HC Deb 25 April 1988 vol 132 cc155-75 10.15 pm
Mr. William O'Brien (Normanton)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Local Government (Prescribed Expenditure) (Amendment) Regulations 1988 (S.I., 1988, No. 434), dated 9th March 1988, a copy of which was laid before this House on 9th March, be annulled. My reason for moving the motion is that on 9 March the Secretary of State announced that he intended to introduce further measures to restrict local authority capital borrowing expenditure. He said: a minority of local authorities are employing artificial devices to incur capital expenditure and to undertake borrowing over and above the levels permitted to them under the existing capital control system."—[Official Report, 9 March 1988; Vo. 129, column 326.] That was the Secretary of State's reason for bringing in the new measures. Again, the right hon. Gentleman is taking panic measures against local authorities, because councillors have found ways of providing for their constituents services that in many instances are important and necessary to maintain and to provide a worthy and Christian way of life in their communities. Tonight, the Secretary of State informed the House of further changes. His statement that he did not know what was happening further demonstrates the panic that the Government are in.

Furthermore, the new regulations come only three months after the Local Government (Prescribed Expenditure) (Consolidation and Amendment) Regulations 1987—statutory instrument No. 2186 of 1987. The financing devices that were under attack in the new regulations did not suddenly come to the Government's attention. The regulations suddenly became necessary through a lack of foresight and the crisis of management facing the Government. Hon. Members will recall that, only a few months ago, the Secretary of State said that he was the only person who understood local government finance. Tonight, he admitted that he does not have a clue. He does not know what is going on.

It has been accepted that several local authorities checked with the Department of the Environment before entering into any barter deals and schemes with private organisations. The Secretary of State told the House tonight that he did not know what was happening. That is a measure of how much the Secretary of State realises what is taking place in his Department.

Obviously, the advice that was given to local authorities was affirmative, and they proceeded in accordance with that advice. The Secretary of State then said that he knew nothing about what was happening. In fact, more than 250 local authorities could be affected by the move that was presented by the Secretary of State. As a result of the new regulations, several local authorities will incur prescribed expenditure set out in agreements that have already been entered into.

The Government have promised to consider issuing more additional capital allocations when the Secretary of State is satisfied that agreements were not entered into for the purpose of evading capital expenditure borrowing controls. We are curious to learn from the Secretary of State how he intends to decide on the imperfections of local authorities, and what information he has about the issuing of additional borrowing powers and to which authorities.

The Secretary of State said that there were no facts given on the issue. However, local authorities will be asking whether their particular schemes will be included in the exemptions that were announced by the Secretary of State. The Department of the Environment accepted that almost one third of local authorities could be affected by these regulations, where barter deals have been entered into. As I said, many authorities checked with the Department of the Environment on the schemes that they were considering before entering into any deals with the private sector. The action of the Secretary of State affects large and small authorities alike.

Cheltenham borough council intended to raise funds to provide a flood relief and draining scheme in their area. That was to be done by lease and leaseback deals, using a swimming pool complex to raise the funds. That is quite legitimate, but, because of the Secretary of State's action, that council will have to look for alternatives. It was not possible for Cheltenham borough council to find that amount of money from their allocations or capital receipts.

Gloucester city council had to stop a £5 million housing development on a former allotment site. That, again, was a necessary scheme. It will now have to find other means of raising funds for the scheme because of the Government cuts, both in the housing improvement programme and the housing investment programme, and because of the regulations that the Secretary of State announced that he would introduce.

Those schemes, and many others, were genuine capital schemes. The capital being raised was to fund existing capital programmes and not, as the Secretary of State implies, to bridge deficits in the revenue account.

Furthermore, local authorities are only copying the Government's attitude in using the assets available to them to finance other policies. The Secretary of State said that councils should transfer their asset base to the private sector. That is exactly what local authorities have been doing. It is devastating for people who serve on local councils, and wish to provide services for their communities, to discover that the Government are reneging on their advice to local government that it should be looking for other forms of financing capital schemes and that the private sector should be taken into consideration and into partnership.

I wish to question the Under-Secretary of State about the concessions that the Secretary of State said are to be made to local authorities. Wakefield district council, in the area I represent, used to boast of being the centre of the mining industry. However, over the past nine years we have watched the demise of the mining industry in west Yorkshire and, because of that demise, the district council wanted to retain some of the history of mining in the Wakefield area. With the co-operation of British Coal and other bodies, it was agreed to turn one of the smaller pits, which had closed, into a mining museum.

Caphouse colliery is a small colliery in West Yorkshire. It is a shallow pit, which is to be developed as a mining museum. The trust that was set up to develop the Caphouse colliery scheme applied to the European Community for a grant and was promised that a grant would be made. Suffice it to say that the Department of the Environment has told Wakefield district council that if the application for the grant is approved and the grant is obtained, the council will have to give up an equivalent amount of loan sanction to cover it.

I ask the Under-Secretary whether the anomalous rules that the Government are introducing mean that that grant will count against that council's prescribed expenditure allocation. In other words, will Wakefield district council come under the provisions of the proposals that the Secretary of State has outlined, or will the grant that would be forthcoming from the EEC count against the capital borrowing levels of Wakefield district council? That issue can be mirrored in many other local authorities which are in the same situation of trying to develop something in their area under the barter system or the lease and leaseback arrangements.

I must also draw attention to the grotesque report that was issued by the Government on 9 March to try to substantiate their action in changing the law on capital spending. The chairman of the Association of Metropolitan Authorities, Councillor Jack Layden, made it clear in his letter to the Secretary of State on 22 March that the statement that was issued by the Secretary of State was dramatically misleading.

Southwark's reply to the Secretary of State's statement was that the statement could not be much further from the truth. Richmond's reply was Mr. Ridley's statement is entirely inaccurate as far as the reference to this council is concerned. Coventry replied: The statement contains a serious inaccuracy. Manchester replied: The Department should have been able to get the facts right and stated that everything was discussed in public. Brighton replied: The section in the document is inaccurate and we have written to the Secretary of State to point this out. In other words, the Secretary of State's statement was totally misleading, and inaccurate in many ways and should have been withdrawn at the very beginning. It is true that my report does not suit Conservative Members, but those are the facts. Local authorities are still waiting for replies to the points that they have made about the Secretary of State's statement.

I draw attention to the report of the Audit Commission entitled "Local Authority Property —A Management Overview." Paragraph 33 states: Resources necessarily tied up in property could be released to generate capital receipts. At a time of increasing pressure on resources it is vital that authorities seek to augment their capital allocations whenever possible. Despite restrictions on the use of capital receipts, they are still worth having. Paragraph 26 states: Capital receipts can also be used for the redemption of debt thus also bringing revenue benefits. A balance therefore needs to be struck between investing in the life of the asset and other conflicting demands. At paragraph 44, the Audit Commission states: Central government ought to place more emphasis on `carrots' rather than 'sticks'. Incentives to develop under-used land could be improved by changes to the system of capital controls. The Audit Commission is advising the Government that there is more to be gained from using incentives and offering support and carrots than from trying to beat local authorities with sticks, which is what the Secretary of State has been attempting to do for some considerable time.

