The Department of Social Care has announced two important changes to public sector housing. Firstly, Council of Ministers has approved that the annual increase in public sector rents with effect from 1 April 2011 will be 5% (five per cent). This decision was taken to carefully balance the rising costs to the taxpayer of public sector housing with the impact upon tenants. Secondly, also with effect from 1 April 2011 the housing maintenance allowance for both the Department of Social Care and the 17 Local Housing Authorities which manage the Island’s 6,000 public sector properties will be reduced from 33 1/3 % to 30% (thirty percent) of rents receivable. In combination, these will reduce the cost to the taxpayer by ?1m annually at no cost to the ratepayer. The Minister for Social Care Hon Martyn Quayle MHK commented: “Public sector housing is a vital part of the Island’s housing stock. My Department has responsibility for housing policy and the associated cost. In view of the current financial challenges, my Department and Council of Ministers gave careful consideration to all possible changes in order to protect vital public services while reducing where possible the burden on the taxpayer. Over the last decade, Government’s investment of tens of millions of pounds in housing has meant that over 1000 new homes have been built and hundreds more substantially improved, raising the quality of life for thousands of people locally. My Department and Council of Ministers are very conscious that this unprecedented investment in public sector housing to meet local needs comes at a cost – indeed the cost to the taxpayer is projected to rise by over ?1m annually to fund the associated capital costs – hence there is pressure to raise rents to contribute to rising costs. At the same time, we are acutely aware of the impact upon some tenants of rising rents, although it must be noted that the most vulnerable who are in receipt of relevant social security benefits from my Department will not be affected by the rent rise. Therefore we carefully balanced these considerations and decided that we would increase rents by 5%, which is consistent with rises in recent years. Following this change, public sector rent levels will still be significantly cheaper than the equivalent in the private sector, hence public sector housing will still be very affordable housing. With regard to housing maintenance, my Department and Council of Ministers again gave this careful consideration and believe that the percentage of rental income committed to the budget for annual maintenance can be reduced while maintaining current properties to a good standard. Indeed, the unprecedented investment in housing over the last decade including the replacement of many of the oldest properties has reduced the need for much maintenance. Also, it must be borne in mind that, as the maintenance allowance is a percentage of rental income which itself rose 5% this financial year and will rise by 5% next year, the actual budget available for maintenance in 2011/12 will only be reduced to broadly the same level it stood at last year (2009/10). As a result, I believe this is a prudent change which makes a small but very important contribution to Government’s efforts to re-balance income and expenditure. I wish to take this opportunity to re-affirm that my Department and this Government remains wholly committed to providing good affordable housing to meet the needs of local people and that we need to do so on a basis that is affordable and sustainable for the taxpayer. Indeed I expect that this will be a record year for completions of Government-funded first time buyer homes and the investment programme for public sector house building is worth ?130m over the next 5 years. I trust Members of Tynwald, the Local Housing Authorities, tenants and the wider public can understand the need for these changes which I believe are necessary, proportionate and achievable. I and my Department look forward to working with the Local Housing Authorities ever more closely to continue to provide high-quality public sector housing.” The remainder of this news release is concerned with further explanation in relation to the change in housing maintenance allowance. The amount of money allowed to be kept by Local Housing Authorities for maintenance has stayed at 33 1/3 % of rents receivable since the housing deficiency scheme was introduced in 1999. When the housing deficiency scheme was introduced much of the public sector housing stock was in relatively poor condition and therefore needed considerable amounts to be spent on maintenance to keep the properties at a suitable standard for the tenants. Since 1999 there has been unprecedented investment in the public sector housing stock to either replace or extensively refurbish ageing stock. Over 1000 properties have been built in the last 10 years, many of which replaced the oldest stock, which was the costliest to maintain. Also millions of pounds have been invested in refurbishing several hundred properties, further reducing maintenance costs. This investment is set to continue, with ?130m Capital expenditure in public sector housing planned over the next 5 years. In addition, rents have risen by at least 5% a year since the housing deficiency scheme was introduced with a third of this rise being kept by the Local Housing Authorities to maintain modern, good quality stock. Hence the sums available to Local Housing Authorities to maintain properties are currently greater than ever before. Furthermore, much planned maintenance work is now addressed through Capital schemes, which further reduces the burden on the annual maintenance budgets. These improvements in the financing of housing maintenance are reflected in the increases in housing reserves held by many Local Housing Authorities. Given these facts, the Department concluded that the amount allowed for maintenance could be reduced to 30% of rents receivable without material adverse effect to either the Local Housing Authorities or tenants. The proposal was approved by Council of Ministers in November 2010. The Department is pleased to confirm that the allowances to Local Housing Authorities in respect of housing administration and community allowance for sheltered housing remain unchanged at 7.5% and 10% respectively of rents receivable. - ENDS –