I would like to make the following statement with regard to the progress of the Government's review of the Disabled Facilities Grant (DFG) programme, which is the responsibility of my Department. This is an inter-departmental review being conducted jointly between the Department for Communities and Local Government, the Department of Health, the Department for Work and Pensions, The Office for Disability Issues and the Department for Education and Skills.

We are today publishing an inter-departmental consultation paper setting out the Government's proposals for improving delivery of this important programme.

Entitlement to a DFG is mandatory for eligible disabled people across all housing tenures. The grant provides financial assistance for the provision of a wide range of housing adaptations ranging from stairlifts, level access showers and home extensions. The programme is therefore important in contributing towards several key Government objectives of providing increased levels of care and support to people in their own homes. In particular the Department of Health, working with other Departments, is now leading on the 13 pilot programmes for individual budgets and DFG is one of the funding streams included in this work.

The DCLG budget for the programme is £120 million per annum but local authorities must provide some of the finance from their own resources. Total public sector spending on the programme is in excess of £200 million per annum.

Despite the undoubted success of the DFG programme in promoting care and independence at home, it has been the subject of much criticism because of excessive bureaucracy and long delays in delivery. The mandatory nature of the grant, combined with increasing numbers of elderly people and larger numbers of disabled children, means that demand remains strong and is growing fast.

We therefore commissioned an independent review of the DFG system by Bristol University, which was published in October 2005 and made a large number of recommendations for change. The Government responded by agreeing to one of the key recommendations immediately—to exempt applications with respect to disabled children from the DFG means test. This was implemented from January 2006. Ministers also said they would respond to the other recommendations in the Bristol report by publishing a comprehensive consultation paper with proposals for change.

The consultation paper sets out a wide range of proposals. Some of the changes can be brought in quickly but there are also some longer-term proposals aimed at achieving a closer integration with social care programmes.

The key short-term changes are designed to broaden the reach of the grant and to simplify and improve delivery. They include proposals to widen the ring fence for the DCLG grant to local authorities that support the DFG programme. This change will first be trialled in 2007-08 for those authorities involved with the individual budget pilots. This will give them greater flexibility on how they use this resource as part of a comprehensive housing adaptations package.

There is also a proposal to raise the maximum limit on a DFG from £25,000. This will initially be to £30,000 but with the possibility of going further. We are linking this proposal to a further change which would allow local authorities to seek (part) repayment of a DFG when the property which has been adapted is sold on in certain specified cases. A number of options on how this might work are proposed but in every case the first £5,000 of grant awarded would be exempt from this charge. The charge could of course only be applied to owner-occupied properties and grants awarded to disabled children would be exempt. The expected revenue stream from this would finance the increase in the grant limit to £30,000 and thereafter govern how fast we could move to the £50,000 limit recommended by the Bristol report.

There is also a proposal to widen the range of purposes for which DFGs can be provided and in particular to clarify that they can be used to ensure a disabled person has access to the garden and other outside spaces.

We are also proposing new guidance to Regional Assemblies, local authorities and housing associations to encourage them to develop clearer strategies and local agreements to deliver an effective housing adaptations service. In relation to DFG applications from housing association tenants we are proposing clearer guidance on where the financial responsibility lies for providing appropriate support.

We are also consulting on options to improve targeting of the grant by amending the means test, particularly in respect of providing more help to families with a small earned income or where there is a large mortgage commitment. Views are being invited on which of the options would be most beneficial and help those most urgently in need of assistance, bearing in mind that resources are limited.

We are also proposing to explore ways of simplifying and speeding up the application process and we will be discussing this with the Local Government Associations. We also want to provide more support to vulnerable households to help them maintain independent living by using Home Improvement Agencies more intensively as support and delivery agents.

In the long term the future of DFG will also be informed by the outcome of the Individual Budget pilots. These are an attempt to bring together six different funding schemes, including adult social care, community equipment and housing adaptations, to operate a much more integrated service for older and disabled people. The Government are committed to piloting this concept in 13 areas over the next two years and if these are successful to roll them out across the country by 2010. This would mean a fundamental change for DFG as it would be re-integrated as part of a wider social care package. As part of this move towards greater integration and improved delivery we are continuing to discuss with the Department of Health the scope for the provision of stair lifts to be moved from the DFG programme and into the Community Equipment Service.

In the meantime the consultation paper sets out a range of proposals to improve delivery of this important programme, which will be rebadged as the Accessible Homes Grant, to ensure that help is delivered fairly, swiftly and efficiently to the many families with a disabled person who are in urgent need of support.

I am also announcing today how the £126 million of grant from my Department to support the DFG programme in 2007-08 will be allocated to local authorities. Details of the amount awarded to each authority are available on the DCLG website at: http://www.communities.gov.uk/index.asp?id=l502662.

Copies of the grant allocations and consultation papers have been placed in the Libraries of both Houses.