Jane Hutt, Minister for Finance & Carl Sargeant, Minister for Housing and Regeneration
We are delighted to announce that the Chief Secretary to the Treasury has agreed for the 11 stock retaining local authorities in Wales to exit from the Housing Revenue Account Subsidy (HRAS) system.
There has been concern for many years at the substantial transfers from local authorities in Wales to HM Treasury, via the Welsh Government, as a result of this complex system. These currently amount to some £73 million per annum.
There are two elements to the agreement. The first part will involve local authorities buying themselves out of the existing subsidy system through a one off lump sum and local authorities will take on new debt to fund the settlement. These reforms will generate a total of £33 million in savings to the 11 stock retention local authorities each year.
The second element, which is a condition of the agreement, will involve the imposition of a housing related borrowing cap. We have managed to negotiate the level of the debt cap which will allow local authorities to continue to invest in their housing stock in line with their current housing business plan commitments. Local authorities will have more to spend on bringing their homes up to the Wales Housing Quality Standard which will bring real and tangible benefits to their tenants.
We will issue a further update on timescales once agreed with the Treasury and we will continue to work closely with local authorities and the Welsh Local Government Association on implementation.
We appreciate that this has been a complex and challenging area of work and we are very grateful for the support of previous Ministers, local authorities, the Welsh Local Government Association and our officials in achieving this historic agreement.