Duty to Keep Housing Revenue Account

Part of Clause 71 – in the House of Commons at 5:22 pm on 7th November 1989.

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Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment) 5:22 pm, 7th November 1989

What could be described as the cyclical painting of estates every three, five or seven years, depending on the area, is an ordinary revenue item. If one wanted to replace windows by means of a major replacement programme which would only be necessary every 20 or 30 years, that would be a legitimate item to capitalise. That is the distinction to be drawn between ordinary expenditure items and items that can properly be capitalised and upon which capital resources can be spent.

Under the rent guideline system that we are introducing, we start by assuming a national total of rent income for the year. Our proposal for next year is that this should reflect an increase of 5 per cent. in real terms, plus 5 per cent. for inflation. That is exactly the same increase as we have assumed in the existing subsidy system for each of the last two years.

The net result of the rent proposals is that the proposed guideline increase is nowhere less than 95p and nowhere more than £4·50. Of 366 local housing authorities in England, 66 receive the maximum guideline increase, 170 receive the minimum increase and the remaining 130 fall somewhere between the two. For almost one half of all local authorities, there will be a guideline rent increase of less than the national inflation figure. I am prepared to guarantee that that is a figure and a fact to which Opposition Members will not draw attention.

The proposals are fair and reasonable. They will start the process of encouraging a more logical pattern of rents which will reflect the true variation in the valuation of property. They will also ensure that rents do not move out of the reach of ordinary people. They certainly do not reflect the dramatic claims made by the Opposition at Report.

While discussing the subsidy calculation and the proposals made on 23 October, it might be helpful if I were to say a few words about the other main assumption in the subsidy calculation—the allowance that we shall be making for expenditure on management and the maintenance of the stock. Our proposed assumption is that each authority will increase its spending by 5 per cent. to take account of inflation, plus an increase of 3 per cent. in real terms. That should enable all authorities to provide a good standard of day-to-day maintenance. The proposal, as with all the other elements of subsidy, is now open to consultation. The authorities have until 4 December to submit their comments.