HC Deb 20 May 1980 vol 985 cc392-403
Mr. Stanley

I beg to move amendment No. 78, in page 82, line 29, at end add— ' (2) Any authority which keeps a Housing Revenue Account may from time to time carry to the credit of its general rate fund (or, as the case may be, the general fund or the general rate) the whole or part of any balance in its Housing Revenue Account.'. In our consultation paper which we issued on 25 October 1979 we made public our intention to end the so-called no-profit rule under section 1(3) of the Housing Rents and Subsidies Act 1975. We also made it clear that we would bring forward separate proposals to deal with the resulting credit balances. The Bill as introduced incorporated the abolition of the no-profit rule and this has received an overwhelmingly favourable response from local authorities.

On 2 April, we issued a consultative paper on the use of credit balances proposing that this should be wholly at the discretion of local authorities. Both the AMA and the ADC have welcomed our proposal. However, the ADC has asked that credit balances should be allowed to augment the HIP allocations of local authorities.

Amendment No. 78 gives effect to our proposal. When credit balances rise local authorities will be able to decide whether any part of that balance should be transferred to the general rate fund. The entire balance can, of course, be applied for housing purposes. Should authorities wish to apply the balance to maintenance and repairs there is no limitation on their doing so, or on the amount of balance that can be spent in that way.

The provisions of clause 124, which enable local authorities to operate a housing repairs account and to transfer funds to it from a housing revenue account, should facilitate the application of balances to repairs. Should they wish to apply balances to finance capital spending, whether on new building or improvements, they will be able to do so, as now, within their overall HIP allocation.

We have considered with care whether authorities' HIP allocation should be increased by the amount of any credit balance arising on their housing revenue account. Our conclusion is that such a step would be inequitable, because the total HIP allocation is set for the country as a whole. Increasing individual allocations within that total for some authorities can only reduce them for others. The presumption must be that the authorities with the greatest claim on available expenditure are probably those least likely to be able to increase their allocations by creating credit balances. Therefore, I cannot agree to the proposal made by the ADC, since it would work to the disadvantage of the stress area authorities.

We considered the possibility of the Exchequer clawing back a proportion of any credit balance, as was done in the 1972 Act We decided against that. That was welcomed by the local authorities. Our conclusion is that local authorities should be responsible both for the creation and the use of any credit balances. The result will be to mirror the arrangements under which authorities are, and will remain, entirely free to make such rate fund contributions to the housing revenue account as they choose. Our proposals will enable them to transfer in the reverse direction. In both cases they will be accountable for their decisions to their electorates.

We consider that this is a proper extension of local authority responsibility. It has been warmly welcomed by the authorities.

Mr. Kaufman

If the hon. Member for Folkestone and Hythe (Mr. Costain) had been Chairman of our Standing Committee we should have been deprived of the presence of my hon. Friend the Member for West Bromwich, West (Miss Booth-royd) and the hon. Member for Plymouth, Drake (Miss Fookes), but he would have ensured that the only thing wrong with the Bill was the spelling mistakes. I only wish that that was all that was wrong with the Bill. The Minister is being disingenuous in a way that we do not expect of him if he really believes that it is a non-controversial and innocuous proposal. The proposal is deeply objectionable and we shall vote against it.

The proposal ends the no-profits rule in the Housing Rents and Subsidies Act 1975, under which local authorities are prevented from making a profit from rents. Under the Bill, local authorities will be able to make a profit out of rent. Since the Government's policy is to force up council rents, the prospect of profits becomes great. In their advice to local authorities the Government say that they wish average council house rents this year to rise by £1.80—a 28 per cent, increase on the average council house rent. The implication of the subsidy provision in the Bill and of the public expenditure White Paper cuts in housing expenditure is not only that council house building will sink almost to nil in many areas, but that rents will be forced up to a very high level.

