FUNDS OF LOCAL AUTHORITIES ETC. (Hansard, 3 August 1976)

§ Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
With this we may take Lords Amendment No. 28, in page 30, line 12, at end insert: 18. Money received from the disposal of any property the income from which or the expenditure on which is included in a local authority's Housing Revenue Account shall not without the consent of the Secretary of State he paid into a fund established by the authority under paragraph 16 of this Schedule.

§ Mr. Guy Barnett
I beg to move, That this House doth agree with the Lords in the said amendment.
These are purely drafting amendments.

§ Mr. Graham Page
The Minister has used the word "drafting" but I must disagree with him. I urge him to give a better explanation about this. The clause says that a local authority may set up capital funds. Then it says that, if the authority sells a house, the rent of which goes into the housing revenue account, the capital realised on the sale must also go into the revenue account.
I do not understand why it should be paid into the revenue account unless the Secretary of State allows it to be paid in another way. Surely, if the rent on the house goes into the revenue account, the capital realised from the sale does not go into that account as well—or am I wrong?

§ Mr. Guy Barnett
The reason why these are drafting amendments is that they are designed to correct an omission in Clause 23. Clause 23 enables local authorities to set up such funds as they consider appropriate. This is achieved 1584 by replacing paragraphs 16 to 18 of Schedule 13 to the Local Government Act 1972 with new paragraphs 16 and 17. But as they stood when the Bill left this House the two new paragraphs did not take account of certain amendments which already had been made to the existing paragraphs. Those amendments provided that capital money received from the disposal of properties within the housing revenue account was not paid into a capital fund without the consent of the Secretary of State, which in practice is rarely given.
The reason for this is to ensure that the benefit of such receipts should accrue to the housing revenue account. If they were paid into the capital fund they could be used for other purposes and thus be lost to the housing revenue account. These amendments ensure that this safeguard is continued.