Local Authority Capital Expenditure

HC Deb 19 December 1984 vol 70 cc301-43 3.44 pm

Dr. John Cunningham (Copeland)

I beg to move, That this House do now adjourn.

Leave having been given on Tuesday 18 December under Standing Order No. 10 to discuss: The statements made on 18 December relating to local authorities' capital expenditure in England and Wales. There are a number of very important reasons why this debate should take place today: its importance to millions of people; its importance in respect of local democracy; its importance to the building and construction industry and, not least, to those who work in it. The debate will give the House of Commons the opportunity to vote upon yesterday's statements about local government capital investment and to record its views on the Government's abysmal management of these matters, which affect millions of people in this country.

The Government's record is one of broken promises, of regular changes of mind, of misleading statements and of prevarication and delay which add up to incompetence in the management by the Government of this crucial area of local government activity. The Tory policies of stop-go of the l950s and early 1960s pale into insignificance when seen beside this Government's performance since 1979. As a result of that performance, this country is now rapidly sliding back to an era of private affluence for some and public squalor for many. A real crisis exists now in housing and the situation is deteriorating rapidly. The crisis affects people who own their own homes, tenants of private landlords and council house tenants, too.

Many recent studies, including those by the Policy Studies Institute and the National Economic Development Office, have shown the continuing and rising need for more public investment in housing. The present backlog exists both in the public and private sector, both of which depend upon support through the national housing investment programme. There are over 1 million households on waiting lists for council accommodation, of which over 200,000 households are overcrowded; almost 250,000 households share accommodation; 190,000 people await sheltered accommodation; 7,000 families await specialised disabled accommodation.

According to the English house condition survey, over 1 million dwellings are unfit for human habitation; almost 400,000 lack basic amenities; over 500,000 require repairs costing more than £7,000 per dwelling; and 2.5 million require repairs costing in excess of £2,000. A particular worry—it should be a worry to the whole House—is the increasing level of homelessness and the escalating cost to the taxpayer of board and lodging accommodation payments and the increasing use of hostels and hotels to accommodate homeless families. Over 80,000 households will be accepted as homeless this year. Many more are refused help.

Defective housing is also widespread in the public sector and the level of slum clearance is at an all-time low. Government policy means that the current year will see the lowest number of council house completions ever recorded. As I said yesterday, the best year of the Government's record produced 214,000 starts in the public and private sectors. In the lowest year of achievement of the previous Labour Government, that total was 264,000 starts—50,000 more.

In a letter to the Prime Minister on 2 November this year, the president of the Building Employers Federation condemned reports of the possibility of capital spending on housing being cut by £600 million in the coming financial year. That is, in effect, what has happened. He claimed that such a reduction was equivalent to 18 per cent. of the total housing programme and to the loss of at least 75,000 jobs in building and construction. He went on: A further cut in housing capital would do untold damage to the industry and would be seen as one more blow in a sustained campaign to undermine the confidence of the British construction industry. The National Home Improvement Council said: It is incredible to think that, while housing is steadily rotting away, local authorities have ready money … but are not allowed to use it for putting housing in order. It is unbelievable that this state of affairs is allowed to exist, especially when money spent on improving our houses not only maintains our standard of living, but also creates jobs as no other industry can. Those views are shared by the Federation of Master Builders—the paymasters of the Conservative party—the Federation of Civil Engineering Contractors, the British construction materials industry, the Confederation of Building Material Producers, the CBI and the TUC. Indeed, they are shared by everyone associated with the management, building and construction of housing and with the building and construction industry.

The Secretary of State for the Environment tried to argue yesterday that nothing had changed. That can only be described as an attempt to mislead the House. In the current year, £3,244 million was allocated to local authorities, new towns and the Housing Corporation. The revised projection for next year is a reduction of £188 million. However, in a statement to the press a few weeks ago, the Department of the Environment and the Secretary of State tried to present that as a reduction of only £65 million compared with the original projection.

The year-on-year cut of £188 million excluded any allowance for inflation. If that is taken into account—and taking the Government's figure of 5 per cent inflation —the real terms reduction is as much as £350 million, or 11 per cent.

Furthermore, while capital receipts were expected to rise by £430 million gross, £310 million net, that was to be clawed back by a reduction in the Treasury contribution from £1,644 million in the current financial year to £1,326 million next year. Therefore, taking the two differences together, the total cut in the money available to local authorities is well over £600 million — a cut in real terms of about 20 per cent. That is what the Secretary of State was telling the House yesterday and that is why he should not have been surprised at the reception that he was given from both sides.

The Government have tried to work a con trick in saying that gross housing provision is being maintained. That is simply not the case.

Indeed, £1,600 million of housing investment programme allocation and 20 per cent. of local receipts mean a housing cash limit of £324 million, compared with more than £1 billion in the current financial year. Looked at that way, the cut is in excess of £700 million in the money that the Treasury is putting into the housing programme. We are told that this is being done to maintain the cash limit for 1985–86. but I suspect, as do many in housing, that that cash limit is already as good as broken by resources committed for the coming financial year. To suggest that it will somehow be maintained is ridiculous. If the limit were enforced in that way, the Government would have to declare, in effect, a total and obligatory moratorium now. I challenge the Government to say whether that is the reality.

The Cambridge Econometrics study that is used by most organisations, including many in the building industry and the private sector, equates £500 million of expenditure with 65,000 jobs in the construction industry and the economy as a whole. If cuts in excess of £1 billion are put into effect, the loss of jobs is likely to exceed 100,000.

The Government have got all this wrong. Their main argument is that the action is necessary to prevent overspending. But no local authority can overspend because, by definition, an authority must balance its budget. In so far as overspend exists at all in the Treasury's mind—the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) has used the phrase "voodoo economics"—it is simply an attempt to match the real world of local authority services and provision, and the needs of people and our infrastructure, with the increasingly unreal world of Treasury economics and accounting.

Will the Secretary of State tell us what the real economic effect would be of letting local authorities spend their capital receipts—their own money? What does he think the sound macro-economic arguments are against that proposal? We have yet to hear from the Secretary of State or from the Chancellor of the Exchequer any convincing arguments on the ground of macro-economic policy as to why the capital expenditure of local authorities, financed wholly from their own capital receipts and assets, should be controlled in the Government's increasingly draconian, arbitrary and unfair fashion.

Even the Financial Times is wholly unpersuaded of the sense of the Government's case. It described yesterday's announcement as a particularly mean-spirited application of the Government's heads-we-win, tails-you-lose approach to local authoritities".

Mr. John Heddle (Mid-Staffordshire)

Would the hon. Gentleman be kind enough to share with the House his view on the following point? He has acknowledged, and none of us perhaps would dispute, that an enormous number of people want rented accommodation. Will he therefore take this opportunity to declare from thae Dispatch Box tht if his party was re-elected to office, it would repeal the shorthold provisions of the Housing Act 1980 which provide private rented accommodation for those in need?

Dr. Cunningham

I regret giving way to the hon. Gentleman. He abused the intervention. It was not even relevant to what I am discussing. I am in the middle of advancing an argument about expenditure of capital receipts to the Secretary of State.

Of course, the Government will argue that they are cash-limiting capital expenditure by local authorities and in doing so they will act to reduce the public sector borrowing requirement, since, if, local authorities cannot invest their capital receipts, they lend them to the markets or the banks, or use them to repay existing debt. In that way the size of the net total of public sector borrowing is reduced.

There is the gravest suspicion that the Treasury is using capital receipts as a back-door method of massaging down the PSBR figures and of indirectly financing Government debt. But only practitioners of voodoo economics—to use the colourful and accurate phrase of the hon. Member for Selly Oak—would regard that as either justifiable or sensible. It is nonsense, economically and socially, to withhold those capital receipts from use in local government where they could be put to effective use in the regeneration of the British economy, housing people and creating jobs and employment in our economy.

We are entitled to ask, and the House is entitled to know, what has changed since 3 November 1982 when, during the debate on the Loyal Address, the Prime Minister said: We need more capital spending by local government and in the public sector generally. I agree that it is vital to maintain the nation's infrastructure, its roads, its buildings, its water supply and its drains." — [Official Report, 3 November 1982; Vol. 31, c. 21.] If that was right in November 1982, why has it suddenly become wrong in December 1984? If it was right in 1981 for the right hon. Member for Blaby (Mr. Lawson), then a Treasury Minister, to argue that there should be no control over local authorities' expenditure of their own capital receipts, why is it right now for him as Chancellor to argue that there should be increasing turning of the screw, leading, presumably, to total control of local authorities' use of their capital receipts?

What has changed in the economy since the right hon. Gentleman changed his position as a Minister? There has not been any improvement, certainly not in housing and certainly not in the building and construction industry. What has changed is simply that an election has come and gone and that the commitments given at that time have been abandoned, just as the commitment to owner-occupiers for grants to improve their premises has been abandoned. Apparently, following yesterday's statement of the Secretary of State for the Environment, there is no longer any commitment either to young people who cannot afford to buy a house to be housed by the local councils. That commitment, too, has been ditched by the Government.

Since the Secretary of State said that people should look to the private market, can he explain the press notice from his Department today, which points out that not only is building falling in the public sector under his policies but that it is falling in the private sector as well? How do the Government expect young unemployed people to buy a house? How do they expect young people in the black and ethnic communities, trapped in appalling conditions and also unemployed, to buy houses? How can elderly and disabled people, living in often crumbling, inadequate, damp and cold accommodation, buy their way out of such situations?

What are the economics behind the Secretary of State's statement yesterday? For that matter, what social policy lies behind it? Do not the Government realise that everyday existence for millions of people in appalling and inadequate housing is abysmal? Do they not recognise the long-term damage to people's health of bad housing conditions? Do they not realise that every child living in overcrowded accommodation, short of space, peace and quiet, and the ability properly to communicate with his or her parents, is a child who will probably be damaged for life? Is there no feeling among Ministers about all that?

How incredibly stupid to argue that allowing the housing stock, the urban environment, the infrastructure and educational facilities in Britain to deteriorate is sound economics. Do not the Government recognise the effects of all that on the British people? The answer can only be no.

In pursuance of a perverse and failed economic policy, this crass and stupid Administration are imposing appalling sacrifices on the people of Britain through their housing policies. Frankly, it is not enough for Conservative Back Benchers to shoot the messenger as they did yesterday. This is the time to force a change, if they really want one. If Conservative Members believe what they said yesterday, if they are concerned about local democracy, employment, the building and construction industry and the infrastructure of Britain—if, above all, they are concerned about people—they will join us in the lobbies tonight.

4.6 pm

The Secretary of State for the Environment (Mr. Patrick Jenkin)

To listen to the hon. Member for Copeland (Dr. Cunningham) one would think that somehow history had begun in 1979. He chided the Government with falling expenditure on new housing starts. He seems to have forgotten that when the Labour party was in government there was a cut in capital expenditure on housing of 45 per cent. That has to be compared with a figure of half that size under this Government.

If the argument today is about the treatment of capital receipts, my hon. Friends might well bear in mind that if the Labour party had been in office, with its well known opposition to the sale of council houses, there would have been no capital reciepts. Therefore, the only way that that party would have been able to sustain a capital investment programme in housing would have been to have either higher borrowing or higher taxation.

For the hon. Gentleman to chide the Government on the subject of home improvement grants is beyond belief. As he will know, in the peak year— it was a short-term major boost to home improvements—the Government spent no less than £900 million. That is 10 times the amount spent by the Labour Government when they left office.

The debate today goes to the heart of the Government's economic strategy—[HON. MEMBERS: "Hear, hear."] I am glad that the Labour party recognises that. The public expenditure plans for next year were announced by my right hon. Friend the Chancellor in his autumn statement on 12 November. That statement was approved by the House on 6 December. I shall remind the House of the terms of the motion. It stated that the House congratulates Her Majesty's Government on keeping the public expenditure planning total for 1985–86 within the figure published in the 1984 Public Expenditure White Paper." —[Official Report, 6 December 1984; Vol. 69, c. 519.] The motion was approved by a majority of 145. We have not cut the total of public expenditure for 1985–86. We stuck to the figure of £132 billion for 1985–86 that we announced a year earlier. We have kept on course. Now we have to deliver that figure, which brings me to the decisions that I announced yesterday.

I repeat that our plans for local authority capital spending remain exactly as provided in the autumn statement and as approved by the House.

Mr. Douglas Hogg (Grantham)

Local authorities have in their possession capital receipts. They can spend them on housing or whatever, without borrowing more money and without raising extra taxation. For the life of me, I cannot see the economic objection to that. Will my right hon. Friend tell the House what the objection is?

Mr. Jenkin

I assure my hon. Friend that I am aware of that argument. I shall deal with it in some detail.

Mr. Allan Roberts (Bootle)

rose—

Mr. Jenkin

I make no complaint about the fact that the House was extremely rough with me yesterday, but I hope that hon. Members will listen to my argument today. [Interruption.]

Mr. Speaker

Order. I ask the House to give the Secretary of State a fair hearing.

Mr. Jenkin

The truth is that during the past two years local authorities in England and Wales have been spending collectively well above the Government's cash limits for each year. In 1983–84 the overspend in England was £368 million. For the present year it could be more than £500 million, even after our request for restraint.

Councils are able to exceed the national cash limit because they are free to spend part of the receipts from the sale of council houses and other assets on top of their allocations. Because of the undoubted success of the right-to-buy policy, the total amount of unspent capital receipts has now grown so large—it is £5 billion or more—that if councils were to spend as much of that as they are allowed to spend under the present rules, there would be another large national overspend in 1985–86. It could amount to £1 billion or more. That would be a direct claim on the contingency reserve. [Laughter.] It would add to the public sector borrowing requirement and obviously it would affect interest rates. [Interruption.] I shall answer the point made by my hon. Friend the Member for Grantham (Mr. Hogg) in a minute. The House wants to hear the argument. That is why I stress that the issue goes to the heart of the Government's economic strategy. I emphasise that we are not merely talking of tens or twenties of millions of pounds but of £1 billion or more.

