News Release

21st February 2003

CASH CRISIS FOR MIDLANDS AS HOUSE-BUILDING MONEY SUCKED SOUTH

"A combination of the national economic slow down and John Prescott's decision to denude the midlands and the north from housing money and siphon it down to benefit the south of England means that local councils have suddenly found that their cash income has been slashed by millions of pounds", says Michael Fabricant.

"Lichfield District Council, among others, have been told by the Government Office of the West Midlands that the Local Authority Social Housing Grant is to be abolished from April 1st 2003 despite being told only two months ago in December that the Council's plans had the Government's approval. This will have a serious impact on the Council's ability to develop new social housing with their four Housing Association partners."

Michael Fabricant has now written to Lord Rooker of Perry Bar (Jeff Rooker) the Minister for Housing in the Office of the Deputy Prime Minister saying that these changes at such short notice are unfair and will adversely affect housing plans in the area. He has told the Minister: "The lead time for developing housing schemes is long, and Lichfield District have been given no assurances that all of the schemes they are developing will go ahead. A competitive bidding process currently under way to develop a scheme for frail elderly persons has had to be suspended, even though Housing Associations have spent considerable funds on developing the scheme to date, because there is no guarantee that funding will be there."

Meanwhile, all other schemes where Local Authority Social Housing Grant has been approved are now under threat.

"The Council have been told that there is a transitional fund, but this is likely to fall far short of the total for all the proposed Local Authority Social Housing Grant schemes, which are at various stages of development across the Country. There is no indication of the criteria to be used, and discussions around 'contractual commitments', 'pipeline', have been vague and do not take account of the 'in principle' decisions which have been made and upon which funds may have been expended. One of the main purposes of Lichfield District transferring its housing stock was to provide affordable decent housing through the use of Local Authority Housing Grant." says Michael Fabricant. Since the transfer of the Council's Housing Stock, the Council have committed £17.8m to fund 532 homes. The Council's Housing Strategy, which includes details of development proposals involving Local Authority Social Housing Grant over the next three years, has been awarded an 'above average' rating by Government office. The most recent assessment of the Strategy was made in December 2002.

In contacting the Office of the Deputy Prime Minister, Michael Fabricant has asked for clarification on a number of points. He has asked: "When were local authorities formally advised of the decision to abolish Local Authority Social Housing Grant? Who made the decision? When was it made? What transitional arrangements are in place? Will the Department guarantee that the much needed affordable housing in the Districts are honoured? How is it expected that Councils can be asked to plan for the next three years, and then be told in year 1 that the major funding stream is to be axed, throwing their plans into disarray?"

Michael now says: "Like so many others, this proposal has not been thought through and is clearly a knee jerk reaction to the national economic downfall. In claiming he had abolished 'boom and bust', Gordon Brown foolishly committed Government spending for 5 years hence and the money just isn't there to pay for it all. It looks as if the midlands and the north are now going to have to foot the bill."