§ 1. Mr. Burden
To ask the Secretary of State for the Environment if he will make a statement on local authority capital expenditure plans for 1997–98. 
§ The Secretary of State for the Environment (Mr. John Gummer)
The Government forecast that local authority capital expenditure in England in 1997–98 will be £6.2 billion.
§ Mr. Burden
On the day that Birmingham city council meets to set its budget, will the Secretary of State congratulate Birmingham on being the most solvent council in the country, having reduced its debts by 5 per cent. in the same period as the Government have doubled the national debt? Secondly, will he explain to the people of Birmingham why the Government have cut the capital allocation to Birmingham by some 50 per cent. and education funding by 80 per cent? Why do the Government seem determined to stop Birmingham's children being educated in schools that have had all the necessary repairs?
§ Mr. Gummer
It is difficult for the hon. Gentleman to talk about education in Birmingham, given its scandalous history of education spending by Labour and the way in which money that should have been used for education was spent elsewhere. Birmingham's basic credit approvals for 1997–98 are the highest of the 392 authorities in the country. The hon. Gentleman should accept that his party has made a commitment that there will be no extra money, so if he wants an explanation to give to the people of Birmingham, he had better seek it from the shadow Chancellor.
§ Mr. Bernard Jenkin
Does my right hon. Friend agree that large numbers of local authorities could lay their 694 hands on funds for capital expenditure if they transferred their housing to housing associations and paid off their housing debts? Does not the fact that Liberal and Labour-controlled local authorities hang on to their council houses like Stalin hung on to agriculture say something about them and their political parties?
§ Mr. Gummer
The fact is that, under the new regime that we have put in place, in 25 Birmingham wards the local authority could spend 100 per cent. of its capital receipts if it went down the route that my hon. Friend described. Birmingham would have every opportunity to spend more if it opted for large-scale voluntary transfers as we would like and the tenants have agreed.
§ Ms Armstrong
Has the Secretary of State read the report prepared for his Department by York Consulting on capital challenge? Does he agree with one of its basic findings that capital challenge has skewed the decisions away from basic needs, so that authorities have been unable to address the basic needs of their communities, but instead have had to respond to the Government's lottery? Will the Secretary of State meet local authorities to discuss the matter before the Government reach a decision? Will he take that basic finding of the report into account?
§ Mr. Gummer
As we commissioned the report, we shall take its findings into account and discuss them with local authorities, as we promised when we started the pilot programme. What is more, Birmingham received £5.7 million under capital challenge. Local authorities that go in for capital challenge decide their own priorities. The hon. Lady wants me to continue with a situation in which we, instead of local authorities, decide where they should spend their money.
§ Mr. Garnier
As the hon. Member for Birmingham, Northfield (Mr. Burden) is so worried about local authority capital expenditure, will my right hon. Friend tell the House about the level of local authority capital debt across England and Wales, whether that has some affect on the public finances, and the Labour party's answer to the question?
§ Mr. Gummer
Birmingham's problem in those circumstances is that, if the Labour party came to power and did what it said it would—release capital receipts—Birmingham would receive no money, because it has no capital receipts. Indeed, Birmingham would receive less money from capital allocations because, as local authorities that do have capital receipts spend them, the money available to be spent on capital would be reduced—unless Labour were to decide that it would increase public spending. However, Labour has said that it would not increase public spending. It cannot have it both ways.