The digest issued by the Association of District Councils refers to 150 district council projects which are in jeopardy because of the Secretary of State's proposed amendments to the new regulations. Of those, at least 31 are leisure schemes, more than 30 are housing schemes and a great many are to provide facilities for the elderly and the disabled.

The district councils are embarking on schemes to provide necessary facilities for their communities. Many involve development for industry, many provide office accommodation to release high-rented accommodation, some provide new market facilities in the communities and there are a host of other proposals. The majority of district councils are Tory-controlled or have no overall majority, so it is not Labour-controlled authorities that are pressing the Government for amendments to their regulations.

In view of what the Secretary of State said tonight, the most appropriate action is to withdraw the regulations. I ask the Minister to withdraw them. If he will not, I ask the House to reject them.

10.32 pm
Sir John Farr (Harborough)

I cannot say that I give an enthusiastic welcome to these regulations, for many of the reasons which the hon. Member for Normanton (Mr. O'Brien) described and particularly because of their impact, which is unfair and harsh, on my district council. It is a modest, prudent, well-run, economically conducted affair, yet it finds these regulations wholly unacceptable.

I shall highlight one or two points in the letter I received today from the chief executive. He states: In view of the progressive decline in the annual housing and other services block capital allocations over recent years the Council has had to seek various ways and means to enable its high priority schemes to proceed. Some major projects have been by means of 'advanced payments schemes' but, of course such devices were blocked by the earlier Government controls introduced about a year ago. Accordingly, more recently and within the law, my district council decided to engage in a 'barter scheme' by the sale of existing Council mortgages to achieve a barter arrangement in conjunction with CIPFA Services Limited. This arrangement was due to have financed two small housing schemes for elderly persons' bungalows"— the sort of project that one would imagine all sides of the House would welcome— at a total cost of £400,000, in villages in which the Council had made no previous housing provision. The barter scheme was also intended to allow the Council to provide a sports pavilion, at a cost of £160,000, for a 50 acre multi-pitch sports ground which the Council has recently acquired after many years of negotiation with a multiplicity of owners. Such worthy projects will be blocked as a results of the regulations that we are discussing. The latest capital expenditure controls also appear likely to block a scheme for bungalow provision for the elderly in another village where the Council intended to sell part of the housing site to a private developer in consideration of the developer building a small group of elderly persons' bungalows for the Council. That scheme has been in the pipeline for many years and had unanimous support. As a result of inadequate housing investment allocation and limitation on the use of capital receipts, it has proceeded no further.

My council and I also believe that two further worthwhile projects will be prejudiced if the regulations re passed tonight. The first is a scheme relating to the provision of another group of bungalows for the elderly under council control. In addition to that, the council has been negotiating to exchange land to provide sites for car parking and recreation.

Initially, it was difficult to believe that such modest requirements in the conduct of model local government should be blocked by any Government at Whitehall. Apparently the new proposals will prevent such exchanges. My council's chief executive has been in touch with the Department of the Environment and it has suggested that the council will be caught and prevented from proceeding with the schemes.

I want the Minister to explain why such model schemes designed to help elderly people and improve the running of small towns by the provision of additional car parking are to be blocked by the regulations.

My council would prefer not to resort to "unorthodox" means of financing capital schemes. The chief executive has, however, pointed out: with the Housing Capital Allocation for 1988–89 at £640,000 and the Other Services Block Allocation at £171,000 it will be evident that capital investment is gradually nearing a standstill, even though the prescribed proportion of capital receipts now produces annually a spending potential almost double the capital allocations. In recent years, Harborough district council has been a model of well-conducted local government. In deference to Government pressure and as a result of declining means of finance since the introduction of the Local Government Planning and Land (No. 2) Act 1980, it has rephased or eliminated many other capital projects.

It will be obvious to the House that the particular schemes that I have mentioned were regarded as high priority by the council. I find it difficult to believe that it is the intention of the regulations to hamper good local government in such a way. I hope that when my hon. Friend replies he will give me answers that are sufficient to convince me to follow him into the Division Lobby.

10.39 pm
Mr. Peter L. Pike (Burnley)

This important debate is on a set of regulations that is another example of the Government's determination to clamp down on local government's ability to deal with its present problems. To some extent, local authorities have had to use such means to finance projects in their areas because of the Government's controls on capital expenditure. By introducing legislation on the powers of local authorities and their means of raising finance, the Government have repeatedly attacked and restricted their ability to function. This is yet another example.

When the Secretary of State spoke earlier about the poll tax Bill, he made it clear that when he made his statement in March he did not realise the exact position. As it is becoming increasingly clear that this means of financing local government expenditure is being used by local authorities of all political persuasions, the Government should be prepared to think again about the regulations. The Association of District Councils has said that the regulations will jeopardise 150 district council projects. That must worry the Government.

As local authorities can use only a limited amount of their capital receipts, the Government must realise the problems that they are creating. The regulations would affect the ability of local authorities to tackle some of the Government's so-called priorities on housing problems and urban decay. Since the general election, they have said much about tackling the problems of the inner cities, yet the regulations would make the task even more difficult.

The hon. Member for Harborough (Sir J. Farr) mentioned the problems that would be created in his constituency, and in the earlier debate the hon. Member for Macclesfield (Mr. Winterton) listed the range of problems that would be created in his local borough if the Government do not change their mind. I hope that the Minister will respond to one or two points that I shall make about Burnley.

A few years ago, Burnley sold more than 100 unmodernised semi-detached council houses to Wimpey. The intention was to renovate the houses and sell them in the private sector, but most of them had been empty for some time. Instead of taking cash for those houses, because the council could have spent only 20 per cent. of it, it agreed that Wimpey should modernise 12 houses that remained in council ownership. It meant that 12 families could have their houses modernised immediately, instead of the smaller number whose houses could have been modernised by the limited amount of capital receipts that the council could have spent.

The chief executive officer of Burnley borough council told me that it is involved in a neighbourhood revitalisation scheme in conjunction with the Government. Indeed, the Under-Secretary of State for the Environment, the hon. Member for Broxbourne (Mrs. Roe) visited the area recently to examine the problems of the Hargher Clough and Stoops estates. Those schemes could also be affected if the Government are not prepared to consider sensibly how they will be financed.

The central area of Burnley also needs modernisation, and we must deal with the car parking problems in the town centre. Those examples are similar to those cited by Conservative Members. It seems sensible that local authorities should be able to deal with the problems; let us have regeneration rather than allowing dereliction and decay.

