Agenda item

Report of Director of Finance and Support (Copy to follow)

Cabinet noted the impact of the Draft HRA Subsidy determination as set out in the Briefing Note (Appendix 1) of the report

Cabinet noted the NBC response to the Draft HRA Subsidy Determination (Appendix 2) of the report.

Councillor Mildren noted that the suggested response to the consultation asked the Government to reconsider the Subsidy Determination. He recalled that the previous Government had reduced a proposed increase two years previously following consultation. The increase in negative subsidy would leave the Council worse off by £.5m. Tenants were already facing an increase in VAT in January and a 1% increase in National Insurance contributions from April. He believed that the worst off would suffer the most from this.

Councillor Clarke commented that the proposal would mean a £5+ per week rent increase for many tenants. He believed that this was indefensible in the current economic climate. He noted that Councillor Beardsworth had objected to a smaller increase two years ago and that Councillor Woods at that time had described it as “obscene and a stealth tax”. He queried what the Aministration’s response would be this time. The Chair asked Councillor Clarke whether he was advocating that rents should not go up in which case the Council would have to pay the Government an additional £2.9m. Councillor Clarke commented that the Administration should be lobbying, with their colleagues, for the increase to be reduced and for the increase in rents to 80% of market rents to be reconsidered. He believed that the public would have more respect for those would spoke the truth than those that merely followed the party line.

Councillor Mason stated that she did not agree with the proposed increases at a time when unemployment was increasing and fuel costs were going up. The enforced rent increase by the Government would only make things worse. The Government spoke about Localism but their proposal was an attack on localism. She was horrified by the figures. In answer to a question from the Chair she stated that the Council did not have much choice in the matter but did not have to accept it happily.

Councillor Perkins, as the relevant Portfolio Holder, submitted a report that set out the key issues that arose from the CLG announcement of the Draft HRA Subsidy Determination for 2011/12 and the proposed response to the consultation on it. He commented that the proposed settlement showed how absurd the HRA was. At best the Council would lose £.5m. Rent convergence was a long standing Government policy and it did help to fund Decent Homes. If the HRA were scrapped the increase in subsidy would most likely increase the Council’s proportion of debt. He did not believe that anyone would be happy about the situation.

Councillor Beardsworth commented that she had been outraged the previous year and had been pleased that the previous Government had helped. The Council would lobby through its MPs against the. She was horrified like everyone else and noted the proposed response to the Government appended to the report.

Councillor Church commented that he had campaigned against the negative subsidy system for many years and believed that this year the Government had got it wrong. He noted that the recently published Localism Bill proposed radical changes to the HRA.

The Chair commented that in years to come the HRA would be in deficit. However the system was broken on a national scale. Both choices, to go along with the proposed increases or not to accept it, led to tenants losing money. Something like £1,000 per tenant head was passported directly to the Government. He noted that the new Government could only do so much in their first six months. He agreed that it was not feasible not to agree to implement a rent increase given that the Council would then have pay £2.9m to the Government.            

RESOLVED:     1.   That the impact of the Draft HRA Subsidy determination as  set out in the Briefing Note (Appendix 1) of the report be noted.

                          2.   That the Council’s response to the Draft HRA Subsidy Determination (Appendix 2) of the report be noted.