Questions, answers and non-answers

Here are the responses to some questions I asked at the full council last week. Judge for yourselves. I’ll comment on them later.

Martin Wicks:

1. How much private finance would be required to fund the transfer our housing stock?

2. Does the Council confirm that it will be following the DCLG statutory guidance of July 2009 throughout the Housing Ballot process?

3. On July 29^th in an email, Bernie Brannan and Brian Mattock committed to providing addresses of tenants to the Swindon Tenants Campaign Group. As of today (September 19^th) they have still not been received. Will the Council carry out the commitment to provide these addresses?

4. What does the Council estimate will be the interest rates for
   1. the debt imposed by government under the self-financing model;
   2. the debt that a Housing Association would have to take on to fund the transfer.

5. The debt of Councils under the ‘self-financing’ system will not be finalised until the new year. Will the Council press the government to adjust the debt to take account of the high percentage of ‘non-traditional housing’ it has?

6. The Cabinet Member for Housing has said publicly that there are risks in either option (transfer or maintaining our housing stock). Can he explain what the risks of transfer to a Housing Association are?

 The Cabinet Member for One Swindon, Communities and Housing has responded:

Thank you for your questions.

1. Private finance is not used for housing stock transfers.
2. Yes, and we hope that those groups opposing the transfer will also abide by it.
3. I am not aware of any such commitment being made. At the time my predecessor held this portfolio the advice was that we could not release such personal information. We are evaluating the Data Protection implications of releasing such data and we will comply with all statutory regulations.
4. We estimate that it will be 5.07% for over 30 years for both models, but this is subject to possible future changes.

The figures are:

1. £176.6 (less £31m notional debt = additional debt of £145 million)
2. £67m
1. This has been raised with both the present and the previous governments on a number of occasions. The Coalition Government, like its predecessor, is consistent with its answer that it will not change the valuation for individual authorities. It is important to set out some of the background in respect of the self financing system. The previous government started a full review of the HRA system in December 2007. In June 2009 the Minister for Housing announced his intention to “dismantle” the subsidy system. His statement included the following remarks:

“Our consultation following this review will propose a devolved self-financing alternative to the current system. This would remove the need to redistribute revenue nationally, while continuing to ensure that all councils had sufficient resources. With these reforms, councils would finance their own businesses from their own rents, in exchange for a one-off redistribution of housing debt. By freeing councils from the annual funding decisions in the current system, this will enable councils to plan long-term and to improve the management of their homes, secure greater efficiencies and improve the quality of service to their tenants.”

“Transferring to a housing association should also remain an option that council tenants can choose. There are potential benefits from bringing in a not-for-profit body with access to private finance to own and manage the homes. However, there should be equity in the terms of public funding whether they are transferred or retained in the future under self-financing. The value placed on the stock in a self-financing agreement and a transfer deal will be based on delivering the same standards of service at a comparable cost.”

A period of consultation ended on October 2009 and in March 2010 a new announcement was made which included the following statement:

“There will be a one-off distribution and allocation of debt between local authorities in order to put all councils in an equal position to support their stock from their future income without the need for annual subsidy. The total debt that is supported in the current system will be around £21.48 billion by April 2011. The value of the stock under self-financing using our lead option of a 7 per cent discount rate is £25.13 billion. This means there will be a net receipt for Government of around £3.65 billion at the point of the self-financing settlement, making this settlement neutral between central and local government.”

Following the General Election, the new Minister announced an intention to continue the previous policy and there was an announcement which contained the following statements:

“We are satisfied that self financing is the right approach and represents a good deal for all authorities over the longer term. However, the success of self-financing depends on a fair valuation of their housing business that guarantees all councils receive a sustainable level of debt that they can afford. As such we will continue to finalise the precise details of the settlement over the next year to ensure they take account of any relevant changes in economic circumstances. The Government will then confirm that the settlement is fair and sustainable and should be implemented next year.”

“Some councils may be considering taking forward housing transfer proposals with their tenants in advance of or post self financing. In order to agree a transfer in future, the financial terms of any proposals will need to be clearly comparable with what self-financing would provide. The Government will consider transfer proposals against the costs under self financing. This will include dealing with backlogs, the costs of future management, maintenance and major repairs and the costs of essential regeneration works due to be undertaken through the proposed transfer. There will be an expectation that councils must provide significant financial support for the transfer, and no assumptions of financial benefit should be made where some measure of Government support may be required. Proposals will be subject to a rigorous value for money assessment”

Under the system Swindon will be allocated £145million of national debt and a borrowing cap of £176.6 million. However because of the impact on Swindon, Officers specifically negotiated a position with the Central Government as set out in the Cabinet report:

“The Council has maintained a dialogue with Government officials on the implications of the “Self Financing”. Members and officers have pressed for an exceptional case to be made for Swindon and have negotiated a position with Government officials, which under stock transfer, provides additional funding to bridge the £70 million shortfall and delivers a viable business plan for the housing stock. Government officials are making recommendations to the Minister for Housing and Local Government that will allow the Council to proceed to a ballot of its tenants.”

Accordingly the Council has negotiated a position with Central Government, whereby if tenants choose to transfer, then the Council will not have to borrow any money under the self financing regime.

6. The Administration’s position is that there are clear benefits to a transfer which include:

• All tenants who need a new kitchen and a new bathroom will be able to have one within the next 10 years.
• In addition, works will commence on the sheltered housing stock to ensure the top priority schemes are fit for purpose over the next 10 years with the remaining sheltered dwellings 
completed during the business plan period. 
• Works will commence over the next 10 years on ensuring non-traditionally built homes have the necessary investment to secure their long term future. All required works will be completed within the period of the business plan. 
• Average rents will be the same under a stand alone organisation, in other words, tenants will not have to pay more for these additional benefits.   
• Tenants can still claim housing benefit as they would with the Council