Lords amendment No. 3B
§ The Minister for Local Government, Regional Governance and Fire (Mr. Nick Raynsford)I beg to move, That this House disagrees with the Lords in the said amendment.
I regret that the Lords have seen fit to pass a further amendment to the clause, one of the key financial clauses in the Bill. I particularly regret that, because this House rightly and properly asserted its privilege in financial matters when it disagreed with the Lords amendment on Monday night. The new amendment would have the same effect. It would prevent the pooling of capital receipts and so would alter the financial arrangements made by this House.
The suggestion made by Baroness Hanham in another place that the latest amendment is somehow a compromise is wholly spurious. Like its predecessor, the amendment would make it impossible for capital receipts received by debt-free authorities to be brought within the pooling mechanism. That directly conflicts with the Government's financial provisions in the Bill. Therefore, once again, privilege applies. Indeed, given the nature of clause 11(2)(b), I cannot conceive of any amendment where this would not be the case.
It would not only be utterly wrong but a very dangerous precedent for this House to waive its privilege on financial matters and permit the Lords amendment to stand. It would also be wrong, because the amendment undermines one of the key principles of the Government's housing finance policy and, indeed, one of the key principles underlying the financial provisions of the Bill.
§ Mr. RaynsfordIt is fundamental to the Government's approach to public finance and investment in public services that resources are allocated 1022 on the basis of need, not on the basis of accident or chance. On that happy note, I will give way to the hon. Gentleman.
§ Mr. DaveyWill the Minister explain the point about privilege a little more? The amendment does not increase or lower taxation and it does not increase or lower overall spending. It just changes the way in which the spending is allocated. How can that relate to privilege?
§ Mr. RaynsfordThe amendment alters the financial arrangement made by the House and would have the direct effect of making it impossible for the Government to secure the pooling of £120 million worth of capital receipts received by debt-free authorities. That, by any measure, is a significant financial impact on which this House rightly insists on privilege.
§ Mr. John Gummer (Suffolk, Coastal)Will the Minister be kind enough to consider this not as a financial matter, but as a moral matter? Surely this is a moral issue. He is taking away from those who have been careful with their money and giving it to people who have not been careful. That is not a financial issue; that is a moral issue.
§ Mr. RaynsfordI am sorry that the right hon. Gentleman was not here two nights ago when we debated these issues in some detail. He would then have heard me explain that this has nothing to do with prudence or good or bad management. We are dealing with the application of capital receipts that come from the sale of council houses under the right-to-buy policy. That reflects the decisions taken not by councils, but by tenants. It also reflects the accidents of geography as to where the properties are located.
The right hon. Gentleman was a Secretary of State for the Environment.
§ Mr. Peter Pike (Burnley)Will the Minister give way?
§ Mr. RaynsfordI am answering the question asked by the right hon. Member for Suffolk, Coastal (Mr. Gummer), but I shall give way to my hon. Friend in a moment.
The right hon. Gentleman will know that some areas are rich in receipts because they happen to have the good fortune of being located in areas with high house prices. The Government in which he was a senior Minister arranged a mechanism for redistributing capital receipts so that those derived by areas that were fortunate because of their geography and tenants' decisions to buy properties could be used to help areas without such advantages. If that was acceptable and right for the Government of which he was a member in 1990, why is the principle wrong now? What is the morality that differentiates the two circumstances?
§ Mr. GummerThe right hon. Gentleman is avoiding my question. I am not arguing about whether he is right or wrong. I am saying that the argument that the matter is one of privilege because it is about only money is not correct. He has to argue the case on its merits rather than arguing the case for putting two fingers up at the other 1023 House. If he argues the case well on its merits, I might well be persuaded by it. However, he cannot say, "I am very sorry but we mustn't discuss this at all because I've already decided that it comes under a nice little box on which I don't have to argue the merits." Will he argue the merits of his case and not be rude about the House of Lords?
§ Mr. RaynsfordAs I said to the right hon. Gentleman a moment ago, if he had been here on Monday night he would have heard the debate in detail because we argued the point at length. If he had been a member of the Committee that considered the Bill—I am not suggesting that he should have been—he would have heard the debates there. The issues have been explored in the House in enormous detail. The amendment has significant financial consequences. The House decided by a substantial majority on Monday evening not to accept the original Lords amendment and, on a matter of privilege, advised their Lordships accordingly. It is extremely disappointing that they have, to use the right hon. Gentleman's delightful phrase, lifted two fingers. I hope that he, as a good democrat, will join us in advising Members of the other place to respect this House's privileges.
§ Mr. PikeIt is right to underline a point that my right hon. Friend is making. If Burnley borough council sold a piece of land, it would get little money for it. However, if the land was only 24 miles away in the centre of Manchester, it would probably be worth 10 times as much, and if it was in London it could easily be worth 100 times as much. The issue has nothing to do with local councils' prudence; it is merely a matter of geography.
§ Mr. RaynsfordMy hon. Friend makes an extremely valid point that is based on his considerable experience. He speaks for a part of the country that has some of the lowest house prices and, therefore, some of the greatest difficulties. He is working with his colleagues to try to address those problems. The Government are trying to help areas in need through the injection of substantial additional funds and by following the previous Government's policy of recycling capital receipts to ensure that they may be allocated to areas in need.
§ Sir Nicholas Winterton (Macclesfield)The Minister might well point out that I was not here on Monday either, but I was actually talking about this very matter with the chief executive of Macclesfield borough council. The council has run its affairs extremely well and is debt free, which it has achieved by not embarking on irresponsible and spendthrift policies. Is the Minister not concerned that his policy might deter responsible councils from trying to become debt free? Surely he wants responsible debt-free authorities.
