Orders of the Day — Scotland (Housing Support Grant)

Part of the debate – in the House of Commons at 10:15 pm on 14th January 1980.

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Photo of Mr George Younger Mr George Younger , Ayr 10:15 pm, 14th January 1980

It may be 29 per cent., but it will be an extra 1·40 a week, which is what the people having to pay it will be interested in.

The next stage is to consider how the grant should be shared out among authorities. Under the old subsidy system, the range of contributions by an authority to its housing revenue account was considerable. The aim behind the housing support grant is to narrow that range so that grant is more closely related to need.

There is a need to move slowly, however, and to ensure that there is a reasonably smooth transition. It was agreed last year that only one-third of the grant should be assessed according to the general distribution formula. Two-thirds of the grant was referred to as the transitional portion and was based on entitlements to subsidies under the previous system. This year, I have decided to reduce the transitional portion to approximately one-third of the total grant available. The transitional portion is calculated according to the authorities' shares of subsidies in 1978–79. In 1980–81, the general portion will account for about two-thirds of the aggregate grant.

The formula assesses for each authority a net amount of expenditure in accordance with the factors shown in the schedule to the order. The most important item used in the formula is that representing loan charges. It has been decided that for this year loan charges should be assessed in relation to the actual loan charges returned by authorities for 1978–79 so that, broadly speaking, the loan charges part of the grant is distributed pro rata to the loan charges incurred by each authority in 1978–79.

That means that an authority whose estimated loan charges for 1979–80 and 1980–81 are likely to move by a greater amount than the average movement in loan charges suffers from the lag and, if the formula remains unchanged, does not catch up for two years. The convention has asked that in order to minimise that discrepancy we should take into account an estimate of the previous year's loan charges, and I have promised to consider that for future years.

The other components on the expenditure side of the formula relate to management and maintenance expenditure. As in 1979–80, a standard amount per house has been allowed, but special factors have been used to boost the grant for authorities with special needs. A high-rise weighting has been used to support urban authorities with high-rise houses in their stock, and that has been set at twice the standard amount for all houses.

Authorities at the other end of the scale, those with relatively small stocks of houses scattered over wide areas, will receive the benefits of sparsity weighting. In 1980–81, in response to a plea by Argyll and Bute district council, it has been decided to widen the qualifications for the sparsity weighting. As a result, the Argyll and Bute and the Ross and Cromarty district councils will benefit from the sparsity weighting. For future years, the Department is carrying out a study of the effects that various factors, including high rise and sparsity, have on management and maintenance costs.

Net assessed expenditure is then calculated by deducting the basic income amount. This is comprised of two components, the first relating to the number of houses of the authorities and the second to the population of the authorities. To encourage authorities to raise rent levels and to fall in with our view that the increased local contribution should be met from rents, we have decided to set the per head income factor at the level established by the variation order for 1979–80 and to add the entire increase in the local contribution to the per house amount.

It has been necessary, as for last year, to build in a safety factor to ensure that authorities with small proportions of houses per head of population do not have to contribute more than a standard amount per house. That ensures that such authorities have some incentive to continue to provide houses where there is a need for local authority housing. The amounts selected for the per house and per head factors take account of a distribution percentage of 85 per cent.

The remaining portion is that concerned with hostels and lodging houses. It is apportioned according to estimates of net expenditure for 1980–81. It has been necessary to recover grant from two authorities in respect of 1979–80. Those authorities, in good faith, claimed grant for two buildings that were not operated as hostels or lodging houses as defined in the statute. It has also been found necessary to use an adjustment as part of the transitional provisions to limit loss of grant for 1979–80. That has been limited to a loss of grant of £52 per house, but it directly affects only a few authorities and the effect of the adjustment on the remaining authorities is negligible.

The amounts of housing support grant to be received by authorities in 1980–81 are listed in the report at annex C and the sums have been calculated to the nearest £10,000, though before payment they are, of course, calculated to the nearest £1.

I have tried to explain as much about the orders as I can in the time available. I think the House will agree that the variation order is extremely generous in the prevailing financial climate. I would very much like to have gone further on the main order, but I hope that the House will feel that in the difficult financial situation that we inherited we have been as generous as possible.