Plaid Cymru Press Release:
WALES TO CONTINUE TO SEND COUNCIL TENANTS MONEY BACK TO THE TREASURY.
Plaid Cymru’s Westminster spokesperson for Communities and Local Government, Jonathan Edwards MP, has criticised the Welsh Government for failing to reach a deal on the Housing Revenue Account subsidy scheme under which Welsh local authorities will pay the UK Treasury £73m this year alone.
The system, originally designed to ensure fairness in housing costs for local authorities, is being scrapped in England under legislation in the Localism Bill.
An announcement today by the Welsh Minister for Housing, Regeneration and Heritage, argues that Wales was not disadvantaged by rule changes in England in 2001. Since 2001, 21 of the 22 Welsh local authorities have made a net loss under the scheme.
A Plaid Cymru amendment to the Localism Bill, tabled by Lord Wigley, will ensure a House of Lords debate regarding the amount contributed by Wales.
Jonathan Edwards MP said:
“The Labour Minister for Housing has today confirmed that Wales will continue to send £73m of Welsh money back to the Treasury in Westminster that should be spent on local housing and construction in Wales.
“This Housing Revenue Account subsidy scheme has seen more than £1bn of council house rents returned to London since devolution began – and with Labour in charge at both ends of the M4.
“That is hardly ‘standing up for Wales’. In fact, it is the very opposite.
“With the Housing Revenue Account subsidy scheme being scrapped in England and not in operation elsewhere in the UK, it is only Wales that will continue to lose out.
“Only 39% of Welsh local authorities are expected to meet the Welsh Housing Quality Standard – in part because they have sent tens of millions of pounds back to London under this scheme rather than improving their housing stock. It is a direct result of Labour’s rules when in power in Westminster that Welsh local authorities are disadvantaged.
“Plaid Cymru have laid an amendment to the Localism Bill that the Treasury should no longer receive receipts as a result of the Housing Revenue Account and that these should remain in Wales, where they belong.”
Since 1999, Wrecsam Council have had to send a £110 million to the Treasury, money that could and should have been used to bring Wrecsam's 11,000 council houses up to the Welsh Quality Housing Standard. So much for Labour standing up for Wales.
Statement by Huw Lewis,
It is vitally important that Welsh Local Authorities are able to meet Welsh Housing Quality Standards (WHQS) by 2012 or a deadline agreed with Welsh Ministers. This is to ensure a basic standard of property for our tenants. The results of the recently published monitoring report indicate that 78% of registered social landlords will achieve WHQS in full by 2012, but only 39% of Local Authorities are expected to do so.
One of the main difficulties that local authorities face in funding WHQS work is the Housing Revenue Account Subsidy system (HRAS) that operates in England and Wales to manage council housing finance. There has been concern for many years at the substantial transfers from local government in Wales to HM Treasury, via the Welsh Government, as a result of this system. These currently amount to some £73M per annum.
My colleague Jane Hutt, as Minister for Business and Budgets in the previous government, wrote to the Chief Secretary to the Treasury prior to the Assembly election voicing the unfairness that is perceived in Wales about this situation. The letter provided an analysis that if there was a parity in approach between England and Wales, then these transfers would disappear, and sought a settlement enabling the HRAS to be brought to an end.
The Chief Secretary to the Treasury has now replied. His letter indicates that the differences in negative subsidy between England and Wales relate to the way Major Repairs Allowance was set up in England in 2001. At that time, the then UK department responsible, the Department for Environment, Transport and the Regions, took a reduction in its budget while a corresponding increase in Annually Managed Expenditure for Major Repairs meant that negative subsidies in England were much lower than in Wales.
The critical point in the Chief Secretary’s letter is that at that time no reduction was made in the Welsh Government’s budget that corresponded to the reduction in the DETR’s budget. This letter is the first time that the UK Government has put this on the record. It means that it is now difficult to continue to argue that Wales was disadvantaged in that process.
However, I am committed to work with Jane Hutt and negotiate firmly with the UK Government to find the best possible way forward for Wales. We understand the UK Government’s constraints to achieve a “financially neutral” settlement, but we will also commission research to demonstrate the need for funds to meet the backlog of repairs in the Welsh Housing stock and the WHQS. If there is to be any final payment from Wales to end the HRAS it must be at an affordable level and provide a better way forward than continuance of the status quo.