Local Authorities: Capital Receipts (Hansard, 18 October 1993)

§ The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Denton of Wakefield)
My Lords, the policy has achieved its objective of enhancing local authorities' resources for spending on capital projects. Our latest provisional estimate of the additional spending power, based upon local authorities' own recent forecasts, is £1.3 billion in England. This money may be used for any kind of capital expenditure and may either be spent immediately or held over for future years.

§ Lord Dean of Beswick
My Lords, perhaps I may, first, congratulate the Minister on her first appearance at the Dispatch Box in her new role, which is very difficult. I am grateful for the figure which the Minister gave of £1.3 billion. That is in excess of what other people say has been gathered in and can be used. However, the Minister must be aware that the then Chancellor, Mr. Lamont, stated specifically that the figure would be £1.75 billion, which means that there is £0.5 billion less 412 than expected. That is an enormous disappointment to local authorities which wish to build housing in order to deal with the difficult problem of homelessness. Furthermore, it is an enormous disappointment to the building industry which, despite all the predictions of an uplift in the economy, remains in severe recession. Will the Minister ask the Secretary of State to make up the shortfall by making available an additional sum of £0.5 billion from the capital receipts which are held by local authorities and on which there is a tight moratorium?

§ Baroness Denton of Wakefield
My Lords, I thank the noble Lord, Lord Dean, for welcoming me to the Dispatch Box in my new role. It is, indeed, a difficult subject but a very worthwhile role. I suggest that he looks again at the Autumn Statement made by my right honourable friend the Chancellor of the Exchequer. The estimate of £1.75 billion did not represent a target; it was a projection based on English local authorities' own estimates of receipts. Therefore there is no question of making up a shortfall. I suggest that many local authorities could, with initiative and enthusiasm, add to that total.

§ Lord Campbell of Alloway
My Lords, in order to understand the dimensions of the Question, will the Minister give the House the total receipts for the sales of assets and the amount spent?

§ Baroness Denton of Wakefield
My Lords, I repeat for my noble friend that the estimated figure for capital receipts, which is based upon local authorities' own figures, is £1.3 billion. They can spend that during the coming years and there is no question of the spend being related to income.

Lord Bruce of Donington
My Lords, the noble Baroness mentioned the £1.3 billion capital receipts. Will she say how much loss has been incurred in the receipt of that money by selling assets at well below their market value? Is that a practice which she would commend to industry generally in order to achieve the recovery which is so devoutly desired?

§ Baroness Denton of Wakefield
My Lords, I am pleased to tell the noble Lord, Lord Bruce of Donington, that it is not for local authorities to sell below market value, and that is not what has happened.

§ Baroness Hollis of Heigham
My Lords, I join with the noble Lord, Lord Dean, in welcoming the Minister to her portfolio, which we are sure she will grace with her usual competence and courtesy.
Is the Minister aware that local authority associations no longer keep records of the numbers of new council houses being built because they are too few—probably barely 1,000 in the entire country this year? Yet at the Tory Party Conference Minister after Minister, to his shame, scapegoated homeless families for the country's housing crisis. Will the Minister agree that we need to build houses for both homeless families and for families on the waiting lists, which is why those capital receipts are so desperately needed? The only way to do that is to build and not blame, and to construct more houses and not more moral homilies.

§ Baroness Denton of Wakefield
My Lords, I thank the noble Baroness, Lady Hollis, for her welcome. I am also pleased that she was one of the people listening so keenly to what was said at the Conservative Party Conference. I stress that total starts on new house-building projects in the three months to July 1993 were 9 per cent. higher than in the same period last year. Homelessness acceptances declined in 1992 for the first year ever. Having said that, I agree with the noble Baroness that we must continue to concentrate wholeheartedly on that issue.

§ Lord Stoddart of Swindon
My Lords, is the noble Baroness aware that some of us were rather puzzled by her answer to my noble friend Lord Bruce of Donington who suggested that council houses have been sold at below their market value? The noble Baroness denied that. I was under the impression—and perhaps she will confirm it—that council houses had been sold at anything between 25 per cent. and 40 per cent. below market value, as those were the discounts given to council tenants. In addition, some council tenants have been given lump sums of £20,000 to get out of their houses. If that is not selling assets at below market value, I do not know what is.

§ Baroness Denton of Wakefield
My Lords, I confirm to the noble Lord, Lord Stoddart, that local authorities have to sell for the best consideration reasonably obtainable. We believe that to allow tenants the right to buy their homes is one of the best policies which this Government have ever brought forward.

§ Lord Dean of Beswick
My Lords, I was grateful for the detailed answer by the Minister to my supplementary question. However, her perception of what has taken place is totally different from mine. I am quite clear in my recollection that Members in another place, and also in your Lordships' House, said at the time that the figure projected by the Chancellor of the Exchequer would never be reached. The Minister must understand that the local authorities are disappointed because they were ready to set designs and let out contracts on the basis that they would be receiving £1.7 billion. That is not the case. Is it not realistic and fair for the Government to make available a similar sum from the capital receipts which the local authorities already have?

§ Baroness Denton of Wakefield
My Lords, those figures were estimates made at that time by the local authorities, which have revised their estimates. As they are responsible for attracting the income, I would expect their spending programmes to be based on those estimates. An extension of the period of the relaxation of the rules would add to pressures on public expenditure. When capital receipts are used to repay debts or are invested for future debt repayments, public expenditure and public sector borrowing are reduced. I was in Ealing this morning and the council has paid back £50 million of its debt. That is to the benefit of its residents.