§ Mr. RaynsfordThat is exactly what we want and our policies are designed to achieve that. Indeed, we made it clear on Monday—I am sorry that the hon. Gentleman could not be with us—that the arrangements that we are putting in place provide real incentives for prudence and good financial management. We want fairness so that 1024 authorities that have high needs and low resources are not penalised in favour of authorities that have, by the accident of geography, much greater resources and, in some cases, lesser needs.
§ Mr. Philip Hammond (Runnymede and Weybridge)The Minister has just agreed with my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) that what the Government want is responsible, debt-free authorities.
§ Mr. Raynsfordindicated dissent.
§ Mr. HammondThat is exactly what the Minister has just agreed with my hon. Friend. What I understood the Minister to say on Monday was that he did not see any particular merit in being debt free.
§ Mr. RaynsfordIf the hon. Gentleman consults Hansard tomorrow, he will see that what I was saying was that we are keen that there should be arrangements in place that encourage prudent financial management and responsible administration. I said nothing at all about whether that involved the authority being debt free or not. That is an accident—[Interruption.] The hon. Member for Macclesfield certainly said that but I made the point that we were interested in prudent financial management and good conduct of financial affairs. The accident of whether an authority happens to be debt free is often simply the product of good fortune and of being in an area with high house prices and high capital values.
§ Mr. GummerWill the Minister give way?
§ Mr. RaynsfordI am going to make some progress now because these issues have been exhaustively covered in the debates that have taken place already.
As I have said, it would be a dangerous precedent for the House to waive its privilege on financial matters and permit the Lords amendment to stand. I have also made the point that it would be wrong because the amendment undermines one of the key principles of our housing finance policy and one of the key principles underlying the financial provisions of the Bill. We want resources to be allocated on the basis of need, not on the basis of accident or chance. We want resources to be distributed fairly and objectively through transparent mechanisms without favour or special treatment for one authority or one group of authorities.
I remind the House how important the Bill is to local government. The Local Government Association and indeed large numbers of individual local authorities have repeatedly stressed their wish that the Bill should receive early Royal Assent, so that local government can have the benefit of the significant freedoms and flexibilities that it provides, yet if the Bill is not passed tomorrow, the prudential system cannot be implemented before April 2005. In these circumstances, I cannot believe that anyone who cares about the interests of local government wants to see any outcome other than immediate Royal Assent.
§ Mr. Edward DaveyOn that point, the Liberal Democrats voted for the Bill on Second Reading. We 1025 support the prudential capital regime that the Government are putting in place. The Minister knows that the Government have a vehicle for bringing back the legislation if they think that their argument is so strong: the housing Bill, which is in draft form already and will be in the Queen's Speech. [Interruption.]
Mr. Deputy SpeakerOrder. It would be better if one hon. Member at a time spoke, and may I discourage the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Corby (Phil Hope), from interrupting from a sedentary position?
§ Mr. DaveyThe Minister could use that legislative vehicle. It will be open to him in a matter of months. He could have his way if he could persuade both Houses of the virtue of his argument. The problem is that he has not managed that today.
§ Mr. RaynsfordI remind the hon. Gentleman that we have persistently won the votes in this House; we have won the arguments and the votes. It is only in the unelected House that a different position has been adopted. It is a slightly odd proposition to put to us that we should agree to drop our particular policy and accept the Lords amendment in the expectation that we would be able to get our original proposals through next year in a different vehicle. Is he suggesting that he would vote differently next year? If so, why would he vote differently?
§ Mr. DaveyIt is possible that the Minister may be able to persuade us. [Interruption.] It would be good if the Minister could at least listen to the answer. By then, we will have the information from the housing regional boards about how the housing needs of these different authorities will be met. We do not have that information at the moment. It is not surprising that many of the councils from which the money is being taken are up in arms, as they do not know whether they will be able to meet housing needs in their communities.
§ Mr. RaynsfordLocal authorities will be up in arms if the prudential regime that they are looking forward to with great enthusiasm is prevented from being introduced in April 2004 as a result of the delaying tactics of colleagues of the Opposition parties in another place, and most recently by their lordships in their vote.
§ Mr. David Wilshire (Spelthorne)If the right hon. Gentleman is sneering at the other place, why is his Prime Minister going to stuff it full of even more of his unelected cronies to try to get his own way?
§ Mr. Raynsfordrose—
Mr. Deputy SpeakerOrder. I do not know what the Minister was going to say in reply, but may I discourage him from following that line, as it is outside the scope of the Bill?
§ Mr. RaynsfordThank you, Mr. Deputy Speaker. I was about to say that the general tenor of our debates on these subjects has been slightly more elevated than that 1026 adopted by the hon. Member for Spelthorne (Mr. Wilshire). I do not intend to debase the debate by going down to that level.
I must remind the Opposition parties, who have frequently criticised the Government for not moving faster to extend freedoms and flexibilities to local government, that their colleagues in another place have already put early implementation of the Bill at risk. Any further delay preventing the implementation of the prudential regime in April 2004 would be inexcusable, and those responsible would rightly stand condemned by all involved in local government.
§ Mr. Eric Pickles (Brentwood and Ongar)I doubt that there is anyone in the Chamber or another place who believes that the right hon. Gentleman would throw the Bill away over the provision.