My hon. Friend the Member for Grantham asked quite properly why that affects the public sector borrowing requirement. When a council sells a house, for example, for £10,000, that money, if it is not spent in the year in which it is received, will be used to reduce the council's borrowing or it will be lent. In either case it reduces the council's net borrowing. That reduction in borrowing reduces the total PSBR in the year in which that £10,000 is received. Those reductions have already been taken into account each year in the public expenditure White Paper figures.

Dr. Cunningham

rose—

Mr. Jenkin

I shall finish my point before I give way. If, in a later year, the council decides to spend that £10,000, it will have to borrow back the money to finance the expenditure. [Laughter.] It will.

Mr. Peter Tapsell (East Lindsey)

rose—

Dr. Cunningham

rose—

Mr. Speaker

Order. Dr. Cunningham.

Dr. Cunningham

If all this kindergarten economics is true now, why was it not true in 1981 when the right hon. Gentleman the Chancellor of the Exchequer was Financial Secretary to the Treasury, and the Government were making the PSBR and the money supply the biggest test of economic and political virility? If it was not true then, what has changed?

Mr. Jenkin

It was true then.

Dr. Cunningham

It was not.

Mr. Jenkin

Yes, it was. Of course it was. The hon. Gentleman has made exactly my point. When the receipts were taken in and not spent, they went to reduce the claim on the PSBR. [Interruption.] Of course they did.

Dr. Cunningham

The right hon. Gentleman has a strange memory. In 1981 there were no central Government-imposed controls on the expenditure of receipts by local councils.

Mr. Jenkin

I shall explain in a moment — Unterruption.] . The Local Government, Planning and Land Act 1980 has always contained such a power. I shall come to that. The hon. Gentleman perfectly fairly asked why the figure was not taken into account. The answer is that it was. The figures go into the public expenditure total, net after receipt. Therefore, in the year in which the receipt was taken and not spent, it was taken into account. Therefore, if it is not treated as an addition to public sector borrowing when it is spent, it is being accounted for twice.

Mr. Tapsell

Does my right hon. Friend agree that in the leading article in today's Financial Times, that newspaper considers his argument in some detail and concludes that it is a purely statistical consideration with no relevance in the real world?

Mr. Jenkin

The writer of that leading article, which I have read, is not responsible for making the figures add up at the end of the day. [Laughter.] That is the responsibility that falls on my right hon. Friend the Chancellor of the Exchequer.

Mr. Patrick Cormack (Staffordshire, South)

rose—

Mr. Speaker

Order. A large number of hon. Members wish to speak in the debate. It is the Secretary of State's decision whether or not he will give way.

Mr. Cormack

rose—

Mr. Jenkin

However much Labour Members shout, the simple truth remains that if a receipt is taken in and not spent, it either reduces borrowing or is lent, and that reduces the PSBR. If, subsequently, it comes back from borrowing and is spent, that increases the PSBR. There is no denying that logic. Capital spending by local authorities—

Mr. Cormack

rose—

Mr. Jenkin

I shall not give way. Mr. Speaker, you have reminded the House that this is a short debate and that many hon. Members wish to speak. I do not wish to take too much time.

Mr. Geoffrey Rippon (Hexham)

If my right hon. Friend could leave this curious academic and statistical debate for a moment—some of us wish to help him and do not wish to vote with the Opposition—could he at least, in the real world, give some assurances to local authorities that are in great difficulty that he will abandon from time to time those irrational arguments and give authorities some latitude in capital expenditure? That would help us a little.

Mr. Jenkin

I must say, with the greatest respect to my right hon. and learned Friend, that they are not academic arguments. They are real arguments that affect the management of the economy.

The 1980 Act always recognised, for this reason, that there had to be some regulation of the pace at which local authorities spend their accumulated receipts. The Act gave an order-making power to regulate the pace, and that is one purpose of the system of prescribed proportions. In previous years, we have used the power by order to slow the rate at which receipts could be spent by reducing the prescribed proportion. It is because of overspending during the past two years, and because of the threat of a big overspend next year, that we must reduce the proportion again. It will give us a much better chance to keep total spending within the cash limit without having to resort to disruptive and unfair measures later in the year.

To come to the point made by my right hon. and learned Friend the Member for Hexham (Mr. Rippon), that must be set alongside the increased end-year flexibility that I announced yesterday and that I am sure is welcomed by local authorities. My right hon. and learned Friend will also have noted that we have made provision for an extra £100 million to give a little extra allocation to those authorities which loyally complied with my request last year.

May I stress another point on which there has been much misunderstanding. The receipts are and will remain the property of local authorities. They can spend them in future years, but the Government must ensure that the pace at which they are spent is compatible with the Government's spending plans, which the House approved on 6 December. It is essential to stick to planned expenditure and to the economic strategy. We need financial discipline to maintain the economic growth that we are achieving.

I should quote something to the House: An essential element of the Government's strategy will be a continuing and substantial reduction over the next few years in the share of resources required for the public sector. It is also essential to reduce the public sector borrowing requirement in order to create monetary conditions which will encourage investment and support sustained growth and the control of inflation.

Mr. Dennis Skinner (Bolsover)

It sounds like the Chancellor.

Mr. Jenkin

I can tell the hon. Gentleman that it was not my right hon. Friend the Chancellor, nor was it me, although I agree with it. It was from a letter—

Mr. Skinner

On a point of order, Mr. Speaker. Is it in order for the Chancellor of the Exchequer, every time the Secretary of State for the Environment falters, to give him a kick?

Mr. Speaker

Order. I repeat that many hon. Members wish to take part in the debate, and this simply takes up time.

Mr. Jenkin

Opposition Members will probably recognise those words from a letter written by the right hon. Member for Leeds, East (Mr. Healey), when he was Chancellor of the Exchequer, eight years ago this month, when he had to go cap in hand to the International Monetary Fund. He knew that those measures were right, the Cabinet of which he was a member knew that those measures were right, and the hon. Member for Copeland, who was a member of that Government, knew that the measures were right. The trouble with the Labour party is that it could not stick to its guns. The difference with this Government is that not only do we know that the policies are right, we stick to them.

Dr. Cunningham

Will the Secretary of State give way?

Mr. Jenkin

No.

Dr. Cunningham

rose—

Mr. Speaker

Order. The Secretary of State is not giving way.

Mr. Jenkin

rose—

Dr. Cunningham

rose—

Mr. Speaker

Order. The Secretary of State is clearly not giving way.

Mr. Jenkin

I have given way many times already.

Dr. Cunningham

rose—

Mr. Speaker

Order. The hon. Member for Copeland (Dr. Cunningham) must realise that the Secretary of State is not giving way. He knows the rules perfectly well.

Mr. Jenkin

rose—

Dr. Cunningham

rose—

Mr. Nigel Spearing (Newham, South)

On a point of order, Mr. Speaker. Can you advise me whether it is the tradition of the House that when an hon. Member mentions another hon. Member and specifically challenges him, and the latter wishes to intervene, the Minister or the hon. Member who said that should give way?

Mr. Speaker

Order. The House knows the conventions. I thought that the Secretary of State was referring to another right hon. Member — [HoN. MEMBERS: "No."] If, nevertheless, the Secretary of State does not give way, that is entirely a matter for him.

Mr. Jenkin

The hon. Member for Copeland asked me several questions about housing, and he made some mistakes. I should make it clear that our priority in housing —there has never been a secret about this—is to enable more people to achieve what they really wish, and that is to own their homes. Since May 1979, more than 600,000 local authority homes in England have been sold to their tenants; 650,000 new houses have been built by private builders. Owner-occupation in England is now more than 63 per cent. and rising. Last year, 167,000 private sector houses were started, which is more than in any year of the Labour Government. Of course —the hon. Gentleman got this wrong—the Government agree that the public sector must continue to provide housing for those who cannot afford to buy or who have special needs.

Dr. Cunningham

That is not what the Minister said yesterday.

Mr. Jenkin

I say that today, and although the hon. Gentleman may have misunderstood me yesterday, that is now on the record.

The public sector housing programme for 1985–86 will be no less than £3,055 million. We need a better directed use of those public sector resources. The more radical authorities are joining in partnerships with the private sector to harness its resources to the task of improving housing conditions. Massive increases in the municipal solution are not the answer.

Yet the Government are still investing large sums. Total local authority capital spending in England next year will be more than £4 billion. Total United Kingdom public sector construction expenditure will be more than £10 billion. Total public sector capital expenditure will be more than £20 billion. The Labour party never takes into account private investment, which is at a record level. Total capital investment in the economy, public and private, is at its highest— about £55 billion—and in 1985 we expect the total to be even higher, at a new record of nearly £60 billion.

It is because the Government have stuck to their economic strategy that we are now getting this capital investment. If it is to be sustained in construction and elsewhere, we must continue to control public spending and borrowing so as to keep down interest rates and beat inflation. That is why the Government's policy deserves support.

Several Hon. Members

rose—

Mr. Speaker

Order. Before I call Back Benchers, I say again to the House that there is a very long list of right hon. and hon. Gentlemen wishing to take part in the debate. I appeal for brief contributions.

4.30 pm

Mr. J. Enoch Powell (South Down)

The Government have succeeded in embroiling themselves deeply with local government, first on the side of revenue and now in the matter of the total of capital expenditure. The hon. Member for Copeland (Dr. Cunningham), who moved the Adjournment, said that the Government had done this in pursuit of their economic policy and that view, rather to my surprise, appeared to be shared by the Secretary of State. In fact, the bitter irony—very bitter not only for many Conservative right hon. and hon. Members—is that they have got where they have got by defiance of both the logic and the spirit of what is the core of their economic policy—the economic policy which they espoused when they came into office in 1979 and which, with this major inconsistency, they have followed since then.

I venture, as one who was into monetarism before the Chancellor of the Exchequer was into long trousers, upon a definition, not in its abusive sense but in its proper sense, of the term "monetarism". It is the proposition that inflation as we have known and suffered from it in the last generation is the consequence of the monetarisation of debt by Government. All parts of that definition are necessary to its truth; for it is only Government that can turn their borrowing into ready spending cash. No one else can do it—no private corporation, no individual, not the most powerful city such as Manchester with its statutory borrowing power or the smallest district council, can monetarise its debts. Only Government can do this.

The logic of the Government's policy, therefore, rests upon control not of the totality of public spending, whether it be central Government or other spending, but the control of the spending, and consequently of the borrowing, of central Government. That is the proposition from which the Government have departed to embroil themselves with the very institution of local government. If the Government had said to the local authorities, "Thus much and no more shall we pay to you by way of rate support grant; but if you decide, being elected persons and elected bodies, to spend more, then you must take the consequences of the rate that you must raise," their logic would not have been challengeable.

Mr. Robert N. Wareing (Liverpool, West Derby)

It has not been challenged.

Mr. Powell

I agree with the hon. Gentleman.

However, there could have been argument about the element of Government expenditure that was involved.

Now the Government come to the local authorities and say that they propose to limit the amount that authorities can borrow. They do not say that they propose to limit the amount that is lent on to local authorities, having been borrowed on Government security. If they said that, they would have an important case, and a case that would deserve support from the Conservative party and the Government. If they had told local authorities, "Thus much and no more shall be lent on to you from the national loans fund, having been borrowed on Government credit; but if you care, on your credit, on the credit of your rates, to go into the market and borrow more—no doubt it may be at a higher rate of interest, and no doubt that will be reflected in the rate—that is your responsibility and that is a power that you have," the theory on which the Government were acting could not have been challenged. A Government who have announced their intention of denationalising the trustee savings movement are in no position to laugh at the notion that arrangements can be made to enable local authorities to borrow otherwise than from the national loans fund.

It is by departing from the central thesis of their economic policy that the Government have not merely embroiled themselves with local government from one end of the country to the other but set themselves at issue with the underlying democratic principle of local government — that is, that as councils raise a revenue upon their responsibility to their ratepayers, therefore central Government will not intervene — otherwise than by statutory control and regulation, by those statutory definitions of policy that belong ultimately to the House— to curb or limit the extent to which in any particular place they decide so to do.

So I exhort the Government to return to the inner logic that should characterise their action, and to control Government expenditure and Government borrowing. If they say that they want to reduce taxation, they will find that that argument will lead them to the same conclusion, for it is upon the Government's own expenditure that the level of taxation for which the Chancellor of the Exchequer will have to ask next spring depends. So even if they take refuge in the argument that their policy is to reduce taxation, they are still destitute of defence for the assault that they have delivered on local government.

I have nearly done, and have only this to say. It may seem strange for a right hon. Member sitting on the Northern Ireland Bench to take time in a debate that concerns Great Britain. I say it is not only not strange but inevitable. My right hon. and hon. Friends and I were returned to say to the House that those whom we represent demand that there be restored to them the same democratic local government as is enjoyed in the rest of the United Kingdom. It would be an absurdity and a contradiction if we did not today use our voice and our vote against the destruction of the democratic principle of local government in the rest of the United Kingdom.

4.37 pm

Sir William Clark (Croydon, South)

The right hon. Member for South Down (Mr. Powell) gave us an interesting exposition how we might change our public sector borrowing requirement, but, with the greatest respect, I point out that the public sector, no matter whether it be central Government or local authority, is competing against investment in the private sector. Consequently, when the right hon. Gentleman says that if a local authority wants to overspend it can increase the rates, I remind the right hon. Gentleman that many people do not pay rates to their local authority because the rates are paid for them by the DHSS. This has a massive effect on the country's income.

Mr. Jack Straw (Blackburn)

rose—

Sir William Clark

No, I shall not give way.

The hysterical reaction of the hon. Member for Copeland (Dr. Cunningham) to this matter is unbelievable. I cannot see what the fuss is about. I point out to my hon. Friends that one of the main planks of our last two election manifestos was an undertaking to control public expenditure, and we are doing so, although many Conservative Members still think that public expenditure in its totality, at 42 per cent. of GNP, is far too high and must come down. The statement by my right hon. Friend the Secretary of State is absolutely true. The figures produced by my right hon. Friend the Secretary of State were in the autumn statement, and they are proof positive that the Government have not changed their view. The autumn statement says that, next year, local authorities will spend £30 billion and that the capital expenditure by local authorities on services, including housing, will be £4 billion—there has been no alteration.