The Government repeatedly say that local government and the private sector should work together. Surely such schemes are a good example of local authorities and the private sector working together to deal with problems in their areas. The chief executive pointed out to me a scheme in the neighbouring authority of Pendle. The authority is to form a company and take a lease or enter a leaseback arrangement to enable it to build a swimming bath. That scheme, too, could be jeopardised if we continue to move in this direction. The regulations have nothing to commend them; they do nothing to enable local authorities to deal with their problems. They will serve only to ensure that the problems get worse rather than tackling them now.

I hope that the Minister will think again. As I said, the Secretary of State made it clear that much more information had come to his attention since he made his statement in March. In the earlier debate, the Minister said that he would grant two concessions to the schemes in the pipeline, but that does not mean that similar schemes will be able to go ahead in future. The Minister may have faced up to reality with regard to schemes that have already been negotiated or are being negotiated now and may have solved the problems they pose, but if he believes that they are valid and justified now, he ought to permit similar schemes in future. If he does not do that, he must once again accept responsibility for creating problems for local government.

10.47 pm
Mr. John Butterfill (Bournemouth, West)

One of the principal problems that the Government faced when they came to power was the indebtedness, not just of national Government but, significantly, of local authorities, particularly as local authorities account for 25 per cent. of all public expenditure. It is significant that, when the controls on the use of capital receipts were first introduced, many local authorities asked, "Why should we not be able to spend the money that we receive from the sale of assets? It is our money and we have it there in the bank." But of course, they did not have the money in the bank. Had they paid the money into the bank, they would only have reduced their indebtedness. That is true of local authorities up and down the land. They are all heavily borrowed and there is a need to reduce the amounts that they borrow. That is why the Government rightly introduced controls on the use of capital receipts.

The measures that my right hon. Friend the Secretary of State introduced on 9 March proved to be absolutely right. It was necessary to introduce them to ascertain the scale of avoidance of the capital receipts rules through the use of barter. My right hon. Friend has done the nation a great service by introducing the regulations.

Nevertheless, my right hon. Friend was absolutely right to respond, as he did earlier this evening, to the particular problems that have been revealed in many places, arising from the regulations. It was right, for example, to make exemptions to allow local authorities to deal with existing unavoidable contractual arrangements. It was right, too, to examine individual proposals for expenditure—par-ticularly where those were necessary to achieve comprehensive redevelopment or to assist in land assembly or with similar problems.

I thank the Secretary of State for his action, which has been very helpful to my own constituency of Bournemouth, West. My hon. Friend the Member for Bournemouth, East (Mr. Atkinson) and I have made a number of representations to the Secretary of State about particular projects in Bournemouth. One was the major redevelopment of an area in Boscombe in which the council was involved in a major programme of land assembly and in promoting with private interests the redevelopment of a rundown area. That was absolutely right and I hope that it will fall precisely within the exemptions that my right hon. Friend has announced.

The other proposal was to refurbish the pavilion in Bournemouth. Again, we proceeded with a partial privatisation of that asset, which all Conservative Members think is entirely laudable. I hope that that project will also fall within the terms of the exemptions announced by my right hon. Friend.

In general, the principle that we need to control public expenditure must be right. In particular, we need to take action where it is clear that avoidance measures are being taken by some local authorities that do not accept the need for such control. The regulations laid before the House on 9 March by my right hon. Friend are right and have been proved right by subsequent events.

10.50 pm
Mr. Simon Hughes (Southwark and Bermondsey)

In a way this is part two of the debate on the Local Government Finance Bill, because earlier we talked about new clauses to do with barter, and we are now talking about regulations to do with leaseback. I shall join other hon. Members in praying against the regulations.

Two sorts of arrangements will be caught by the regulations if they are approved by the House. One is sale and leaseback and the other is lease and leaseback. I entirely understand the Government's general economic policy, about which the hon. Member for Bournemouth, West (Mr. Butterfill) has just spoken. I ask the hon. Gentleman to consider that in many respects, and not just for specific constituency reasons that we put forward when we seek to have an exemption granted, it would be quite consistent for him to argue the Government's policy while at the same time opposing the regulations. I hope that at least I have the hon. Gentleman's understanding of that.

One cannot be dogmatic in asserting that leaseback arrangements need necessarily mortgage the future or the massive increase in public expenditure that the hon. Member for Bournemouth, West implied in his speech. We do not take the view that one ought to condone leaseback schemes that allow the elected representative of tomorrow to charge their poll tax payers a massive amount for the expenditure of today.

There can be perfectly reasonable leaseback schemes in which the method of arranging the lease and the finance does not build up the cost towards the end of the term. The cost is charged reasonably at the beginning, when people pay for what they receive. Many local authorities, mainly metropolitan authorities, will be caught by these arrangements, and not all those authorities are controlled by the same party. Outside London, Doncaster and Newcastle will be caught. Inside London, Greenwich, Lewisham and Southwark, which are Labour-controlled, will be caught, as will Merton and Westminster which are controlled by the Conservatives, and Tower Hamlets and Richmond which are controlled by my colleagues.

All those authorities have schemes that were worked out over months or years with Government approval, and different arrangements were made along the lines that the Government said they were keen to support. Sometimes it is necessary to go further and to do a true sale or leaseback in order to raise money to meet the bills of today. When the Government impose enormous cuts on local government, that often drives local authorities to extreme positions.

Of course, the capital control system is the main reason for councils trying to be creative and to get around the controls. Like other hon. Members, I have always accepted that there must be an upper limit on capital expenditure and that the Government must set reasonable parameters. However, example by example, scheme by scheme, lease by lease is not the way in which the controls should be implemented.

I shall make a couple of points that, as far as I am aware, have not been made. First, I resent the fact that the scheme has not been subject to prior consultation. The Minister will know that in the past there has been consultation. I know that his first line of reply will be to say that this is a temporary scheme which runs only until October and that the regulations have a limited life and will have to be renewed. I understand that, but I can tell the Minister and the hon. Member for Harborough (Sir J. Farr) whose speech I heard and understood, that the legal advice received by some councils suggests that, even in these regulations, the Government may be acting illegally.

I say that carefully. I do not make an allegation wildly but on the basis that it has been held in advance that regulations brought about without consultation and which would act to the severe detriment of local authorities who had entered into arrangements on the basis of expectation and prior practice could well be illegal. I warn the Government about that and hope that they do not find themselves in the same political difficulty as in the past when they have brought to the House measures which were later held to be illegal by the courts.

Secondly, I must repeat the complaint by the hon. Member for Copeland (Dr. Cunningham) in the earlier debate. My research assistant wrote to the private secretary of the Secretary of State following the announcement of 9 March and she replied—no doubt in similar terms to the reply given to the hon. Member for Copeland—enclosing a copy of the notes which the press officers gave to members of the Press who asked for examples of the kind of local authority schemes which might be affected The words ring amusingly hollow. It continued: This was not a note prepared with formal distribution in mind. The next day it managed to get into the papers, including The Daily Telegraph, the local papers in Southwark and Richmond and many others.

