HC Deb 08 July 1980 vol 988 cc378-402
Mr. Gordon Oakes (Widnes)

I beg to move amendment No. 137, in page 47, line 18, leave out 'for each year' and insert 'for a period of three years. The Minister may subsequently vary the allocations made for the second and third years by an amount but may not reduce the provisional allocations made for the second and third years by more than 20 per cent.'. We have now reached part VIII of the Bill, which deals with the capital expenditure of local authorities. The three local authority associations combined detest these provisions with the same virulence as they detested part VI, largely because most of the provisions are unnecessary and have been inserted contrary to the advice of the local authority associations because the Government wanted it that way.

At present, a local authority which wants capital for a capital development can raise it from its own resources from revenue or, if it wants to borrow the capital, it must go to the Government for loan sanctions. That has worked very well. We accept that there must be some central Government control over the total capital spending of local authorities. When we were in government we exercised that duty over the capital spending of local authorities. That has now been thrown away by the Government. Instead, this new system has been introduced which deals with the capital requirements of local authorities in individual years.

This is a modest amendment. Its effect would be to secure that, instead of local authorities being hog-tied to capital expenditure for any one given year, there would be a three-year period so that local authorities can with confidence plan their capital spending over that period.

There is a great deal of evidence that local authorities, far from overspending on capital in the past, have, year after year under successive Governments, frequently fallen short of the actual capital amount they could have spent. Therefore, I can see no motive for the Government to introduce part VIII in order to reduce capital spending.

What the Government are really doing is putting local authorities with a capital spending in a unique class. The central Government do not do this. They have their PESC figures. Wisely, they have PESC figures over a period of years, so that capital transactions and capital expenditure, of necessity, for any large scheme, translate beyond one year. They go from one year to two years, to three years and sometimes even more—of necessity, by the very nature of capital expenditure.

The central Government do not do this in hived-off annual parts. Business and commerce would laugh at this kind of expenditure. In expending its capital requirements, no firm in the country would ever dream of locking it into boxes a year at a time and not providing for capital expenditure to run for over a period of a single given year, and yet that is precisely what the Government are suggesting in this part of the Bill.

I am delighted that the hon. Member for Hornchurch (Mr. Squire), who has moved so many amendments from the Conservative Benches in support of the local authority associations, has appended his name to this amendment. The three associations are simply asking that there be a period of three years so that local authorities know where they are and do not engage—which they well could do under the present system—in capital expenditure in one year and then find that that expenditure is totally aborted by a change in the grant for the subsequent year or the year after that.

I cannot think of any formula devised by this House or anyone else that would create more waste than that kind of system—buildings and capital developments begun and then ended and remaining unfinished until the next year that came along which got an approval so that the money was there for the local authority to carry on.

The system that the Government have proposed will also cause unnecessary bureaucracy in having people assessing all the time the annual boxed-in requirements for each particular year. So again, another object of central Government, the reduction of manpower of local authorities, and particularly manpower doing needless bureaucratic jobs, would be infringed by part VIII, which is totally unnecessary with the present system of working.

The amendment is modest indeed as compared with the distaste which local authorities have for the whole of part VIII. Because it is a modest amendment, because the local authorities want it, and because local authorities would be in a position unique in this country in having to deal with their capital expenditure on an annual accountancy basis rather than in the real world, accepting the fact that many projects take more than one year to complete, and sometimes many years, I hope that the Government, although they set their face so hard against all the amendments to part VI, will see their way clear to accepting at least the spirit of this amendment, as inspired by the three associations, even if they do not accept its wording.

Mr. Richard Alexander (Newark)

I hope that my right hon. Friend the Minister of State will see some merit in this amendment, which has been quite courageously supported by my hon. Friend the Member for Hornchurch (Mr. Squire). He and I have had some experience in local government, mine going back some 15 years, if one includes the time that I have spent as a Member of this House.

We cannot all go along with all of the local authorities' objections to the block grant system, although I think that we can understand some of their anxieties. If the clause remains unamended, we shall sympathise with the Opposition. How can local authorities plan their expenditure on a system that is based on single year allocations? Concern has rightly been shown for expenditure control. Governments—like everyone else—need to plan expenditure a year ahead. Local authorities also have to plan ahead. Even the least progressive local authority is forced to think more than a year ahead.

I support the amendment because the clause penalises the local authority that tries to think more than a year ahead. The clause gives no guarantee of continuity from one year to the next. Is it wrong that local authorities should want to know what lies in store in terms of Government allocations in future years?

Anyone who has served in local government will know that local authorities need to plan more than one year ahead. Let us accept that the block grant system is introduced. It would then become essential for an indication to be given annually of the minimum allocation to each authority in the few years immediately ahead. We should catch spendthrift local authorities, such as Lambeth and South Yorkshire. Indeed, this Bill is largely designed to do that. In addition, we would be legislating for ordinary, prudent authorities, such as Newark district council and Nottingham county council. Those authorities try to live within their means. They need to know where they stand from year to year. They wish to plan sensibly for the future. They are gravely worried about the implications of the clause.

Mr. King

I understand the points made by the right hon. Member for Widnes (Mr. Oakes) and by my hon. Friend the Member for Newark (Mr. Alexander). They suggested that authorities should be given the best possible guidance so that they can plan their capital expenditure. I understand that local authorities need to plan as far forward as possible. We intend to give the best possible indication of capital expenditure provisions for following years.

I cannot accept the amendment, nor can I give a firm commitment now about the exact levels. However, I accept the principle behind it. I am mindful of the difficulties of practice. I checked upon some details about the Labour Government. They decided that for each of three years they would approve borrowing on up to 80 per cent. of the previous year's allocation. They decided that they would allow that expectation for the next year. However, they had to withdraw that approval halfway through the year in every year. They could not implement that provision for the locally determined sector.