The Government have a responsibility to examine overspending. In 1983–84 the local authorities overspent by £368 million. My right hon. Friend the Secretary of State has said that this year's overspend will be about £500 million. Yesterday, my right hon. Friend announced that in 1985–86 local authorities will have to restrict their capital expenditure on services, including housing, to £4 billion.

People talk about reserves, but I do not believe that many of us understand what they are. The are not cash reserves. As my right hon. Friend said, the sale of council houses, land and such assets has produced a reserve of £5 billion in the hands of local authorities. Much of that money, although it is in reserve, has been lent to council tenants to buy their houses.

Mr. John Fraser (Norwood)

Will the hon. Gentleman give way?

Sir William Clark

I shall not give way.

Some local authorities have been giving mortgages to purchase council houses, and in this case those mortgages canot be called in. People believe that the £5 billion is cash in reserve; it is not. Part of the money is in reserve, but not all of it. The bulk has been lent to the local authority to be used in its area or to other local authorities, and they have used the money. Consequently, if authorities wanted to spend some of those reserves, they would have to call in some of those loans.

Mr. John Fraser

rose—

Sir William Clark

I shall not give way. It would not be a bad idea if the Opposition waited.

If there were a massive calling in of loans to use the money to provide extra housing or other capital projects, the market would be affected. We must remember that, next year, the public sector borrowing requirement may increase. I believe that everyone, including my hon. Friends, would agree that it is high enough at £8.5 billion. Some of my hon. Friends would like more money to be spent on capital projects, and I can understand their point. We must find the money either by borrowing or by taxing, and I do not believe that we shall obtain the money by taxation.

Mr. Charles Irving (Cheltenham)

Will my hon. Friend give way?

Sir William Clark

I shall not give way.

Statements have been made about linking these reserves to the amount of capital expenditure. The Housing Act 1980 allows a council to spend up to 50 per cent. of receipts from the sale of assets, apart from the money that the council could generate itself. That percentage was reduced to 40 per cent. and then was reduced again to its present level of 20 per cent. It is incorrect to say that this is a new measure. It has been done since 1980. The same principle applies to the sale of land.

There is no question of taking these capital reserves from local authorities. The Government are saying merely that the pace at which those reserves are spent is to be restricted so that the public sector demands on the market are contained within the £8.5 billion limit. I am sure that all my hon. Friends would like increased capital expenditure, but I certainly would not like more capital expenditure at the expense of more taxation or borrowing.

I agree that public sector starts in house building have decreased. Last year, 167,400 houses were built by the private sector—a 10—year record. During the first nine months of 1984, construction industry output increased in real terms by 4.7 per cent. compared with 1983. In 1983, capital expenditure by the private and public sectors amounted to £45.5 billion in 1980 terms. That is not a bad record.

The Opposition talk sneeringly about home improvement grants, but they have little room to criticise this Government. In 1983–84, the Government spent £770 million of taxpayers' money on those grants.

Mr. Peter Hardy (Wentworth)

rose—

Sir William Clark

During the last year of the term of the previous Labour Government, only £98 million was spent on those grants. False excitement has been generated by the announcement by my right hon. Friend the Secretary of State. As he rightly pointed out, on 12 November the House agreed the autumn statement—no doubt the Opposition did not agree—and I should have thought that every hon. Member would agree that the public sector borrowing requirement should not be exceeded. We must support the Government in this issue. I remind those hon. Members who want to increase the public sector borrowing requirement that the national debt is costing the taxpayer £16.5 billion a year in interest alone. It would be folly to increase that debt.

The Government are to be commended on sticking religiously to their economic strategy, despite the wishes of vested interests, the Opposition, and so on. It is only because we have not been deflected from our purpose that we are now enjoying a rate of inflation which is the lowest for many years.

4.48 pm

Mr. Eric Heffer (Liverpool, Walton)

I wish to declare an interest. I believe that only three hon. Members are former construction workers—myself, as a member of the Union of Construction, Allied Trades and Technicians, my hon. Friend the member for Motherwell, North (Mr. Hamilton), who is sponsored by the Amalgamated Union of Engineering Workers, and my hon. Friend the Member for Liverpool, Riverside (Mr. Parry), who is a member of the Transport and General Workers Union. I have an interest in this subject from the angle of the construction workers and those who, like myself, when first married, lived for seven years in two rooms and therefore understand exactly what it means to be on a housing list and to live in overcrowded conditions without a proper home of one's own. That is why I was angry when I listened to the Government's statement yesterday.

To some extent I feel sorry for the Secretary of State because I do not think that he is the villain of the piece. I believe that the villain of the piece is the right hon. Gentleman who has just walked out of the Chamber—the Chancellor of the Exchequer—and who is backed by the Prime Minister. The Treasury, backed by the Prime Minister, is responsible for what the Government are doing today. I remember that the Secretary of State was asked to fight his corner—to fight for the industry. That call came not just from Opposition Members; it came clearly also from Conservative Members.

I give the Secretary of State his due. We were told that £600 million was likely to be cut from the housing budget. He undoubtedly put up a fight inside the Cabinet. We were all delighted—although not completely, because we did not want to see any cuts; we would .have liked to see further investment in the construction industry —. when he said that there was to be a reduction of only £75 million. The National Builder this month says: The Autumn Statement was better than at first feared. The truth is, as one of my hon. Friends said yesterday, the Treasury has now got its revenge. I am not always in agreement with The Guardian but it said, rightly, I think: In yesterday's package the Treasury seized hack £588 million in an accounting trick which is likely to deceive all but the closest observers. I have a great deal of sympathy with the Conservative chairman of the Association of District Councils who, following the announcement, said: In the Autumn round of public expenditure decisions, the DOE claimed that £600 million of spending cuts had been avoided. Today's announcement gives that claim a hollow ring. That is right. The Government—to use an Orwellian phrase—are using "doublethink" and "newspeak". In the debate on the Queen's Speech on 3 November 1982, the Prime Minister answered my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) — before the general election of course, that is the important point—and said: We need more capital spending by local government and in the public sector generally."— [Official Report, 3 November 1982; Vol. 31, c. 21.] In a letter to Sir Jack Smart, then a prominent figure on the Association of Metropolitan Authorities—before the general election, of course—the Prime Minister said: Local authorities have been enabled, and indeed encouraged, to increase their capital expenditure by using capital receipts to supplement their capital allocation. We are seeing the opposite of that policy being carried out today.

Mr. Eddie Loyden (Liverpool, Garston)

My hon. Friend will recall that when Liverpool city council was negotiating with the Secretary of State he told the council that although the Prime Minister was opposed to the spending of capital receipts, he was not. It was on that basis that Liverpool eventually found a solution to its problem. Does my hon. Friend see the announcement as a breach of faith with Liverpool?

Mr. Heffer

I do. I agree with my hon. Friend. It underlines the next point that I was going to make. Mr. George Smith, the president of the Institute of Housing, has said that local authorities had been the victims of a monstrous confidence trick. That is the position in which we are today.

I have no doubt that many of my hon. Friends will rightly demand the Secretary of State's resignation. I do not care whether he resigns or not, and I will tell the House why. If he resigned, leaving the Chancellor of the Exchequer and the Prime Minister, we might have someone even worse. Just imagine that. With their majority, we might have someone even worse than we have now. I can see that happening.

It is interesting to read the exchanges that took place in the House yesterday afternoon. There were Conservative Members who regarded the policy as "voodoo economics". Only two Conservative Members defended their Front Bench. Conservative Members must do what many Labour Members did when our Government made drastic cuts in housing expenditure. We were prepared to get up and say that that was wrong. Conservative Members must not just say that the policy is wrong; they must show that it is by their vote. If they do not want to vote with the Opposition, they do not have to vote with the Government. It is the only way in which the Government will take notice of what is happening.

The Secretary of State said that the announcement goes to the heart of the Government's policy. He is right. I draw attention to what the Minister for Housing and Construction said to the Building Employers Confederation in London recently. I have a high personal regard for him, but politically I feel differently. Before he spoke, Mr. Millwood, the national president, said: In the last decade total construction output had fallen by around one-fifth while output of new work had dropped by no less than one-third. The effect on building employment of that drastic reduction in workload made even more sombre reading. The Minister responded to that, and I want the House to listen carefully to what he said because it is at the heart of the Government's philosophy. It is reported in this month's National Builder that he said: Employment creation is not in itself enough to justify public spending on construction, nor for that matter on anything else. That is at the heart of the Government's argument. They are not interested in investment in the construction industry, as a Conservative Member said yesterday, to create homes and employment for the people. When some of us have said that the Government have used unemployment as a weapon, we have been told that that is exaggeration, but that is a clear statement by the Minister, and it is the essence of the Government's position.

I speak as a construction worker. There are 400,000 of my people—construction workers—out of work. Many of them are highly skilled. Many of them have been out of work for well over a year and in some cases two and three years. Thousands of young working couples wanting a home are on a waiting list. They are living in appalling and overcrowded conditions. Many of them have no hope of having a home for five or six years or even longer. Many are living in homes that need improvements and repairs. The Government have affected all those people. The Government must be prepared to change their policy. If not, the right hon. Gentleman should cease to be Secretary of State and the Government should go out of office to give those of us who want investment in the construction industry the opportunity to get our people back to work.

5 pm

Mr. Geoffrey Rippon (Hexham)

It is a pleasure for me to find myself once again in full agreement with the right hon. Member for South Down (Mr. Powell). I, like him, have been a monetarist for many years—indeed, ever since I was assistant to Professor Hayek, who I think is well regarded by my colleagues on the Government Front Bench. I have always made a distinction, as the right hon. Gentleman did when a Labour Chancellor of the Exchequer introduced the monetarist policy that the Conservative Government carried on, between good and bad monetarism. That is a distinction that sometimes my right hon. Friends and the Secretary of State for the Environment have failed to make. The argument that he advanced today is bad monetarism and irrational economic nonsense. It should be dismissed for the reasons outlined by the right hon. Member for South Down, which I warmly support.

The right hon. member for South Down referred to a factor which has been central to the policy of both Conservative and Labour Governments for many years. As Professor Hayek wrote in his great work, "The Road to Serfdom", we cannot have real democracy without effective and real local government. That is what the debate is all about. Many of us on the Conservative Benches have been worried for a long time about the growing divergence between central Government and local authorities which, for generation after generation, have worked together in partnership. They have certainly not worked always in absolute agreement, but there has been an understanding of each other's points of view and problems. That is why we have been so disturbed by the nature and manner of the statement that was made yesterday by my right hon. Friend the Secretary of State.

My right hon. Friend's statement appeared irrational, and it can be considered erratic in the context of the request made by the Government—it was made in the speech of my right hon. Friend the Prime Minister and in the speeches of other Ministers—to the local authorities to quicken and increase capital expenditure. What could be more irrational than to urge local authorities in January to increase capital expenditure by March? It is impossible for local authorities, companies, Governments or any other organisations to plan capital expenditure, except on a rational long-term basis against the background of some consistency of policy from the Government.

The money is in the hands of the local authorities in the sense that I regard my money to be in my own hands when I sell my house and lend the money to a bank at a high rate of interest, happily, thanks to the Government. Having done so, I do not consider it wrong to say, "I want the money back because I want to build a new house." The money is available, so that is M1.

Secondly, we have the men. There is no question of too much pressure being placed on the labour force. We have Ml, the money, and M2, the men. Thirdly, we have M3, the materials. I suggest that that is a much more rational concept of economics than the motorway madness, as I used to call it, of M1, M2 and M3 statistics.

I welcome what my right hon. Friend the Secretary of State had to say—I think that I understood him aright although it was rather noisy at the time—about bringing orders before the House and providing the opportunity for debate. Of course, we want to be helpful to my right hon. Friend. I do not want a vote on the Adjournment of the House to hold up all the other important discussions that are to take place this evening. I do not think that I can vote on that Question this evening, but I am prepared to abstain. However, many of my right hon. and hon. Friends and I want to leave entirely open the attitude that we shall take to the orders that my right hon. Friend lays before the House. Much will depend on his ability to give the assurance for which I asked—that the Government will consider the problems of the inner cities, some of which are great and desperate, in a broad way. In other words, between now and the laying of the orders, I hope that clear undertakings will be given to local authorities that my right hon. Friend's use of "flexible" means that if their needs can be proved they will be met, because of need, not loyalty .

Mr. Patrick Jenkin

The announcement that I made yesterday had nothing to do with the substantial sums that the Government have earmarked for the urban programme. Those sums will not be affected by the statement, and the Government will continue to make them available. there will be an increasing concentration on the partnership and programme areas. In that respect, I can go quite a long way to meet my right hon. and learned Friend.

Mr. Rippon

I am grateful for that. I have no doubt that that issue can be clarified further in subsequent discussions with local authorities before the orders are laid. Many of us are concerned that the necessary dialogue between the Government and local authority associations is not taking place. If there is further clarification on the issue to which my right hon. Friend referred, and an indication that where a case can be made a local authority will be allowed to use in a proper way more of its capital receipts, it may not be necessary to vote against the orders.

5.6 pm

Mr. Simon Hughes (Southwark and Bermondsey)

I am happy to be called by you, Mr. Deputy Speaker, after the right hon. and learned Member for Hexham (Mr. Rippon), because I think that I can speak with some authority on behalf of the inner city areas he referred to. Only 2.6 per cent. of the housing in my constituency is owner-occupied, and nowhere in Britain is there a constituency with a lower percentage. There are only four areas in Britain where the council sector is a larger proportion than in my constituency. It is over 80 per cent. in Southwark and Bermondsey. It seems to my constituents, and those of many other hon. Members, that we are debating two main issues, one being economic and one social.