The trouble is that what was asserted was patently untrue. It is extremely poor practice for the Government to distribute to the press—although it was not an official document marked, "Press release from the DOE"—a list of facts and assertions about practices in local authorities which are inaccurate or insubstantial. Will the Minister explain how that came about? I have no doubt that those allegations, probably from Conservative party political sources, were disseminated and publicised unchecked and gave many of the councils concerned—including Conservative councils—a bad name.

Richmond, a council run by my party, was in that list. The Daily Telegraph stated: Richmond-upon-Thames planned to raise £10 million to finance a leisure complex by leaseback of assets. Richmond has not attempted to raise money for a leisure complex by a leaseback scheme. The reference is entirely erroneous.

Tower Hamlets has two leaseback schemes which have had to be abandoned as a result of the 9 March statement. The first involved buying accommodation for providing temporary housing for homeless families before they were rehoused permanently in ordinary council stock. The temporary accommodation was outside the borough. Such accommodation can be used only in ways of which the Government approve. Tower Hamlets would have been doing just what the Government have been asking it to do —provide units for large families averaging six members and involving in total to 2,400 people. It would have been cheaper than bed and breakfast and would have used private finance.

The second scheme was to set up an "arm's-length" development company in Globe Town which would raise private money to buy sites locally which would be sold to housing associations and then leased back to the council. In this case, £300 million expenditure would have provided 800 homes for shared ownership schemes over three years and 300 to 400 ordinary rented homes for people in Tower Hamlets.

The great problem is that, if those schemes, or any others, are caught under the Government's proposals, the councils have to seek exemption. The theory is fine, but the reality is that sometimes, it never happens administratively, I can give a specific example to show that the after-the-event approval is not working, and things have clogged up in Marsham street. In February 1987, certain schemes were outlawed—for example, some in Tower Hamlets. The council sought approval for a scheme—the Minister may know it—involving the National Leasing and Finance Co., Merrill Lynch and the United Kingdom Housing Trust Ltd. As of today, 14 months after the request, no answer has been received.

Tower Hamlets wrote to the Department of the Environment seeking an exemption on 13 February 1987, received no reply, chased it on 3 April, received a holding reply on 8 April, heard no more. I raised it when I went with a deputation in the autumn; there was a letter back from the Department on 19 November, saying that it was seeking legal advice, and would be writing again. Tower Hamlets has still heard nothing, 14 months after asking for an exemption for a scheme that the Government encouraged. It is not acceptable for the Government to change the rules to say that they will make the decision and then not to decide anything. This scheme would have allowed a £50 million rented housing scheme, but it cannot happen.

I shall give an example from my constituency, to pre-empt what might otherwise be a similar delay. Southwark was mentioned in this list of what was envisaged by local councils. The article claimed: Southwark raised £30 million by leaseback of offices and fixtures and fittings in council houses. The deal will cost £96 million over 20 years. Sadly, that, too, was completely false. Southwark did not raise the money, the scheme did not involve the leaseback, of council house fixtures and fittings, and money was to be used not for revenue purposes but as capital resources. The important thing is that Southwark is affected, because the announcement on 9 March has frozen expenditure, so all capital schemes have had a moratorium placed on them.

This is an excellent scheme that the Government have applauded as a partnership between the London docklands corporation, the council, the Housing Corporation, the Nationwide building society and Barratts. The Amos estate is the place, in the old, downtown area of Southwark docks. This is just the sort of scheme which the Government have smiled upon and encouraged. It involved a public, voluntary and private sector partnership, with the knowledge of the previous Minister for Housing, and approval intimated by officials.

The scheme was agreed and signed in September, and it was due to be opened by the Queen Mother in June. Now, it has effectively been banned retrospectively. This is ludicrous. We cannot do anything to help that, but although my constituents and my local council do not agree on everything, like any logical people, we ask the Government to get their act together, instead of producing regulations that ban a scheme that they have encouraged, and which partnership deals have been implemented, that is ready to go and due to be opened.

I hope that the Government will look at schemes such as that in the Amos estate in Southwark and realise that this sort of ex post facto legislation banning the lot and then seeking to undo the effects is the wrong way round. Leaseback, and sale and leaseback, can be a perfectly reasonable way forward. For heaven's sake, will Ministers not be so paranoid about local government?

11.3 pm

Mr. Roger Knapman (Stroud)

I second all that my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) said, no doubt with a great deal more eloquence than I can command. He raised an important point: some quarter of all Government expenditure in this sector is conducted by local authorities, so we must examine it. After listening for the last half-hour, I wonder whether there is any form of control over local government expenditure that Opposition Members consider right and proper. We heard something from their Front Bench about a carrot. Carrots help one to see in the dark, and that would be an asset in the activities that Labour councils control.

I ask my hon. Friend the Minister to look at the difference between those local authorities that are selling or leasing assets merely to balance the books and those that are doing it to achieve some form of capital expenditure as they carry out many forms of worthwhile activities, particularly those authorised under the Town and Country Planning Act 1947 and subsequent Acts. I believe that there are many enabling powers that we do not want to hamper.

I listened with great interest to details of the new scheme this afternoon and especially to the third part, or that part of it I could hear—I will read the report in Hansard tomorrow with interest—about the assets that can be finished and then owned or managed by the private sector. Perhaps my hon. Friend the Minister can tell me when he replies whether the private sector will include building societies and housing corporations. Will they be able to take over the activities from local authorities?

I would have thought that these measures would have satisfied all but the most avid empire-builder in local authorities. They leave a great deal of scope and I welcome them. I also suggest that Opposition Members should not criticise any part of the proposals until they are quite sure that local authorities in their constituencies do not have scores of empty council houses.

11.5 pm

Mr. Tony Banks (Newham, North-West)

These regulations are a clear example of the Government believing in their own propaganda. They are an example of the Government legislating in haste and repenting at leisure.

As my hon. Friend the Member for Burnley (Mr. Pike) said earlier, local authorities have got themselves into this situation not because they are wilful, or spendthrift or because they like dancing rings around the civil servants at the Department of the Environment, but because they have been forced into it by the circumstances imposed on them by central Government policies.

The Government have been panicked by what they have read in the newspapers. The mealy-mouthed comments, innuendos and downright lies now seem to inspire the Government in terms of their relationship with local government and it is causing them to make asses of themselves. That is precisely what the Government have been doing over this measure.

The hon. Member for Stroud (Mr. Knapman) spoke in that vein, as if this matter dealt with intransigent local authorities that just wanted to carry on spending money for the sake of it. I do not know what experience the hon. Gentleman has of local government. However, I want to inform the Minister that a whole range of Labour-controlled authorities in London have viable schemes which might now be threatened—although we cannot be sure whether they are threatened because further changes were announced earlier this evening.

We have already heard a litany of complaints from Conservative Members about how their local authorities will be affected. I hope that the Minister was able to listen to his hon. Friend the Member for Macclesfield (Mr. Winterton) who described the kind of schemes that would be caught. I also hope that the Minister heard the hon. Member for Exeter (Mr. Hannam) detailing the schemes that might now be jeopardised by the Government's proposals.