I am sure that the right hon. Gentleman will accept that the previous Government could not implement their decision. He has suggested that the clause should be amended, but experience sadly shows that it is impossible to anticipate with any certainty the state of the British economy and the public expenditure provision. It is therefore impossible to accept the amendment. I may have disappointed my hon. Friend the Member for Newark, who made a fair point. However, I cannot commend the amendment to the House in its present form. Experience shows that the previous Labour Government had to change the allocation every year. They allocated a borrowing level of 80 per cent. to the locally determined sector, but they had to change that allocation in the following year. Therefore, it would be a triumph of hope over experience to recommend that this should be written in to the Bill. At the same time, it would be our intention to improve on the record of the previous Government and also to seek to give—

It being Ten o'clock, the debate stood adjourned.

Ordered, That, at this day's sitting, the Local Government, Planning and Land (No. 2) Bill may be proceeded with, though opposed, until any hour.— [Mr. Brooke.]

Question again proposed, That the amendment be made.

Mr. King

The message behind the amendment is entirely accepted and we shall seek to give the clearest indication of forward years to the authorities in their capital expenditure allocations.

Mr. Oakes

Although I accept that the Minister means what he says—that the Government will give the best indications that they can—I do not think that that is acceptable or could be acceptable to the local authorities.

First, I shall deal with the Minister's analogy of the locally determined sector when he said that the Government of which I was a member found themselves in this difficulty year after year. That is not a fair analogy. I am not just talking about the locally determined sector; I am talking about the old loan sanction. Once loan sanctions were given, they were not in any way tied to time. Once an authority had loan function for a project, it could proceed with that project. It did not have to come back to central Government or fear that in a subsequent year there might be some drastic alteration that would halt that project or bring it to an end. Therefore, it is not a fair comparison to use the question of locally determined sector money in this regard.

The Minister said that he would give the best indications that he could in this matter, but the amendment that we propose—and I am grateful for the support of the hon. Member for Newark (Mr. Alexander)—is even more modest than I led the House to believe in my initial speech. It says: The Minister may subsequently vary the allocations made for the second and third years by an amount but may not reduce the provisional allocations made for the second and third years by more than 20 per cent.'. Therefore, we are allowing a degree of flexibility in operating the capital limit on local authority spending.

We have not heard from the Minister any defence whatever of why the Government seek to introduce part VIII of the Bill in this way. The amendment limits in a very narrow way the damage that part VIII will do to local authorities. I should have thought that the Minister, in replying to the debate, would have put up some defence for the complete change in practice that the Government are introducing, which is directly contrary to what all three local authority associations want.

The local authorities want a system that will give them a guarantee of minimum approval. Even then, we are prepared in the amendment to allow a 20 per cent. variation and a 20 per cent. margin. Does the Minister realise what will happen if this is not written into the Bill? Even if he gives his "best indications" to a local authority, the treasurer or the engineer of that authority cannot rely on them when he is planning a capital project. He may be faced with the fact that a school, a sewerage system, a road system or a building development may be half built when the rug is pulled from under the local authority. Even though the words "best indications" are used, there is nothing written in the statute to give the officer the confidence to proceed with the capital development.

I repeat that the Government do not do that. The hon. Member for Newark made it clear that business would not do so. One cannot imagine that a well-run manufacturing business or building development firm would operate on that annual capital basis. It would chase away an accountant who made such a suggestion for precisely the reasons that I put forward. Local authorities need not just one year but a number of years certainly in order to carry out the majority of their capital developments.

The other difficulty is that the Government, in part VIII of the Bill, are seeking to prevent local authorities from using rate money for capital projects. Money spent from revenue will be offset against the capital allocation. The authority may find itself on the horns of a dilemma. Even though the Government say that they will try to avoid it, a local authority could be precluded from spending from revenue in order to complete a necessary project. When I was a member of a local authority, we took pride in spending from revenue and not having to pay interest, and interest rates were then not as high as they are under this Government. The Government are seeking to put local authorities in a straitjacket purely for accounting reasons.

It is not good enough for the Minister to say that Government Departments will use their best endeavours to help local authorities. They are putting yet another severe constraint on them. Local authorities will be prevented from getting on with jobs for no good reason. When discussing part VI the Minister could argue that local authorities wanted a change from the needs element in the block grant. However, he cannot argue that local authorities complained of the capital expenditure provisions. The decision comes entirely from central Government.

I am disappointed that this modest amendment does not find favour with the Government. I can foresee chaos. Any Conservative Member who has knowledge of the construction industry knows the difficulties that a firm would have in trying to conform on an annual basis without knowing what the minimum limit will be for successive years. I cannot accept the Minister's undertaking that the Government will give the best indication that they can to local authorities. Local authorities rightly want this modest amendment to be written into the Bill. They will then know where they and their officers stand when planning capital developments. I fear that we shall have to divide the House unless the Minister is prepared to accept at least the spirit of the amendment.

Mr. Wigley

The right hon. Member for Widnes (Mr. Oakes) referred to the interplay between amendment No. 137 and the later group headed by amendment No. 139. There is an interrelationship between them and I wish to raise a point with the Minister in the hope that we can reach an accommodation.

If a local authority gets involved in a capital programme that goes on for two or three years and projects run into difficulties through bad weather or for other reasons so that the authority cannot accommodate its capital programme in the following year because the Government are cutting capital expenditure, will the Government at least allow the authority to be able to take money from its revenue account to spend on capital projects in order to save them?

Two doors are being closed at the same time. One is the restriction to 12 months for a capital programme, and the other is that there is not the let-out of an authority's being able to fund a capital programme from its revenue account.

Capital expenditure is probably the most popular expenditure undertaken by local government. It represents something that ratepayers can see. Local authorities that fund capital expenditure partly from the rates can always carry the ratepayers with them. The money that ratepayers do not like spending is that which is lost on bureaucracy and for which they feel that they do not get value. There is invariably widespread support for capital projects, assuming that the council is reflecting what the people want.

