HC Deb 27 June 1988 vol 136 cc90-6

8 pm

Mr. Waldegrave

I beg to move amendment No. 350, in page 63 line 19, after 'acquired', insert— `or, as the case may be, the disposal cost which, disregarding section 93(3) below, is attributable to the property to be acquired by virtue of subsection (2A) below'.

Mr. Deputy Speaker (Mr. Harold Walker)

With this it will be convenient to take Government amendments Nos. 351 to 360.

Mr. Waldegrave

The amendments are simpler than they look. The principle, which we have already debated, concerns dowries. With our present select band, although rather fewer than in Committee, it is right that we should look at such complicated amendments. My hon. Friend the Member for Stamford and Spalding (Mr. Davies) is here in case we get muddled. He may be able to produce some visual aids if we get into difficulties.

Amendment No. 350 provides for dowries. We foreshadowed this in our October explanatory paper. We said that market value subject to tenancy could give rise to negative valuations, and we debated the principle earlier on tenants' choice. That could arise when the landlord had failed to fulfil his contractual repairing obligations. Once a sum is deducted from a valuation to allow for a backlog of landlord's repairs, the value of the property could well be less than nothing. In those circumstances, it would be open to a tenant to take the present landlord—the council—to court and insist that the repairs were made. This provision merely transfers an obligation that already exists.

Hon. Members have argued against dowries but, as long as we ensure that the subsidy regime takes account of them, it is logical that dowries—which do not invent any new obligations or costs for local authorities that do not exist already but simply capitalise them—should be available. The amendments bring that about.

Amendment agreed to.

Amendments made: No. 351, in page 63, leave out line 22.

No. 352, in page 63, line 23, leave out 'attributable to the houses' and insert 'the amount attributable to houses as defined in section 93(4) (b) below'.—[Mr. Waldegrave.]

Mr. Simon Hughes

I beg to move amendment No. 1, in page 63, line 25, after second 'be', insert 'the greater of the amount of any debt attributable to its construction, acquisition or renovation which is outstanding on the relevant date and'.

Mr. Deputy Speaker

With this it will be convenient to take the following amendments: No. 128, in page 63, line 25, leave out 'relevant date' and insert— 'date of valuation subject of a revision of such valuation if completion is delayed by more than twelve weeks and such delay is not the result of a failure on the landlord's part to meet deadlines prescribed in this Part of the Act'.

No. 134, in page 63, line 27, leave out 'on the following assumptions' and insert— 'with the addition of a sum equal to the value of any arrears of rent owing by the tenant of that property. The following assumptions will apply to the assessment of open market value'.

No. 137, in page 63, line 40, at end insert— '; and

  1. (f) that the price payable must not be less than the debt outstanding on the dwelling at that time.'.

No. 138, in page 63, line 40, at end insert— '; and

  1. (f) that the price will be a positive value payable to the vendor.'.

No. 261, in page 63, line 40, at end insert— 'provided that the price shall not be less that the market value of the property with vacant possession reduced by an amount equating to the national average discount under Part V of the Housing Act 1985 as prescribed from time to time'.

No. 158, in page 64, line 5, leave out from `valuer' to end of line 6 and insert— 'and there shall be an appeal to Tribunal set up for this purpose; and any costs shall be shared between the parties equally'.

No. 394, in page 64, line 6, at end insert— '(6) If, following an acquisition made under this Part at a purchase price determined under this section, a local authority has outstanding debt attributable to construction, acquisition or renovation of any property subject to the acquisition made under this Part, the Secretary of State shall take responsibility for servicing and paying the debt.'

Mr. Hughes

It is a strange circumstance that four and a half days into the Report stage we are debating amendment No. 1, but that is the way of the world. It is debated with amendment No. 394, in my name, and with other no doubt excellent ideas put forward by other hon. Members, which, I must be honest, I have not considered as carefully.

The amendment is about transfer price. The Minister touched on this matter in his brief remarks in the debate on amendment No. 350. The proposal is that local authorities should not be left with outstanding loan debt on properties in which they no longer have an interest. If the tenanted market value is less than the outstanding loan debt, and the local authority continues to have responsibility for the debt and does not receive resources to cover it, the cost to the local council of servicing and paying off the remaining debt will have to be borne—this is the crucial point—by the remaining tenants of the council and-or by the ratepayers. From what we understand will be in next year's housing Bill—when debts arising out of housing matters will not be allowed to be transferred across to the general rate account—those debts will have to be borne by the remaining tenants.

That raises the bizarre and grossly inequitable prospect of local authorities that have had a large proportion of their stock bought by new landlords—with no say by the local authority; it has no power to stop that—having to impose the remaining debt burden on an ever-decreasing number of tenants. It raises the bizarre consequence that local authorities that dispose of all their stock to a new landlord for a price less than the outstanding loan debt would have to pay off that debt without any resources.

That must be the implication of the scheme as proposed. Ministers are forced to agree, although they may not politically want to concede it, that the logic lies with the amendment, which says that the purchase price cannot be lower than the outstanding debt.

