Brecon and Radnorshire Liberal Democrats

'Tenant tax' costs Powys £5.4 million - Kirsty & Mick

Welsh councils will pay a total of £94 million, with Powys paying £5.4 million, to the Treasury this financial year as part of a housing subsidy system that penalises tenants in 17 of the 18 local authorities that still retain Council housing.

The Housing Revenue subsidy system has developed over a period of time and was originally designed to prevent council housing accounts making a loss. It is meant to be revenue neutral however last year UK Government coffers benefited to the tune of £194 million after it had paid out surpluses to over 50 Councils, all but one of which is situated in England.

Hackney (which received over £48 million), Islington (over £58 million) and Manchester (£34 million) together received a positive subsidy in excess of the amount clawed back from Wales.

In Wales, the two biggest payments to the Treasury were made by Cardiff and Wrexham Councils, who lost £12.7m and £11.2m respectively from their housing revenue account. Merthyr Tydfil was alone in receiving a £293,500 payment.

The Liberal Democrats are calling for the system to be reformed.

Kirsty Williams AM for Brecon and Radnorshire said: "Powys paid out a phenomenal £5.4 million this financial year to the treasury, while we still have a huge shortage of habitable housing across the county.

"Local council's across Wales face a £3 billion bill in order to get their housing stock up to the Welsh Housing Quality Standard, this ludicrous system does nothing to help them reach this target. In the vast majority of cases the only way that this can be achieved is by transferring the homes to a not-for-profit community mutual housing association, simply because they are not generating enough revenue to finance repairs.

"Each penny paid by Councils by this ludicrous system is a penny less to make Council houses wind and waterproof, install decent bathrooms and kitchens and improve their energy efficiency.

"This money is being taken directly from the rents of Welsh tenants and used to subsidise housing in London and other big English cities. The Treasury is also benefiting at the expense of tenants across the UK. There is no longer any logic in the way that the subsidy system operates and it needs reform.

"What is most disturbing is that this Labour-Plaid government fails to acknowledge this. The English Housing Minister recently issued a consultation paper that proposes changing the housing subsidy system so as to encourage Councils to start building new Council homes, however the Assembly Government is not engaging in this exercise. They should be using the consultation to argue for the end to a subsidy system that is costing tenants so much money."

Mick Bates AM for Montgomeryshire said:

"There has been a failure by the Labour-Plaid government to engage with the review being undertaken in England on Housing Subsidy. This is very disappointing given that the majority of our councils are net contributors to the Treasury. Wales is losing money to the Treasury; while the Deputy Housing Minister is fully aware of this, she isn't doing anything about it.

"The Scottish local authorities were exempt from the subsidy regime when the system was introduced in 1989 and currently Welsh authorities are paying £94 million to the Treasury to reimburse London boroughs and some metropolitan authorities. I want answers from the Deputy Housing Minister as why she is allowing money to be clawed back from Welsh councils to the Treasury, especially at a time when councils will face even bigger cuts in their budgets."

Notes:

Attached is a list of how much is being paid by, or received by, each Local Authority in Wales since 2002/03.

The figures for 2002/03 and 2003/04 represent the best information available as HRAS system changes were introduced with effect from 2004/05

Attached is a list of how much is being paid by, or received by, each Local Authority in England as at October 2008.http://www.publications.parliament.uk/pa/ld200809/ldhansrd/text/90123w0002.htm#column_WA241

Data for 2008/09 obtained from 2nd Interim Estimate form which will be subject to audit in due course and will include adjustments necessary to reflect stock transfers undertaken during the year

The following local authorities transferred its housing stock to newly formed RSLs:

Bridgend in September 2003

Rhondda Cynon Taff in December 2007

Monmouth in January 2008

Torfaen in March 2008

Conwy in September 08

Newport in March 09

Ends