I hope that, if the Minister cannot accept amendment No. 137 he will assure us that local authorities will be given flexibility to take money from their revenue accounts so that we do not get into a position in which some treasurers—and treasurers tend to be a little conservative and to look for an excuse for not doing things—have an excuse not to undertake any capital programmes be- cause of the fear that they will be caught by the 12-month provision.

I hope that the Minister will give some indication of a let-out for local authorities that, through no fault of their own, get into a tangle and cannot constrain themselves within the finances that will be made available for a period of 12 months. I hope that we shall see some daylight on that issue, if not tonight at least in another place.

Mr. King

I must tell the right hon. Member for Widnes (Mr. Oakes) that the analogy that I used was a fair one. I am advised that the locally determined sanctions were tied to a single year. The right hon. Gentleman was not correct in saying that they were not tied in that way.

The hon. Member for Caernarvon (Mr. Wigley) is perhaps under the impression that there will not be any more capital expenditure. The amendment suggests that we should specify capital expenditure allocations for three years. The Labour Government tried to guarantee, on the basis of one year's sanction allocation, that local authorities could plan on a level of 80 per cent. of that allocation for the following year. For three consecutive years, the Labour Government had to withdraw that contingent approval because they were not able to implement it. We hope to do better.

We propose a different system of capital control. At present there is detailed control over local authority capital expenditure. It is exercised by borrowing and by the most painstaking project control in the regional offices of my Department. On the housing side, regional officers pore over endless detailed plans. We propose to get rid of all that unnecessary duplication of activity.

Local authorities have to take responsibility for their decisions. They have to live within their own judgments. Under the new system they will get capital allocations under the five blocks of expenditure that in their hands will become a single block. They will have something that local authorities never thought that they would get—100 per cent. virement between the various authorities. That is not an entirely fair point to make. It depends on the tier of authority, whether it is a county or a district, exactly which services it provides—in other words, education, social services, transport, LDS and housing. That is the system that will operate. There will be the opportunity to vire or to carry forward 10 per cent. from one year allocation to the next, or the possibility of an overspend or an underspend. There will also be the opportunity to vire between different authorities not merely within the same area but throughout the country. Underspend allocations in one area can be taken up on a swap basis between different authorities.

10.15 pm

The Government are concerned about one thing—the totality of capital expenditure. The figure this year is some £2,500 million. The Government's proper concern is that this total should be preserved. We shall not maintain effective control of public expenditure if a programme of that magnitude is allowed to remain totally uncontrolled. We are determined, within that overall control, to introduce far greater flexibility than has existed to date. I cannot give a name, but in a private remark a distinguished member in local government said to me, "I never believed that the Government would give us this degree of freedom within the overall bracket." There will be total freedom for authorities, between the programmes, to determine their own priorities. This is a major step forward for people who believe in the freedom of local authorities to take their own decisions.

All capital receipts, with the exception of housing, are exempted from this control. This will encourage local authorities that wish to make new capital investment to recycle their funds to make the best use of resources available to them. Under the Labour Government, when council houses were sold, 100 per cent. of the credit was subsumed by the Treasury. Now, for the first time, 50 per cent. of council house sales will be available to assist capital expenditure for new projects by local authorities. There is a direct interest for local authorities to promote council house sales in their area because it will help to supplement their capital resources.

Mr. Alton

I wonder whether the Minister will clarify one point. It seems to me that this new freedom is in some ways illusory. The right hon. Gentleman says that the virement will exist between one block and another. It will surely still be accountable to the individual spending Ministry. It will still be for the Ministry to give approval for the schemes that will be embarked upon. This new freedom will not be a very good freedom if local authorities have not the money to spend that they possessed previously.

Mr. King

Whether we have this system or any other system, we cannot use resources that we have not got. We have to start with the amount of resources available. The hon. Gentleman is wrong. It is a single block. There is what is called a 100 per cent. virement. Spending Departments and service Departments will be interested in the spending patterns of different authorities. Our expectation is that, by and large, this will average out across authorities. In one authority, a school project may be held up by planning problems or access, and it may proceed with an old people's home, which it decides at that moment has higher priority. In another authority, that situation may be reversed. We shall monitor the situation to see what happens.

I know that the hon. Gentleman has some experience of local government. He cannot believe that this is what the Government intend to do. This is precisely what is in the Bill. It is the freedom that we intend to give local government. I warmly commend it to the House.

Mr. Oakes

Again the Minister has quoted the anonymous gentleman who says that he cannot believe that the Government would give local authorities so much power. Many other people do not believe it. The Conservative-controlled Merseyside county council and the Conservative-controlled Cheshire county council do not believe it. They have written to me on the matter.

I take the Minister's point about virement. If proposals are made by a local authority to build a school, I cannot believe that the Department of Education and Science will sit quietly by and allow the local authority to spend the money on a road. I can imagine the chaos that would be caused.

I note what the Minister has said about virement. Another more important series of amendments is to be discussed on which it might be more appropriate to divide the House. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Fox

I beg to move amendment No. 138, in page 47, line 19, leave out subsection (2) and insert— '(2) The Minister of Transport may specify an amount of prescribed expenditure in relation to any authority mentioned in section 58(1) above but it shall not be his duty to do so except in relation to a county council.'. County councils are highway authorities and will, therefore, normally require expenditure allocations for transport. Most district councils and London boroughs, however, do not incur transport expenditure, so transport allocations will not normally be needed for them. The amendment makes it clear that, whereas the Minister of Transport has a duty to make expenditure allocations to county councils, he has the power to give an allocation to any authority to whom part VIII of the Bill applies.

Other Government amendments have the effect of removing the Greater London Council from the scope of part VIII of the Bill. The Minister of Transport will have neither the duty nor the power to make any allocation to the GLC whose capital expenditure on transport will continue to be controlled by the annual Money Bill procedure.

Amendment agreed to.

Mr. Oakes

I beg to move amendment No. 139, in page 47, line 36, leave out from 'receipts' to end of line 37.