Perhaps the best way to encapsulate what has been said so far is to say that the prophecy made in the autumn of 1983 by the president of the National Federation of Building Trades Employers has been fulfilled. The president warned that Treasury pressure would undermine the Government's housing policies. We have now arrived at a position at which the only available economic arguments seem also not to carry weight. If the best that the Government can do is to put up their Back Bench chairman of the finance committee to advance arguments that are spurious and points that are misleading, they had better change some of the officers who advise the Conservative party on economic affairs.

The arguments about the balance of expenditure between central Government and local government make it necessary first to remember that central Government have been by far the worse culprit. The local authorities have not been overspending considerably in excess of targets but that sort of spending has been carried on from Whitehall. It is only since the Government came to power in 1979 that we have had controls on local authority capital expenditure. We have not had the present system under any other Government, and the hon. Member for Croydon, South (Sir W. Clark) was wrong to intimate otherwise. First there was 50 per cent. control, then it was 40 per cent. and now we are told it is 20 per cent.

Dr. Keith Hampson (Leeds, North-West)

rose—

Mr. Hughes

How do the Government answer three questions that arise from the debate and which have been asked by various organisations and writers? First, how do they answer the question that is put in today's edition of the Financial Times? When the local authorities are financing from capital receipts, they are not financing from borrowing because the money is available to them and is not locked away elsewhere. How does that financing undermine the Government's economic strategy? That strategy does not require the moneys to be drawn from another source. They are present and available to local authorities and they are not, as the hon. Member for Croydon, South suggested, being lent out by local authorities to their tenants to finance mortgages. Most of the mortgages that are made available under the right-to-buy scheme are from building societies, not local councils.

Dr. Hampson

My intervention is almost redundant but I think that the hon. Gentleman will wish to put the record straight. The present system, which stems from 1980 legislation, is much freer and flexible than its predecessor. Until the 1980 legislation, there had been project controls by individual central Government Departments on everything spent by local authorities. That system was reformed and the new flexibility allowed authorities to move their capital receipts between various sectors.

Mr. Hughes

In one respect, some flexibility was introduced between the different blocks of spending, but there was another element that the right hon. Member for South Down (Mr. Powell) criticised so validly — the power of central Government to intervene in an unparalleled way in 1980, under the 1980 Act — in theory, and, since then, increasingly in practice—in the moneys, expenditure patterns and democratically made decisions of local authorities up and down the country.

I should like to ask the Minister the second question. Is it or is it not the view of the Treasury and its colleagues in other Departments that money spent on house building and home repair is a very good investment, in simple economic, financial and accounting terms as well as everything else? This figure is one of the most authoritative that I have recently seen. Is it not right that for every £100 million invested in construction, one saves about £75 million in taxation and social security benefits by taking people out of the dole queue and giving people the opportunity to live in a home of their own? If that is not right, how is it that there are criticisms from people who work in the industry—for example, only a couple of weeks ago from the president of the Building Employers Confederation—that at the moment 400,000 construction workers are being paid £600 million by the Government this year in dole money for doing nothing while the housing stock is sliding into decay and disrepair?

I have a last question for the Government. When the Secretary of State answered a question of mine on his trailer statement on the subject in July, he referred to the moneys that the Government would save by the announcement. He said that the percentage had been reduced so that we would have a larger slice to reallocate to those authorities which did not have the same opportunities for sales as others. The right hon. Gentleman concluded: I had hoped that the hon. Gentleman would give the Government some credit for that."—[Official Report, 18 July 1984; Vol. 64, c. 336–37.] I should like to pursue the question asked by the right hon. and learned Member for Hexham. Does the Secretary of State's reply mean that authorities such as mine, which have a large amount of public sector housing stock, most of which are flats, most of which are in high-rise blocks and therefore most of which will not be and have not been bought, will be the beneficiaries of the moneys that the Government are now saving? Or was what I was told in July a lie, because the whole exercise was designed simply to save central Government funds and put the central accounts in what the Government regard as some sort of order? If this is getting the Government off the backs of the people, which appeared to be the motto upon which the Government went to the people and secured a reduction in their vote last year, it is a funny sort of non-interference.

The social arguments are no less valid than the economic ones. How is it possible to justify the halving in London of the provision of public housing investment since the Government came to office? I accept that my borough is unusual because it has the largest public housing sector stock in London. In 1979–80, it received £54,068 million in Government support, which was reduced last year to £31 million, and will be reduced again. How is that justifiable when there is such a substantial need and all the figures prove that? [Interruption.] Conservative Members are rightly saying that there is mismanagement. Of course there is, and I am the first to criticise it. However, that does not justify the Government not putting money into housing when there is still a substantial need. If the Government made a substantial effort it would have immediate results in increasing employment and providing housing for our people.

The programme that we put to the electorate last year was similar in one respect to that of some other opposition parties, in that we said that what was needed was a substantial increase in public sector borrowing to make our country's infrastructure such that we would be allowed to prosper and not decline. Sewers, housing, roads and buildings are our national assets. It is ludicrous for the Government to say that they are unworthy of investment, just as it is appalling for them to preside over their perpetual decline.

One or two weeks ago the Minister for Housing and Construction used a phrase that may remain for a long time in hon. Members' memories. He said that the Government's policies in a certain area were designed to introduce into our national life the magic of the market place. This policy is the monetarism of the madhouse. It is economically, politically and socially mad. I accept that it is not even true to the Government's declared policy and philosophy and it certainly is not true to what the Government declared was their commitment to the people. If they do not believe me, I should like to tell the Government this. Compared with all the housing programmes and housing investment of all our partners in western Europe, it is in this country that the people are most miserably housed and where the smallest proportion of gross national product is spent on housing. I obtained the figures on that from Vol. 64 of Hansard. This country should therefore start to correct and not ignore the appalling disrepair and mismanagement of our assets, for which the Government and their predecessors in 1979 have been responsible.

We believe that improving the nation's housing stock would not only make a positive contribution to the well-being of the United Kingdom but create a better way of life for all sectors of our community. If the Government refuse to respond today, I hope that they will think again over Christmas and decide that they should alter their course, with a resolution not to be so stupid in the new year.

5.16 pm

Mr. Michael Howard (Folkstone and Hythe)

The hon. Member for Southwark and Bermondsey (Mr. Hughes) spoke of the Government's objective of getting off the backs of the people. His thinking and that of many of his hon. Friends and other Opposition Members is bedevilled by the fact that he confuses the people with local authorities. The Government's objective is indeed to get off the backs of the people, by trying to keep rates, taxes and interest rates as low as possible. It is sometimes necessary to intervene in the way in which local authorities conduct their affairs to achieve those objectives.

Having listened to what has been said by Opposition Members, one might suppose that this was the first occasion on which central Government have sought to intervene in this way to control the expenditure of local authorities. That is why my right hon. Friend the Secretary of State was right to remind the House about the events of 1976. We have the benefit of the account that has been given to us by Lord Barnett, who was then Chief Secretary to the Treasury. We can obtain the flavour of those events, particularly through the description of Cabinet meetings, in which the exchanges culminated in bitter controversy over the issue of whether the right hon. Member for Leeds, East (Mr. Healey) would sell his own grandmother or ask Lord Barnett to do that work for him. However, that is a reminder of the fact that all Governments have recognised that it is an important and central part of their responsibilities to control public spending as a whole, and that includes the spending of local authorities.

It is in the context of the Government's overall economic policy that one has to examine and assess the proposals before the House. It is predictable that Opposition Members should seek to make political capital out of the fact that control of public spending often means that it is necessary to postpone desirable projects, but, given the failure of Opposition Members when they were in government to achieve so many desirable objectives that they themselves set, their extravagant language on the matter will be heavily discounted by anyone who does not share their partisan point of view.

We have to see how the proposals before us fit in with the Government's overall economic policy. That is why I am somewhat puzzled by the criticisms advanced by so many of my right hon. and hon. Friends, especially as so many of them supported the Government in the Division after the debate on the autumn statement less than a fortnight ago. The proposals announced by my right hon. Friend the Secretary of State yesterday were foreshadowed in the autumn statement and form a central part of the strategy at the heart of that statement. That must be taken fully into account in any assessment of the proposals.

Mr. Irving

I am most interested in my hon. and learned Friend's speech and am listening carefully to every word of it, but I do not quite understand what he is talking about. I do not recall there being anything about this in the autumn statement — unless it was in the same jingle-jangle language as the rate support grant proposals, so that people could not understand it. Local authorities were told previously that the money that they contributed to the pool would be at their disposal. The Secretary of State has repeated today that that money will be "available" to local authorities—but they will not be able to spend it. Why?

Mr. Howard

I shall tell my hon. Friend why. The matter is dealt with in paragraph 2.29 of the autumn statement. If local authorities spend an unlimited amount of money, less money will be available for the private sector— [HON. MEMBERS: "Ah!"] Other things being equal, that means that interest rates will be higher than they otherwise would be. That remains the case whether the money being spent by local authorities is borrowed or is derived from the proceeds of selling council houses or other assets. In any event, the money is being spent, and it is thus not available to be borrowed by the private sector. That is why interest rates would be higher than would otherwise be the case. Local authority treasurers do not sleep with that money under their mattresses. It is either used to diminish existing borrowing or put on deposit and is available to be borrowed by the private sector. If that source of finance is removed, less money will be available to be borrowed and interest rates will be higher.

Mr. Rippon

Paragraph 2.29 of the autumn statement says: The outlook for local authority capital spending in 1984–85 is uncertain. Early returns suggested a large overspend on cash limits in England and Wales, and local authorities were asked to restrain spending, and to generate extra receipts. Net provision for Great Britain in 1985–86 is about £3.1 billion. This is a reduction from Cmnd. 9143 of about £600 million, to take account of the 1983–84 overspend and of increased receipts"— to which I would add, which, to the best of our knowledge and belief, they will be allowed to spend.

Mr. Howard

The figure for Great Britain is indeed £3.1 billion. The figure given by my right hon. Friend the Secretary of State yesterday represents the proportion for England. There is a reduction from Cmnd. 9143 of the amount stated, and it certainly takes account of the previous year's overspend and increased receipts.

Dr. Hampson

There are a couple of distortions that my hon. and learned Friend seems not to have considered. No one is arguing for unlimited freedom to spend capital assets, but we all know that local authorities borrow against capital assets. Moreover, as they are gaining interest on them, that revenue can be and is spent on current account. The Government constantly argue that current account spending is running away and should be controlled while capital spending should be increased, but the current proposals positively encourage the reverse.

Mr. Howard

That is one of the matters to be taken into account. If the money were spent in the year under discussion, less would be available for future years and pressure of interest rates on local authority current account payments would be that much heavier and more difficult in the future.

I hope that the whole House will welcome the objective of keeping interest rates as low as possible in the cause of job preservation and creation. In all our constituencies there are many businesses on the cusp of profitability. If interest rates were raised, they might well cease to operate or have to make workers redundant. That would increase unemployment. There are also businesses contemplating new projects and people contemplating starting new businesses. Interest rates are a critical component in the costs that those people have to take into account in making their decisions.

It is all very well for my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and others to share the general approbation of the attempt to reduce interest rates, but it is one thing to say that that is a good thing and quite another to will the means for that end. My right hon. Friend the Chancellor of the Exchequer cannot permit himself the luxury of that mental dichotomy between the means and the end. He has to make the connection between the two, and that connection is embodied in the autumn statement that so many of my right hon. and hon. Friends supported less than a fortnight ago. The proposals now before us represent a central part of the strategy embodied in that statement. If one wants lower interest rates, one must will the means and accept the sometimes uncomfortable consequences of so doing.

Mr. Straw

Even within the hon. and learned Gentleman's view of the money market as a closed system in which crowding out pushes up interest rates, does he not realise that, although holding cash balances in local authorities may reduce interest rates, the reduction in orders and the increased borrowing by companies that this causes will increase interest rates? If the money were transferred from local authority balances to construction company balances, the result would be more construction, more people back at work and an increase in company liquidity without any overall increase in interest rates.

Mr. Howard

The hon. Gentleman leaves out of account the overriding importance of encouraging at every turn the wealth-creating private sector of the economy. That is best achieved by pursuing policies that will keep interest rates as low as possible.

I stood for election 18 months ago on a manifesto containing the following words: We shall maintain firm control of public spending and borrowing. If Government borrows too much, interest rates rise, and so do mortgage payments. Less spending by Government leaves more room to reduce taxes on families and businesses. I am proud to have been elected to the House on that manifesto, and I adhere to its commitments. That is why I supported the Government in the Division after the debate on the autumn statement and that is why I shall support the Government today.

5.28 pm

Mr. David Winnick (Walsall, North)

While the hon. and learned Member for Folkestone and Hythe (Mr. Howard) was speaking, one of my hon. Friends suggested to me that the hon. and learned Gentleman was trying to become the new Secretary of State for the Environment.

Mr. John Fraser

No—just Creep of the Year.

Mr. Winnick

If that was indeed the hon. and learned Gentleman's purpose, I must say that I doubt whether he would have any more success at the Dispatch Box than the present Secretary of State.

We should be grateful to the Secretary of State for the Environment for one thing only — turning the spotlight on the present appalling housing situation. I had often wondered how long it would be before the media and others outside the House turned their attention to the situation in the building industry and the difficulties faced by so many people as a result of the housing shortage.

Ministers often refer — the Secretary of State did so today — to what happened under the Labour Government. They try to use that as an excuse for what is happening at present. It is true that there was a decline in public sector house building under the Labour Government — I would not wish to deny the obvious, and my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) has made the same point — but it is interesting to note that in 1978, after that decline had taken place, there were 107,000 housing starts in the public sector. By 1981, under the present Government, the figure was just 37,000. The estimated number of public sector housing starts in 1984 is 40,000. There is no comparison between what happened under the Labour Government — even bearing in mind the decline that took place between 1976 and the time the Labour Government left office — and what has occurred under the present Government.

It is possible that, as a result of yesterday's statement, the number of public sector starts in 1985 will be 36,000, or less. It is interesting to note, too, that there will be fewer starts in the private sector this year than in 1978.