Mr. John Battle (Leeds, West)

My hon. Friend may recall that one of the schemes referred to was intended to solve the problem of Airey houses and homes that have been classified as defective by the Government. Will my hon. Friend care to remind the hon. Member for Stroud (Mr. Knapman), who referred to scores and scores of empty council houses, that one of the great problems has been defective houses which councils have not been able to improve because no system has existed to enable them to do so? When people have bought those houses, they have been blighted because mortgage companies would not give mortgages for them unless the authorities could find solutions to those problems. It comes a little cheap from Conservative Members to refer to houses being boarded up if they do not look at the facts and the evidence and without providing the funds to do something about the problem.

Mr. Banks

I entirely agree with my hon. Friend. This is an example of Conservative Members speaking from the depths of their prejudices and bigotry rather than from the experience that Opposition Members and others have of the problems that we have to confront in the inner cities.

My hon. Friend the Member for Leeds, West (Mr. Battle) mentioned a problem that also exists in the London borough of Newham where there are Taylor Woodrow Anglian blocks. Ronan Point is in the constituency of Newham, South. A development brief has been issued for the disposal and development of those blocks. They are all empty: 800 units of accommodation are now void because they are unsafe and cannot be used. Therefore, the council has become involved in a proposal that could involve an element of barter. I want to know from the Minister whether that particular scheme in the London borough of Newham involving the Taylor Woodrow Anglian blocks, which he knows much about, will go ahead under his new proposals.

I turn now to some of the "wilful" schemes in Labour boroughs. Hammersmith and Fulham council made a last-minute bid to escape the deadline and on the night of 9 March it entered into a £25 million deal which involved retaining the freehold on non-residential property and leasing it back through a company wholly owned by the council. The money will be used both to refurbish existing housing stocks and to build new houses; what a waste of money—seeking to improve existing homes and build new ones. What an irresponsible council Hammersmith and Fulham has become! I mention also its 1988–89 HIP allocation of £14.3 million and its estimated bed-and-breakfast bill of £7 million. What do Conservative Members know about the problems that confront councils serving London's inner-city areas?

Haringey has been caught with a scheme comprising 45 units of accommodation, all destined for use as temporary housing. Lewisham has a scheme of 48 one and two-bedrooms flats caught by the rule change. It is another of the boroughs that now finds that it must allocate all its housing to homeless families, with the remainder going to urgent transfer cases. Those are the problems with which London local authorities are trying to deal, and by using the very schemes and arrangements which the Government and Conservative Members roundly condemn, without knowing precisely why they were proposed.

Before the Minister attempts to defend the indefensible, I may ask him what will be the situation for a number of the schemes in Newham. We have short-term private property having leases of from five to 10 years for the homeless. We have also the leases of office accommodation for more than three years, and leases and leaseback deals for newly built housing with housing associations or developers—for example, the Winsor and Moore Paragon schemes. Then there are the barter deals; package deals with developers, whereby the council receives land, works or buildings as part of the package; package deals undertaken through the medium of a private company, whereby land, works and so on are funded by private finance; and other developments with private developers, whereby the council receives land or works, depending on how the legislation is drawn up.

Those are just some examples, and while it sticks in the throats of many Labour local authorities to make so many deals in the private sector, they do so because they wish to look after the interests of the people in their boroughs. It is for that reason that they will sit down and sup with the devil—and that includes the Secretary of State, who would perhaps be an even less attractive proposition as a dinner companion than the devil himself.

With regard to private sector leasing, Newham's current policy is to lease private properties for the homeless for a period of between five and 10 years, without needing—at present—to use any capital resources. As from 10 March 1988, such leases will result in prescribed expenditure to the full freehold value. Newham's schemes are designed not to get around capital controls but to alleviate the homeless crisis that exists there. It is a major crisis. In 1983–84, Newham was spending only £52,000 per year on bed-and-breakfast charges. In 1987–88, that increased to more than £5 million. The borough must do something to deal with that grave social problem, which afflicts not only Newham but the whole of London's inner city.

The Government deny councils the resources to deal with the problem on the ground, as it were, by building new council accommodation. However, councils are bound to enter into such arrangements and it would be a dereliction of their duty if they did not do so. I hope that when the Minister replies he will say that where a borough such as Newham has made barter or leaseback deals to deal honestly with its housing problem, those schemes will be approved by the Department of the Environment.

I have already mentioned the Taylor Woodrow-Anglian blocks. Let me also mention the Woodlands estate, the Upton park goods yard/Cleves road development, and the docklands and other planning proposals. All are known to the Department. Letters have been going backwards and forwards. At least, they have been going towards the Department; we have not received many replies yet. Will the Minister give me an assurance that tomorrow he will go to his Department and ask his civil servants to dig out all correspondence relating to the various deals that have been received from the London borough of Newham, and that a speedy and urgent reply will result?

Earlier, the Secretary of State made it clear in a very disarming way that when the announcement was made on 9 March he did not know very much about the position. He now realises that it was not as he had thought: that it was not as he had read it in The Sun, the Daily Mail, the Daily Express and the Evening Standard. It did not resemble the propaganda put out by Conservative Central Office. It did not even resemble what had been caught up in the fevered minds of the right hon. Gentleman's colleagues on the Front Bench and at No. 10 Downing street.

It was a case of local authorities, both Conservative and Labour, trying to deal with the problems that now confront them—many of those problems exacerbated by central Government policies. Because of the way that they have done this, they should gain the Government's support, not their opposition. I hope that the Minister will at least be able to tell me something good for once, so that I can go back and tell the people of Newham.

10.16 pm
The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope)

This is, in a sense, the second part of a debate that was started earlier this evening when we discussed the new clauses to the Local Government Finance Bill. Perhaps I could start by making some general remarks about the regulations, and then reply to the specific points that have been raised.

The regulations have two main purposes. First, they shorten from 20 years to three the maximum length of lease that is exempt from prescribed expenditure control. Secondly, they provide that certain capital receipts shall not give rise to additional spending within the capital control system.

It has been suggested that the regulations mark a major new restriction on local authority activity. That is not the case. The regulations are a response to a growth in local authority activity outside the capital control system. The previous regulations exempted from capital controls leases which were for less than 20 years, and which were not building leases in the sense that it was envisaged that buildings would be built on the land for the local authorities concerned.

If local authorities had been content to accept the spirit of the regulations then, there would have been no need for action. In the event, however, leasing has become a growth industry. We have seen a flurry of leases for a period of 20 years less one day, sometimes with recitals that it is the intention of the parties that they should be renewed after 20 years. We have seen elaborate option agreements which appear to have no purpose other than to avoid the provisions on building leases.

The regulations therefore reduce the exemption period from 20 years to three. They also remove the exemption from leases that are part of a wider transaction. That leads me to the question of lease and leaseback.

