Ernie Clark. Hilperton Division, Wiltshire Council.

I asked two questions at the full WC council meeting.

The question, and its answer, were as follows.

Question 2.

With September’s RPI at 5.6%, the amount of debt being allocated to councils through Housing Revenue Account reform looks likely to soar. What amount will Wiltshire Council now be liable for under this scheme? How is this debt going to be funded? Is it the intention of this council to pass the cost of this debt to tenants through increased rents from April 2013?’

Response.

In 2012 (28 March 2012), subject to the prior ‘passing’ of the Localism Bill, under the Government’s proposed reform of the Housing Revenue Account (HRA) Subsidy Scheme will mean Wiltshire Council will need to borrow an additional £126 million. This is a notional value of our stock as determined under the process and is unaffected by interest rate movements. This borrowing will be kept within a separate (HRA) loan pool, and officers are currently assessing the most efficient and effective vehicle(s) for borrowing. At the moment given the national scale of debt to be taken on there is considerable market interest and options to progress deals at competitive rates. This debt will then be funded from future rent collections rather than the current subsidy system. Initial indications suggest that the cost of the debt financing will be less than the subsidy payment and as such this will benefit the HRA and tenants. The calculation of the rent is based on a national formula which takes account of RPI. The Authority in light of the changes to the funding is reviewing the options available to set future rent levels as part of the decision through the setting of a rents policy. This will assess the debt repayment period and the convergence of rents using the national formulae taking account of RPI. At this stage it is therefore not possible to comment in isolation as to the level of rent increases from April 2012. Further information will be presented to members for decision making as part of the process to set the 2012/13 budget and rent levels, and this will include consultation with tenants in January 2012. Clearly we will need to ensure that rents are collected and administered effectively to finance the debt and this is an area currently under our remit with good collection rates (98% 2010/11).