Local Government Act 2003

Local Government Act 2003

2003 CHAPTER 26

Commentary on Sections

Part 7: Housing Finance Etc

Section 90: Housing Revenue Account subsidy: negative amounts

237. This section inserts a new section 80ZA into the Local Government and Housing Act 1989 (“the 1989 Act”).

238. The new section 80ZA provides that where the calculation of HRA subsidy under sections 79 and 80 of the 1989 Act (as amended by section 89) results in an overall negative amount, the authority concerned shall

• pay that amount to the Secretary of State or the Assembly; and

• charge the costs of doing so to its HRA. The costs will fall to be met from rental and other income in the HRA.

239. This ensures that authorities which are able to generate surplus rental income, even though incurring management and maintenance etc expenditure comparable with other authorities, make a contribution towards meeting the costs incurred by authorities which cannot generate sufficient rent income to meet such costs.

240. This is effectively what happened under the HRA subsidy arrangements for financial years up to and including 2003-04, whereby the surplus was set off against that part of subsidy attributable to rent rebates. But those arrangements are not consistent with the new financial framework for local authority housing (including resource accounting), and have not been well understood. That is why rent rebates are being removed from the HRA from 1^st April 2004. Following that the previous redistributive mechanism will no longer be available.

241. There is provision as to the timing and manner of such payments (including provision for payment by instalments), and for the Secretary of State and the Assembly to charge interest where any payments are made late, and to charge for any other costs associated with pursuing late payments. The amendment made by this section to section 141(8) of the Local Government Finance Act 1988 means that any amounts payable by an authority (including interest and other costs) may, in accordance with regulations, be set off by the Secretary of State or the Assembly against specified amounts payable by him/the Assembly to the authority concerned e.g. by way of revenue support grant.

242. Section 80(2) of the 1989 Act is repealed by subsection (2) of this section. For financial years up to and including 2003-04 section 80(2) provided that, where an authority’s HRA subsidy calculation was a negative amount, an equivalent positive amount was to be transferred from their HRA to some other revenue account of the authority, other than the Housing Repairs Account. The effect of this was that housing resources (e.g. rents) were used to meet non-housing expenditure for some authorities in England.