It’s local authority tenants who will have to pick up the tab for the ‘nominal’ charges imposed by the Debt Management Office in making loans to councils as part of housing finance reforms
Who’d be a banker? Banks used to be such dependable and staid institutions. Their staff mirrored that tradition. Steady, solid jobs and if you made it to be a branch manager, you were a pillar of society. Look at Dad’s Army’s Captain Mainwaring.
Nowadays, at the top of these maligned institutions, you never know if your rewards are going to change from one government to the next or indeed from one week to the next.
You can get up as Sir and end the day as a common Mr, without having to do anything. Your remuneration committee wants to pay you a bonus, yet those who so recently set the rules say you should not take it and others run scared in case it affects what we think about them.
It’s a topsy-turvy world in which bankers’ lives have become a roller coaster running on the rails of public opinion. But then the bankers haven’t done themselves many favours.
Take the Housing Revenue Account determination issued last week, which indicated that tenants will pay the government – ie the Treasury – around £8bn up front in March.
But, to add insult to injury, the bankers are trying to get their cut. With Public Works Loan Board rates cut for a one off special deal for those authorities that have to borrow to pay the Department for Communities and Local Government, and ultimately the Treasury, for the privilege of keeping their tenants’ rents, the bankers at the Debt Management Office are looking to make nominal charges.
Now 35p does not sound much for every £1,000 borrowed. But given the size of the transactions that will take place in March, the bankers at the PWLB look as though they will net themselves a cool £5m from a captive audience. (Ever heard of a licence to print money?)
And who will be picking up the tab for this? – Yep you guessed it, the over one million tenants who have just seen their rents rise by up to 10% and will face above-inflation rises for the next 30 years.
Trebles all round, as Private Eye would say.
Ken Lee is chair of the CIPFA Local Authority Housing Panel and director of resources at Wigan and Leigh Housing Company
