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Housing: Finance

Volume 467: debated on Thursday 22 November 2007

To ask the Secretary of State for Communities and Local Government what the basis is for the assumptions for rent receipts allowances and interest rates for future years being used in the six authorities' pilot study for examining the removal of local authorities from the national housing revenue account. (165567)

The modelling work used as an assumption that current policies would continue. On this basis, it assumed that rents would increase at RPI + 0.5 per cent. following convergence with formula rents in 2011-12 and that allowances would rise in line with GDP. Interest charges were based on local consolidated rate of interest forecasts. The modelling work however also tested sensitivity to changes in all the variables which have an impact on a business plan, including debt levels, interest and inflation rates, expenditure levels, rental and other income, and sales. The 30-year model business plans run well beyond medium term forecasts and policy commitments so it is important to consider a wide range of scenarios.