4% |
|
Fareham |
49,268 |
3,047 |
11.8% |
|
Gateshead |
−21,450 |
0 |
11.9% |
|
Gloucester |
2,143 |
6,794 |
15.9% |
|
Gosport |
57,029 |
0 |
14.1% |
|
Gravesham |
106,246 |
10,875 |
14.8% |
|
Great Yarmouth |
58,383 |
12,676 |
13.6% |
|
Greenwich |
−125,533 |
0 |
16.2% |
|
Guildford |
192,435 |
0 |
14.0% |
|
Hackney |
−752,570 |
101,415 |
14.5% |
|
Hammersmith |
−197,354 |
37,142 |
15.6% |
|
Haringey |
−233,850 |
54,684 |
18.3% |
|
Harlow |
208,837 |
8,198 |
14.3% |
|
Harrogate |
67,967 |
8,425 |
9.2% |
|
Harrow |
88,461 |
0 |
17.9% |
|
Havering |
165,248 |
28,591 |
15.6% |
|
High Peak |
37,481 |
4,928 |
13.2% |
|
Hillingdon |
191,571 |
43,925 |
16.6% |
|
Hinckley |
67,652 |
1,718 |
13.0% |
|
Hounslow |
−275 |
29,619 |
17.6% |
|
Ipswich |
99,602 |
10,132 |
15.2% |
|
Islington |
−367,266 |
67,309 |
15.6% |
|
Kensington |
24,960 |
11,423 |
13.0% |
|
Kettering |
72,903 |
1,425 |
12.8% |
|
Kingston upon Hull |
78,989 |
0 |
12.9% |
|
Kingston upon Thames |
115,531 |
19,410 |
14.8% |
|
Kirklees |
−31,395 |
35,675 |
10.9% |
|
Lambeth |
−165,210 |
147,933 |
15.2% |
|
Lancaster |
31,241 |
13,650 |
14.8% |
|
Leeds |
−112,138 |
25,369 |
12.9% |
|
Leicester |
−8,414 |
4,987 |
14.6% |
|
Lewes |
56,673 |
5,317 |
15.1% |
|
Lewisham |
−136,338 |
43,730 |
15.2% |
|
Lincoln |
24,931 |
7,385 |
13.6% |
|
Luton |
89,456 |
20,582 |
14.7% |
|
Manchester |
−294,276 |
60,104 |
13.5% |
|
Mansfield |
52,173 |
10,305 |
12.8% |
|
Medway Towns |
19,144 |
4,689 |
13.5% |
|
Melton |
27,622 |
1,649 |
12.9% |
|
Mid Devon |
46,590 |
7,293 |
20.6% |
|
Mid Suffolk |
57,206 |
0 |
18.1% |
|
Milton Keynes |
170,360 |
5,310 |
15.7% |
|
NE Derbyshire |
127,090 |
10,640 |
16.9% |
|
New Forest |
142,704 |
11,736 |
15.8% |
|
Newark |
36,078 |
7,487 |
13.4% |
|
Newcastle upon Tyne |
−293,702 |
0 |
11.7% |
|
Newham |
−544,045 |
81,868 |
15.3% |
|
North Kesteven |
56,867 |
9,987 |
16.7% |
|
North Tyneside |
128,193 |
0 |
11.5% |
|
North Warwick |
59,539 |
0 |
15.9% |
|
Northampton |
192,920 |
17,918 |
14.7% |
|
Northumberland UA |
10,254 |
7,454 |
14.0% |
|
Norwich |
148,898 |
35,225 |
14.6% |
|
Nottingham |
−65,988 |
45,609 |
14.2% |
|
Nuneaton |
71,455 |
9,088 |
14.4% |
|
NW Leicester |
76,785 |
10,141 |
13.9% |
|
Oadby & Wigston |
18,114 |
3,763 |
12.7% |
|
Oldham |
−29,277 |
7,855 |
7.9% |
|
Oxford City |
198,528 |
24,695 |
16.1% |