So far, I have dealt with the national position. In Walsall borough no contracts have been entered into for new council house building since 1979. As a result, an increasing number of people there have to wait to be rehoused. In many cases, tenants have to wait for many years before any improvements are made to their pre-war council dwellings.

Nationally the position is appalling. The House should be very concerned about the cuts that are to be made in addition to all the previous cuts. In England, last year, it is estimated that 78,000 households were accepted by local authorities as being homeless. In London, more than 2,000 homeless families were using bed-and-breakfast hotels as temporary accommodation last summer. The cost of such temporary accommodation in London alone is estimated at £12 million a year.

Mr. Tony Marlow (Northampton, North)

What about shortholds?

Mr. Winnick

Instead of shouting from a sedentary position, the hon. Member for Northampton, North (Mr. Marlow) should bear the facts in mind. That money would pay off the loan charges of 3,000 rented homes costing £30,000 each.

Mr. Marlow

rose—

Mr. Winnick

I shall not give way, because of time. There are other categories of people about whom we should be deeply concerned. There is the plight of the young, young marrieds. If young couples cannot obtain a mortgage and if the local authority is unable to rehouse them, they will probably not have adequate accommodation. There may be nowhere for them to live. That appalling situation is one more reason why a proper housing drive should be undertaken.

There are also families with young children in my constituency and, of course, in many other areas, living in high-rise flats, who wait for years on end to be rehoused in rented houses. It is all very well for Ministers to talk about the number of dwellings sold. Almost without exception, those dwellings have been houses, not high-rise flats.

Many homes remain unfit. I have received some figures from Shelter on the subject. The Minister for Housing and Construction should be deeply concerned about the problem. Nearly a million homes are unfit for human habitation. Nearly a million homes lack one or more basic amenities. Nearly 4 million need substantial repairs. The number of homes needing expensive repairs — repairs that will cost more than £2,500—has risen by over 20 per cent. in five years. The situation, therefore, is extremely serious.

Mr. Hardy

My hon. Friend is presenting a most realistic appraisal of the situation. However, he has not mentioned the fact that last year we cleared only 0.1 per cent. of the housing stock. As the houses now being built in the private sector will not last for a thousand years, we are storing up trouble for the future.

Mr. Winnick

I take my hon. Friend's point.

I do not blame the Minister for Housing and Construction. The real culprit is the Chancellor of the Exchequer. However, it was leaked to the press, before the autumn statement was made, that if there was to be a cut of £600 million, the hon. Member for Eastbourne (Mr. Gow) intended to resign. The story was never denied. It appears that the cut is to amount to over £400 million. The hon. Gentleman should remember the stories that appeared in the press, which I took to be true. As a housing Minister, he has duties and responsibilities. I certainly do not see how he can carry out his duties after the statement made yesterday by the Secretary of State.

Like all my hon. Friends, and many Conservative Members as well, I find it difficult to understand how when so many people are desperately in need of new accommodation or repairs to their homes, nearly 25 per cent. of building workers can be on the dole. What justification can there be for allowing so many people to remain on the dole when they could be building and improving the homes so urgently needed for our people?

We must always bear in mind how much money is paid out in total in unemployment and supplementary benefit to people in the dole queues. How can the Government be serious about trying to reduce unemployment when, as a result of yesterday's statement, so many more building workers will join the dole queue during 1985?

I find it difficult to envisage how historians in future will write about these days. How will they explain the present Government's refusal to allow local authorities to spend their own capital receipts—not borrowed money —on providing the dwellings that are needed, while at the same time the Government are spending overall such large sums on supplementary and unemployment benefit? It is no wonder that, when the Secretary of State made his statement yesterday, hardly any Conservative Members defended the Government's position. At most, two Conservative Members did so, including the hon. Member for Northampton, North.

Conservative Members who refuse today to support what is, in essence, a Treasury diktat to the Secretary of State for the Environment will be not only doing a service to the homeless and to others in acute housing need, but showing that, unlike the Secretary of State, they cannot vote for an economic absurdity. I hope that a sufficient number of Conservative Members will demonstrate their independence as Back Benchers by refusing to support measures that can only harm the country and substantially increase unemployment.

5.38 pm

Mr. Peter Hubbard-Miles (Bridgend)

Thank you, Mr. Deputy Speaker, for calling an hon. Member who represents a Welsh constituency. Local government in Wales might have something to teach English local authorities. Anyone who has been involved in local government for some time must have concluded that the breakneck acceleration in local government spending during the 1960s and 1970s could not have continued indefinitely. Most of the years that I have spent in local government have been punctuated by dire warnings from Ministers in successive Governments. Those warnings started with our being told that the party was over.

I have served on a large county council in Wales and am a member of a Welsh district council. I am surprised to be taking part in a debate on an Opposition motion that criticises the Government for cuts in capital expenditure. If any party has acquired expertise in the use of the knife, it is the Labour party. It has been responsible for much heavier cuts in local government capital expenditure than the present Government.

If there were any Welsh Labour Members present, I should not apologise for reminding them of when the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) trekked around housing authorities in Wales boasting of the Labour Government's intention to expand the capital investment programme. He urged us to spend, spend, spend. He cheerily waved as he told us to go out and try to break the bank. Only a few short weeks later we received the bad news that the bank was broke. We then received the worse news that no houses had been built and that the programme had been scrapped.

In July 1976 the right hon. Member for Leeds, East (Mr. Healey) announced cuts of £1.012 million, four fifths of which was in capital spending, and which the Treasury admitted cost 150,000 jobs. Further cuts of £800 million in 1977–78 and £1.5 million in 1978–79, about half of which were in capital spending, caused the loss of another 140,000 jobs.

In 1973–74, Welsh capital spending was 42 per cent. of revenue spending but in 1978–79, when Labour was in office, it had been reduced to 18 per cent. of revenue spending. So much for the bleatings of Opposition Members about the need for more capital expenditure. They support policies that produce a level of revenue spending that precludes any increase in capital spending. In Wales, capital spending has increased from £226 million in 1978–79 to £388.5 million—

Mr. Ray Powell (Ogmore)

Give the figures in real terms.

Mr. Hubbard-Miles

The hon. Member for Ogmore (Mr. Powell) was in the council chamber when the hon. Member for Merthyr Tydfil and Rhymney announced his expansion of capital spending. He was the first to welcome that tremendous expansion in housing investment but had to apologise later when the programme was scrapped.

Mr. Powell

Will the hon. Gentleman give way?

Mr. Hubbard-Miles

I cannot give way because time is short.

Mr. Powell

Will the hon. Gentleman give way?

Mr. Hubbard-Miles

No. I shall consider a local authority that the hon. Member for Ogmore knows well—

Mr. Powell

Give way, then.

Mr. Deputy Speaker

Order. The hon. Member for Bridgend (Mr. Hubbard-Miles) is clearly not giving way.

Mr. Powell

But he has mentioned me.

Mr. Hubbard-Miles

The local authority of which the hon. Member for Ogmore was a member for a time increased its capital expenditure—

Mr. Powell

But how many more homeless people are there in Ogmore now?

Mr. Hubbard-Miles

I shall answer that question later.

In 1982–83, Ogmore borough council's capital expenditure was £12 million. In 1983–84, it was £17 million— an increase of 40 per cent. I am sure that Opposition Members will say that that is a great thing and that the authority is providing services. However, not one penny of that increase was spent on housing. The Labour party in the local authority which the hon. Member for Ogmore knows so well got its priorities right, like all other Labour-controlled authorities in south Wales, and spent the increase on new council offices and leisure centres. So much for the Labour party's caring about homeless people in south Wales. The Ogmore council's projected spend for next year is £21 million—a further increase of 24 per cent. Only a fraction of it is to go into housing.

I know that some of my right hon. and hon. Friends have a great deal of sympathy with Conservatives in south Wales. They recognise that we have to live with extravagant and profligate councils that are so heavily Labour-controlled. If I were to tell ratepayers in my constituency that the local authority was prudent and budgeted wisely, they would laugh in my face. They believe the local authority to be profligate.

Mr. Powell

They will be laughing in the hon. Gentleman's face at the next general election.

Mr. Hubbard-Miles

I did not lose my community council seat and I was not defeated in the borough elections. The hon. Member for Ogmore will remember those elections. Although ratepayers think that local authorities in my area are profligate, if Welsh local authorities had increased their current expenditure last year in line with their English counterparts, they would have spent £66 million more — equivalent to an additional rate burden of 24p in the pound.

As a result of Welsh local authorities' comparatively wise budgeting, my right hon. Friend the Secretary of State for Wales has been able to release resources for a wide range of capital schemes. For 1984–85, Government expenditure plans amount to £84 per head—45 per cent. above the equivalent figure for England. The lesson from Wales to English local authorities is that English authorities have eaten their seed corn and have too often followed high-spending, extreme and extravagant Socialist priorities. I welcome the fact that, as a result of overall restraint by Welsh local authorities on public expenditure, my right hon. Friend the Secretary of State has been able to announce a more flexible and generous capital settlement this year. I also welcome what, for me, is one of the most important aspects of the English and Welsh proposals—the fact that those proposals build much more flexibility into the capital control system.

The Labour Government and the present Government have overspent and underspent. As a result they have had to take midstream corrective measures. Both Governments have witnessed resources being wasted through under-spending — there was an £85 million underspend in housing in the two years 1981–83 — and both Governments have had to act because overspending was likely to send the economy out of control.

The advantage of the present proposals is that they afford longer lead times for the planning of capital expenditure by local authorities; a higher proportion of underspend can now be carried forward into the following year; and a modest amount of overspending will not upset the programme. This is important because there are bound to be occasions when vital and unforeseen projects will have to be carried out when the local authority will find that it has already committed its total capital allocation. If the need for mid-term intervention can be eliminated, that will be a great step forward. It will avoid the need for local authorities to commit the bulk of their capital allocation as early as possible in the financial year, thereby avoiding any possibility of restraints midstream. That is what presently happens.

My own local authority, in the first three months of the year, contractually committed £ll million out of its total capital allocation of £17 million. That produces a distorted picture of the pattern of capital spending.

It has been argued that the reduction in the prescribed proportion of capital receipts in England to 20 per cent. will affect the number of council house sales, but Wales has lived with a figure of 25 per cent. for a long time. That is now to be reduced to 15 per cent., but Wales has sold a larger proportion of its housing stock than England.

The Labour party's record on capital housing in Wales is dismal. The protestations of Labour Members about the reduction in the prescribed proportion is hypocritical, because as my right hon. Friend said, if they had their way there would be no capital receipts. If only for those two reasons, I intend to support the Government tonight.

5.52 pm

Mr. Dafydd Wigley (Caernarfon)

I am glad to have this opportunity of following the hon. Member for Bridgend (Mr. Hubbard-Miles), if only to apologise to the people of Wales for the fact that some Welsh Conservative Members, who are so totally uncritical of what the Government have proposed, are capable of making crawling, uncritical speeches such as the one we have just heard. We did not hear a word from the hon. Gentleman about the rights of Welsh local authorities to determine what to do with their resources. I wonder what his friends on the councils that he used to mix with will think about that.

The hon. Gentleman merely looked backwards to what happened in the 1970s. It was wrong then, and it is wrong now, and two wrongs do not make a right. He criticised profligate councils in his own area for what they have done in the past and more recently, but the answer should remain in the hands of the local electorate who have the right to vote such authorities in or out of office. That is what democracy is about. It is no use the hon. Gentleman pouring out his venom towards those councils simply because the Conservative party failed to take control of the local authority in his area.

Mr. Keith Best (Ynys Moô)

rose—

Mr. Wigley

I shall not give way, just as the hon. Member for Bridgend did not give way, but I am sure that the hon. Gentleman will have an opportunity to catch the eye of the Chair.

Yesterday, when the Secretary of State for Wales made his announcement, I had the opportunity to draw to the attention of the House the reduction in capital expenditure in Wales since 1979. The papers that have been supplied to the House show that capital expenditure in Wales for the next three years will be £349 million, £351 million and £345 million respectively—about £1 billion over three years, or an average of £330 million per annum —compared with £440 million per annum from 1979 to 1984. That is a reduction in capital expenditure which Wales can ill afford.

I realise that part of the problem arises from the success of the Government's repair and renovation policy, which presented opportunities for the people of Wales, whose housing stock is appreciably worse than the average housing stock in the United Kingdom as a whole. We have been told that 1 million houses are substandard in Britain as a whole. In Wales, the figure is almost 100,000. Therefore, 5 per cent. of the population has 10 per cent. of the problem, and the aging housing stock in Wales reflects the old industrial patterns of many south Wales areas.

Out of that repair and renovation policy came a tremendous demand for money. I concede that the grants available were extremely attractive. The tragedy was that having given this promise before the general election in 1983, the Government subsequently failed to make the money available, and thousands of people in Wales who expected to carry out renovation programmes have been unable to do so. Some have been caught in the impossible position of having to wait six, seven or eight years before the money will be available.

The small Dwyfor district council area had asked for £1.25 million capital, but is to get only £605,000 for housing. Within the £1.25 million for which it asked, £500,000 was to deal with 130 applicants for repair grants, even though it received a total of 710 applications. Although only a small fraction of the number of applicants would have been catered for, the Government have given half what the council asked for. It will therefore be virtually impossible for any of those 710 people to be paid. Even though they have a right to expect it, hardly any of them will receive the money next year. That is the net effect on the ground of the policy which the Government are pursuing.

Dwyfor also has a contractual obligation for a refuse disposal unit, but it will be extremely difficult to meet that commitment, given the settlement that has just been announced.

There is a similar pattern in the Arfon borough council area. Even though 1,100 people had a legitimate and legal right to a repair grant, only 250 at most will be dealt with next year. The other 850 will have to wait for a second or third year until the grants are paid. That just is not good enough.

