Agenda item

The Housing Portfolio Holder made a personal response (attached) to the consultation prospectus on the government’s proposal to replace the Housing Revenue Account (HRA) Subsidy System, which offered this authority to take on £197 million of debt incurred by other councils, in return for which the authority would be able to retain 100% of housing rent collected locally, noting that the views of full Council would be sought on 22 July 2010 and any additional matters raised would be forwarded to the government.

Council is asked TO ENDORSE the Housing Portfolio Holder’s response as the view of the authority and TO AGREE any further representations to be included.

Council REFUSED TO ENDORSE the Housing Portfolio Holder’s personal response to the government consultation and required officers to forward to the government the points raised at the Council meeting as the Council’s response.

Councillor Mark Howell proposed, seconded by Councillor Francis Burkitt, that Council endorse the Housing Portfolio Holder’s response as the view of the authority and agree any further representations to be included.

Councillor Mark Howell, Housing Portfolio Holder, presented his personal response to the government’s consultation on its review of Council Housing Finance, the deadline for which had been 6 July 2010.  He explained that the government was seeking to pass back the £25 billion housing debt it had accumulated from Councils across the country, a figure which also included debt taken on by the government when Council houses were transferred to Housing Associations.  Councillor Howell stated that he personally felt that it was unfair to ask the authority, currently debt-free, to take on a debt incurred elsewhere.  The proposed debt allocated South Cambridgeshire District Council was the second highest in the country, equivalent to £36,000 per dwelling.  Councillor Howell cautioned Members that a rejection of the government’s debt offer outright left the Council unable to try to negotiate a better settlement, and that the Council had been advised that it must accept the debt voluntarily or the government would pass primary legislation to impose it.  If Members were unable to support the Portfolio Holder’s individual response, the Chairman of Council would write to the government to say that the full Council had rejected the offer in its entirety.

Councillor Howell reminded Members that the response from tenants during the Housing Futures ballot had shown that tenants were unhappy at the proposed £80 million debt to be taken on by South Cambridgeshire Village Homes, but that the debt proposed by the government was now £197 million, rising to £206 million within the first five years due both to interest and to the government’s calculations which assumed that the authority had a higher rental income than it actually received.  Councillor Howell confirmed that Members had been aware of these reforms since April 2010, and that the amount originally told to the Council had been £154 million, then £168 million, before the final consultation paper had been received with its offer of a debt of £197 million.

Councillor Sebastian Kindersley stated that the Liberal Democrat group would abstain as the information supplied was insufficient to allow them to form a view.  Councillor Howell reminded Members that a report had been presented at his 19 May 2010 Portfolio Holder meeting, at which the matter had been discussed thoroughly.  Councillor Howell added that what was before Council was a response to a consultation document and not the final result of negotiations.

Councillor Tony Orgee noted that the consultation papers had been available for public consultation from April to July 2010 and read aloud his personal representations.

Comments in support of the Portfolio Holder’s response:

·                      The Portfolio Holder had said that the Council supported in principle the move to a self-financing system for council housing, but opposed the imposition of such a significant debt incurred elsewhere as the price to be paid for that settlement;

·                      Only be voluntarily agreeing to accept some level of debt would the authority be in a position to negotiate;

·                      If the Council paid off the principal and the interest, the total debt should not rise above £206 million;

·                      After thirty years, the Council would be in a position where it owned all its housing stock and retained rents and capital receipts for local benefit;

·                      Council could reject the offer of a £197 million debt and have the full amount imposed by legislation, which would not be supported by tenants, or it could try to negotiate for a lower settlement knowing that tenants would prefer that debt be kept as low as possible;

·                      A subsequent government might change the redistribution of the debt.

Comments opposing the Portfolio Holder’s response:

·                      The responses appeared contradictory: in paragraph 5.1 the Portfolio Holder stated that the self-financing proposal was preferable in the long term to the current system but the Council was reluctant to proceed to early implementation, but in paragraph 5.2 the Portfolio Holder stated that the Council could implement self-financing in time for 2011/12;

·                      Some Members felt that the Housing Portfolio Holder had responded without other Members being aware;

·                      The Portfolio Holder’s response to the questions in the consultation did set out other alternatives;

·                      The scope for negotiation had been reduced by sending the response, as the Council had shown its hand;

·                      Commercial rates of interest were unknown and the interest payments would place an unsustainable burden on the Housing Revenue Account (HRA).

General comments:

·                      The public had to be made aware that any level of debt would require cuts to services to finance the debt and interest repayments;

·                      Abstention was unhelpful: Council was being asked to take a view on whether or not it accepted the principle of accepting to pay off debts incurred elsewhere, regardless of the actual amount of debt;

·                      The on-going ramifications would be for tenants rather than for council taxpayers generally;

·                      The determination to keep the Council debt-free was to be commended;

·                      The scale of the debt was opposed unanimously.

Councillor Simon Edwards, seconded by Councillor Howell, moved that the question now be put.  Councillor Howell, supported by more than six Members, called for a recorded vote on whether or not Council endorsed the personal response he had made to the consultation document.  Fifty-one Members recorded their presence for the vote.

For (12)

Against (22)

Abstained (12)

Not Voted (5)

In response to a question by the Chief Executive, Council confirmed that it was satisfied that the votes had been recorded properly.

Council REFUSED TO ENDORSE the Housing Portfolio Holder’s personal response to the government consultation and required officers to forward to the government the points raised at the Council meeting as the Council’s response.