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The Government are providing for and permitting that by removing the no-profit rule in the Bill. That is bad enough, and we find it both objectionable and odious. But now we have an addendum—namely, what the Government will allow to be done with the profits that they are inducing, and in many cases requiring, local authorities to make. The Government are saying to local authorities "Force your council house tenants to pay high rents. Although your tenants are poorer than the generality of your ratepayers, although the average household income of council tenants is only 76 per cent. of that of other households in the community, and although your council house tenants are poorer than the rest of the community, the profits that you are making by forcing them to pay unnecessarily high rents shall be used to relieve and to reduce the rate burden on the better-off members of the community."

That is a peculiar reverse action of the Marxist slogan From each according to his abilities. People will be taxed by a Government increase beyond their ability to pay. The proceeds of that tax will be used to relieve taxation on the more affluent ratepayers.

Council tenants in the poorer inner areas of Manchester will be made to pay high rents, which will be used to relieve the rates paid by the better-off living in the outer areas of Manchester. That will happen in every great city. That is why we find the proposal objectionable. It is a reversion to something in the Housing Finance Act 1972 that we also found objectionable and repealed when we returned to office.

Because we regard it as morally wrong that the poor should be taxed to help the rich, we ask the House to vote against the amendment.

Mr. Gummer

I rise to speak on this matter because, once again, we are seeing a monochrome attitude by Opposition Members—as though the whole country were exactly the same as the constituency of the right hon. Member for Manchester, Ardwick (Mr. Kaufman). Many of us represent constituencies where the problems are very different from those that he has outlined. Many of the poorest people in my constituency live, not in council houses, but in private properties, often in the depths of the country, which they bought cheaply many years ago. As they have become older they have been less and less able to maintain them, because the rate burden has increased year by year.

In local authorities, such as the Mid-Suffolk district council or the Suffolk coastal district council, there is a proper rent rebate system, which enables the local authority to help the poorest council tenants in the amount of rent that they pay. It is more difficult for them to do something similar with the rates in general.

We have already had one terrible blow to our area this evening. The right hon. Member for Ardwick made the most disgraceful statement that I have heard in the House for a long time. Once again, the right hon. Gentleman is talking simply because he finds it difficult to listen to the truth. We know that the numbers of homeless will rise again because of what has been said in the debate. The right hon. Gentleman suggested that we should not agree to the amendment, but it will provide one of the small ways in which a local authority will have more control over how best to deal with its local problems.

That is the trouble with the whole of the debates in the House on this sort of subject. We have begun to believe that Westminster alone understands every scintilla of what happens in the country as a whole.

We are supposed to be not only omnipresent, but omniscient. Evidently we are able to draw up the most minute details and to tell every council in the country that to make a profit on its housing revenue account is totally evil in all circumstances. I am sure that many hon. Members on both sides of the House in their heart of hearts believe that local authorities often make better decisions on how best to arrange their finances in the interests of their areas than we can possibly make here.

Why are we so afraid of local democracy? The answer to the right hon. Member for Ardwick is simple. If the Manchester councils behave in the way that he suggested, they must have their political complexion or membership changed at the elections. If they do not behave in the way that he suggested, no doubt whoever is making those decisions will get brownie points with the electorate. To suggest that we in this House have to guard every section of the community, every kind of constituency, against the decisions of locally elected councils is very worrying.

I hope that the House will support this proposal. It will mean that, for example, my local authority will have the kind of flexibility which it has sought for a long time and without which it will not be able to aim at the people most in need the subsidy and help that it gets. To talk of the public as though they can be categorised easily into council and non-council tenants—that council tenants are poor and that non-council tenants are rich—is not only nonsense but something that the right hon. Member for Ardwick can prove to himself to be wrong any time he cares to take a walk outside this House. The fact is that the local authority is more likely to make sensible decisions within the local context than this House is ever likely to make, particularly if it takes the advice of the right hon. Gentleman.

Mr. Gwilym Roberts (Cannock)

I strongly support my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) in objecting to the amendment. I do not think that he put the argument strongly enough. Irrespective of what was said by the hon. Member for Eye (Mr. Gummer), statistics prove that council tenants are, on the whole, the poorer section of the community.

