We believe that a discontinuation of the current subsidy system would give the opportunity to have a fresh look at the MRA. For regeneration funding which allows cross service and cross GF/HRA investment, grants of these types are of great benefit in achieving the government’s objectives for comprehensive regeneration. The Consultation Paper refers to the notion of grant support being different over time depending upon spending needs, presumably reflecting life cycle replacement expenditure patterns in business plans This approach appears fundamentally flawed given that there is not likely to be enough public expenditure to meet the full expenditure requirements so that the problem the sector has is not one of receiving grants before they are needed but actually the other way round.
There may be complications if specific loans funded from the allowances were treated in Treasury Management terms as separate to existing debt portfolios, although it is recognised that successful ALMO’s will need to overcome this issue anyway. We would want to avoid a situation, as we have now with borrowing approvals, where not utilising allowances in one year for capital borrowing results in a reduction in allowances in the future. If the subsidy system is retained, this approach could offer advantages in terms of achieving local flexibility and we would want to take the opportunity to review the balance between investment allowances and MRA and the Department could consider providing debt support through the subsidy system (as for ALMO’s).
However, we would ask the extent to which the investment allowance approach is consistent with the move to Prudential Borrowing, and if the discontinuation of the present subsidy system is considered, a system based on prudential indicators (as below) would be preferable.
The overwhelming feeling of delegates at events held during this debate and the wider membership of the Housing Quality Network has been towards the achievement of greater local flexibility in the context of an overall system for redistribution of resources. There has been a strong feeling that the option to review the way in which existing debt is paid for, combined with a commitment to discontinue the need for subsidy surpluses and deficits to be calculated, has such potential attraction that it merits detailed consideration. The contribution of each HRA to national debt repayment is determined by reference to the relative need to spend on both revenue and capital and takes account of the progress of rent restructuring. for more detail: E Conveyancing Adelaide
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