In fact, money is available. As the Secretary of State for Wales said last year, when speaking about capital allocations for 1984–85: Local authorities can, of course, augment the spending power of those allocations by the use of capital receipts". He made that promise to Parliament, yet he has now gone back on it. The right hon. Gentleman is in breach of promise, and as a result local authorities which took him at his word have been caught with the responsibilities but without the resources to meet them. Indeed, capital resources for local authorities are reaching the same state as post-war credits—after the depression is over, those resources will be unfrozen and local authorities may have a hope of doing something with them.

The first issue at stake is the freedom of local authorities to use money which they rightly thought would be theirs, and which the Secretary of State told them would be theirs to spend. That will now be cut to the bare bone. A couple of hundred million pounds will be held up which could be pumped into the economy to meet the cost of housing, education and the other capital projects in Wales.

Secondly, there is the effect that this announcement will have on the thousands of people who need to have this work done, not to mention the effect it will have on the 40,000 building employees at present out of work. They could have looked to the Government for the money to be used to alleviate the social problems facing many families and the unemployment problems now facing building workers. Many small building companies will now go bankrupt because of the drying up of funds from the Government's capital programme.

The third issue is the effect on the economy. It appears that the Government think that this is necessary in the context of the PSBR, but we are really seeing money taken from the private sector as a result of the sale of council houses. We are debating today a necessary corollary of the programme of selling council houses. The Government did not envisage that by selling council houses they would be taking millions of pounds out of the private sector to pay for them. The assets remain, but they have been transferred from the public to the private sector. The money has gone the other way. Capital resources are now at the disposal of local authorities, which could use that money to build other capital resources for the community. The balance would then be the same.

Approximately the same proportion of money's-worth of capital resources would be in the public sector as in the private sector. However, less money is available in the private sector. Some private money has been dried up by the transfer to the public sector for the purchase of council houses. The point that the Government do not like is that there is less money in the private sector. It does not make any difference to the public sector borrowing requirement. It is as broad as it is long. However, the consequence of the policy of selling council houses on the availability of finance in the private sector is hitting the Government. Instead of sticking to dogma, they ought to release this money and get it to work for both economic reasons—employment—and social reasons—housing.

6.1 pm

Dr. Keith Hampson (Leeds, North-West)

I have a suspicion, following the speech of the hon. Member for Caernarfon, (Mr. Wigley), that the Treasury is rubbing its hands with glee. Far from not recognising what was likely to happen, I feel sure that it felt unhappy in 1980 when local authorities were given greater freedom over the use of their capital receipts. The Treasury felt that to give such freedom to local authorities would create problems. The success of the policy of selling council houses in particular — most of the £5 billion came from council house receipts—is now a cause of embarrassment. I fail to understand, however, why we are raising the matter on a hypothetical overspend for 1985–86. At times we have encouraged more spending. Why should we antagonise yet again our friends in the local authorities? They are upset because it was part of the deal to give them greater freedom on the capital side when we imposed tighter restrictions on the current side. It was argued that we had to tighten up much more on current account as a result of the passing of the 1980 Act.

What is happening to housing? The figures are depressing. There is a 23 per cent. reduction on the same quarter last year on the public sector housing side and an 8 per cent. reduction on the same quarter last year on the private side. That would be understandable and acceptable if there were a commensurate increase for home improvements, the policy adopted by several of my right hon. Friends. They accepted a reduction in new building because of the massive increase in home improvements. There was a fourfold increase in home improvement grants during the first four years of this Government. They have been reduced from 90 to 75 per cent. The rate of home improvement grants is slowing down. At the same time, there is a slowing down of new building. Consequently, there is a dampening of economic activity in housing. My right hon. Friend's approach will psychologically dampen down prospects even further.

Mr. Tony Banks (Newham, North-West)

Will the hon. Member therefore support a move requiring local authorities to stop selling council houses because this will only lead in the future to greater embarrassment?

Dr. Hampson

No, quite the contrary. I should like there to be greater freedom within ceilings for local authorities to use their assets as they wish. The Secretary of State for the Environment deserves a great deal of praise —I am glad that he is here to hear me say this—for the way in which he defended the housing investment programme. However, there is a certain irony about the fact that although we refer to the housing investment allocation, it is not an allocation of cash but an authorisation to borrow. The permission to borrow is held up while at the same time local authorities are restricted in their freedom to use the cash which is in their hands. That distortion is even more acute when that cash, put on deposit, generates revenue. It results in interest charges, which provides them with more revenue to spend upon current account. Minister after Minister has said that most of all we have to get to grips with the current expenditure of local authorities. There was a graph which showed current account spiralling out of control, with capital account being crucified and falling away rapidly. What is the sense of our present approach when we ought to be encouraging the use of cash assets and controlling the current account of local authorities?

The first-class speech of my hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) put superbly the Treasury case for job creation. However, is the fact that these assets are available for private companies to draw on and hence, theoretically, to create jobs, the most effective way in the real world of creating jobs as a matter of urgency? Or is it not the case that if the same money were allocated to private companies for the construction of houses and for home improvements it would create jobs immediately? The person who carried out my home alterations told me that every time he is given a contract to modernise bathrooms in council houses which were built in the 1930s he hires at least 12 to 20 extra unskilled people, in a pocket of unemployment, in order to fulfil those contracts. This money is creating jobs, but which is the right way to create them? This casts real doubt upon the PESC theology relating to what is public expenditure over that period. My right hon. Friend has not yet convinced me that his proposals are worthy of support.

6.7 pm

Mr. William O'Brien (Normanton)

Conservative Members have given very little encouragement to the districts and metropolitan areas where the hurt is felt most. Yesterday's statement by the Secretary of State, and today's contribution, leave no doubt about what is in the mind of the Government and the effect that it will have upon those who want new housing, particularly in the rented sector, and its effect upon improvement grants. There is also the question of the capitalisation of repairs and the infrastructure. The claim made by the Secretary of State will affect the destinies of many people. The consequences of the Secretary of State's actions will shatter the hopes of those who want rented accommodation. His statement will add further to the despair of those who want grants from local authorities for improvements and repairs to property. It is a further blow to the construction industry. Both the public and the private sectors have appealed to the Government for a capital injection into the construction industry.

Minutes before the statement was made yesterday, a meeting was held between the Under-Secretary of State for the Environment, the hon. Member for Ealing, Acton (Sir George Young), and the Institute of Maintenance and Building Management, at which the members of the institute appealed to the Minister to give special consideration to the construction industry because of the effects that the statement will have on the industry and because the restrictions applied by the Government will reduce still further the low level of investment in both the public and private sectors of the industry.

Conservative Members have referred to partnership agreements. They have been tried, but no real help is given to existing partnership agreements. The training needs of the industry have to be considered. The industry has been decimated because it is denied the required capital expenditure. If there is no training, the practical, experienced people who are required to make sure that the industry can continue to function effectively will not be available. That is because of the way in which the Government have been attacking the construction industry. Conservative Members have claimed that this is the first cut in the capital programme, but I remind the House that there have been capital and revenue cuts in local government for many years under this Government. The latest cut is a further blow to democracy in local government.

The Secretary of State said that there had been a 4 per cent. growth in the building industry in the past year. But a 4 per cent. growth from a low base means little, and that is how the captains and workers in the industry view the Secretary of State's statement. Unless the Government help the industry, there will be redundancies and more unemployment.

Many local authorities, including the two in my constituency, have had to stop providing improvement grants—only grants for the bare necessities are allowed —because of reductions in their HIPs. The Secretary of State's statement means that there is no hope for people who want improvement grants.

I served on the Wakefield council for many years and I know that council house improvements in that area have ceased because of expenditure cuts. About 5,000 houses built immediately after the war have had no improvements made to them. Tenants have demanded that their houses, which are 35 or 40 years old, should be brought up to modern standards. The Secretary of State's statement gives them no hope. In Wakefield, 4,000 old-age pensioners—including 518 over the age of 75—are on the waiting list. They have no hope of being housed.

Mr. Roland Boyes (Houghton and Washington)

I understand why my hon. Friend is concentrating on the problems of improving homes, but many people do not have a home at all. During the debate on homeless persons which I initiated on Friday, the Minister for Housing and Construction, in a sympathetic and understanding speech, said: It is up to local authorities, first, to discharge their statutory duty and, secondly, to determine their own priorities after we have made our HIP allocations. No one disagrees with the hon. Gentleman when he says that the resources available for housing are a material factor."—[Official Report, 14 December 1984; Vol. 69, c. 1337–8.]

Mr. Speaker

Order. This is a speech.

Mr. Boyes

No. I have finished. Is not this—

Mr. Speaker

Order.

Mr. O'Brien

I agree with some of the points made by my hon. Friend.

The Leeds district council applied for £66 million to cover its housing needs for the coming year. It is to receive only about £28 million, which means that there will be no new starts in the city of Leeds in the next financial year. There is a demand for more investment and we must wonder what will happen under the Housing Defects Act 1984. No one knows what effect the Secretary of State's statement will have on that Act. I hope that the Minister for Housing and Construction will give us some information on that.

Will the Minister also explain what will happen to capital receipts from land? Will there be no interference with those receipts? Will that money be available to local authorities or will it come under the whiplash of the attack on freedom and democratic procedures in local government?

6.15 pm

Mr. Tony Marlow (Northampton, North)

A few facts: capital allocations this year, on the same basis as last year, after London Regional Transport has been stripped out, go down from £4,200 million to £4,000 million—not a great difference. Education, despite falling rolls, will have the same level of expenditure allocated. Transport and roads will have an increased level of expenditure. Personal social services will come back a bit, but only to reflect the actual level of expenditure on those services.

There are only two significant changes. One is that the Government have devised a strategy for keeping within limits that have been agreed, but not met in the past, and the other is that local authority expenditure on housing will be reduced against last year by about £200 million.

Mr. Roger Freeman (Kettering)

Will my hon. Friend give way?

Mr. Marlow

No. There is no time.

Local authority expenditure on housing divides, as everyone knows, between an authority's expenditure on its own resources and expenditure on grants. The House was moist yesterday with the weeping of the Opposition over grants. Hon. Members would hardly think that in the last year of the Labour Government housing grants amounted to less than £100 million, whereas in the last full year of this Government they were £700 million.

After the orchestrated cacophony of misinformation from the Opposition Front Bench yesterday, many people would not have realised that those without basic amenities in their houses are still entitled to statutory grants. Mandatory awards remain mandatory.

To the extent that discretionary grants are being reduced, if the Opposition are concerned to provide cash for the middle classes to carry out improvements to their homes—which they would probably have carried out on their own account anyway—with the taxes of the lower paid, we shall be interested to hear that in the winding up speech from the Opposition Front Bench.

I must say to my hon. Friends that all that is happening is that cuts will be made in local authority housing programmes—the building of council houses. I do not know about my hon. Friends, but I believe that we were not sent here massively to increase the number of council houses. We are here to increase private housing. If my hon. Friends are concerned about it, let them go to other countries in Europe where there are fewer council houses and more private sector rented accommodation. Are the slums worse there? Is homelessness worse there? Is the standard of housing worse there? Do we want more council houses or do we want more private accommodation?

Look at the record of local authority housing. Look at the massive mismanagement that has taken place in some areas. Who built the tower blocks that are causing us problems now—the private sector or the public sector? Who uprooted communities and built slums in their place —the private sector or the public sector?

Let us have a quick glimpse at some of the more infamous Left-wing local authorities and see how they have dealt with their housing assets and with the people who live in their council houses. For example, 105,000 local authority homes are currently vacant. In Hackney, one council house in 14 is empty; In Liverpool, 6,500 are vacant. In the Socialist republics, vacancy rates —wastage—are three times the national average and three times as high as they need to be.

Shirts were torn on the Opposition side on behalf of the homeless yesterday. Hypocrisy! The Floor was overflowing with Socialist crocodile tears about homelessness. Why is it that Labour authorities predominate on the list of housing shame? Why are there between 700,000 and 1 million houses vacant at the moment? Is it not because they have been blighted from use by Socialist threats of retribution against the private sector? Why are Labour Members holding the sword of Damocles over the shorthold provisions which would otherwise provide housing for many of the homeless?

Time is short, so I have just one plea to make to my right hon. Friend the Secretary of State. Some houses have been transferred from the public sector for privatisation and improvement. Privatisation is so successful in many areas of the economy—let us get hold of some of these little Moscows and pass them on to people who know how to manage them. Let us privatise more houses and cut the public cost of housing.

6.20 pm

Mr. Barry Jones (Alyn and Deeside)

As the hon. Member for Northampton, North (Mr. Marlow) has illustrated, the debate has been both contentious and lively. Indeed, it has been a Back Benchers' debate. The pity of it is that many hon. Members sought to catch your eye, Mr. Speaker, but were prevented from speaking by the pressures of time.

In his opening speech, the Secretary of State undoubtedly nailed his colours of Thatcherism to the mast. But I believe that many hon. Members on both sides of the House rejected that academic defence. Many of us thought that we saw the very bankruptcy of the Government's policy throughout his speech, just as we saw it yesterday when he delivered his statement. The response of hon. Members on both sides of the House demonstrated that. After a searching examination by hon. Members from all parties, there was precious little support for the principles that the right hon. Gentleman had attempted to expound from the House.

The right hon. Gentleman's speech was replete with many revealing phrases, such as "public expenditure plans", "the overspend", "the contingency reserve", "the PSBR", "the cash limit" and "public sector resources". It was the dry as dust, unfeeling, intellectual approach of the Treasury Minister in exile. But we would say that housing is about people, and that is what was missing from the right hon. Gentleman's speech. Indeed, it was a speech made with the Chancellor of the Exchequer at his side, looking for all the world like a veritable minder. Many of us, particularly in the Opposition, believe that yesterday's statements, which have scandalised opinion within and without the House, were effectively constructed inside the Treasury. Indeed, housing Ministers seem to be the prisoners of the Treasury.

From the point of view of statecraft and of good, just government, the state and the Government should not pass up the chance to create good housing. The aim should surely be to lessen the divide between the haves and the have nots, and between those in good and those in wretched housing. If Cabinet Ministers will not tackle the rotten housing in our great cities, but instead seek to strangle the efforts of housing authorities to enhance the lives of the underprivileged, the badly housed and the unwaged, they are accomplices to the storing up of immense social and economic problems for future Governments.

