Housing Subsidies (Hansard, 4 February 1981)

§ 11. Miss Wright
asked the Secretary of State for the Environment what effect the present moratorium on new council house building has on housing subsidies payable in the current year under section 2 of the Housing Rents and Subsidies Act 1975; and whether any decrease in subsidies will be carried over in the calculation of the base amount of housing subsidies for 1981–82 payable under section 98 (1)(b) of the Housing Act 1980.

§ Mr. Stanley
The only subsidy effect of the moratorium has been to avoid payments being incurred on capital expenditure in excess of the national cash limit. The base amount for subsidy under the new subsidy system beginning on 1 April is the amount of subsidy payable in respect of 1980–81.

§ Miss Wright
Is the Minister conceding that the moratorium on building basically means that there has been no new capital costs subsidy earned during this period and that, as a result, there will be an artificially low level of subsidy incorporated in next year's base amount, or is he saying—I am not clear—that it will not take into account the lower capital costs subsidy which is clearly going to local authorities as a result of the moratorium?

§ Mr. Stanley
I assure the hon. Lady that subsidy is still being paid on projects that are in the process of construction and completion now. Those subsidies have continued since the moratorium started. The only effect of the moratorium is to try to ensure that the national cash limit that was previously agreed is adhered to for 1980–81. I do not accept the hon. Lady's view that there has been an artificial reduction in the amount of subsidy. We are simply trying to keep the level of expenditure down to the level that was originally announced.

§ Mr. Kaufman
Will the Minister come completely clean on this matter? Is he aware that the Government have stopped local authority housing programmes in their tracks for nearly six months? Will he now make clear to the House whether, in addition to that, he is now pinching subsidy from those local authorities as a result of his preventing them from incurring capital costs?

§ Mr. Stanley
I assure the right hon. Gentleman that there is no question of any subsidy being pinched. The rules on subsidies have remained unchanged. I hope that the right hon. Gentleman will be prepared to recognise that, as a result of the changes that we made with the introduction of a new system, there will be a number of significant items of expenditure that will be admissible for subsidy for the first time from 1 April.

§ Mr. Kaufman
Is the Minister aware that we need to get this matter absolutely clear? Is he further aware that under section 92 of the Act it is perfectly clear that the subsidy for the next financial year is very much affected by the base amount? May I ask the Minister to make clear to the hundreds of local authorities that are affected and want to know their subsidy entitlement whether the depression of the base amount caused by the moratorium will mean that they will lose subsidy in the coming financial year?

§ Mr. Stanley
The subsidy rules applying to this current financial year are wholly unchanged.