|
Poole |
43,908 |
0 |
15.3% |
|
Portsmouth |
88,619 |
37,363 |
13.8% |
|
Reading |
147,821 |
4,205 |
14.6% |
|
Redbridge |
60,121 |
33,931 |
16.0% |
|
Redditch |
98,929 |
0 |
14.8% |
|
Richmondshire |
22,188 |
3,660 |
12.4% |
|
Rochdale |
−123,395 |
20,972 |
12.8% |
|
Rotherham |
15,188 |
39,964 |
12.9% |
|
Rugby |
72,949 |
4,592 |
13.9% |
|
Runnymede |
103,292 |
355 |
15.9% |
|
Salford |
−61,056 |
16,803 |
14.5% |
|
Sandwell |
25,489 |
55,959 |
14.0% |
|
Sedgemoor |
47,321 |
5,649 |
17.9% |
|
Selby |
57,733 |
6,190 |
13.5% |
|
Sheffield |
−518,353 |
42,558 |
12.8% |
|
Shepway |
40,110 |
5,922 |
14.8% |
|
Shropshire UA |
83,350 |
9,765 |
15.6% |
|
Slough |
135,841 |
18,433 |
14.0% |
|
Solihull |
69,566 |
4,694 |
12.7% |
|
South Cambridge |
205,123 |
0 |
19.0% |
|
South Derby |
57,423 |
9,430 |
13.3% |
|
South Holland |
67,456 |
4,448 |
17.1% |
|
South Kesteven |
121,652 |
11,361 |
14.5% |
|
South Lakeland |
69,897 |
13,124 |
9.9% |
|
South Tyneside |
60,818 |
19,581 |
11.6% |
|
Southampton |
73,847 |
21,927 |
14.2% |
|
Southend−on−Sea |
34,692 |
0 |
12.8% |
|
Southwark |
−199,254 |
125,937 |
14.5% |
|
St Albans |
175,916 |
0 |
14.3% |
|
Stevenage |
199,911 |
21,583 |
14.5% |
|
Stockport |
−25,943 |
21,628 |
12.0% |
|
Stoke−on−Trent |
74,441 |
15,033 |
14.8% |
|
Stroud |
91,717 |
10,764 |
18.2% |
|
Sutton |
141,126 |
14,829 |
18.9% |
|
Swindon |
138,617 |
21,917 |
18.3% |
|
Tamworth |
44,668 |
11,345 |
16.0% |
|
Tandridge |
70,189 |
0 |
11.7% |
|
Taunton Deane |
85,198 |
16,134 |
18.0% |
|
Tendring |
35,979 |
5,365 |
11.4% |
|
Thanet |
−925 |
4,750 |
16.5% |
|
Thurrock |
160,889 |
20,294 |
14.9% |
|
Tower Hamlets |
−236,199 |
114,706 |
14.1% |
|
Uttlesford |
88,407 |
1,458 |
15.4% |
|
Waltham Forest |
−120,427 |
29,964 |
17.5% |
|
Wandsworth |
433,623 |
70,431 |
14.7% |
|
Warwick |
136,157 |
14,211 |
14.4% |
|
Waveney |
68,286 |
9,136 |
14.6% |
|
Waverley |
188,797 |
0 |
14.7% |
|
Wealden |
47,923 |
11,352 |
12.5% |
|
Welwyn Hatfield |
304,799 |
2,555 |
16.3% |
|
West Lancashire |
88,212 |
17,354 |
13.5% |
|
Westminster |
67,945 |
36,289 |
14.0% |
|
Wigan |
99,083 |
38,372 |
14.5% |
|
Wiltshire UA |
118,810 |
2,120 |
18.4% |
|
Winchester |
156,722 |
0 |
13.8% |
|
Woking |
98,006 |
0 |
13.4% |
|
Wokingham |
95,468 |
5,768 |
14.9% |
|
Wolverhampton |
−47,748 |
2,828 |
13.8% |
February 2012