§ Mr. RaynsfordIt is our wish to get the Bill on the statute book as soon as possible, and we have been working to that effect for a very long time indeed. If the hon. Gentleman believed what he said he would have spent time in recent months encouraging his colleagues in another place to be more constructive and expeditious in their consideration of the Bill. Today, Baroness Hanham advanced a spurious argument pretending that the amendment that she was urging their lordships to accept was a compromise. It was nothing of the sort—it was a further wrecking amendment that sought to overturn the decision of the elected House on a financial matter, thereby breaching privilege. I hope that the hon. Member for Brentwood and Ongar (Mr. Pickles) agrees that the privilege of the House is too important to be allowed to be passed over simply because he wants to score a political point. I urge the House to resist the amendment.
§ Mr. Philip Hammond (Runnymede and Weybridge)The original clause 11(2)(b) permitted the Secretary of State to sequester anything up to 100 per cent. of the housing capital receipts received by local authorities. The House of Lords, in its wisdom, removed that provision entirely when the Bill was sent back to us on Monday so that receipts would remain with the receiving authorities. Among the arguments that the Minister deployed against the attack on clause 11(2)(b) was an argument about the use to which housing capital receipts had been put by some local authorities. He argued that they had not been used for housing purposes. Our objection, and that of my noble Friends, to clause 11(2)(b) concerns the fact that it interferes with the right of debt-free authorities to dispose of their capital receipts as they see fit.
However, in an attempt to compromise and address one of the Minister's principal objections, which he elaborated at great length in Committee during the Commons consideration of the Bill and again on Monday evening, the amendment was framed to allow the Secretary of State to ensure that a portion, determined by him, of those capital receipts is indeed for housing or urban regeneration purposes. That goes to the heart of one of the Minister's key objections to the thrust of the Lords' attack on the clause.
The Lords amendment does indeed compromise the freedoms of local authorities, which is a cause of some concern. It is a compromise, whatever the Minister says, 1027 but it prevents the Government from snatching local authorities' capital receipts in their entirety. The Government have advertised the Bill as being about freedoms and flexibilities for local authorities, but at its heart is a provision that snatches the housing capital receipts of debt-free local authorities, as the Minister himself said, of about £120 million a year to fund the Government's own programme. That is the very antithesis of freedom and flexibility for local authorities.
§ Sir Nicholas WintertonMay I follow up with my hon. Friend my earlier intervention on the Minister? In Macclesfield, which is debt-free, if the council does not receive the full amount of capital receipts from the sale of council houses, within a short period the account relating to maintenance and upgrading—the improvement of housing in the borough—will go into substantial deficit. The council has planned for the future. It has been responsible. The measure will penalise a responsible authority such as the Macclesfield borough council, with which I discussed the matter at length on Monday afternoon and early evening.
§ Mr. HammondMy hon. Friend is right. Many prudent local authorities throughout the country that have become debt-free will find themselves in the same position as Macclesfield.
§ Dr. Brian Iddon (Bolton, South-East)Is the hon. Gentleman saying that in some authorities housing capital receipts should be spent on things other than housing, when his own party during my time in this place has been headlining the need to spend more money on housing, both in the south and south-east and in other regions of the country?
§ Mr. HammondNo. What my noble Friends have suggested in the amendment is that the Secretary of State should have a power to direct the use of those receipts, to secure that they are indeed used for housing or urban regeneration purposes. That is the thrust of the amendment, under which the Secretary of State would have the power to direct that up to 100 per cent. of the capital receipt could be used by the authority for a purpose specified by the Secretary of State.
§ Mr. GummerDoes not that mean that the difference between the amendment and the Government's position is not a financial difference, but a difference about who makes the decision? Would it not be true that any houses built anywhere are necessary, given the very large deficit? In those circumstances, would it not be better for the Government to allow the local authority to make decisions about its local needs?
§ Mr. HammondThat is precisely the point that I seek to make. The Minister's synthetic anger—to use one of his favourite phrases—about matters of privilege is just that: synthetic. That is not the issue tonight.
During Monday's debate and before, the Minister argued that it is somehow unfair and even bizarre to allow debt-free authorities to keep and control their housing capital receipts. It is common sense: if one sells an asset and has no debts, one would expect to be free 1028 to use the proceeds. Equally, if one sells an asset against which one has borrowed, one cannot reasonably expect to be free to dispose of the proceeds as one wishes. People throughout the country would understand that as the normal way of the world—the way things work.
The Minister speaks as though debt-free status was a freak of nature. It is not. Many local authorities have worked hard to become debt-free. Many more local authorities aspire to that status, only to find now that the prize is kicked beyond their reach. The Minister says that councils' housing stock is a national asset. Of course we accept that some of it has been built and maintained, in part at least, by Government grants, but those have been grants. The Government cannot change the rules retrospectively. The care and maintenance, the enhancement and improvement, and sometimes the original provision of the housing stock, have also been funded by tenants and council tax payers, especially in local authorities that have been in negative housing subsidy for years.
The stock belongs to local authorities and local communities, not to central Government, and the capital receipts from sale of that stock should belong to the local authorities for the benefit of their local communities. What does the Minister plan to do next? Does he plan to attack the cash balances of authorities that have been prudent in managing their resources and their assets, and have accumulated cash balances? Is that his next step?
§ Mr. RaynsfordDoes the hon. Gentleman believe that there should be any mechanism for redistribution between authorities, or does he think that resources should simply rest with the authority that receives the receipts?