My right hon. Friend under-estimated the statistics when he said that the average income of council tenants was about 76 per cent. of that of the community as a whole. I believe that the figure is slightly lower—about 70 per cent. Therefore, on the whole, council tenants are the lower income group in the community.

The proposal is particularly obnoxious because it amounts to a transfer of resources from the poorer to the richer section of the community. My right hon. Friend did not put the argument strongly

enough. This is a question not of taxing people in the general sense but of directly taxing the poorer section of the community.

Question put, That the amendment be made:—

The House divided: Ayes 287, Noes 231.

Division No. 316] AYES [10.08 pm
Adley, Robert Fairgrieve, Russell Knox, David
Alexander, Richard Faith, Mrs sheila Lamont, Norman
Alison, Michael Farr, John Lang, Ian
Amery, Rt Hon Julian Fell, Anthony Langford-Holt, Sir John
Ancram, Michael Former, Mrs Peggy Latham, Michael
Arnold, Tom Finsberg, Geotlrey Lawrence, Ivan
Aspinwall, Jack Fisher, Sir Nigel Lawson, Nigel
Atkins, Robert (Preston North) Fletcher, Alexander (Edinburgh N) Lee, John
Atkinson, David (B'mouth, East) Fletcher-Cook, Charles Lennox-Boyd, Hon Mark
Baker, Nicholas (North Dorset) Forman, Nigel Lester, Jim (Beeston)
Banks, Robert Fox, Marcus Lewis, Kenneth (Rutland)
Beaumont-Dark, Anthony Fraser, Rt Hon H. (Stafford & St) Lloyd, Ian (Havant & Waterloo)
Bell, Sir Ronald Fraser, Peter (South Angus) Lloyd, Peter (Fareham)
Bendall, Vivian Fry, Peter Loveridge, john
Benyon, Thomas (Abingdon) Galbraith, Hon T. G. D. Lyell, Nicholas
Benyon, W. (Buckingham) Gardiner, George (Reigate) McGrindle Robert
Best, Keith Gardner, Edward (South Fylde) Macfarlane, Neil
Bevan, David Gilroy Garel-Jones, Tristan MacGregor John
Biffen, Rt Hon John Ramour Rt. Hon Sirlan MacKay, John (Argyll)
Biggs-Davison, John Goodhew, Victor McNair-Wilson, Michael (Newbury)
Blaker, Peter Goodlad, Alastair McNair-Wilson, Patrick (New Forest)
Body, Richard Gorst, John McQuarrie Albert
Bonsor, Sir Nicholas Gow, Ian Madel, David
Boscawen, Hon Robert Gower, Sir Raymond Major John
Bottomley, Peter (Woolwich West) Grant, Anthony (Harrow C) Marland, Paul
Boyson, Dr Rhodes Gray, Hamish Marlow, Tony
Braine, Sir Bernard Greenway, Hairy Marshall Mirhaol (Arundel)
Bright, Graham Grieve, Percy Mates, Michael
Brinton, Tim Griffiths, Eldon (Bury St Edmunds) Mathor Carel
Brocklebank-Fowler, Christopher Griffiths, Peter (Portsmouth N) Mawby, Ray
Brooke, Hon Peter Grist, Ian Mawhinney, Dr Brian
Brotherton, Michael Grylls, Michael Maxwell-Hyslop, Robin
Brown, Michael (Brlgg & Sc'thorpe) Gummer, John Selwyn Mellor, David
Browne, John (Winchester) Hamilton, Hon Archie (Eps'm&Ew'll) Meyer, Sir Anthony
Bruce-Gardyne, John Hamilton, Michael (Salisbury) mills, lain (Menoen)
Bryan, Sir Paul Hampson, Dr Keith Miscampbell, Norman