I shall briefly outline some of the problems that we face in Wales. They are desperate problems, which it will take a long time to put right, even if we were in the ideal situation of having all the resources that we asked for. The Welsh housing problem is both unique and extremely worrying. It is worrying not only to those forced to live in conditions of increasing squalor but also to the various sectors of the Welsh housing industry which view the next 20 years with profound trepidation. They believe—as I do — that unless a properly planned, long-term programme of housing investment is launched very soon, we shall need to undertake massive slum clearance schemes by the end of the century.

The problem is as simple as it is serious. We have a vast stock—much larger than the average—of older houses that are now in need of urgent repair. About 39 per cent. of our total housing stock was built before 1919, compared with a figure of 29 per cent. for Britain as a whole. Indeed, 9 per cent. of Welsh homes are described as chronically unfit and another 18 per cent. need immediate renovation work. Thus we say that the Government have failed to tackle the housing crisis effectively.

I beg the Government to reconsider their inflexible approach. We have major human, social and economic problems in our valleys and in the great seaboard of towns of Swansea, Cardiff and Newport. In our valleys, one in five men are jobless. In south-east Wales health problems abound and are well above the average. As hon. Members will concede, the environment is frequently most unsatisfactory—to put it mildly. Our transport facilities are poor. In effect, the debate must be about the quality of life of those who live in the valleys of south-east Wales.

We say that it is unjust of the Government to deny those communities the prospect of a better life. Good housing is needed for that better life but it is not promised by the Government's promises as enunciated today. Housing allocations, and allocations for all other services, have in Wales taken a reduction in real terms of more than £60 million. The Welsh districts now claim an effective reduction of nearly one third in capital housing expenditure over the past two years. The reduced prescribed proportions of housing capital receipts and of other capital receipts have reduced those districts' spending power next year by £50 million at a stroke.

I say to the Secretary of State for Wales that a veritable mountain of sales receipts is staring him in the face. He should use it. He should not forget that, under his regime, a housing crisis of mammoth proportions has arisen. That crisis has paralleled a mass unemployment crisis, to which he has also contributed. We say that he has neglected the social and economic needs of the Welsh people as much as he has attacked and restricted the freedoms of local government.

Despite the Secretary of State's claims, at current rates of allowance for capital expenditure, it is estimated that it will take 40 years to improve the housing stock of the Cynon valley. That is an example of how the right hon. Gentleman has starved housing in Wales. I say to Conservative Back Benchers that Ministers clearly have not moved an inch from yesterday's much-condemned statements. Conservative Members have no doubt listened hard to find reasons for supporting the Government tonight, but if they objected yesterday to the Government's policy, they will surely object to it tonight. They should remember the many homeless, the unemployed building and construction workers, the many tenants, and particularly — perhaps from their point of view — the hard-hit owner-occupiers, who should be given grounds for hope.

For those reasons, I ask hon. Members to support us in the Lobby.

6.29 pm

The Secretary of State for Wales (Mr. Nicholas Edwards)

We are being asked to adjourn the House and lose the business. I can confirm to my right hon. and learned Friend the Member for Hexham (Mr. Rippon) that there will be an opportunity in the new year to vote on the orders relating to these capital expenditure matters.

Three main points of view have been represented in the debate. There is the point of view of those on the Opposition Benches who do not believe in control of public expenditure and whose own reckless pursuit of that principle led them to the IMF and the largest cutback in capital spending that Britain has ever seen. For the hon. Member for Copeland (Dr. Cunningham) to talk about stop-go policies against that background was a pretty good impertinence.

Dr. Cunningham

rose—

Mr. Edwards

We heard a great deal—

Dr. Cunningham

rose—

Mr. Edwards

I am going to reply to the debate.

Dr. Cunningham

rose—

Mr. Speaker

Order. I hope that we shall not have a repetition of what happened earlier this afternoon.

Mr. Edwards

The hon. Member for Alyn and Deeside (Mr. Jones)—

Dr. Cunningham

rose—

Mr. Speaker

Order.

Mr. Edwards

The hon. Member for Alyn and Deeside and others complained about the condition of the housing stock, but—

Mr. Ray Powell

On a point of order, Mr. Speaker. Will you rule whether it is in order for a Minister, replying to a debate, to mention any Front Bench spokesman and not give way to that hon. Member?

Mr. Speaker

Order. We had all this earlier this afternoon. The House well knows the convention. If the Secretary of State or any other hon. Member does not give way that is entirely a matter for him.

Mr. Edwards

The hon. Member for Alyn and Deeside and others complained about the condition of the housing stock. But we know that Labour councils have created some of the worst housing slums. My hon. Friend the Member for Bridgend (Mr. Hubbard-Miles) reminded us that they had done nothing to improve their housing stock. The Government have made a concerted and determined effort to improve that stock. The latest example of that is the scheme for priority estates, which have such importance in some of our inner cities. The Opposition demand an unlimited right to spend accumulated receipts, yet they fought tooth and nail to prevent the sales that produced those receipts.

The second point of view in the debate is that of those of my hon. Friends who believe that Government policies to control spending should be relaxed, at least to the extent of increasing capital expenditure. But even they recognise that the totality of expenditure must be controlled and preferably matched by the control or reduction of current spending. The CBI was called in aid yesterday to support capital spending. It has specifically drawn attention to the need to cut current spending in order to make that possible.

The third point of view that has emerged from the debate is provided by those who, like my hon. and learned Friend the Member for Folkestone and Hythe, believe that the Government's strategy of tight control of public spending on which we were elected is vital if we are to keep interest rates and taxes down and stimulate the industrial investment that alone will create the additional social resources that we all want. Some of them believe profoundly in that strategy but are understandably concerned, perhaps because we have not explained clearly enough, about why the overhang of housing receipts threatens that strategy. Others perhaps recognise that threat but are concerned about our relationship with local government

I want to deal with those understandable concerns, but I must first make it clear that what we did yesterday when we made the statements was not introduce a new policy; nor introduce a new round of cuts. We are concerned to deliver the plans that we announced to the House in the public expenditure White Paper which the House subsequently approved by the vote on 6 December. I shall return in a moment to the inherent threat to our public expenditure plans.

First, I want to say a word about one thing on which there is probably agreement on both sides of the House. It was raised in the debate by my right hon. and learned Friend the Member for Hexham who spoke of the inadequacies, under successive Governments, of the longterm arrangements for capital planning by local authorities. It is undoubtedly true. We have had underspend under both Labour and Conservative Governments. We were reminded by my hon. Friend the Member for Bridgend that in an earlier age the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) urged us to spend, spend, spend, and break the hank. He did, and the Labour party called in the IMF and had a full-scale moratorium.

We had our own problem of underspend in the early 1980s and then we urged local authorities to spend. When they did it was on a scale that threatened our public expenditure control programme. It is because of those inadequacies—

Mr. Straw

rose—

Mr. Edwards

I want to deal in detail with the point.

Mr. Straw

rose—

Mr. Edwards

It was because of those inadequacies—

Mr. Straw

rose—

Mr. Edwards

—that, in the summer, I launched consultations with Welsh local authorities and my right hon. Friend is launching parallel discussions with local government. That is why I announced yesterday that we have begun to move towards a system that gives greater stability and assurance, flexibility around the cash limit, enables us to carry forward a reasonable level of underspend, and accepts that a comparable level of overspend should not lead to mid-term intervention or moratorium. That, combined with increasingly firm forward indications, will enable local authorities to plan better for the future.

Mr. Tony Banks

rose—

Mr. Edwards

Some hon. Members have implied that local authorities have been prevented from making use of the assets that have been released from the sale of houses. But over the past three years a large proportion of new housing receipts were built into the housing allocations in order to encourage local authorities to use them, and, in addition, the authorities were free to use the prescribed proportions. If, in practice, those built-in receipts had been used simply to finance house building instead of, for example, for reducing debt, we might not have the threat to the cash limit that we now have. The fact is that up-to-date housing allocations have carried 100 per cent. borrowing approval and the availability of that has enabled local authorities to accumulate receipts on a massive scale. Those receipts provide a large potential overspend on the cash limit, and, indeed, enabled local authorities in effect to spend their resources twice over.

The potential overspend amounts to hundreds of millions of pounds and it comes on top of a current expenditure overspend. All the receipts have flooded in over two or three years and all that the Government are urging is that local authorities should spread that expenditure over a somewhat longer period—

Mr. Simon Hughes

rose—

Mr. Tony Banks

rose—

Mr. Edwards

—and not to spend it all at once.

My hon. Friend the Member for Cheltenham (Mr. Irving), in an intervention, said that authorities were not being allowed to spend their receipts. They are being spent. They are being used to enhance spending over the net amounts that we could otherwise afford. They are making an important contribution to the spending power that is available.

The hon. Member for Caernarfon (Mr. Wigley) suggested that we had cut back sharply in Wales the spending plans over the next three years compared with the previous six years. The hon. Gentleman got his maths wrong. He calculated it on five years when the comparison was with six years.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

rose—

Mr. Barry Jones

rose—

Mr. Simon Hughes

rose—

Mr. Edwards

I wish to answer the points raised in the debate. I hope that hon. Gentlemen will forgive me—

Mr. Speaker

Order. Mr. Barry Jones.

Mr. Jones

Why does the right hon. Gentleman not tell the House that, as a Housing Minister, he has the worst record of any Welsh Office Minister? Is it not a fact that last year his starts record was a pathetic 1,500 houses?

Mr. Edwards

It is characteristic of the hon. Gentleman to believe that the only contribution to housing should come from the local authority sector. He has not referred to the massive increase in investment that is going on in the private sector.

Several hon. Members

rose—

Mr. Speaker

Order.

Mr. Jones

rose—

Mr. Speaker

Order. There is little time left. The House wishes to hear what the Secretary of State has to say.

Mr. Jones

rose—

Mr. Speaker

Order. Mr. Edwards.

Mr. Edwards

The hon. Gentleman also forgets the Government's massive increase in expenditure on housing improvements that the Labour Government totally neglected.

Mr. Jones

rose—

Mr. Edwards

The Labour Government spent £90 million a year. We spent — [Interruption.] The hypocrisy of the hon. Gentleman—

Mr. Jones

rose—

Mr. Speaker

Order. It is nearly the Christmas holidays. Can we proceed in peace?

Mr. Edwards

The hon. Gentleman is behaving like a Christmas clown. I remind my hon. Friends, as my hon. and learned Friend the Member for Folkestone and Hythe did, that our success in keeping the overall control of public spending is the major element in the rising industrial investment that is taking place. Interest rates are lower than they would otherwise be, despite the pressures on sterling, the effect of a strong dollar, the mining strike and movements in oil prices.

Private sector building is especially sensitive to movements in interest rates. Manufacturing industry is investing now because it has confidence in our policies. In sharp contrast to the humiliation suffered by the Labour Chancellor and Prime Minister, my right hon. Friend the Prime Minister is setting out to two major international meetings with the confidence of investment, the markets and other world leaders behind her. They know that the Government mean what they say when they set about a policy, and that they will maintain it. The House by its vote will wish to maintain that confidence.

Question put, That this House do now adjourn:—

The House divided: Ayes 225, Noes 325.

Division No. 58]	[6.43 pm
AYES
Abse, Leo	Dixon, Donald
Adams, Allen (Paisley N)	Dobson, Frank
Alton, David	Dormand, Jack
Anderson, Donald	Douglas, Dick
Archer, Rt Hon Peter	Dover, Den
Ashdown, Paddy	Dubs, Alfred
Ashley, Rt Hon Jack	Duffy, A. E. P.
Atkinson, N. (Tottenham)	Dunwoody, Hon Mrs G.
Bagier, Gordon A. T.	Eadie, Alex
Banks, Tony (Newham NW)	Edwards, Bob (W'h'mpt'n SE)
Barnett, Guy	Ellis, Raymond
Barron, Kevin	Evans, John (St. Helens N)
Beckett, Mrs Margaret	Ewing, Harry
Beggs, Roy	Fatchett, Derek
Beith, A. J.	Faulds, Andrew
Bell, Stuart	Field, Frank (Birkenhead)
Benn, Tony	Fields, T. (L'pool Broad Gn)
Bennett, A. (Dent'n & Red'sh)	Fisher, Mark
Bermingham, Gerald	Flannery, Martin
Bidwell, Sydney	Foot, Rt Hon Michael
Blair, Anthony	Forrester, John
Boothroyd, Miss Betty	Foster, Derek
Boyes, Roland	Foulkes, George
Brown, Gordon (D'f'mline E)	Fraser, J. (Norwood)
Brown, Hugh D. (Provan)	Freeman, Roger
Brown, N. (N'c'tle-u-Tyne E)	Freeson, Rt Hon Reginald
Brown, R. (N'c'tle-u-Tyne N)	Freud, Clement
Bruce, Malcolm	Garrett, W. E.
Buchan, Norman	George, Bruce
Caborn, Richard	Gilbert, Rt Hon Dr John
Callaghan, Rt Hon J.	Godman, Dr Norman
Campbell, Ian	Golding, John
Campbell-Savours, Dale	Gould, Bryan
Canavan, Dennis	Hamilton, James (M'well N)
Carlile, Alexander (Montg'y)	Hamilton, W. W. (Central Fife)
Carter-Jones, Lewis	Hancock, Mr. Michael
Cartwright, John	Hardy, Peter
Clark, Dr David (S Shields)	Hargreaves, Kenneth
Clarke, Thomas	Harman, Ms Harriet
Clay, Robert	Hart, Rt Hon Dame Judith
Clwyd, Mrs Ann	Hattersley, Rt Hon Roy
Cocks, Rt Hon M. (Bristol S.)	Healey, Rt Hon Denis
Cohen, Harry	Heffer, Eric S.
Coleman, Donald	Hogg, N. (C'nauld & Kilsyth)
Concannon, Rt Hon J. D.	Holland, Stuart (Vauxhall)
Conlan, Bernard	Home Robertson, John
Cook, Frank (Stockton North)	Howell, Rt Hon D. (S'heath)
Cook, Robin F. (Livingston)	Howells, Geraint
Corbett, Robin	Hoyle, Douglas
Corbyn, Jeremy	Hughes, Dr. Mark (Durham)
Cowans, Harry	Hughes, Robert (Aberdeen N)
Cox, Thomas (Tooting)	Hughes, Roy (Newport East)
Craigen, J. M.	Hughes, Simon (Southwark)
Crowther, Stan	Hume, John
Cunningham, Dr John	Janner, Hon Greville
Dalyell, Tam	John, Brynmor
Davies, Rt Hon Denzil (L'lli)	Johnston, Russell
Davies, Ronald (Caerphilly)	Jones, Barry (Alyn & Deeside)
Davis, Terry (B'ham, H'ge H'I)	Kaufman, Rt Hon Gerald
Deakins, Eric	Kennedy, Charles
Dewar, Donald	Kilroy-Silk, Robert

