Local Government Finance (Hansard, 21 November 1995)

§ 4. Mr. Austin-Walker
To ask the Secretary of State for the Environment what assessment he has made of the total capital receipts currently held by local authorities in England (a) from sale of council homes and (b) from sale of other properties and assets. [735]

§ The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry)
The stock of usable capital receipts from all assets stood at £1.5 billion at the end of March this year. About 90 per cent. of those receipts are held by authorities whose responsibilities include housing, but it is not possible to say exactly how much of the total derives from the sale of houses. No figures for set-aside capital receipts are available.

§ Mr. Austin-Walker
Is it not madness that this money sits idle when thousands of families live in squalid housing conditions? Is the Minister not aware that that money could build about 18,000 homes, which could house at least half of those who are currently in temporary accommodation?

§ Mr. Curry
The hon. Gentleman makes two fundamental mistakes. First, the money is not sitting idle: it is being used—for example, for capital projects. The idea that somehow a great pile of gold coins is under somebody's mattress is a fundamental misunderstanding. Secondly, only a proportion of the money comes from the sale of council houses. Local authorities are required to set aside money from their revenue accounts for depreciation, and I hope that the hon. Gentleman does not intend to lay his hands on that.
All that the Labour party demonstrates by that argument is how little it understands about local authority finance. Opposition Members would be much more plausible if, instead of banging on about that matter, they would just once tell us how much of the capital receipts they would spend over what sort of period, and how they would deal with the problem that the overwhelming amount of these receipts is in the shire districts or the outer London districts. They will not answer any of those questions. All they do is whinge and that, like the rest of their policies, has no substance.

§ Mr. Jacques Arnold
Have we not today had a display of the Opposition's total ignorance of accountancy, and of local government finance in particular, which shows why they are not suitable to govern? We have heard precisely from my hon. Friend that the sums involved amount to slightly over £1 billion, but the other side of the local government balance sheet shows £37 billion of local government debts. Therefore, the money is a mirage: it does not exist.

§ Mr. Curry
The Labour party cannot come to terms with the fact that, if a local authority has got rid of its debt, it can spend the money on what it likes. It must be a fundamental first charge on any revenues to discharge responsibilities for debt. Once that is done, a local authority has complete freedom. That is merely prudent housekeeping.

§ Mr. Dobson
Why will not the Government allow councils to invest those enormous funds to build new homes for the thousands of people who have nowhere decent to live? Last year, the Government restricted 448 councils in England to building just 414 houses and flats, compared with the 54,000 new homes that were started under Labour in 1979. If the Minister says that we are wrong in saying that those funds should be used to fund new building, why did the Deputy Prime Minister, when Secretary of State for the Environment, promise that that was exactly what would happen to those funds, and why is that exactly what has happened to them in Scotland throughout the whole period?

§ Mr. Curry
The funds that are attributable to the sale of council houses, which is a proportion, but nowhere near the entire amount of the money, are not used for building new homes, because we do not believe that local authorities are the best providers of housing. [HON. MEMBERS: "Ah!"] There is no mystery about that. We have spelt that out for years. The best providers of housing are housing associations. It is interesting that we have just had a great success because Manchester Labour council has promoted the transfer of one of its major estates to a housing association, which shows that our view is being increasingly accepted.
If the hon. Gentleman is so concerned about housing, if that is such a Labour preoccupation, how is that it, in all the time devoted to discussing the Queen's Speech, Labour is not devoting one single minute to the subject of housing? It is all blather; it is all rhetoric. There is no substance, because the Labour party has no policy that it can defend.

§ Mr. James Hill
Is it not true that the city of Southampton has £12 million on deposit, but is in debt to the Government in relation to housing for £90 million? Could it not be made clear to the public that councils that have spent, spent and spent must be brought under control and that capital receipts, from which they can receive interest, should be held until they balance their books?

§ Mr. Curry
That is quite clearly the case, but my advice to councils such as Southampton is to follow the example being pursued by a number of Labour councils, and to recognise that transferring their stock to the housing association movement is a win-win deal for the council that receives the receipt and for the tenants who receive a major refurbishment programme. The last word lies with tenants. That is tenants' choice in action.

§ 5. Ms Eagle
To ask the Secretary of State for the Environment what discussions he has had with business concerning the 1996–97 national non-domestic rate. [736]

§ Sir Paul Beresford
I have received representations from a number of businesses.

§ Ms Eagle
Does the Minister agree that next week's rate support grant settlement will mean that businesses must pay higher business rates, that council tax payers must pay higher council taxes, all for fewer services, and that, year on year, under the Tories people must pay more and get less?

§ Sir Paul Beresford
I find that extraordinary coming from an hon. Member on the Opposition Benches. If one considers Labour authorities and their behaviour, one would expect the scenario that the hon. Lady has spelt out. If one considers the period just before the uniform business rate, in Liverpool council, Labour-controlled, and Wirral council—which includes Wallasey— Labour-controlled, there was no concern by Labour local 449 authorities for business—none at all. In Liverpool, the rate was 38 per cent. above the national average. In Wallasey, it was 40 per cent. above that average. Where was the concern?

§ Mr. Nigel Evans
Does my hon. Friend agree that it is important to protect small businesses from local authorities such as Labour-controlled Lancashire county council, which is interested only in spending money and not in the level of services that it provides? Does he agree that it is important for us to look at extra ways of helping to protect small rural businesses from the unified business rate? Does he agree that the announcement in the rural White Paper will be extremely important for those small rural businesses?

§ Sir Paul Beresford
I agree completely with my hon. Friend, but I would not limit it to rural businesses. We can look back to another example from 1988, 1989 and 1990 to an area which includes Holborn and St. Pancras. We can compare Camden and Westminster. There were filthy streets in Westminster—[Interruption.] Sorry, there were filthy streets in Camden, but the business rate in Camden was 34 per cent. above that of Westminster.