Mr. Deputy Speaker

With this we may discuss the following amendments:

No. 140, in page 47, line 37, at end insert 'and (e) an amount equal to the product of a rate of 2p in the £ for their area for the years.'.

No. 141, in page 47, line 37, at end insert—

  1. '(e) an amount for the year equal to the product of a rate of 2p in the £ for their area; and
  2. 390
  3. (f) any amount applied from funds established under S.29 of the Local Government (Miscellaneous Provisions) Act 1976; and
  4. (g) any amount received by way of grant or loan from the EIB, ERDF; and
  5. (h) any amount applied to capital purposes from the proceeds of local lotteries.'.

Mr. Oakes

The hon. Member for Caernarvon (Mr. Wigley) will agree that his amendment No. 140 does not go into as much detail as amendment No. 141.

We touched on this problem when discussing the previous amendment. It involves the inability of local authorities under part VIII to spend money from revenue on capital projects. If they spend such money, it is taken off the capital spending for the area.

In my day in local authorities—and the underlying economic situation is no different today—it was considered prudent for a local authority to spend out of revenue rather than borrow capital. I remember with pride that in the old authority of Widnes there was a bus department which was almost unique in that it made a good profit. We were told by Mr. Green, the then boorugh treasurer, who was a prudent man and a Lancashire man, that it had succeeded so well because we saved up to buy buses ourselves out of revenue, not out of capital. We did not need to borrow to buy buses. Many other local authorities in their wisdom and at their discretion could and should afford to pay for some projects out of revenue.

I can understand the Minister and his colleagues, with their constant fear of high public expenditure, thinking that some local authorities might go mad in such a situation and fund enormously expensive capital projects entirely on the backs of the ratepayers for a current year. That does not fit in with what the Government say about local authority freedom and allowing local authorities their head on this matter. Nevertheless, they may fear that.

This amendment is supremely modest It says that a local authority shall be allowed to spend an amount equal to the product of a rate of 2p in the pound for their area. That is a 2p rate to spend on a capital project. I doubt whether any amendment could be more modest. No authority will be able to go wild on that kind of expenditure of ratepayers' money.

A number of other items that should be taken into account include section 29 moneys under the Local Government Act and the moneys spent on capital projects from the proceeds of local lotteries. I do not see the right hon. Member for Crosby (Sir G. Page) in the Chamber, but I remember him introducing his Private Member's Bill. One of the clearest points in support of his Bill was that capital could be raised for many much needed items—on which local authorities could not otherwise spend capital—by using the local lottery. Moneys raised from a local lottery for capital purposes should be excluded from the provisions of part VIII of the Bill.

What I, the hon. Member for Caernarvon and the three united local authority associations are asking for is modest and entirely in accordance with the much proclaimed and much vaunted statement by the Government that they will allow local authorities a far greater degree of freedom in the conduct of their affairs. All right, let us test the Government. This is the most modest request for a degree of freedom for local authorities. We ask that a 2p rate should be spent on capital projects. That is all we ask. Surely the Government who believe so much and proclaim that belief in local authority freedom can agree with us.

Mr. Wigley

This amendment leads on from the last one that we discussed, since it relates to the flexibility of local authorities. As I said in the previous debate, the sort of projects that local authorities have funded through their revenue accounts, by putting 1p or 2p on the rates, have been amongst the most popular projects undertaken by local authorities.

In my area there is a scheme for a sports and leisure centre and swimming pool. It is to be funded by this method. That has been done after years of failure to provide an elementary service in the community. My area is a tourist centre and there is no swimming pool in the whole of my constituency. That is a reflection on standards. We have reached the point where councillors are saying that because of public pressures they are willing to put an incremental 1p or 2p on the rates in order to provide that facility. That is one of the justifications for our view. The other is the provision of flexibility. When things go wrong on capital projects, whether as a result of timing or cost or whatever, there should be flexibility so that an authority may take money from the revenue account.

I ask the Minister a specific question. Am I right, in interpreting the Bill in relation to community councils in Wales, in thinking that they will be able to put 1p or 2p on the rates for capital purposes? If all the community councils within a district area are able to do that, will district councils and county councils be able to do the same so that we can overcome this problem in Wales? Will the Minister confirm that?

Mr. Eldon Griffiths

The amendment moved by the right hon. Member for Widnes (Mr. Oakes) is a wrecking amendment. It is not the widow's mite; it is the housemaid's baby. The right hon. Member knows perfectly well that what he is trying to do here is to escape control. Whether he likes it or not, that is the spirit Of the Bill, and he must recognise that his amendment to add 2p in the pound is simply a method of escape which contradicts the whole purpose of the clause.

10.30 pm
Mr. King

The comments of my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) put the argument against the amendment very clearly indeed.

My answer to the hon. Member for Caernarvon (Mr. Wigley) is that parish councils and community councils are not covered; they are outside these capital allocation provisions.

The words that amendment No. 139 seeks to remove are an obvious safeguard that the Government must have. We have to protect the totality of capital expenditure against the coincidence in any one year of a massive amount of capital receipts from sales within local authorities. The value of those receipts will not be lost. Some of them may merely have to be phased into further years. It is obviously an essential safeguard. I doubt whether it will be necessary to use it, but if there were to be substantial capital sales which endangered the totality of the cash limit on capital expenditure it would have to be invoked.

Amendment No. 141 refers to a 2p rate and to investment by the EIB, the ERDF, or under section 29 of the Local Government (Miscellaneous Provisions) Act 1976. As my hon. Friend the Member for Bury St. Edmunds indicated, these are all ways to try to stretch or to elasticise the cash limit. That is not possible.

The right hon. Member for Widnes (Mr. Oakes) suggested that this is a test of freedom. We give total freedom within our proposal. We do not mind if the funds are raised by a 2p rate. We do not mind how the funds are raised. No longer will there be the constraints under the borrowing powers within the totality of the allocation. It is a matter for the authority to decide how it raises the funds, whether it is by borrowing, through revenue or from capital receipts.