Buchanan-Smith, Hon Alick Hannam, John Moate, Roger
Buck, Antony Haselhurst, Alan Molyneaux, James
Budgen, Nick Hastings, Stephen Montgomery, Fergus
Bulmer, Esmond Havers, Rt Hon Sir Michael Moore, John
Burden, F.A. Hawkins, Paul Morgan, Geraint
Butcher, John Hawksley, Warren Morris, Michael (Northampton, Sth)
Butler, Hot Adam Hayhoe, Barney Morrison, Hon Charles (Devizes)
Cadbury, Jocelyn Heddle, John Morrison, Hon Peter (City of Chester)
Carlisle, John (Luton West) Henderson, Barry Mudd, David
Carlisle, Kenneth (Lincoln) Heseltine, Rt Hon Michael Murphy, Christopher
Channon. Paul Hicks, Robert Myles, David
Chapman, Sydney Higgins, Rt Hon Terence L. Needham, Richard
Clark, Hon Alan (Plymouth, Sutton) Hill, James Nelson, Anthony
Clark, Sir William (Croydon South) Hogg, Hon Douglas (Grantham) Neubert, Michael
Clarke, Kenneth (Rushcllffe) Holland, Philip (Carlton) Nott, Rt Hon John
Clegg, Sir Walter Hooson, Tom Onslow, Cranley
Cockeram, Eric Hordern, Peter oppenhpeim Rt Hnn Mrs Sally
Cope, John Howell, Rt Hon David (Guildford) Osborn, John
Corrle, John Howell, Ralph (North Norfolk) Page" John (Harrow, West)
Costain A. P. Hunt, David (Wirral) Page, Rt Hon Sir R. Graham
Critchley, Julian Hunt, John (Ravensbourne) rage, Richard (Sw Henfordshire)
Dickens, Geoffrey Irving, Charles (Cheltenham) Parris Matthew
Dorrell, Stephen Jenkin, Rt Hon Patrick Patten, Christopher (Bath)
Douglas-Hamilton, Lord James Jessel, Toby Patten, John (Oxford)
Dover, Denshore Johnson Smith, Geoffrey Patten, Geoffrey
Dunn, Robert (Dartlord) Jopling, Rt Hon Michael Pawsey, James
Durant, Tony Kaberry, Sir Donald Percival, Sir Ian
Dykes, Hugh Keliett-Bowman, Mrs Elaine Peyton, Rt Hon John
Eden, Rt Hon Sir John Kimball, Marcus Pink, R. Bonner
Eggar, Timothy King, Rt Hon Tom Pollock, Alexander
Emery, Peter Kitson, Sir Timothy Porter, George
Fairbairn, Nicholas Knight, Mrs. Jill Powell, Rt Hon J. Enoch (S Down)
Prentice, Rt Hon Reg Smith, Dudley (War. and Leam'ton) van Straubenzee, W. R.
Price, David (Eastleigh) Speller, Tony Vaughan, Dr Gerard
Proctor, K. Harvey Spence, John Viggers, Peter
Raison, Timothy Spicer, Jim (West Dorset) Waddington, David
Rathbone, Tim Spicer, Michael (S Worcestershire) Wakeham, John
Rees, Peter (Dover and Deal) Sproat, lain Waldegrave, Hon William
Rees-Davies, W. R. Squire, Robin Walker, Rt Hon Peter (Worcester)
Renton, Tim Stainton, Keith Walker, Bill (Perth & E Perthshire)
Rhodes James, Robert Stanbrook, Ivor Walker-Smith, Rt Hon Sir Derek
Rhys Williams, Sir Brandon Stanley, John Wall, Patrick
Ridsdale, Julian Steen, Anthony Waller, Gary
Rifkind, Malcolm Stevens, Martin Walters, Dennis
Roberts, Michael (Cardiff NW) Stewart, Ian (Hitchin) Ward, John
Roberts, Wyn (Conway) Stewart, John (East Renfrewshire) Watson, John
Ross, Wm. (Londonderry) Stokes, John Wells, Bowen (Hert'rd & Stev'nage)