§ Mr. HammondI suggest to the Minister that in the current housing crisis, every authority receiving capital receipts could use every penny in its area. Let us be clear that authorities are receiving these capital receipts because they are disposing of housing stock. In my opinion and that of my hon. Friends, that implies an immediate need to replace that housing stock. I suggest to him that every authority could use every last penny of the capital receipts that it receives for entirely appropriate purposes in its own area. I also suggest to him that it is appropriate to fund the programmes that the Government have rightly and understandably introduced, and that the Deputy Prime Minister has announced, through general taxation. That is an appropriate way of funding those programmes.
§ Mr. RaynsfordDoes the hon. Gentleman agree, therefore, with this statement:
local Government needs to be granted a far greater degree of financial autonomy …Of course, there are important limiting factors on how far these additional freedoms can go. There will always be a vital and active role for central Government in providing mechanisms of redistribution that ensure a degree of territorial equity, as well as in enforcing broad financial stability"?
§ Mr. HammondGeneral taxation in respect of the distribution of Government grant is redistributive by its very nature. [Interruption.] The Minister is attacking—[Interruption.]
Mr. Deputy SpeakerOrder. I am sorry to interrupt the hon. Gentleman, but we must not have conversations in the Chamber. If hon. Members want a meeting, they should go elsewhere and not interrupt proceedings here.
§ Mr. HammondThe Minister is seeking to grab £120 million—a relatively small sum in the grand scheme of the Government's housing programme—from about 34 authorities that have managed their affairs in such a way that they are debt-free and are situated in areas where capital receipts from housing right to buy are relatively high, which suggests a need to replace units of social housing that have been sold. He is seeking to take those capital receipts and redistribute them to areas that have been less prudent. I argue that, in many cases, such areas will be in less need of affordable housing in the present housing crisis than the areas to which the receipts accrue.
§ Mr. RaynsfordIn the hon. Gentleman's repudiation of the concept of redistribution, why is he clearly rejecting the views set out by his own party in a document called "Total Politics", which was launched on 11 September this year? Are Opposition Members' memories that short?
§ Mr. HammondIf the Minister would like a hard copy with a glossy cover, I shall be happy to send him one.
§ The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope)The hon. Gentleman has not read it.
§ Mr. HammondAs it happens, I have read the document.
I have not repudiated arguments for redistribution. What I have told the Government is that they have a large pot of money available for funding housing need. I have told them that the proper way of funding such need is to use the resources that they have available and not try to attack a relatively small sum held by a small number of prudent and well-managed local authorities.
§ Mr. PikeDoes the hon. Gentleman accept that in a council such as Burnley, which has very low-value properties, we need £115 million to put right the problems that we have in respect of private sector housing, as there are currently 4,500 empty houses? The type of policy that he proposes will provide no solution to such problems.
§ Mr. HammondAs the hon. Gentleman will realise if he thinks about the matter, in the areas where the capital receipts are being generated, empty houses could be a solution to the problem. In areas where capital receipts are being generated because house prices are high, our problem is precisely that there is a total dearth of available and affordable housing to house the very public sector workers whom the Government desperately need if they are ever to deliver on their myriad promises to improve public services.
1030 The Minister argues that local authorities with large housing capital receipts do not need housing reinvestment. He ignores the fact that those receipts are being generated by the sale of council houses, which must then be replaced. He also ignores the fact that the areas with high house prices and high housing demand are, in the present crisis, the very areas in which the need for new investment in affordable housing is at its greatest. I suggest to him that the real housing crisis today is in those areas—precisely the areas that he has tried to paint as leafy and suburban, without real housing need and not deserving of the ability to reinvest capital receipts in their own area for the benefit of local people and local communities.
If the Government's agenda of public service improvement, or even maintenance of basic public services, is to stand a chance of being achieved in those areas, the Minister had better support the reinvestment of those funds in the affordable housing that is so vital for key public sector workers.
The Minister argues that receipts have been diverted from housing. Our principled objection to clause 11(2)(b) is that central Government should not interfere in local authorities' disposal of their capital receipts. Whatever he may say, our noble Friends have sought to achieve a compromise, and have addressed his concern. Even at the price of compromising on the principle that central Government have no right to interfere with these receipts, they have proposed a power for the Secretary of State to direct that they be used for specific purposes, the clear understanding being that the power would be used to ensure that the receipts are spent on housing investment, housing repairs and urban renewal.
The Lords, then, have sought to compromise; but they have insisted on challenging the Government's demand to levy what is effectively a tax on the housing capital receipts of well-managed, prudent local authorities. The Government say that it would initially be 75 per cent., but the Bill does not restrict it to that level: it could be increased to 100 per cent. by secondary legislation.
All that the Government have done by insisting on the original clause is to show that their rhetoric about freedom and flexibility for local government is precisely that—empty rhetoric. They have shown their hostility to prudent management of local authority finances and their indifference to local authorities and local communities that have worked hard to become debt-free, and reconfirmed their hostility to the right-to-buy policy that has given hope and opportunity to millions—a policy that the Government, and the Deputy Prime Minister in particular, have sought to erode, restrict and undermine.
I urge my hon. Friends and Liberal Democrats who value the principle of local authority freedom to vote to retain the Lords amendment, and send the Government a clear message that we will not give in to this assault on prudent, well-managed authorities by an increasingly imprudent and cash-strapped central Government.