The right hon. Gentleman chided me just now about our belief in freedom. It was clear from the earlier debate that he still does not really believe that we shall give a 100 per cent. virement. He made clear that he could not conceive of circumstances in which such a thing would be possible. I can tell the right hon. Gentleman that it will happen, and it is for that reason that we have put a clear proposition to the House. We need to preserve the total of capital expenditure within the allocations, and we can-

not allow these extra deviations on top of the very significant concessions that we have already made.

I therefore hope that the House, in recognising the merits of our proposals, will reject these amendments.

Mr. Oakes

I did not say that I do not believe that the Government intend to do what they proclaim. My point is that I cannot believe that it can possibly work. I cited an example relating to schools and roads. If this virement starts to operate, we shall soon see the chaos and the cat fights that will result between different Departments.

It was suggested that this is a wrecking amendment to allow a local authority to use these tuppences and bits and pieces of expenditure on capital. When we consider the vast amounts of capital moneys spent by local authorities, it is absurd to suggest that it is a wrecking amendment.

What we see is an example of the tight screw of control that the central Government are imposing on local authorities in this country by means of the Bill. For that reason, I hope that my hon. Friends will support me in the Lobby.

Question put, That the amendment be made:—

The House divided: Ayes 236. Noes 292.

Division No. 394] AYES [10.34 pm
Abse, Leo Cook, Robin F. Fletcher, L. R. (Ilkeston)
Adams, Allen Cowans, Harry Fletcher, Ted (Darlington)
Allaun, Frank Craigen, J. M. (Glasgow, Maryhill) Foot, Rt Hon Michael
Alton, David Crowther, J S. Ford, Ben
Anderson, Donald Cryer, Bob Forrester, John
Archer, Rt Hon Peter Cunliffe, Lawrence Foster, Derek
Ashton, Joe Cunningham, George (Islington S) Fraser, John (Lambeth, Norwood)
Atkinson, Norman (H'gey, Tott'ham) Dalyell, Tam Freeson, Rt Hon Reginald
Bagler, Gordon A. T. Davies, Ifor (Gower) Garrett, John (Norwich S)
Barnett, Guy (Greenwich) Davis, Clinton, (Hackney Central) Garrett, W. E. (Wallsend)
Barnett, Rt Hon Joel (Heywood) Davis, Terry (B'rm'ham, Stechford) George, Bruce
Berth, A. J. Deakins, Eric Gilbert, Rt Hon Dr John
Bennett, Andrew (Stockport N) Dean, Joseph (Leeds West) Ginsburg, David
Bidwell, Sydney Dempsey, James Gourlay, Harry
Boothroyd, Miss Betty Dewar, Donald Graham, Ted
Bray, Dr Jeremy Dixon, Donald Grant, John (Islington C)
Brown, Hugh D. (Provan) Dobson, Frank Hamilton, James (Bothwell)
Brown, Robert C. (Newcastle W) Dormand, Jack Hamilton, W. W. (Central Fife)
Brown, Ronald W. (Hackney S) Douglas, Dick Harrison, Rt Hon Walter
Brown, Ron (Edinburgh, Leith) Douglas-Mann, Bruce Hart, Rt Hon Dame Judith
Buchan, Norman Dubs, Alfred Hattersley, Rt Hon Roy
Callaghan, Rt Hon J. (Cardiff SE) Duffy, A. E. P. Haynes, Frank
Callaghan, Jim (Middleton & P) Dunnett, Jack Healey, Rt Hon Denis
Campbell, Ian Dunwoody, Mrs Gwyneth Heffer, Eric S.
Campbell-Savours, Dale Eastham, Ken Hogg, Norman (E Dunbartonshire)
Canavan, Dennis Edwards, Robert (Wolv SE) Holland, Stuart (L'beth, Vauxhall)
Carmichael, Neil Ellis, Raymond (NE Derbyshire) Home Robertson, John
Carter-Jones, Lewis Ellis, Tom (Wrexham) Homewood, William
Cartwright, John English, Michael Hooley, Frank
Clark, Dr David (South Shields) Ennals, Rt Hon. David Horam, John
Cocks, Rt Hon Michael (Bristol S) Evans, Ioan (Aberdare) Howells, Geraint
Cohen, Stanley Evans, John (Newton) Hudson Davies, Gwilym Ednyfed
Coleman, Donald Faulds, Andrew Hughes, Mark (Durham)
Concannon, Rt Hon J. D. Field, Frank Hughes, Robert (Aberdeen North)
Conlan, Bernard Flannery, Martin John, Brynmor
Johnson, Walter (Derby South) Morton, George Snape, Peter
Jones, Rt Hon Alec (Rhondda) Moyle, Rt Hon Roland Soley, Clive
Jones, Barry (East Flint) Newens, Stanley Spearing, Nigel
Jones, Dan (Burnley) Oakes, Rt Hon Gordon Spriggs, Leslie
Kaufman, Rt Hon Gerald Ogden, Eric Stallard, A. W.
Kerr, Russell O'Halloran, Michael Steel, Rt Hon David