Rossi, Hugh Stradling Thomas, J. Wheeler, John
Rost, Peter Tapsell, Peter Whitney, Raymond
Royle, Sir Anthony Taylor, Teddy (Southend East) Wickenden, Keith
Sainsbury, Hon Timothy Tebbit, Norman Wfggin, Jerry
Scott, Nicholas Temple-Morris, Peter Wilkinson, John
Shaw, Giles (Pudsey) Thomas, Rt Hon Peter (Hendon S) Williams, Delwyn (Montgomery)
Shaw, Michael (Scarborough) Thompson, Donald Winterton, Nicholas
Shelton, William (Streatham) Thome, Nell (Ilford South) Wolfson, Mark
Shepherd, Colin (Hereford) Thornton, Malcolm Young, Sir George (Acton)
Shepherd, Richard (Aldridge-Br'hills) Townend, John (Bridlington)
Shersby, Michael Townsend, Cyril D. (Bexleyheath) TELLERS FOR THE AYES:
Sims, Roger Trippier, David Mr. Spencer Le Marchant and
Skeet, T. H. H. Trotter, Neville Mr. Anthony Berry
NOES
Abse, Leo Dobson, Frank Janner, Hon Greville
Adams, Allen Dormand, Jack Jay, Rt Hon Douglas
Allaun. Frank Douglas, Dick John, Brynmor
Alton, David Douglas-Mann, Bruce Johnson, Walter (Derby South)
Anderson, Donald Dubs, Alfred Jones, Rt Hon Alec (Rhondda)
Archer, Rt Hon Peter Duffy, A. E. P. Jones, Barry (East Flint)
Ashley, Rt Hon Jack Dunn, James A. (Liverpool, Kirkdale) Jones, Dan (Burnley)
Ashton, Joe Dunnett, Jack Kaufman, Rt Hon Gerald
Atkinson, Norman (H'gey, Tott'ham) Dunwoody, Mrs Gwyneth Kerr, Russell
Bagler, Gordon A. T. Eastham, Ken Kilfedder, James A.
Barnett, Guy (Greenwich) Ellis, Raymond (NE Derbyshire) Kilroy-Silk, Robert
Beith, A. J. English, Michael Kinnock, Neil
Benn, Rt Hon Anthony Wedgwood Evans, loan (Aberdare) Lambie, David
Bennett, Andrew (Stockport N) Ewing, Harry Lamborn, Harry
Bidwell, Sydney Faulds, Andrew Lamond, James
Booth, Rt Hon Albert Field, Frank Leadbitter, Ted
Bottomley, Rt Hon Arthur (M'brough) Fitch, Alan Leighton, Ronald
Bray, Dr Jeremy Flannery, Martin Lewis, Arthur (Newham North West)
Brown, Hugh D. (Provan) Fletcher, Ted (Darlington) Lewis, Ron (Carlisle)
Brown Robert C. (Newcastle W) Ford, Ben Litherland, Robert
Brown, Ronald W. (Hackney S) Forrester, John Lofthouse, Geoffrey
Brown, Ron (Edinburgh, Leith) Freeson, Rt Hon Reginald Lyons, Edward (Bradford West)
Callaghan, Jim (Mlddleton & P) Garrett, John (Norwich S) Mabon, Rt Hon Dr J. Dickson
Campbell, Ian Garrett, W. E. (Wallsend) McCartney, Hugh
Campbell-Savours, Dale George, Bruce McDonald, Dr Oonagh
Canavan, Dennis Gilbert, Rt Hon Dr John McElhone, Frank
Cant, R. B. Ginsburg, David McGuire, Michael (Ince)
Carter-Jones, Lewis Grant, George (Morpeth) McKay, Allen (Penlstone)
Cartwright, John Grant, John (Islington C) McKelvey, William
Clark, Dr David (South Shields) Grimond, Rt Hon J. Maclennan, Robert
Cocks, Rt Hon Michael (Bristol S) Hamilton, James (Bothwell) McNally, Thomas
Cohen, Stanley Hamilton, W. W. (Central Fife) McNamara, Kevin
Concannon, Rt Hon J. D. Hardy, Peter McWilllam, John
Conlan, Bernard Harrison, Rt Hon Walter Magee, Bryan