§ Mr. Edward DaveyWith this amendment, the House of Lords has effectively called the Government's bluff. When we debated this matter in detail in Committee, the Minister gave examples—not many, as he did not have 1031 many to give—in which he alleged that debt-free authorities used receipts from the sale of council houses for non-housing purposes. He suggested that some of the money was being used to subsidise council tax levels, and that some was being used for other council projects unconnected with housing. The amendment would give the Government power to ensure that councils used the money for the purposes the Government wanted—for housing, presumably. So the Government's bluff has been called. If they wish to ensure that the money is retained in the housing sector, within the overall housing policy envelope, they now have the means to do so.
§ Mr. RaynsfordThe hon. Gentleman will remember that, essentially, our debate of two nights ago was about a very simple argument: whether fairness, involving redistribution, should in this case be given precedence over receipts simply resting where they happen to fall, through the accidents of history and geography. We challenged him to say whether he was on the side of fairness, and of redistribution in favour of deprived areas such as Liverpool, or whether he would like to allow receipts simply to fall in the area in which they were accrued, because house prices happened to be high. Is he now confirming that he is against fairness and in favour of the accidents of history and geography?
§ Mr. DaveyI am grateful to the Minister for trying to answer my point, but in fact he answered it with a completely different argument. I shall come to redistribution, but I should point out that he did not seek to deny that point in Committee; he used examples of authorities that did not use receipts for investment in housing. Such examples have been shown not to be relevant by the amendment before us; the argument has been well and truly won.
My speech will be relatively short because what I said two nights ago still stands and has not been affected by events, and because I agree with many of the comments of the hon. Member for Runnymede and Weybridge (Mr. Hammond). That said, it would have been good if the previous Conservative Government had allowed local authorities to keep receipts from council house sales so that they could have invested in affordable housing. However, we do not want to return to the sorry history of the Conservatives' many failures in this area.
One key principle that works against the Government's position is that of prudent financial management and proper fiscal incentives for local authorities to run down their debt. In an earlier exchange, the Minister tried to redefine that principle by limiting it simply to prudent financial management, thereby excluding the incentive to move to debt-free status. At no point during our debates on this key fiscal principle—it is certainly important to us, and, indeed, to the Conservatives—was the Minister able to point to any other aspect of the new regime, or of previous statutes, that would provide such an incentive for local authorities to move to debt-free status. The Chancellor of the Exchequer ought surely to be keen on such an incentive.
§ Mr. RaynsfordThe hon. Gentleman is eliding two different concepts: prudent financial management and 1032 debt-free status. There will be many cases in which it is prudent to borrow to achieve benefits that would not otherwise be achievable for the residents of a given area. Alternatives such as the private finance initiative—his party is not terribly keen on the PFI—might not necessarily be the best way to invest, if a borrowing alternative exists that will achieve the objective. Does he agree that such a situation is possible, and if so, that it might be prudent—I am not saying that it definitely would be—for an authority to take such a decision?
§ Mr. DaveyThe Minister knows that we do not disagree with that overall point, given that we support the capital regime that the Bill puts in place. That does not mean, however, that no incentive should exist elsewhere in the system to move to debt-free status. The two concepts can exist side by side: the point at issue between us is that the Minister is excluding one of them.
On the Minister's point about fairness, I agree with the hon. Member for Runnymede and Weybridge. In terms of redistribution, it is important that areas with low resource bases and real needs get funds from central Government, but that is not what the Minister is trying to do here; rather, he is trying to take money from other local authorities. As we know, local authorities in many areas—rich or poor—are cash-strapped; that is why the council tax has been going up so much. The Minister ought to have some sympathy and compassion for such local authorities. Redistribution is needed, but it should come from central Government.
§ Sir Nicholas WintertonThe hon. Gentleman is making an extremely good case, but will he also deal with this point? As a debt-free authority, Macclesfield is going to lose out, in that housing maintenance and other projects and budgets will go into deficit. Affordable, low-cost housing is often funded through the money that housing associations receive from the Housing Corporation. In the foreseeable future, Macclesfield will further lose out, in that the money that its housing associations receive through the Housing Corporation for low-cost, affordable housing projects will be dramatically reduced.
§ Mr. DaveyThe hon. Gentleman is on to a good point and helps to explain why some debt-free authorities feel so passionately about the issue. Many of them worked hard to attain their good position because they wanted to meet some of the Government's own targets—on decent homes, for example.
I know that Three Rivers district council, which I referred to on Monday, worked hard at all aspects of its finances to reach a good position, meet the standards and provide more affordable housing for its key workers. It was a policy target for the council, but the problem is that the Government are changing the rules when councils have worked within them. There is a degree of retrospection, because housing policy has to be considered over a period of years. I am particularly concerned about the retrospection involved in the grab of money from the debt-free authorities.
Another important principle is the balance between centralism and localism. The Bill was sold to us as one that would liberalise local authorities, offering them 1033 freedoms and flexibilities. Yet this week we have already heard that one of the key freedoms and flexibilities for authorities judged excellent and good under the comprehensive performance assessment—namely, no danger of capping—is being removed. We now know that another key financial freedom that existed under the old system is going to be removed. The Government are making it worse than it was under the system that they inherited from the Conservatives.
I want to touch on the point about privilege, which the Minister focused on in his remarks. He is interpreting the principle oddly. As I said in my intervention, it is not about tax or overall spending going up or down, but about redistribution. I recall when the Minister was in opposition and the Conservatives were passing the poll tax. I am sure that his party, like mine, worked as hard as it could in the other place to defeat that appalling Conservative measure. If the House of Lords had insisted that the poll tax should fall, I doubt whether he would have been too worried—
§ Mr. RaynsfordIt did not.