I fully accept that lease and leaseback and sale and leaseback are well recognised commercial techniques. Their commercial purpose is well known. They are a means of allowing a loan to be raised on the security of property. They are in fact loans, although they may not in law be loans.

There is no reason why a local authority should need to raise a loan by this means, other than to avoid borrowing controls. Local authorities have exellent credit ratings, and the Local Government Act 1972 secures the loans that they raise on their revenues. The regulations therefore provide that a lease taken by a local authority is always within capital controls if the authority already holds a freehold or superior leasehold interest in the property.

One of the principles underlying the 1980 Act is what I might call the "duality" of prescribed expenditure and capital receipts. If a local authority disposes of an asset, or ceases to possess an asset, it is treated as if it had received a capital receipt equal to the amount of prescribed expenditure that it would have had to incur to acquire the asset. Regulation 2 preserves that principle. It provides that no capital receipt is generated on the acquisition of which no prescribed expenditure, or nil prescribed expenditure, was scored.

The regulations have a temporary effect. They will expire on 1 October, and will be replaced by permanent regulations on or before that date. That is because they were of necessity introduced without prior consultation and with immediate effect. I regret that experience dictated that the legislative changes had to be introduced without consultation. I drew attention earlier, however, when we were discussing the Local Government Finance Bill on Report, to what our experience has been. I am sure that the House will accept that it was prudent to announce our decision in the way that we did on 9 March.

Mr. Tony Banks

On 9 March, the Secretary of State said: if time permits, we intend to legislate, in the autumn, for a total reform of the capital control system."—[Official Report, 9 March 1988; Vol. 129, c. 333.] Does that remain the policy of central Government?

Mr. Chope

Certainly. It is the policy of central Government to reform the capital control system. We hope to introduce legislation at the earliest opportunity to bring that into effect.

In recognition of experience on consultation, the regulations are temporary. We are consulting the local authority associations on what changes should be made before permanent regulations are laid. Even tomorrow, there will be a meeting between the officials of the Department of the Environment and local authority representatives to discuss some of the detail of the regulations.

One of the proposed relaxations concerns the transfer of new town houses. The present regulations provide that, where a local authority has acquired assets since the start of the present control system without incurring prescribed expenditure, the disposal of those assets will not generate a capital receipt. This is to ensure that local authorities that have acquired assets outside the capital control system do not get credited with spending power within that system if they sell them.

It has been brought to our attention that this will prevent district councils which have taken transfers of new town houses and other assets from having the benefit of receipts from sales. That was not the intention of the regulations, and the anomaly will be corrected in relation to new town assets and other transferred assets when permanent regulations are introduced. The Department will take administrative action in respect of disposals in the meantime.

I do not think that it is appropriate in the time available to enter into a long discussion about the list of schemes that was released to the press and the circumstances that surrounded that. That is history. It was not part of an organised press release. I am sure that the Government would have been criticised by Opposition Members if we had not had available some examples of the sort of abuses that were taking place.

Mr. Roland Boyes (Houghton and Washington)

I ask the Minister to comment on a short paragraph in a letter that I received from Redditch borough council. It concerns a series of barter schemes that would have created a number of dwellings for the people of Redditch. The paragraph reads: However, there would be distinct advantages if the Secretary of State could be persuaded to exempt barter schemes which were already the subject of agreement on 9th March, but where the assets to be acquired under the agreement had not yet been transferred to the Council. Can the Minister give any guidance to the chief executive of Redditch in the light of that paragraph?

Mr. Chope

My right hon. Friend the Secretary of State dealt with that issue when we were debating new clauses that were tabled on Report to the Local Government Finance Bill, especially those that dealt specifically with barter and interim pipeline arrangements. I refer the hon. Gentleman to the Official Report for details of the concessions that were made.

Mr. Simon Hughes

I heard what the Minister said about the press release or handout on 9 March. Will he give the House an undertaking that in future the Department will not issue, formally or informally, documents that are clearly inaccurate and have not been checked that bring local government into unnecessary disrepute?

Mr. Chope

The document was much more accurate than some Opposition Members might care to admit. It made it clear that there were many schemes in the pipeline and others that had already been implemented. Not all the schemes had come to the notice of the Department in detail. Our experience is that councils are reticent about some schemes. The substance of the document was to a large extent correct. In a letter to the chairman of the Association of Metropolitan Authorities, my right hon. Friend set out the issue clearly. That document is a public letter that has been released to the press.

The hon. Member for Normanton (Mr. O'Brien) referred to the EEC grant to be paid on the mining museum in Wakefield. That has nothing to do with the regulations that are before us. He also raised a point about agreements that are already entered into. If a local authority took a lease under an agreement to which both parties were fully committed on or before 9 March, the new regulations do not apply. They apply to agreements that become binding on or after 10 March.

The hon. Gentleman referred also to the Audit Commission report. My right hon. Friend also referred to that report in his remarks in the debate on the new clauses. We accept the point that the Commission made, although not the wider conclusions that the hon. Member for Normanton drew. The report is relevant to barter and to the new clauses that the Opposition did not vote against, but not to the regulations, which are about leasing and not property rationalisation.

My hon. Friend the Member for Harborough (Sir J. Farr) asked for an explanation of the reasons for the measures announced on 9 March. From his description of the schemes, they are affected, if at all, by the new clauses that we debated earlier, rather than by the regulations. I urge him to read in the Official Report the explanation that my right hon. Friend gave when moving the new clauses. I urge him and the council in the area that he represents to consider the terms of the concessions announced earlier.

I confirm to my hon. Friend the Member for Stroud (Mr. Knapman) that, for the purposes of the regulations, building societies and housing associations are classed as private sector.

The hon. Member for Newham, North-West (Mr. Banks) raised several points. He did not tell us the extent to which, in the past, Newham incurred capital expenditure. It has now accumulated capital debt of £450 million. That is the figure for 1986–87. That is a £2,199 debt per head of population. The hon. Gentleman wants to allow that council to have freedom to incur more and more debt without any restraint whatever. We have a capital control system to prioritise capital spending by local authorities.

Mr. Simon Hughes

I specifically put to the Minister a point about delay in dealing with exemptions, and cited the example of a 14-month delay. Will the Minister admit to the House that that is entirely unacceptable and that, if he wants to go ahead with the scheme, it will not be on the basis that local government cannot get an exemption or a reason from the Department?

Mr. Chope

I shall certainly draw the hon. Gentleman's remarks to the attention of my hon. Friend the Minister who is responsible for that matter.

Again, schemes were introduced in which approvals can be given. Some of them have turned out to be a lot more complicated than was at first thought.

The Government have an excellent record on capital controls and on capital allocations to local authorities. Indeed, in 1987–88, there was gross capital expenditure by local authorities of over £6.7 billion. That is 30 per cent. of all public sector capital expenditure, civil and military.

The debate is about definitions. It is about bringing within the control system those schemes of a capital nature that should be brought within the control system. Surely that is sensible and should commend itself to the House.

11.28 pm
Mr. O'Brien

The Minister has not convinced his colleagues or the Opposition. Each hon. Member who has spoken in the debate has outlined to him the shortcomings and problems that, because of the regulations, authorities in their constituencies must meet.

The Minister said that the press release from the Secretary of State's Department was accurate. Yet local authorities have submitted evidence to show that the statements in the press release were totally inaccurate. The Minister should have agreed that it should have been withdrawn. Local authorities have been slighted by some schemes that were genuinely entered into in accordance with the law and in line with the previous regulations that were set by the Department of the Environment.

Referring to the Wakefield scheme, I take it that there will be no problem with EEC grants financing local authority capital schemes and that the Minister has assured the House that they will not be taken into consideration.

Finally, I make one point concerning the question of the 20 years less one day. In Wakefield, there is a residuary body scheme for the provision of office accommodation. Is the Minister saying that the residuary body will be able to reclaim that scheme in 20 years' time? That was the implication which the Minister gave in his reply to a question from one of my hon. Friends. In view of the uncertainty of the regulations, I ask the Minister to withdraw them. If he will not, we shall vote against them.

Question put:—

The House divided: Ayes: 147, Noes: 274.

