The Minister for Health and Social Care, Howard Quayle MHK, has today responded to an open letter received by the Department concerning the 2015/16 rent increase for public sector housing:
Thank you for your letter regarding the increase to public sector housing rents.
I understand that any increase in rents for public sector housing is bound to be an emotive issue with a multitude of differing points of view.
Each year the Department must strike a balance between protecting vulnerable social housing tenants and charging a rent that is fair for both tenants and the taxpayer. This is not always easy; however I believe that the decision to increase rents next year by 5% – around 2% when taking inflation into account – is a fair and equitable settlement that has achieved this balance.
The most vulnerable of our public sector housing tenants will be shielded from the increase in rent through a commensurate increase in their social security benefits.
As you are aware, the Department funds the difference between the cost of providing social housing and the rental income it generates. The Government’s accounts for 2013/14 show this figure to be in excess of £6 million. Whilst the difference between the two figures is inevitable to some degree, we must ensure that it is placed on a sustainable footing so as not to jeopardise future investment in existing and new housing stock.
Government remains firmly committed to providing affordable rented accommodation for those in need. However, sustainability can only be achieved by ensuring that rents more closely reflect the actual cost of both providing and running public sector housing. It is worth noting that the Island’s public sector rents are lower than the average equivalent public sector rents in England and are also significantly lower than those charged in the private rented sector.
As you acknowledge, the Department had budgeted for a 10% increase in public sector rents for 2015/16. In recognition of the work that needs to be carried out to deliver means testing, the need to develop an alternative funding model for public sector housing, and the need to achieve value for money across the service; a decision was taken to halve this amount to 5%.
The Department is working closely with the Treasury to develop a deliverable, sector-wide means testing system. This is a priority for this Administration and we must make sure it does not generate additional costs for the taxpayer whilst targeting those most in need.
The shortfall of 5% will have to be borne by the Department at a time of increasing pressure upon the health and social care services the Department delivers.
The Department consulted with local authorities on this matter and, as you acknowledge in your letter, the majority of authorities were in favour of an increase. Where a view on a particular percentage increase was offered by an authority, the most common figure was either an outright increase of 5% or a rate up to a maximum of 5%.
I am, therefore, content that the Department has both engaged with and listened to the views of authorities and that 5% is the right level by which to increase rent, for the reasons I have outlined above.
In the spirit of your open letter to me, I have requested that this letter be published on the Department’s website and a copy made available to the local media.
