GOVERNMENT COUNCIL HOUSING REFORM GIVES YORK £100M DEBT TO PAY OFF (York Liberal Democrats)

York Liberal Democrats <info@yorklibdems.org.uk>

GOVERNMENT COUNCIL HOUSING REFORM GIVES YORK £100M DEBT TO PAY OFF

April 13, 2010 12:00 AM

A change to the way council house rent is administered could mean City of York Council is forced to take on £100 million of debt accumulated by other Local Authorities.

Last month the Government announced that it would be consulting on reforms to the Housing Revenue Account system. The changes would allow Councils to keep all the rent collected from local council housing in a bid to boost the construction of council houses.

However, the reforms would also see the £25 billion of debt accumulated by other councils on their Housing Revenue Accounts shared out between all local authorities.

City of York Council currently loses about £5m a year from the Housing Revenue Account, which the Government takes to subsidise other local authorities.

Under the new system the negative subsidy will disappear as each local Housing Revenue Account becomes self funding. However, in order to make the system self funding the Government will divide the £25 billion of debt currently in the system between local authorities.

The division of debt will see York take on around £100 million of debt, despite not having accumulated any debt in the first place.

Liberal Democrat Leader Councillor Andrew Waller, said the new system would not help deliver any new social housing for the foreseeable future. He said, "The Government admit that it will be the end of the next parliament before this new system will be able to deliver any new social housing."

"We have been campaigning for a long time to be able to keep the rent collected from our council houses locally to pay for improvements and new housing. However, with these new proposals the Government is giving with one hand and taking away with the other."

"We will be able to keep the £5 million a year that we were losing through negative subsidy but will be saddled with £100 million of debt accumulated by other local authorities."

Councillor Waller said it was especially frustrating given that the Government hadn't even distributed all the money it collected from negative subsidies last year.

He said, "Last year the Treasury estimated that it would only redistribute £560m of the £756m taken in negative subsidy, keeping the remaining £195m."

"The Government could have helped reduce some of the debt on Housing Revenue Accounts by distributing all the negative subsidy they collected but instead they used it to support their spending and left local Councils to pick up the debt."

"Many local authorities will now be more focused on paying off these massive debts than on building the new social housing that is desperately needed."