§ Mr. DaveyThe Minister says that it did not, but that is not relevant to my point. He would have supported the House of Lords. Will he tell us whether he would not have wanted the other place to defeat the poll tax if it had the opportunity to do so? On those sorts of matters, the issue of privilege is not so significant.
The issue of privilege has moved on. We have seen various reforms to the other place—introduced by the Minister's Government—to give it greater legitimacy, so they say. Under his Government and the previous Conservative Government, the House's role in public finance and scrutiny of the public purse has been reduced to a myth. The House does not control the Executive over finances and the Minister knows it. We do not have proper debates on the estimates. We have only three days a year under Standing Orders to debate them, and when we do, we do not really debate the estimates, but the Select Committee report. On one of those days, I had the temerity to ask a Treasury Minister about the estimates before us, but that Minister had not even been briefed to answer the question. That shows how the House does not really scrutinise expenditure. The idea of praying in aid privilege when the House has virtually given up any role in financial scrutiny does not bear analysis.
I believe that it would be right for the House to agree with the other place tonight. We have won the argument in principle and in practical examples, and it is time that the Government listened.
§ Mr. GummerIt may help if I provide an analogy. If the Government were bringing forward a decision to penalise debt-free Ministers and redistribute their money to Ministers who had not been as careful with their finances, would it stand any examination? The problem is simply this. The difference is not about fairness. If the Minister were saying that local authorities' needs should be examined and, where they have resources far beyond those needs, they should be redistributed, the House might be prepared seriously to listen to his argument.
1034 What the Minister is saying is that it is axiomatic that local authorities that are debt free do no have acute housing needs.
§ Mr. RaynsfordNo, I am not.
§ Mr. GummerIf the right hon. Gentleman does not mean that, he should accept the amendment, which would enable him to direct those authorities without needs to use the money for the kind of housing that is necessary in every part of the country. I challenge the Minister to tell me the name of a single local authority that is debt free and does not need affordable housing. If he can give us a list of such authorities, we can think about his argument, but until he can, we know that this is not a matter of fairness. It is a matter of redistribution, and we know why the right hon. Gentleman wants to redistribute. Some authorities have been careful and have sought a way to provide affordable housing in their high-cost areas. Of course, such authorities receive more money when they sell their council houses, because their areas are high cost. Such areas need more money, not less, when they are trying to provide affordable housing. Therefore, the Minister's argument is not just accidentally wrong: it is nonsense.
§ Mr. RaynsfordHad the right hon. Gentleman been here on Monday, he would have heard me presenting the argument. I argued not that there were no needs in debt-free areas, but that there were relative differences in need between different areas. The right hon. Gentleman would have heard me argue that in the same way that the Conservative Government of which he was a member felt that it was right to exercise a degree of redistribution to achieve fairness, we sought to do the same. Does he agree with the Conservative party's document that states:
There will always be a vital and active role for central Government in providing mechanisms of redistribution that ensure a degree of territorial equity"?
§ Mr. GummerIt is called the council tax grant. We all know that it is a mechanism used by the Government to ensure that the aid from the centre to local government is tailored properly to the needs of the locality. Everybody knows that, and the Minister knows that we spent much time trying to make it as fair as possible.
The only reason why I did not have the chance to listen to the Minister on Monday was that I was in Cancun trying to discuss a trade issue of some importance. I have listened carefully to what the Minister said, and I return to my accusation. To make his argument stand up, he has to show that those councils that are debt free have less need—to such a degree that it is worth overriding the local interest—that they need to have their resources taken away from them.
I do not even argue that every authority that is debt free is so as a result of prudence, although I bet that if Ministers were debt free they would claim it was their own work. The accident that enables some local authorities to have large receipts from the sale of council houses also means that it is more expensive for those authorities to provide housing for teachers and nurses and other essential workers than it is for other areas that are not as fortunate in the amount of money that they receive from selling council houses.
§ Mr. HammondWould my right hon. Friend also note that the very fact that those authorities have received 1035 those capital receipts from housing means that they have reduced their social housing stock? They have sold units to obtain the capital receipts, and the presumption must be that they must reinvest to replace those units.
§ Mr. GummerMy hon. Friend is right, but he is being too kind to the Government. The problem is that the Government claim to believe in local decision making and local action, but in every case they turn to central planning and control. The Government use the fine words "devolution", "devolvement" and "locality" whenever they introduce a measure, but what they are actually doing is imposing the central Government diktat.
I noticed the paucity of the Minister's arguments because he could speak only about privilege. This is not about the quantum of money involved, or about raising or lowering taxes. It is about fairness, which is a matter that the House of Lords is perfectly able to debate.
Fairness means that local authorities—where the provision of affordable housing for people who need support is expensive—should be allowed to use the additional receipts that they get. My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) is right, and the comparison is exact: one sells an asset in an expensive area at a higher price because it costs more to replace it. The Government do not understand the basic facts of supply and demand, or of the provision of affordable housing in areas where that is most needed. That explains why they have presided over the worst housing figures since world war one.
§ Mr. GummerThe Government must accept that they are incredible when it comes to housing, because they have created circumstances in which fewer houses are built every year. They will make the situation worse unless they allow prudent authorities to use the results of their prudence to provide affordable housing where it is often most needed—in expensive areas where necessary workers who serve the community are not otherwise able to find homes.
§ Mr. Edward DaveyDoes that not show that the Government do not understand how markets work? In this case, they are taking money that could be used to increase the supply of affordable housing. With the starter homes initiative in London and the south-east, in contrast, they are giving money to increase demand. They are therefore reducing supply and increasing demand, and making the problem worse.
