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OVER£1.4 BILLION FUNDING FOR HOUSING NEXT YEAR

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Details of the biggest allocation of resources for housing for three years have been announced by housing minister ...
Details of the biggest allocation of resources for housing for three years have been announced by housing minister Hilary Armstrong.

The£1.4 billion package of resources for investment in housing by local authorities in 1999/2000 includes nearly£840 million from the Housing Investment Programme (HIP) and£570 million from the Capital Receipts Initiative (CRI). Overall, it represents an increase of 3% in resources for housing.

Local authorities' housing performance ratings have also been published to encourage a continued improvement in the management and delivery of housing services for local people.

Hilary Armstrong said:

'This package will help to tackle the past serious under-investment in social housing, enabling local authorities to continue to improve their housing stock and helping to reinvigorate communities.

'Local authorities can now plan for next year's work on renovating even more properties across the country, continuing our drive to deal with an estimated£10 billion backlog of improvements needed in council stock. The package will also help to improve poor private sector housing and to provide new homes with Registered Social Landlords.'

On local authorities' performance, the minister said:

'We want all local authorities to develop good quality housing strategies and to spend their resources efficiently. I expect authorities whose performance has been assessed as below average in the ratings to work hard on improving their performance in the future.'

Today's package allocates the first part of the massive£3.6 billion programme of additional resources for housing investment agreed in the recent comprehensive spending review.

Under HIP, authorities will get£609 million for general housing purposes,£165 million for private sector renewal and£65 million for disabled facilities grants. The HIP allocations for individual authorities are based half on indices of assessed need and half on assessments of authorities' performance as housing authorities.

The additional£570 million of CRI resources have been allocated in a similar way, but with some allowance for local authorities' past capital receipts.

NOTES

HIP Allocations

1. HIP allocations have three components: a general purpose housing Annual Capital Guideline (ACG) allocation; an allocation of grant for private sector renewal activity (known as private sector renewal support grant'); and a guideline allocation of Specified Capital Grant (SCG) resources for disabled facilities grants.

2. The three separate components of the HIP resources have been distributed in two stages:

- the distribution of the total resources between regions has been made in proportion to the sum of the relevant Needs Index scores of the local authorities in each region;

- then, half of each regional total has been distributed to individual local authorities in proportion to their Needs Index score, with the remaining 50% being distributed on the basis of assessments of the relative performance ofeach authority made by Government Offices for the Regions (see paragraph 10 below).

3. The housing ACG figures include the recently announced additional resources for housing in coalfield areas (£8 million).

4. The housing ACG figures feed into the calculation of the single overall basic credit approval totals which are issued to each authority. A credit approval is the means by which the secretary of state allows a local authority to borrow or to use its set-aside capital receipts to pay for capital expenditure (ie expenditure on assets such as buildings, land, vehicles etc).

5. Both Private Sector Renewal Support Grant (PSRSG) and SCG for disabled facilities grants (DFGs) are a grant contribution equal to 60% of the cost of any works eligible for assistance. The sum available for private sector renewal is limited to each council's allocation.

6. For every pound of SCG paid towards disabled facilities grant expenditure, an authority must extinguish an equal amount of credit

approvals. Credit approvals up to the guideline allocation are provided for this purpose. The SCG allocation for disabled facilities grant is only a guideline allocation and a council may claim further grant contributions. Where additional SCG contributions towards DFGs

are claimed, councils must bear the requirement to extinguish credit approvals in respect of the additional contributions from their other available credit approvals.

Capital Receipts Initiative

7. The 1999/2000 CRI resources have been allocated in much the same way as HIP allocations. The only major difference is that the Index used in the allocation is based on a combination of assessed need (two-thirds) and the total of eligible set-aside receipts generated by each authority between 1 April 1990 and 31 March 1997. This represents a change on the position in the two previous years when allocations were determined on a purely formulaic basis (ie no

performance element).

8. Under the Local Government and Housing Act 1989, local authorities have been required to set aside a specified proportion of most types of capital receipts raised from the sale of assets. An authority's set-aside receipts can be used to repay debts or pay off credit arrangements. Until they are used, they are generally held in approved investments or invested internally by being used as an alternative to short-term borrowing. Authorities with no long-term debt are not required to set aside part of capital receipts and may

spend them as they wish.

9. The CRI allocations are issued in the form of supplementary credit approvals (ie additional approval to borrow to finance capital expenditure). Revenue support is provided through Housing Revenue Account Subsidy and Revenue Support Grant.

Performance Assessment

10. Local authorities' efficiency and effectiveness in meeting housing need in their areas is assessed relative to other authorities in the region. Four factors are assessed: housing strategies and how well authorities perform on managing their investment programme, delivering housing services and in involving tenants. Each authority has been placed in one of five performance bands. The bands, which reflect relative performance within regions, are: well above average, above average, average, below average, well below average.

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