HC Deb 10 November 1982 vol 31 cc530-3
2. Mr. Alton

asked the Secretary of State for the Environment whether local authorities have taken up his invitation to increase capital spending.

7. Mr. Campbell-Savours

asked the Secretary of State for the Environment if he will make a statement on the instructions he is giving to local authorities on capital spending limits for the year 1982–83.

15. Mr. Jim Marshall

asked the Secretary of State for the Environment what estimate he has made of capital spending plans by local authorities for the year 1982–83.

The Secretary of State for the Environment (Mr. Michael Heseltine)

Returns from local authorities suggest that there will be an underspend on capital investment by English authorities by over £1 billion in 1982–83. I have urged local authorities to bring forward worthwhile capital schemes and have offered additional expenditure allocations for that. I have also asked my regional offices to approach individual authorities, as has happened many times in the past, to establish what schemes they may have available suitable for acceleration. I hope that will lead to a reduction in the underspend, with consequent benefit for the construction industry, but applications from local authorities are still being received and it is too early to forecast the extent of the response. For 1983–84, allocations will be made shortly in the usual way.

Mr. Alton

Has the Secretary of State had an opportunity to explain to the Prime Minister that, contrary to what she said in the House last week, money allocated for capital schemes cannot be transferred by local authorities to pay for wage demands? How are councils to deal with the revenue implications? Will they not face clawback if they spend money on capital projects and incur revenue implications? Does the right hon. Gentleman agree that taking decisions against the clock will result—

Mr. Speaker

Order. I have twice this week appealed that when an hon. Member is called to ask a supplementary question he asks what is his right—one supplementary question—or he takes up the time of other hon. Members.

Mr. Heseltine

I believe that the hon. Gentleman was asking me about the jerry-building that local authorities will propose as a result of the schemes that they put forward. We shall ensure that local authorities do not do that. There is not the slightest evidence that they will.

My right hon. Friend the Prime Minister has expressed herself clearly. I see no reason for doubt.

Mr. Campbell-Savours

Will the Secretary of State place on record that local authorities can use their capital receipts to pay interest charges on borrowings that arise from the use of the £1 billion that is being made available to them on a wider basis? Is he aware that my local authority is applying to him for £1,250,000 extra to pursue the programme that he has set as an objective, because it is worried about what will happen at the year-end on carryover? Will he introduce flexibility in that area?

Mr. Heseltine

It is early days, but the hon. Gentleman's local authority is one of those that have responded with a number of schemes. That proves that it is possible for local authorities to do exactly what we requested. No Minister has expressed the view that the total underspend predicted for this year can be made up on any significant scale. It is too large and too late. That is the difficulty facing the Government. Local authorities have underspent on such an enormous scale for this year that that capital resource is lost to the construction industry. The Government are doing their best to make up some of the shortfall that the local authorities have created.

Mr. Marshall

If the Secretary of State's exhortations to local authorities are successful, will he give an assurance that any increased revenue expenditure arising from increased capital expenditure this year will be exempt from any future controls on local authority revenue expenditure?

Mr. Heseltine

The hon. Gentleman knows that we cannot separate the accounts of 420 local authorities to find the revenue consequences arising from any decisions in the way that he suggests. Local authorities understand that fully, as they have always done. They will use their own judgment. The real world is made up of a large number of local authorities, many of them represented by Opposition Members, which are now trying to find schemes to create jobs in the construction industry. If the Opposition would concentrate on helping those local authorities, as opposed to raising difficulties, more jobs would be created.

Mr. Chapman

Has my right hon. Friend seen the proposal by the House-Builders Federation that local authorities should use part of their capital underspend this year to buy houses already built and to offer them to people on their waiting lists on a shared equity basis? Will he encourage that proposal?

Mr. Heseltine

That is a classic example of a constructive approach to what the Government are trying to do. I am looking at that idea.

Mr. Frank Allaun

After halving housing expenditure in three years and bringing council house building to almost nothing, is there not something indecent in the Secretary of State now telling local authorities to increase capital expenditure? If he is aware of the misery that he is causing, he is a stinking hypocrite.

Mr. Speaker

Order. The hon. Member knows that it is out of order to refer to another hon. Member in those terms. One cannot say "If' and add that a man is a hypocrite, or we shall be crawling on the floor, without standards.

Mr. Allaun

I withdraw that remark, Mr. Speaker, and say that this is a stinking hypocrisy.

Mr. Heseltine

I shall do my best to draw those interesting observations to the hon. Gentleman's local authority, which happens to be putting in one of the longest lists of bids.

Mr. Squire

Will my right hon. Friend continue to review the need to make a commitment to local authorities on future capital expenditure and borrowing powers, because the main deterrent is against sudden capital expenditure on fairly minor schemes. Anything that has happened during the past few weeks cannot change the position on major schemes, unless they have a greater expectation of support in future years on capital spending.

Mr. Heseltine

I understand the point made by my hon. Friend, but he will realise that as local authorities have £600 million of capital underused from last year, £1 billion capital underspent this year and substantial projected capital receipts next year, the level of allocation by the Government becomes less important in their forward capital planning.

Mr. Kaufman

First, will the right hon. Gentleman answer the question put by my hon. Friend the Member for Wokington (Mr. Campbell-Savours)—a question that he dodged—on whether local authorities can use capital receipts to service loans? Secondly, will he summon up the honesty to admit that his and the Prime Minister's new spend, spend, spend stunt is nothing but a phoney and a sham? He is simply asking local authorities to bring forward by four months next year's capital spending projects. If they are incautious enough to obey him, the revenue consequences, plus the abolition of the GREA amnesty and the planned reduction in their spending ceilings, will make them liable to savage penalties for doing what the Secretary of State is telling them to do.

Mr. Heseltine

The right hon. Gentleman is an expert in trying to frustrate any scheme that is to the benefit of the construction industry. It is fortunate that Labour-controlled local authorities take absolutely no notice of what he says. Significant numbers of local authorities are producing capital schemes to help the construction industry, and the right hon. Gentleman is deliberately trying to frustrate them.