§ Mr. GummerThe hon. Gentleman is right. The Government do not understand the laws of supply and demand. They do not understand that, in the present housing crisis, it does not matter where the houses are built, nor what sort of houses are built. We have a shortage at every level, and in every circumstance. The Minister is merely carrying out the diktat of the Treasury. He must get his fingers on as much money as possible, use it centrally, and put it where it can aid his friends. That is what this is about—taking from those 1036 who need and giving to those who might support this Government. We know that, as does the House of Lords. The amendment will be rejected, not because it is a matter of privilege but because it is a way of fiddling the books.
§ Mr. RaynsfordI hope that the right hon. Gentleman, who was once Secretary of State for the Environment, will reflect on what he has said and realise that his final remark was unworthy of him. We are discussing mechanisms very similar to the ones for which he, when in government, used to be responsible. They ensured that capital receipts were redistributed from areas with high receipts and relatively low needs to other areas. Had the right hon. Gentleman been here on Monday, he would have heard me say all that then. Alternatively, he could have read the Hansard report.
§ Mr. RaynsfordOf course.
§ Dr. IddonI have been trying to make this point for some time. Does my right hon. Friend agree that abandoning the concept of pooling, which Opposition Members appear to want, would mean that there was no hope for owner-occupiers in the 23,000 unfit houses in Bolton alone? That is not to mention all the unfit houses in the private sector.
§ Mr. RaynsfordMy hon. Friend makes a valid point. He highlights the enormous extent of housing need in this country. We inherited that on coming to government, and it includes the massive backlog of substandard housing, especially council housing. In our six years in government, we have acted to improve more than 700,000 homes which were in appalling condition when we inherited them from the previous Conservative Government but which are now decent and modern homes.
It ill behoves a former Secretary of State who presided over the worst homelessness and housing crisis in a long time to ignore the fact that we are investing two and a half times as much as his Government did. Because we need to maximise investment, we are rightly taking the same approach that his Government took—redistribution in favour of the areas of greatest need. Indeed, judging from a pamphlet published only a few days ago, the right hon. Gentleman's own party still believes that that is appropriate. That leaflet provides recognition by people who have thought about the issues that redistribution is necessary to ensure that resources are used to best effect and to achieve territorial equity.
The Liberal Democrats sadly failed the test of whether they were on the side of fairness or opportunism. Presented with the choice of saying, on a difficult decision, that they would favour redistribution to ensure that areas of greatest need got more or of sticking to the principle of leaving money wherever it arose through the accident of geography, they opted for the latter, even though they know that it is wrong. The hon. Member for Kingston and Surbiton (Mr. Davey) knows that it is wrong, and he knows that his colleagues in Liverpool would not support what he said tonight. They would argue for redistribution—and I have no 1037 doubt that when he goes to Liverpool with other Liberal Democrats, he too will say, "Let's redistribute more money in favour of Liverpool." That is what they will say in Liverpool; they will not say it here because they are appealing to a different audience. That is the Liberal Democrats—say one thing to one group of people and something quite different to another.
We have established a policy of principle to try to ensure that housing resources are used to best effect and that the needs of our country are met. That policy will be frustrated if the Lords amendment stands. It would deliberately prevent some £120 million in capital receipts from debt-free authorities from being used through recycling to help the needs of other areas. Our policy would not mean that the debt-free authorities would receive nothing: they would stand to benefit and would keep a proportion of their capital receipts. However, it is a principle of fairness that those authorities should be subject to the same redistribution rules that apply to the 200 more authorities that have housing stock. Opposition parties have entirely ignored the argument about why some authorities—a small group of 40 or so—should be uniquely advantaged and given the benefit of keeping their capital receipts in full when all other authorities are subject to a redistribution mechanism.
The Opposition's arguments are threadbare. Their colleagues in the other place are arguing against the privilege of this House and against logic and common sense. This House should reject the Lords amendment.
§ Question put, That this House disagrees with the Lords in the said amendment:—
§ The House divided: Ayes 221, Noes 112.