Amendment No. 394 proposes an alternative way forward. There is some evidence that the Government are aware of the problem raised by it and plan to provide additional subsidy to local authorities that are left with outstanding loan debt on property that they no longer own. In the general election campaign last year, the Secretary of State made it clear, according to the "Housing Association Weekly" of 5 June 1987—the week before the general election—that Any local authority which loses money on a transfer will be able to claim extra RSG to cover the loss of interest on debt. In Committee, in the debates on housing action trusts, the Minister of State said that revenue expenditure to cover outstanding loan debt charges should be covered by subsidy arrangements. The press briefing which the Minister gave last week and which was widely reported in the specialist press referred to that problem, and included this quotation from the Minister: The Government won't write off debt, but it will take account of its effects. The subsidy system will have to direct resources to those who have a new burden. In Committee—[Interruption.]

Hon. Members

Give way.

Mr. Hughes

Do not tempt me. The Principality—in the form of my hon. Friend the Member for Brecon and Radnor (Mr. Livsey)—is coming to the rescue, hot-foot from Korea, as I understand it.

In Committee, referring to housing action trusts, the Minister said that if there were a negative sale value such that the capital payment had to be made by the council to the new landlord when the council sold property to him, that payment, or dowry, would be financed through the housing investment programme. There is plenty of evidence that the Government have already thought that there will have to be additional subsidy.

Amendment No. 394 requires the Secretary of State directly to take responsibility for servicing and paying any outstanding loan debt. It is important that some requirement be written into the Bill to guarantee local authorities that they will not face a massive debt and have no money to pay it. They might be able to call on only a small number of residential tenants. We need to hear exactly what the Government will do about outstanding loan debt. It is not a theoretical problem.

The Government must tell local councils what happens if they sell housing stock or have it forced out of their hands, but are left with a debt to pay. The Government must accept that, even if they do not want high prices putting off new landlords, the ratepayers or the tenants who remain with the council—the only people left—should not effectively have to subsidise new landlords because of a purchase price determined by central Government on the basis of ensuring that it is low enough to benefit the new landlords. This is an important point. Ratepayers and tenants remaining with the council will pay to subsidise the landlords who buy under this so-called tenants' choice.

The Government have stated that the principal subsidy for new landlords lies in the purchase price. They must make sure that it is a subsidy, but one from Government and not one that must be paid by tenants who remain with the council.

A similar amendment was tabled by the hon. Member for Mid-Staffordshire (Mr. Heddle)—[HON. MEMBERS: "Where is he?"] I do not know. He was here earlier, but he has disappeared again.

Mr. Winnick

He is looking after his tenants.

Mr. Hughes

He is looking after his tenants.

The hon. Gentleman tabled the amendment at the request of the Conservative-controlled Association of District Councils, which is worried about this issue. In response to the "Tenants' Choice" document, the ADC said: We are concerned that in some circumstances property may have to be sold at a price which is lower than the outstanding loan debt. Authorities which are still in receipt of housing subsidy will be somewhat cushioned from this loss. However other councils will be left with the residual debt in the housing revenue account. The ADC naively asked: Will the Government he making financial assistance available to these local councils in order to service the debt? We need to be assured that ratepayers and remaining council tenants will not have to subsidise the new takeover landlords. If the Government want the scheme, they must make money available to the councils to pay for it. The Government must not be allowed to get off the hook by saying that this is a theoretical problem. It is a very real problem that will cost most councils in England and Wales millions of pounds.

Mr. Waldegrave

I despair of my powers of persuasion. I have tried to persuade the hon. Member for Southwark and Bermondsey (Mr. Hughes) so many times out of his views, but I have not succeeded. [Interruption.] The hon. Gentleman says, from a sedentary position, that all sorts of people try to persuade him out of his views, which I have no doubt is true, but so far they have all failed.

The point is that nothing will change. The valuation will reflect the reality in the area concerned. If a local authority has property that is costing it more than it derives in rent, it has a negative value. I refer to the experience of the hon. Member for Knowsley, North (Mr. Howarth). I know that his local authority is in the unfortunate position of having a large amount of housing that has a very large amount of outstanding debt attached to it and that, in terms of market valuations, is not worth very much. Practically every local authority has similar properties. If local authorities were to receive something that was based not on a property's valuation but on the historic cost, that would dramatically change the position. The Government's position will not change the authority's position. We are capitalising the flows, whether they be negative or positive.

Ms. Primarolo

To give the Minister's powers of persuasion yet another chance to correct our views, I mentioned earlier that Bristol city council asked the Chartered Institute of Public Finance and Accountancy to calculate the valuation price of the transfer of a single unit in Bristol to a private landlord. Its valuation was £3,000. I do not say that the Minister is being dishonest, but I think that he is misleading us about the criteria on which such a valuation is made. Apparently the valuation is to be made by saying that that unit has a depreciation value. If all houses were valued on that basis, the price of houses would be lower, instead of which there is growing concern about house prices. Property Investment Company. which is a subsidiary of TSB, has been set up to advise on the transfer of council houses to private landlords under the scheme. It says that the valuation of the housing would have to be extremely low to attract investors' interest. That flies in the face of what the Minister has said.