Kilfedder, James A. O'Neill, Martin Stoddart, David
Kilroy-Silk, Robert Orme, Rt Hon Stanley Stott, Roger
Kinnock, Neil Paisley, Rev Ian Strang, Gavin
Lambie, David Palmer, Arthur Straw, Jack
Lamborn, Harry Park, George Summerskill, Hon Dr Shirley
Leadbitter, Ted Parker, John Taylor, Mrs Ann (Bolton West)
Leighton, Ronald Parry, Robert Thomas, Jeffrey (Abertillery)
Lewis, Arthur (Newham North West) Pavitt, Laurie Thomas, Mike (Newcastle East)
Lewis, Ron (Carlisle) Pendry, Tom Thomas, Dr Roger (Carmarthen)
Litherland, Robert Penhaligon, David Thorne, Stan (Preston South)
Lofthouse, Geoffrey Powell, Raymond (Ogmore) Tilley, John
Lyon, Alexander (York) Price, Christopher (Lewisham West) Torney, Tom
Lyons, Edward (Bradford West) Race, Reg Urwin, Rt Hon Tom
McElhone, Frank Radice, Giles Varley, Rt Hon Eric G.
McGuire, Michael (Ince) Rees, Rt Hon Merlyn (Leeds South) Wainwright, Edwin (Dearne Valley)
McKay, Allen (Penistone) Roberts, Allan (Bootle) Walker, Rt Hon Harold (Doncaster)
McKelvey, William Roberts, Ernest (Hackney North) Watkins, David
MacKenzie, Rt Hon Gregor Roberts, Gwilym (Cannock) Weetch, Ken
Maclennan, Robert Robertson, George Wellbeloved, James
McNally, Thomas Robinson, Geoffrey (Coventry NW) White, James (Glasgow, Pollok)
McNamara, Kevin Robinson, Peter (Belfast East) Whitehead, Phillip
McQuade, John Rodgers, Rt Hon William Whitlock, William
McWilliam, John Rooker, J. W. Wigley, Dafydd
Magee, Bryan Roper, John Willey, Rt Hon Frederick
Marks, Kenneth Ross, Ernest (Dundee West) Williams, Rt Hon Alan (Swansea W)
Marshall, David (Gl'sgow.Shettles'n) Ross, Stephen (Isle of Wight) Williams, Sir Thomas (Warrington)
Marshall, Jim (Leicester South) Rowlands, Ted Wilson, Gordon (Dundee East)
Martin, Michael (Gl'gow, Springb'rn) Ryman, John Wilson, William (Coventry SE)
Maxton, John Sandelson, Neville Winnick, David
Maynard, Miss Joan Sever, John Woodall, Alec
Mellish, Rt Hon Robert Sheldon, Rt Hon Robert (A'ton-u-L) Woolmer, Kenneth
Mikardo, Ian Shore, Rt Hon Peter (Step and Pop) Wrigglesworth, Ian
Millan, Rt Hon Bruce Short, Mrs Renée Wright, Sheila
Miller, Dr M. S. (East Kilbride) Silkin, Rt Hon John (Deptford) Young, David (Bolton East)
Mitchell, Austin (Grimsby) Silkin, Rt Hon S. C. (Dulwich)
Mitchell, R. C. (Soton, Itchen) Silverman, Julius TELLERS FOR THE AYES:
Morris, Rt Hon Alfred (Wythenshawe) Skinner, Dennis Mr. James Tinn and Mr. Hugh McCartney
Morris, Rt Hon Charles (Openshaw) Smith, Rt Hon J (North Lanarkshire)
Morris, Rt Hon John (Aberavon)
Adley, Robert Buchanan-Smith, Hon Alick Eyre, Reginald
Aitken, Jonathan Buck, Antony Fairbairn, Nicholas
Alexander, Richard Budgen, Nick Faith, Mrs. Sheila
Allson, Michael Bulmer, Edmond Farr, John
Amery, Rt Hon Julian Burden, F. A. Fell, Anthony
Ancram, Michael Butcher, John Fenner, Mrs Peggy
Arnold, Tom Butler, Hon Adam Finsberg, Geoffrey
Atkins, Robert (Preston North) Cadbury, Jocelyn Fisher, Sir Nigel
Baker, Nicholas (North Dorset) Carlisle, John (Luton West) Fletcher, Alexander (Edinburgh N)
Banks, Robert Chalker, Mrs. Lynda Fletcher-Cooke, Charles
Beaumont-Dark, Anthony Channon, Paul Fookes, Miss Janet
Bell, Sir Ronald Churchill, W. S. Forman, Nigel
Bendall, Vivian Clark, Hon Alan (Plymouth, Sutton) Fowler, Rt Hon Norman
Benyon, Thomas (Abingdon) Clark, Sir William (Croydon South) Fox, Marcus
Benyon, W. (Buckingham) Clarke, Kenneth (Rushcliffe) Fraser, Rt Hon. H. (Stafford & St)
Best, Keith Clegg, Sir Walter Fraser, Peter (South Angus)
Bevan, David Gilroy Cockeram, Eric Galbraith, Hon T. G. D.
Biffen, Rt Hon John Colvin, Michael Gardiner, George (Relgate)
Biggs-Davison, John Cope, John Gardner, Edward (South Fylde)
Blackburn, John Corrie, John Garel-Jones, Tristan
Blaker, Peter Costain, A. P. Glyn, Dr. Alan
Body, Richard Cranborne, Viscount Goodhart, Philip
Bonsor, Sir Nicholas Critchley, Julian Goodhew, Victor
Boscawen, Hon Robert Dean, Paul (North Somerset) Goodlad, Alastair
Bottomley, Peter (Woolwich West) Dickens, Geoffrey Gorst, John
Bowden, Andrew Dorrell, Stephen Gow, Ian
Boyson, Dr Rhodes Douglas-Hamilton, Lord James Grant, Anthony (Harrow C)
Braine, Sir Bernard Dover, Denshore Gray, Hamish
Bright, Graham Dunlop, John Greenway, Harry
Brinton, Tim Dunn, Robert (Dartford) Grieve, Percy