| Division No. 322] | [12:03 am |
| AYES | |
| Adams, Irene (Paisley N) | Casale, Roger |
| Ainsworth, Bob (Cov'try NE) | Cawsey, Ian (Brigg) |
| Alexander, Douglas | Challen, Colin |
| Allen, Graham | Chapman, Ben (Wirral S) |
| Anderson, Janet (Rossendale & Darwen) | Chaytor, David |
| Clark, Paul (Gillingham) | |
| Armstrong, rh Ms Hilary | Clarke, rh Charles (Norwich S) |
| Atherton, Ms Candy | Clarke, rh Tom (Coatbridge & Chryston) |
| Atkins, Charlotte | |
| Austin, John | Clarke, Tony (Northampton S) |
| Bailey, Adrian | Coffey, Ms Ann |
| Barnes, Harry | Cohen, Harry |
| Bayley, Hugh | Colman, Tony |
| Beggs, Roy (E Antrim) | Connarty, Michael |
| Benton, Joe (Bootle) | Cook, rh Robin (Livingston) |
| Berry, Roger | Cousins, Jim |
| Best, Harold | Cox, Tom (Tooting) |
| Blackman, Liz | Cranston, Ross |
| Blears, Ms Hazel | Cruddas, Jon |
| Borrow, David | Cryer, Ann (Keighley) |
| Bradley, Peter (The Wrekin) | Cryer, John (Hornchurch) |
| Bradshaw, Ben | Cunningham, Jim (Coventry S) |
| Brennan, Kevin | Cunningham, Tony (Workington) |
| Brown, rh Nicholas (Newcastle E Wallsend) | Curtis-Thomas, Mrs Claire |
| Davey, Valerie (Bristol W) | |
| Browne, Desmond | Davidson, Ian |
| Burden, Richard | Davies, rh Denzil (Llanelli) |
| Burgon, Colin | Dawson, Hilton |
| Burnham, Andy | Dean, Mrs Janet |
| Byers, rh Stephen | Denham, rh John |
| Cairns, David | Dismore, Andrew |
| Campbell, Alan (Tynemouth) | Dobbin, Jim (Heywood) |
| Campbell, Mrs Anne (C'bridge) | Dobson, rh Frank |
| Donohoe, Brian H. | MacShane, Denis |
| Doran, Frank | Mactaggart, Fiona |
| Dowd, Jim (Lewisham W) | McWalter, Tony |
| Eagle, Maria (L'pool Garston) | Mallaber, Judy |
| Efford, Clive | Mann, John (Bassetlaw) |
| Etherington, Bill | Marshall, David (Glasgow Shettleston) |
| Farrelly, Paul | |
| Fitzsimons, Mrs Lorna | Marshall, Jim (Leicester S) |
| Flint, Caroline | Marshall-Andrews, Robert |
| Flynn, Paul (Newport W) | Martlew, Eric |
| Foster, rh Derek | Merron, Gillian |
| Foster, Michael (Worcester) | Michael, rh Alun |
| Foster, Michael Jabez (Hastings & Rye) | Miller, Andrew |
| Moffatt, Laura | |
| Foulkes, rh George | Morley, Elliot |
| Francis, Dr. Hywel | Mullin, Chris |
| Gardiner, Barry | Murphy, Jim (Eastwood) |
| Gerrard, Neil | O'Brien, Bill (Normanton) |
| Gibson, Dr. Ian | Osborne, Sandra (Ayr) |
| Gilroy, Linda | Palmer, Dr. Nick |
| Goggins, Paul | Pearson, Ian |
| Hall, Mike (Weaver Vale) | Perham, Linda |
| Hamilton, David (Midlothian) | Picking, Anne |
| Hanson, David | Pickthall, Colin |
| Harris, Tom (Glasgow Cathcart) | Pike, Peter (Burnley) |
| Havard, Dai (Merthyr Tydfil & Rhymney) | Plaskitt, James |
| Pollard, Kerry | |
| Healey, John | Pound, Stephen |
| Henderson, Ivan (Harwich) | Prentice, Gordon (Pendle) |
| Hendrick, Mark | Primarolo, rh Dawn |
| Heppell, John | Prosser, Gwyn |
| Hermon, Lady | Purchase, Ken |
| Hesford, Stephen | Quinn, Lawrie |
| Hill, Keith (Streatham) | Rammell, Bill |
| Hope, Phil (Corby) | Rapson, Syd (Portsmouth N) |
| Hopkins, Kelvin | Raynsford, rh Nick |
| Howarth, rh Alan (Newport E) | Reed, Andy (Loughborough) |
| Hughes, Beverley (Stretford & Urmston) | Robertson, John (Glasgow Anniesland) |
| Hughes, Kevin (Doncaster N) | Ross, Ernie (Dundee W) |
| Humble, Mrs Joan | Savidge, Malcolm |
| Hurst, Alan (Braintree) | Sawford, Phil |
| Iddon, Dr. Brian | Shaw, Jonathan |
| Irranca-Davies, Huw | Sheridan, Jim |
| Jenkins, Brian | Simon, Siôn (B'ham Erdington) |
| Johnson, Alan (Hull W) | Simpson, Alan (Nottingham S) |
| Jones, Lynne (Selly Oak) | Skinner, Dennis |
| Jones, Martyn (Clwyd S) | Smith, rh Andrew (Oxford E) |
| Keeble, Ms Sally | Smith, Jacqui (Redditch) |
| Kemp, Fraser | Smith, John (Glamorgan) |
| Kennedy, Jane (Wavertree) | Smith, Llew (Blaenau Gwent) |
| Khabra, Piara S. | Soley, Clive |
| Kidney, David | Squire, Rachel |
| Kilfoyle, Peter | Starkey, Dr. Phyllis |
| King, Andy (Rugby) | Stevenson, George |
| Kumar, Dr. Ashok | Stewart, David (Inverness E & Lochaber) |
| Ladyman, Dr. Stephen | |
| Lazarowicz, Mark | Strang, rh Dr. Gavin |
| Lepper, David | Sutcliffe, Gerry |
| Leslie, Christopher | Taylor, David (NW Leics) |
| Levitt, Tom (High Peak) | Thomas, Gareth (Clwyd W) |
| Love, Andrew | Todd, Mark (S Derbyshire) |
| Luke, Iain (Dundee E) | Touhig, Don (Islwyn) |
| McAvoy, Thomas | Trickett, Jon |
| McCabe, Stephen | Truswell, Paul |
| McCafferty, Chris | Turner, Dennis (Wolverh'ton SE) |
| McDonagh, Siobhain | Turner, Dr. Desmond (Brighton Kemptown) |
| MacDonald, Calum | |
| McDonnell, John | Turner, Neil (Wigan) |
| McFall, John | Twigg, Derek (Halton) |
| McGuire, Mrs Anne | Tynan, Bill (Hamilton S) |
| McIsaac, Shona | Vaz, Keith (Leicester E) |
| McKechin, Ann | Vis, Dr. Rudi |
| McKenna, Rosemary | Ward, Claire |
| