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Monday, 8 November 2010

HRA deficit and 6.9% rent rise

Tenant rental payments are credited to the Housing Revenue Account (HRA) which every council is legally obliged to maintain, and this account cannot be topped up by other council monies, nor can it be used to contribute to the general finances of the council either. Its ring-fenced, in other words. Additionally, by law the HRA is not allowed to go into deficit.

Central Government subsidise council rents by a set amount, decided on a formula dreamt up in Whitehall. If the Central Government is more than enough to cover the councils costs then the extra amount is returned to the Government, if it is not enough the council receives the subsidy. Currently RBKC is paid about £5.5million in subsidy. However, in a couple of years it is expected that RBKC will have to start paying back as the grant formula changes and other factors kick-in.

All in all, it means the HRA account is, unless something is done is heading for deficit, something it legally cannot do.

The council have used a outside firm, called Tribal Consulting, (is this the same one used to recruit potential candidates for the Conservatives at local elections?) to come up with various scenarios on what happens if we do this, this or this.

The proposal is that council rents are increased by 3.9% plus inflation representing an overall increase of over 6% in real terms.

1 comment:

  1. Meanwhile, the state of many of their homes is despicable, not because of tenants, but because there's been no investment. But why would they care? It's just the wretched poor.


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