Kinnock, Rt Hon Neil	Redmond, M.
Kirkwood, Archy	Rees, Rt Hon M. (Leeds S)
Lambie, David	Richardson, Ms Jo
Lamond, James	Roberts, Allan (Bootle)
Leadbitter, Ted	Robertson, George
Lewis, Ron (Carlisle)	Robinson, G. (Coventry NW)
Lewis, Terence (Worsley)	Rogers, Allan
Lloyd, Tony (Stretford)	Rooker, J. W.
Lofthouse, Geoffrey	Ross, Wm. (Londonderry)
Loyden, Edward	Rowlands, Ted
McCartney, Hugh	Ryman, John
McCusker, Harold	Sedgemore, Brian
McDonald, Dr Oonagh	Sheerman, Barry
McGuire, Michael	Sheldon, Rt Hon R.
McKay, Allen (Penistone)	Shore. Rt Hon Peter
McKelvey, William	Short, Ms Clare (Ladywood)
McNamara, Kevin	Short, Mrs R.(W'hampt'n NE)
McTaggart, Robert	Silkin, Rt Hon J.
McWilliam, John	Skinner, Dennis
Madden, Max	Smith, C.(Isl'ton S & F'bury)
Maginnis, Ken	Smith, Rt Hon J. (M'kl'ds E)
Marek, Dr John	Smyth, Rev W. M. (Belfast S)
Marshall, David (Shettleston)	Snape, Peter
Mason, Rt Hon Roy	Soley, Clive
Maxton, John	Spearing, Nigel
Maynard, Miss Joan	Steel, Rt Hon David
Meacher, Michael	Stewart, Rt Hon D. (W Isles)
Meadowcroft, Michael	Stott, Roger
Michie, William	Strang, Gavin
Mikardo, Ian	Straw, Jack
Millan, Rt Hon Bruce	Taylor, Rt Hon John David
Miller, Dr M. S. (E Kilbride)	Thomas, Dr R. (Carmarthen)
Mitchell, Austin (G't Grimsby)	Thompson, J. (Wansbeck)
Molyneaux, Rt Hon James	Thorne, Stan (Preston)
Morris, Rt Hon A. (W'shawe)	Tinn, James
Morris, Rt Hon J. (Aberavon)	Torney, Tom
Nellist, David	Wainwright, R.
Oakes, Rt Hon Gordon	Walker, Cecil (Belfast N)
O'Brien, William	Wardell, Gareth (Gower)
O'Neill, Martin	Wareing, Robert
Orme, Rt Hon Stanley	Weetch, Ken
Owen, Rt Hon Dr David	Welsh, Michael
Park, George	White, James
Parry, Robert	Wigley, Dafydd
Patchett, Terry	Williams, Rt Hon A.
Pavitt, Laurie	Winnick, David
Pendry, Tom	Woodall, Alec
Penhaligon, David	Wrigglesworth, Ian
Pike, Peter	Young, David (Bolton SE)
Powell, Rt Hon J. E. (S Down)
Powell, Raymond (Ogmore)	Tellers for the Ayes:
Prescott, John	Mr. Sean Hughes and
Radice, Giles	Mr. Lawrence Cunliffe.
Randall, Stuart
NOES
Aitken, Jonathan	Bonsor, Sir Nicholas
Alexander, Richard	Bottomley, Peter
Alison, Rt Hon Michael	Bottomley, Mrs Virginia
Amess, David	Bowden, A. (Brighton K'to'n)
Ancram, Michael	Bowden, Gerald (Dulwich)
Arnold, Tom	Boyson, Dr Rhodes
Ashby, David	Brandon-Bravo, Martin
Atkins, Rt Hon Sir H.	Bright, Graham
Atkins, Robert (South Ribble)	Brinton, Tim
Atkinson, David (B'm'th E)	Brittan, Rt Hon Leon
Baker, Rt Hon K. (Mole Vall'y)	Brooke, Hon Peter
Baker, Nicholas (N Dorset)	Brown, M. (Brigg & Cl'thpes)
Baldry, Tony	Browne, John
Batiste, Spencer	Bruinvels, Peter
Bellingham, Henry	Bryan, Sir Paul
Bendall, Vivian	Buchanan-Smith, Rt Hon A.
Bennett, Sir Frederic (T'bay)	Buck, Sir Antony
Best, Keith	Budgen, Nick
Bevan David Gilroy	Bulmer, Esmond
Biffen, Rt Hon John	Burt, Alistair
Biggs-Davison, Sir John	Butcher, John
Blackburn, John	Butler, Hon Adam
Blaker, Rt Hon Sir Peter	Butterfill, John
Body, Richard	Carlisle, John (N Luton)

Carlisle, Kenneth (Lincoln)	Higgins, Rt Hon Terence L.
Carttiss, Michael	Hill, James
Cash, William	Hind, Kenneth
Chalker, Mrs Lynda	Hogg, Hon Douglas (Gr'th'm)
Channon, Rt Hon Paul	Holland, Sir Philip (Gedling)
Chapman, Sydney	Holt, Richard
Chope, Christopher	Hooson, Tom
Churchill, W. S.	Hordern, Peter
Clark, Hon A. (Plym'th S'n)	Howard, Michael
Clark, Dr Michael (Rochford)	Howarth, Alan (Stratf'd-on-A)
Clark, Sir W. (Croydon S)	Howarth, Gerald (Cannock)
Clarke, Rt Hon K. (Rushcliffe)	Howell, Rt Hon D. (G'ldford)
Cockeram, Eric	Howell, Ralph (N Norfolk)
Colvin, Michael	Hubbard-Miles, Peter
Conway, Derek	Hunt, David (Wirral)
Coombs, Simon	Hunter, Andrew
Cope, John	Hurd, Rt Hon Douglas
Corrie, John	Jenkin, Rt Hon Patrick
Couchman, James	Jessel, Toby
Cranborne, Viscount	Johnson Smith, Sir Geoffrey
Crouch, David	Jones, Gwilym (Cardiff N)
Dorrell, Stephen	Jones, Robert (W Herts)
Douglas-Hamilton, Lord J.	Joseph, Rt Hon Sir Keith
du Cann, Rt Hon Edward	Kellett-Bowman, Mrs Elaine
Dunn, Robert	Kershaw, Sir Anthory
Durant, Tony	Key, Robert
Edwards, Rt Hon N. (P'broke)	Kilfedder, James A.
Eggar, Tim	King, Roger (B'ham N'field)
Emery, Sir Peter	King, Rt Hon Tom
Eyre, Sir Reginald	Knight, Gregory (Derby N)
Fallon, Michael	Knight, Mrs Jill (Edgbaston)
Farr, Sir John	Knowles, Michael
Favell, Anthony	Lamont, Norman
Fenner, Mrs Peggy	Latham, Michael
Finsberg, Sir Geoffrey	Lawler, Geoffrey
Fletcher, Alexander	Lawrence, Ivan
Fookes, Miss Janet	Lawson, Rt Hon Nigel
Forman, Nigel	Lee, John (Pendle)
Forsyth, Michael (Stirling)	Leigh, Edward (Gainsbor'gh)
Forth, Eric	Lennox-Boyd, Hon Mark
Fowler, Rt Hon Norman	Lewis, Sir Kenneth (Stamf'd)
Fox, Marcus	Lightbown, David
Franks, Cecil	Lilley, Peter
Fraser, Peter (Angus East)	Lloyd, Ian (Havant)
Gale, Roger	Lloyd, Peter, (Fareham)
Gardiner, George (Reigate)	Lord, Michael
Gardner, Sir Edward (Fylde)	Luce, Richard
Garel-Jones, Tristan	Lyell, Nicholas
Glyn, Dr Alan	McCurley, Mrs Anna
Goodhart, Sir Philip	Macfarlane, Neil
Goodlad, Alastair	MacGregor, John
Gorst, John	MacKay, Andrew (Berkshire)
Gow, Ian	MacKay, John (Argyle & Bute)
Gower, Sir Raymond	Maclean, David John
Greenway, Harry	Madel, David
Griffiths, E. (B'y St Edm'ds)	Major, John
Griffiths, Peter (Portsm'th N)	Malins, Humfrey
Grist, Ian	Malone, Gerald
Ground, Patrick	Maples, John
Grylls, Michael	Marland, Paul
Gummer, John Selwyn	Marlow, Antony
Hamilton, Hon A. (Epsom)	Marshall, Michael (Arundel)
Hamilton, Neil (Tatton)	Mates, Michael
Hampson, Dr Keith	Mather, Carol
Hanley, Jeremy	Maude, Hon Francis
Hannam, John	Mawhinney, Dr Brian
Harris, David	Maxwell-Hyslop, Robin
Harvey, Robert	Mayhew, Sir Patrick
Havers, Rt Hon Sir Michael	Mellor, David
Hawkins, C. (High Peak)	Merchant, Piers
Hawkins, Sir Paul (SW N'folk)	Meyer, Sir Anthony
Hawksley, Warren	Miller, Hal (B'grove)
Hayes, J.	Mills, Iain (Meriden)
Hayhoe, Barney	Mills, Sir Peter (West Devon)
Hayward, Robert	Miscampbell, Norman
Heathcoat-Amory, David	Mitchell, David (NW Hants)
Heddle, John	Moate, Roger
Henderson, Barry	Monro, Sir Hector
Heseltine, Rt Hon Michael	Montgomery, Fergus
Hickmet, Richard	Moore, John

Morris, M. (N'hampton, S)	Smith, Tim (Beaconsfield)
Morrison, Hon P. (Chester)	Soames, Hon Nicholas
Moynihan, Hon C.	Spence, John
Murphy, Christopher	Spencer, Derek
Neale, Gerrard	Spicer, Jim (W Dorset)
Needham, Richard	Spicer, Michael (S Worcs)
Nelson, Anthony	Squire, Robin
Neubert, Michael	Stanbrook, Ivor
Newton, Tony	Stanley, John
Nicholls, Patrick	Steen, Anthony
Normanton, Tom	Stern, Michael
Norris, Steven	Stevens, Lewis (Nuneaton)
Onslow, Cranley	Stevens, Martin (Fulham)
Oppenheim, Phillip	Stewart, Allan (Eastwood)
Oppenheim, Rt Hon Mrs S.	Stewart, Andrew (Sherwood)
Osborn, Sir John	Stewart, Ian (N Hertf'dshire)
Ottaway, Richard	Stokes, John
Page, Sir John (Harrow W)	Stradling Thomas, J.
Page, Richard (Herts SW)	Taylor, John (Solihull)
Parkinson, Rt Hon Cecil	Taylor, Teddy (S'end E)
Parris, Matthew	Temple-Morris, Peter
Patten, Christopher (Bath)	Terlezki, Stefan
Patten, John (Oxford)	Thomas, Rt Hon Peter
Pawsey, James	Thompson, Donald (Calder V)
Peacock, Mrs Elizabeth	Thompson, Patrick (N'ich N)
Percival, Rt Hon Sir Ian	Thorne, Neil (Ilford S)
Pollock, Alexander	Thurnham, Peter
Portillo, Michael	Townend, John (Bridlington)
Powell, William (Corby)	Tracey, Richard
Powley, John	Trippier, David
Prentice, Rt Hon Reg	Trotter, Neville
Price, Sir David	Twinn, Dr Ian
Proctor, K. Harvey	van Straubenzee, Sir W.
Raffan, Keith	Vaughan, Sir Gerard
Raison, Rt Hon Timothy	Viggers, Peter
Rathbone, Tim	Waddington, David
Rees, Rt Hon Peter (Dover)	Wakeham, Rt Hon John
Renton, Tim	Waldegrave, Hon William
Rhys Williams, Sir Brandon	Walden, George
Ridley, Rt Hon Nicholas	Walker, Bill (T'side N)
Ridsdale, Sir Julian	Walker, Rt Hon P. (W'cester)
Rifkind, Malcolm	Waller, Gary
Roberts, Wyn (Conwy)	Ward, John
Robinson, Mark (N'port W)	Wardle, C. (Bexhill)
Roe, Mrs Marion	Warren, Kenneth
Rossi, Sir Hugh	Watson, John
Rost, Peter	Watts, John
Rowe, Andrew	Wells, Bowen (Hertford)
Rumbold, Mrs Angela	Wells, Sir John (Maidstone)
Ryder, Richard	Whitfield, John
Sackville, Hon Thomas	Whitney, Raymond
Sainsbury, Hon Timothy	Wilkinson, John
St. John-Stevas, Rt Hon N.	Wolfson, Mark
Sayeed, Jonathan	Wood, Timothy
Scott, Nicholas	Woodcock, Michael
Shaw, Giles (Pudsey)	Young, Sir George (Acton)
Shaw, Sir Michael (Scarb')	Younger, Rt Hon George
Shelton, William (Streatham)
Shersby, Michael	Tellers for the Noes:
Skeet, T. H. H.	Mr. Robert Boscawen and
Smith, Sir Dudley (Warwick)	Mr. Ian Lang.

Question accordingly negatived.