Mr. Waldegrave

The hon. Lady knows that the ultimate valuation, in case of dispute, would come from the district valuer. I do not detect Bristol city council objecting to the acceptance of district valuer prices in other circumstances. I do not therefore see why the council should object to district valuer prices in this case.

The argument about dowries has been advanced several times today. The hon. Member for Southwark and Bermondsey had to go back to the general election campaign to detect that we then said that there would be subsidy consequences. He did not need to go back as far as that. In a previous debate today, I said that there would be subsidy consequences and that the Government must take them into account.

Mr. Simon Hughes

To pursue the point made by the hon. Member for Bristol, South (Ms. Primarolo), the managing director of Property Investment Company is quoted in the Financial Times of 20 June as saying: Private investors would not finance the purchase of council housing estates by housing associations unless the Government was prepared to write off local authority debts on council homes. What does the Minister have to say in reply?

Mr. Waldegrave

The gentleman in question can say what he likes. We say that it would be wrong if local authorities did not get the proper value for their properties, which is tenanted market value. In some cases that will mean that councils will do very much better out of it than if they received outstanding loan debt. The hon. Member for Southwark and Bermondsey wants councils to win in either case. It is far simpler to have a proper valuation. It is not a transfer within the public sector, and the best way to deal with it is by means of tenanted market value. On that basis, I oppose the amendment.

8.15 pm
Mr. Simon Hughes

The Minister's answer was no more convincing than the one that he gave in Committee. It is not believed by many of the advisers, and I quoted somebody who is regarded as authoritative and independent. The Minister did not answer some of the key questions that were put to him about who would pick up the tab. The answer is that the only people who are left to pick up the tab are the ratepayers and remaining council tenants. They will have to foot the bill and subsidise the new landlord. They will have to pay for the Government's policies. That is why I tabled the amendment and why I do not intend to withdraw it.

Mr. Deputy Speaker

The question is, That the amendment be made. As many as are of that opinion say, Aye. To the contrary, No. I think the Ayes have it. The Ayes have it. [Interruption.] I beg the pardon of the House. The Noes have it.

Mr. McCartney

On a point of order, Mr. Deputy Speaker. I am not trying to cause mischief, but this is the second time that the Opposition have been cheated out of an amendment—once in Committee and again tonight. A vote was taken, and you stated the result absolutely clearly. There should be no attempt to alter the decision. It should be accepted.

Mr. Deputy Speaker

There was a misunderstanding by the Chair, just as there can be a misunderstanding by any hon. Member. The sensible way out of the difficulty would be for the Chair to put the Question again.

Mr. Simon Hughes

Further to that point of order, Mr. Deputy Speaker. It would at least be generous of the Government to concede that on amendment No. 1, of all amendments, they were happy to accept your initial ruling.

I ask the Minister to do so.

Mr. Deputy Speaker

The House had better put the matter right beyond doubt. The Chair will put the question again. The Question is, That the amendment be made——

Mr. McCartney

rose——

Mr. Deputy Speaker

Order. The Question is, That the amendment be made. As many as are of that opinion say, Aye. To the contrary, No. I think that the Noes have it. The Noes have it.

I understand that amendments Nos. 140, 141 and 159 are not to be moved.

Mr. McCartney

On a point of order, Mr. Deputy Speaker. I do not wish to cause further problems, but I want this matter clarified. It is important for those hon. Members who have spent literally hundreds of hours on the Bill. It seems that when a vote is taken and then retaken it is just to give credence to an arrangement about the outcome of votes. That is not how I, as a Back Bencher, see the matter. A vote was clearly taken, and I find the outcome extremely difficult to understand. If that is to be the principle that governs voting, I think that each time the Opposition lose a vote we should ask for it to be retaken.

Mr. Deputy Speaker

It is within the discretion of the Chair. If there is doubt about the outcome of the Question that has been put to the House, it is right that the Chair should put the Question again to remove any doubt.

Mr. Simon Hughes

Further to that point of order, Mr. Deputy Speaker. At the time that the vote was taken, I counted 10 hon. Members on this side voting and nine hon. Members on the other side voting. I know that we are talking about a funny voting system, but it seems to me that 10 over nine is a majority for the amendment.

Mr. Deputy Speaker

If the hon. Gentleman had said that he wished to press the matter to a Division, that would have clarified matters. I did not get that impression from the hon. Gentleman. I heard a distinct cry of "No" and I said that the Noes had it. I did not hear the hon. Gentleman challenge the Chair's ruling. These points of order are delaying the House.

Amendments made: No. 353, in page 63, line 40, at end insert— '(2A) Subject to section 93(3) below, there is a disposal cost attributable to the property to be acquired if, having regard to the expense likely to be incurred in carrying out the works referred to in paragraph (d) of subsection (2) above, the property to which the acquisition relates would not realise any price in the circumstances specified in that subsection; and that disposal cost is the amount by which the expense likely to be so incurred exceeds what would be determined under that subsection as the price if those works had already been carried out.'

No. 354, in page 63, line 42, after 'price', insert— `or, as the case may be, disposal cost'.—[Mr. Waldegrave.]

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