Division No. 276] [11.30 pm
AYES
Adams, Allen (Paisley N) Dalyell, Tam
Allen, Graham Darling, Alistair
Anderson, Donald Davies, Ron (Caerphilly)
Archer, Rt Hon Peter Davis, Terry (B'ham Hodge H'I)
Armstrong, Hilary Dixon, Don
Banks, Tony (Newham NW) Doran, Frank
Barnes, Harry (Derbyshire NE) Douglas, Dick
Barron, Kevin Duffy, A. E. P.
Battle, John Dunnachie, Jimmy
Beckett, Margaret Evans, John (St Helens N)
Beith, A. J. Ewing, Mrs Margaret (Moray)
Bermingham, Gerald Fatchett, Derek
Blair, Tony Field, Frank (Birkenhead)
Blunkett, David Fields, Terry (L'pool B G'n)
Boyes, Roland Fisher, Mark
Bradley, Keith Foster, Derek
Bray, Dr Jeremy Foulkes, George
Brown, Gordon (D'mline E) Fraser, John
Brown, Nicholas (Newcastle E) Fyfe, Maria
Buchan, Norman George, Bruce
Buckley, George J. Golding, Mrs Llin
Caborn, Richard Gordon, Mildred
Callaghan, Jim Graham, Thomas
Campbell, Menzies (Fife NE) Griffiths, Nigel (Edinburgh S)
Campbell, Ron (Blyth Valley) Griffiths, Win (Bridgend)
Campbell-Savours, D. N. Heffer, Eric S.
Clarke, Tom (Monklands W) Henderson, Doug
Clay, Bob Hinchliffe, David
Clelland, David Home Robertson, John
Clwyd, Mrs Ann Howarth, George (Knowsley N)
Cook, Frank (Stockton N) Hoyle, Doug
Cook, Robin (Livingston) Hughes, John (Coventry NE)
Corbett, Robin Hughes, Sean (Knowsley S)
Cousins, Jim Hughes, Simon (Southwark)
Cryer, Bob Illsley, Eric
Cummings, John Ingram, Adam
Cunliffe, Lawrence Jones, Barry (Alyn & Deeside)
Cunningham, Dr John Jones, Ieuan (Ynys Môn)
Kinnock, Rt Hon Neil Prescott, John
Lamond, James Quin, Ms Joyce
Leadbitter, Ted Redmond, Martin
Leighton, Ron Reid, Dr John
Lewis, Terry Roberts, Allan (Bootle)
Lloyd, Tony (Stretford) Robertson, George
Lofthouse, Geoffrey Robinson, Geoffrey
Loyden, Eddie Rogers, Allan
McAllion, John Rooker, Jeff
McAvoy, Thomas Ross, Ernie (Dundee W)
McFall, John Rowlands, Ted
McKelvey, William Salmond, Alex
McLeish, Henry Skinner, Dennis
McNamara, Kevin Smith, Andrew (Oxford E)
McWilliam, John Smith, C. (Isl'ton & F'bury)
Madden, Max Soley, Clive
Mahon, Mrs Alice Spearing, Nigel
Marek, Dr John Steinberg, Gerry
Marshall, David (Shettleston) Taylor, Mrs Ann (Dewsbury)
Marshall, Jim (Leicester S) Taylor, Matthew (Truro)
Martin, Michael J. (Springburn) Turner, Dennis
Maxton, John Wall, Pat
Meale, Alan Wallace, James
Michie, Bill (Sheffield Heeley) Wardell, Gareth (Gower)
Millan, Rt Hon Bruce Wareing, Robert N.
Moonie, Dr Lewis Welsh, Andrew (Angus E)
Morgan, Rhodri Welsh, Michael (Doncaster N)
Mowlam, Marjorie Wigley, Dafydd
Mullin, Chris Williams, Alan W. (Carm'then)
Murphy, Paul Wise, Mrs Audrey
Nellist, Dave Worthington, Tony
O'Brien, William Wray, Jimmy
O'Neill, Martin Young, David (Bolton SE)
Parry, Robert
Patchett, Terry Tellers for the Ayes:
Pendry, Tom Mr. Alun Michael and
Pike, Peter L. Mr. Allen McKay.
Powell, Ray (Ogmore)
NOES
Aitken, Jonathan Butcher, John
Alexander, Richard Butler, Chris
Alison, Rt Hon Michael Butterfill, John
Allason, Rupert Carlisle, John, (Luton N)
Amess, David Carlisle, Kenneth (Lincoln)
Amos, Alan Carrington, Matthew
Arbuthnot, James Carttiss, Michael
Arnold, Jacques (Gravesham) Channon, Rt Hon Paul
Arnold, Tom (Hazel Grove) Chapman, Sydney
Ashby, David Chope, Christopher
Aspinwall, Jack Clark, Hon Alan (Plym'th S'n)
Atkins, Robert Clark, Dr Michael (Rochford)
Atkinson, David Colvin, Michael
Baker, Rt Hon K. (Mole Valley) Conway, Derek
Baker, Nicholas (Dorset N) Coombs, Anthony (Wyre F'rest)
Baldry, Tony Coombs, Simon (Swindon)
Batiste, Spencer Cope, John
Bellingham, Henry Cran, James
Bendall, Vivian Currie, Mrs Edwina
Bennett, Nicholas (Pembroke) Davies, Q. (Stamf'd & Spald'g)
Bevan, David Gilroy Davis, David (Boothferry)
Biffen, Rt Hon John Day, Stephen
Blackburn, Dr John G. Dickens, Geoffrey
Blaker, Rt Hon Sir Peter Douglas-Hamilton, Lord James
Bonsor, Sir Nicholas Dover, Den
Bottomley, Peter Dunn, Bob
Bottomley, Mrs Virginia Durant, Tony
Bowden, A (Brighton K'pto'n) Dykes, Hugh
Bowden, Gerald (Dulwich) Eggar, Tim
Bowis, John Evans, David (Welwyn Hatf'd)
Brandon-Bravo, Martin Evennett, David
Brazier, Julian Fallon, Michael
Bright, Graham Favell, Tony
Brittan, Rt Hon Leon Fenner, Dame Peggy
Brooke, Rt Hon Peter Field, Barry (Isle of Wight)
Brown, Michael (Brigg & Cl't's) Finsberg, Sir Geoffrey
Bruce, Ian (Dorset South) Fookes, Miss Janet
Buchanan-Smith, Rt Hon Alick Forman, Nigel
Burns, Simon Forsyth, Michael (Stirling)
Burt, Alistair Forth, Eric
Fowler, Rt Hon Norman Madel, David
Fox, Sir Marcus Major, Rt Hon John
Franks, Cecil Malins, Humfrey
Freeman, Roger Mans, Keith
French, Douglas Marshall, John (Hendon S)
Gale, Roger Marshall, Michael (Arundel)
Garel-Jones, Tristan Martin, David (Portsmouth S)
Goodlad, Alastair Maude, Hon Francis
Goodson-Wickes, Dr Charles Mawhinney, Dr Brian
Gow, Ian Maxwell-Hyslop, Robin
Gower, Sir Raymond Mayhew, Rt Hon Sir Patrick
Greenway, John (Ryedale) Mellor, David
Griffiths, Sir Eldon (Bury St E') Miller, Hal
Griffiths, Peter (Portsmouth N) Mills, Iain
Grist, Ian Mitchell, Andrew (Gedling)
Ground, Patrick Mitchell, David (Hants NW)
Grylls, Michael Moate, Roger
Gummer, Rt Hon John Selwyn Monro, Sir Hector
Hamilton, Hon Archie (Epsom) Montgomery, Sir Fergus
Hamilton, Neil (Tatton) Morris, M (N'hampton S)
Hanley, Jeremy Morrison, Hon Sir Charles
Hannam, John Morrison, Hon P (Chester)
Hargreaves, A. (B'ham H'll Gr') Moss, Malcolm
Hargreaves, Ken (Hyndburn) Neale, Gerrard
Harris, David Needham, Richard
Haselhurst, Alan Nelson, Anthony
Hayes, Jerry Neubert, Michael
Hayhoe, Rt Hon Sir Barney Newton, Rt Hon Tony
Hayward, Robert Nicholls, Patrick
Heathcoat-Amory, David Nicholson, David (Taunton)
Heddle, John Nicholson, Emma (Devon West)
Hicks, Mrs Maureen (Wolv' NE) Onslow, Rt Hon Cranley
Hicks, Robert (Cornwall SE) Oppenheim, Phillip
Hill, James Paice, James
Hind, Kenneth Parkinson, Rt Hon Cecil
Hogg, Hon Douglas (Gr'th'm) Patten, Chris (Bath)
Holt, Richard Pattie, Rt Hon Sir Geoffrey
Howard, Michael Porter, David (Waveney)
Howarth, Alan (Strat'd-on-A) Portillo, Michael
Howarth, G. (Cannock & B'wd) Powell, William (Corby)
Hughes, Robert G. (Harrow W) Price, Sir David
Hunt, David (Wirral W) Raffan, Keith
Hunt, John (Ravensbourne) Raison, Rt Hon Timothy
Hunter, Andrew Rathbone, Tim
Hurd, Rt Hon Douglas Redwood, John
Irvine, Michael Renton, Tim
Jack, Michael Rhodes James, Robert
Jackson, Robert Riddick, Graham
Janman, Tim Ridley, Rt Hon Nicholas
Jessel, Toby Ridsdale, Sir Julian
Johnson Smith, Sir Geoffrey Roberts, Wyn (Conwy)
Jones, Gwilym (Cardiff N) Rossi, Sir Hugh
Jones, Robert B (Herts W) Rowe, Andrew
King, Roger (B'ham N'thfield) Rumbold, Mrs Angela
King, Rt Hon Tom (Bridgwater) Ryder, Richard
Kirkhope, Timothy Sackville, Hon Tom
Knapman, Roger Sainsbury, Hon Tim
Knight, Greg (Derby North) Sayeed, Jonathan
Knight, Dame Jill (Edgbaston) Shaw, David (Dover)
Knowles, Michael Shaw, Sir Giles (Pudsey)
Knox, David Shelton, William (Streatham)
Lamont, Rt Hon Norman Shephard, Mrs G. (Norfolk SW)
Lang, Ian Shepherd, Colin (Hereford)
Latham, Michael Sims, Roger
Lee, John (Pendle) Skeet, Sir Trevor
Leigh, Edward (Gainsbor'gh) Smith, Sir Dudley (Warwick)
Lennox-Boyd, Hon Mark Smith, Tim (Beaconsfield)
Lightbown, David Soames, Hon Nicholas
Lilley, Peter Speed, Keith
Lloyd, Sir Ian (Havant) Speller, Tony
Lloyd, Peter (Fareham) Spicer, Sir Jim (Dorset W)
Lord, Michael Spicer, Michael (S Worcs)
Luce, Rt Hon Richard Squire, Robin
Lyell, Sir Nicholas Stanbrook, Ivor
Macfarlane, Sir Neil Stanley, Rt Hon John
MacGregor, Rt Hon John Steen, Anthony
MacKay, Andrew (E Berkshire) Stern, Michael
Maclean, David Stevens, Lewis
McLoughlin, Patrick Stewart, Allan (Eastwood)
McNair-Wilson, P. (New Forest) Stewart, Andy (Sherwood)
Stradling Thomas, Sir John Ward, John
Summerson, Hugo Wardle, Charles (Bexhill)
Tapsell, Sir Peter Warren, Kenneth
Taylor, John M (Solihull) Watts, John
Tebbit, Rt Hon Norman Wheeler, John
Thompson, D. (Calder Valley) Whitney, Ray
Thompson, Patrick (Norwich N) Widdecombe, Ann
Thorne, Neil Wilkinson, John
Thornton, Malcolm Wilshire, David
Thurnham, Peter Wolfson, Mark
Townend, John (Bridlington) Wood, Timothy
Townsend, Cyril D. (B'heath) Woodcock, Mike
Tracey, Richard Yeo, Tim
Twinn, Dr Ian Young, Sir George (Acton)
Vaughan, Sir Gerard Younger, Rt Hon George
Waddington, Rt Hon David
Wakeham, Rt Hon John Tellers for the Noes:
Walden, George Mr. Robert Boscawen and
Waller, Gary Mr. Stephen Dorrell.

Question accordingly negatived.