Brittan, Leon Durant, Tony Griffiths, Eldon (Bury St. Edmonds)
Brooke, Hon Peter Dykes, Hugh Griffiths, Peter (Portsmouth N)
Brotherton, Michael Eden, Rt Hon Sir John Grist, Ian
Brown, Michael (Brigg & Sc'thorpe) Edwards, Rt Hon N. (Pembroke) Gummer, John Selwyn
Browne, John (Winchester) Eggar, Timothy Hamilton, Hon Archie (Eps'm&Ew'll)
Bruce-Gardyne, John Elliott, Sir William Hamilton, Michael (Salisbury)
Bryan. Sir Paul Emery, Peter Hampson, Dr Keith
Hannam, John Mawhinney, Dr Brian Shepherd, Colin (Hereford)
Haselhurst, Alan Maxwell-Hyslop, Robin Shepherd, Richard (Aldridge-Br'hills)
Havers, Rt Hon Sir Michael Mayhew, Patrick Shersby, Michael
Hawkins, Paul Mellor, David Silvester, Fred
Hawksley, Warren Meyer, Sir Anthony Sims, Roger
Hayhoe, Barney Miller, Hal (Bromsgrove & Redditch) Skeet, T H. H.
Heddle, John Mills, Iain (Meriden) Smith, Dudley (War. and Leam'ton)
Henderson, Barry Mills, Peter (West Devon) Speller, Tony
Heseltine, Rt Hon Michael Miscampbell, Norman Spence, John
Hicks, Robert Mitchell, David (Basingstoke) Spicer, Michael (S Worcestershire)
Higgins, Rt Hon Terence L. Moate, Roger Sproat, Iain
Hill, James Monro, Hector Squire, Robin
Hogg, Hon Douglas (Grantham) Montgomery, Fergus Stanbrook, Ivor
Holland, Philip (Carlton) Morris, Michael (Northampton, Sth) Stanley, John
Hooson, Tom Morrison, Hon Charles (Devizes) Steen, Anthony
Hordern, Peter Morrison, Hon Peter (City of Chester) Stevens, Martin
Howell, Rt Hon David (Guildford) Murphy, Christopher Stewart, Ian (Hitchin)
Howell, Ralph (North Norfolk) Myles, David Stewart, John (East Renfrewshire)
Hunt, David (Wirral) Neale, Gerrard Stokes, John
Hunt, John (Ravensbourne) Needham, Richard Stradling Thomas, J.
Irving, Charles (Cheltenham) Nelson, Anthony Tapsell, Peter
Jenkin, Rt Hon Patrick Neubert, Michael Taylor, Robert (Croydon NW)
Jessel, Toby Newton, Tony Taylor, Teddy (Southend East)
Johnson Smith, Geoffrey Onslow, Cranley Tebbit, Norman
Jopling, Rt Hon Michael Oppenheim, Rt Hon Mrs Sally Temple-Morris, Peter
Joseph, Rt Hon Sir Keith Osborn, John Thomas, Rt Hon Peter (Hendon S)
Kimball, Marcus Page, John (Harrow, West) Thompson, Donald
King, Rt Hon Tom Page, Rt Hon Sir R. Graham Thorne, Neil (Ilford South)
Kitson, Sir Timothy Page, Richard (SW Hertfordshire) Thornton, Malcolm
Knight, Mrs Jill Parkinson, Cecil Townend, John (Bridlington)
Knox, David Parris, Matthew Townsend, Cyril D. (Bexleyheath)
Lamont, Norman Patten, Christopher (Bath) Trippier, David
Lang, Ian Patten, John (Oxford) Trotter, Neville
Langford-Holt, Sir John Pattie, Geoffrey Vaughan, Dr. Gerard
Latham, Michael Pawsey, James Viggers, Peter
Lawrence, Ivan Percival, Sir Ian Waddington, David
Lawson, Nigel Peyton, Rt Hon John Wakeham. John
Lee, John Pink, R. Bonner Waldegrave, Hon William
Lennox-Boyd, Hon Mark Pollock, Alexander Walker, Bill (Perth & E Perthshire)
Lewis, Kenneth (Rutland) Porter, George Walker-Smith, Rt Hon Sir Derek
Lloyd, Ian (Havant & Waterloo) Prentice, Rt Hon Reg Wall, Patrick
Lloyd, Peter (Fareham) Price, David (Eastleigh) Walters, Dennis
Loveridge, John Prior, Rt Hon James Ward, John
Luce, Richard Proctor, K. Harvey Warren, Kenneth
McCrindle, Robert Ralson, Timothy Watson, John
Macfarlane, Neil Rathbone, Tim Wells, John (Maidstone)
MacGregor, John Rees, Peter (Dover and Deal) Wells, Bowen (Hert'rd & Stevn'age)
Mackay, John (Argyll) Rees-Davies, W. R. Wheeler, John
Macmillan, Rt Hon M. (Farnham) Renton, Tim Whitelaw, Rt Hon William
McNair-Wilson, Michael (Newbury) Rhodes James, Robert Whitney, Raymond
McNair-Wilson, Patrick (New Forest) Ridley, Hon Nicholas Wickenden, Keith
McQuarrie, Albert Ridsdale, Julian Wilkinson, John
Madel, David Rifkind, Malcolm Williams, Delwyn (Montgomery)
Major, John Roberts, Wyn (Conway) Winterton, Nicholas
Marland, Paul Rossl, Hugh Wolfson, Mark
Marlow, Tony Rost, Peter Young, Sir George (Acton)
Marshall, Michael (Arundel) Sainsbury, Hon Timothy Younger, Rt Hon George
Marten, Neil (Banbury) St. John-Stevas, Rt Hon Norman
Mates, Michael Scott, Nicholas TELLERS FOR THE NOES:
Mather, Carol Shaw, Giles (Pudsey) Mr. Spencer Le Marchant and Mr. Anthony Berry
Maude, Rt Hon Angus Shaw, Michael (Scarborough)
Mawby, Ray Shelton, William (Streatham)

