§ Miss Widdecombe
Most of the benefit costs of the two schemes are currently met through direct subsidy (which is not cash limited) at a rate of 97 per cent. The balance is taken into account in local government finance settlements. In addition there are a number of lower rates of direct subsidy, ranging from nil to 50 per cent. in certain "incentive" areas where authorities have most scope to control costs. Sums reflecting unavoidable expenditure in these areas are also taken into account in local government finance settlements.
The main change since the 1988 social security reforms has been the introduction of the housing revenue account arrangements in England and Wales in April 1990; under these, most rent rebate expenditure is taken into account at 100 per cent. when calculating subsidy, with expenditure in the "incentive" areas subsidised through a cash-limit specified sum. The basic rate of subsidy for expenditure outside these arrangements will change from 97 to 95 per cent. next April; again, this change has been taken into account in local government finance settlements.
The Department also subsidises 50 per cent. of local authorities' estimated administrative needs through a cash-limited specific grant; the remaining 50 per cent. is taken into account in local government finance settlements. The proportion met by direct subsidy was 60 per cent. between April 1988 and March 1990; there are no present plans for further changes, although all subsidy matters are kept under review.