Council to borrow £68m for housing

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HARROGATE Council is borrowing nearly £70m to buy its housing stock from the Government.

The authority says the move will save around £1.2m a year, have no effect on council tax and pay for improvements to tenants’ homes.

In July 2010, it declined to pay the £60m lump sum, saying it would plunge the council into 30 years’ worth of debt.

Council leader Don Mackenzie said at last week’s cabinet meeting: “Year by year it’s a very good deal for the taxpayer.”

The council, which has 4,900 tenants, will pay around £4.4m in “negative subsidy” to the Government this year, funding housing in poorer areas of the country.

This figure would have risen to £5m in 2012-3.

Under the new arrangements, Harrogate will instead borrow £68.4m at preferential rates, paying the money to the treasury as a lump sum, then repaying its debtors over 30 years.

By comparison, the council’s annual general fund budget for 2012-3 is between £21m and £22m.

It says the changes are a “no-brainer”, saving £1.2m a year and giving the authority “major advantages”.

“This is a question of money,” Coun Mackenzie said.

“We currently have to pay a £4m negative housing subsidy to the Government, because our income in rents exceeds the amount of money it costs us to upkeep and maintain the council houses.

“The Government now wants every council which has council houses to borrow money and repay central government what they consider to be the value of the council housing.

“This will be less than the negative subsidy has been costing us, so it represents value for money.”

The council is increasing rents for the first period of 2012-3 by an average of 6.78 per cent.

It says the system will be “self-financing”, with the cost being met by tenants and there being no impact on council tax.

In July 2010, Coun Robert Windass, then the cabinet member for housing, said the current system was unsustainable, but backed his authority’s decision to oppose a one-off settlement, saying it would have plunged the council into 30 years’ worth of debt

At an emergency meeting, the council instead resolved to write to the new Government, voice its unhappiness about both the current system and the proposed alternative, and asking them to change the rules.

Coun Windass said at the time: “This system is penalising the good people of the Harrogate district by asking them to fund the inner cities.

“If we carry on like this, we will quite simply run out of money.”