Question accordingly negatived.

10.45 pm
Mr. Fox

I beg to move amendment No. 142, in page 47, line 39, at end add— '(3A) For the purpose of determining whether a payment was authorised under subsection (3) above the amount of the net capital receipts of the authority who made the payment shall be ascertained on 31st March in the year in which the payment was made. (3B) In this section "net capital receipts", in relation to any year, means the receipts of an authority which by virtue of section 62(1) below are capital receipts for the purposes of this Part of this Act, as reduced by any payment in a previous year which was authorised by subsection (2) (d) above.'.

Mr. Deputy Speaker

With this we may take the following amendents:

Government amendment Nos. 143 and 144.

Amendment No. 145, in clause 62, page 49, line 6, leave out subsection (4).

Government amendment No. 146.

Amendment No. 145, in clause 62, page 49, line 22, at end insert— '(5) For the purposes of this Section, there is a disposal of an interest in or right over property mentioned in subsection (2) above when an authority ceases to be entitled under the contract concerned to the immediate or future use of the property.'.

Mr. Fox

Amendment No. 142 is a technical amendment that clarifies the treatment of payments under clause 59 (3)(d)—payments that local authorities are entitled to make by virtue of their capital receipts. The amendent provides that an authority will be free to make payments in anticipation of capital receipts that will arise before the end of the financial year in which the payments are made. An authority will be free to use capital receipts in any year to cover payments in excess of its allocation for that year. Once it has done so, the capital receipts concerned will not be available to cover payments over and above the allocation made for a future year.

With regard to amendment No. 143, on the date when this part of the Bill comes into effect—the commencement date, which will probably be 1 April 1981—each local authority will have capital receipts that will have arisen before that date. Some of those receipts will have been spent on paying off debts or on financing capital expenditure. Others will not have been spent but kept in reserve. We intend that authorities should be able to spend, over and above their allocation, an amount equal to whatever capital receipts are left unspent by the commencement date. In addition to that amount, authorities will be free to supplement their allocations each year by an amount equal to capital receipts arising after the commencement date, irrespective of whether the receipts have been spent.

Other Government amendments provide that for the purpose of this part of the Bill an authority's capital receipts will be treated as reduced to the extent that they will be used to cover expenditure in excess of allocations in previous years.

With regard to amendment No. 144, under clause 67, where an authority acquires an interest in land or goods without becoming the outright owner of the capital asset involved, an amount equal to capital value of the asset will be charged against its expenditure allocation. This amendment fulfils the promise that we made in Committee to provide that where an authority acquires such an interest and later disposes of its right to occupy or use the land or goods concerned the authority will effectively be credited with a capital receipt when it disposes of its interest. The effect of the amendment will be to remove any obstacle that the Bill might have put in the way of an authority wishing to take on the head lease of an industrial estate or to sublet individual factory units to private users.

On amendment No. 145, under clause 59 the Minister is empowered to prescribe what proportion of its net capital receipts an authority may use to supplement its approved expenditure allocation. It is envisaged that authorities will generally be free to supplement their allocations by the use of all their capital receipts that remain unspent. The only exception will be that 50 per cent. of certain housing capital receipts may be used to supplement an authority's allocation. This is because of the scale of the receipts likely to be involved, especially in respect of the disposal of council houses.

So far as national public expenditure plans are concerned, the remaining 50 per cent. will be used to increase housing allocations to local authorities generally, since the areas with the greatest housing need will not necessarily be those which have the biggest housing receipts. So far as the individual authority is concerned, the remaining 50 per cent. will as now, be available to fund expenditure within approved ceilings.

In the absence of a flexible power to control the extent to which authorities will be able to supplement their expenditure allocations by the use of capital receipts, the Government's only means of preventing an overspend against the national cash limit could be to reduce basic allocations to allow for the use of capital receipts. This could be unfair on authorities which, perhaps through no fault of their own, have the least accumulated capital receipts. For this reason, we would prefer to keep the power to vary the proportion of capital receipts which can be used to supplement basic expenditure allocations.

As regards amendment No. 146, in response to an amendment proposed in Committee we agreed that certain receipts not arising from the disposal of assets or the repayment of grants and advances should be treated as capital receipts for the purposes of this part of the Bill. The amendment put forward in Committee, and afterwards withdrawn, concerned receipts arising from any agreement made under section 52 of the Town and Country Planning Act 1971. I do not need to tell the House what a section 52 agreement is. However, receipts under section 52 are not the only other payments which might be treated as capital receipts for the purposes of capital expenditure control. Compensation payments by contractors and insurance payments, for example, should have similar treatment. This amendment will enable the Secretary of State to make regulations to provide that all these receipts should be treated as capital receipts for the purposes of this part of the Bill.

Amendment No. 147 purports to provide that where an authority disposes of a leasehold interest in land it will be treated as gaining a capital receipt equal to the capital value of the land. We are fully in sympathy with the aims of the amendment. In fact, we ourselves have tabled Government amendment No. 144, which will achieve the same objective as this amendment. Amendment No. 147 is technically defective. Therefore, I should be grateful if Opposition Members would agree not to move it, in favour of amendment No. 144.

Mr. Eldon Griffiths

My hon. Friend the Under-Secretary has struck exactly the right balance in allowing authorities to have 50 per cent. of their capital receipts, notably from the sale of council houses. It is an incentive and an encouragement for them to sell those houses to the tenants who want them. Additionally, that money can and will be used in all sensible authorities to provide those one-bedroom and two-bedroom homes which are so badly needed by the elderly, and which, as elderly people move into them, will free under-occupied three-bedroom council houses to help those who are still on the waiting list.

Last Saturday I had the pleasure to hand over the deeds for the 150th council house sold in the small overspill town of Haverhill in my constituency, which is ne of some 600 that we have successfully sold in St. Edmundsbury district council area. The district council has netted about £6 million of capital assets. I am confident that this relatively small rural district will raise that figure to about 1,000 houses and £10 million worth of assets before long. The council will be able to enjoy 50 per cent.—half the total sum—and will be able to utilise it at its discretion in the wide field of housing.

That demonstrates the good sense of selling council houses and that my right hon. Friend the Secretary of State has struck the right balance. He has allowed councils to have 50 per cent. of those assets, while using the other 50 per cent. for the balance of aggregate expenditure of other local authorities. I congratulate him on the measure.

Amendment agreed to.

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