Cook, Robin F. Hart, Rt Hon Dame Judith Marks, Kenneth
Cowans, Harry Haynes, Frank Marshall, David (Gl'sgow, Shettles'n)
Craigen, J. M. (Glasgow, Maryhill) Healey, Rt Hon Denis Marshall, Dr Edmund (Goole)
Crowther, J. S. Heffer, Eric S. Marshall, Jim (Leicester South)
Cryer, Bob Hogg, Norman (E Dunbartonshire) Maynard, Miss Joan
Cunliffe, Lawrence Holland, Stuart (L'beth, Vauxhall) Meacher, Michael
Cunningham, George (Islington S) Home Robertson, John Mellish, Rt Hon Robert
Cunningham, Dr John (Whitehaven) Homewood, William Mikardo, Ian
Dalyell, Tarn Hooley, Frank Millan, Rt Hon Bruce
Davidson, Arthur Healey, Rt Hon Denis Miller, Dr M. S. (East Kilbride)
Davies, Rt Hon Denzll (Llanelli) Horam, John Mitchell, Austin (Grimsby)
Davies, Ifor (Gower) Howell, Rt Hon Denis (B'ham, Sm H) Mitchell, R. C. (Soton, lichen)
Davis, Clinton (Hackney Central) Howells, Geraint Morris, Rt Hon Alfred (Wythenshawe)
Davies, Terry (B'rm'ham, Stechford) Huckfield, Les Morris, Rt Hon Charles (Openehaw)
Deakins, Eric Hudson, Davies, Gwllym Ednyfed Morris, Rt Hon John (Aberavon)
Dean, Joseph (Leeds West) Hughes, Mark (Durham) Moyle, Rt Hon Roland
Dempsey, James Hughes, Robert (Aberdeen North) Newens, Stanley
Dewar, Donald Hushes, Roy (Newport) Oakes, Rt Hon Gordon
Ogden, Eric Sheldon, Rt Hon Robert (A'ton-u-L) Varley, Rt Hon Eric G.
O'Halloran, Michael Short, Mrs Renée Wainwright, Edwin (Dearne Valley)
O'Neill, Martin Silkin, Rt Hon John (Deptford) Wainwright, Richard (Colne Valley)
Orme, Rt Hon Stanley Silkin, Rt Hon S. C. (Dulwich) Watkins, David
Palmer, Arthur Silverman, Julius Weetch, Ken
Park, George Skinner, Dennis Wellbeloved, James
Parry, Robert Smith, Cyril (Rochdale) Welsh, Michael
Penhaligon, David Smith, Rt Hon J. (North Lanarkshire) White, Frank R. (Bury & Radcliffe)
Powell, Raymond (Ogmore) Snape, Peter Whitehead, Phillip
Prescott, John Soley, Clive Whitlock, William
Price, Christopher (Lewisham West) Spearing, Nigel Wigley, Dafydd
Race, Reg Spriggs, Leslie Williams, Rt Hon Alan (Swansea W)
Radice, Giles Stallard, A. W. Williams, Sir Thomas (Warrington)
Richardson, Jo Stoddart, David Wilson, Rt Hon Sir Harold (Huyton)
Roberts, Albert (Normanton) Strang, Gavin Wilson, William (Coventry SE)
Roberts, Allan (Bootle) Straw, Jack Winnick, David
Roberts, Ernest (Hackney North) Summerskill, Hon Dr Shirley Woodall, Alec
Roberts, Gwilym (Cannock) Taylor, Mrs Ann (Bolton West) Woolmer, Kenneth
Robinson, Geoffrey (Coventry NW) Thomas, Dafydd (Merioneth) Wrlgglesworth, Ian
Rooker, J. W. Thomas, Jeffrey (Abertillery) Wright, Sheila
Ross, Ernest (Dundee West) Thomas, Dr Roger (Carmarthen) Young, David (Bolton East)
Rowlands, Ted Tilley, John
Ryman, John Tlnn, James TELLERS FOR THE NOES
Sandelson, Neville Torney, Tom Mr. George Morton and
Sever, John Urwin, Rt Hon Tom Mr. Ted Graham.

Question accordingly agreed to.

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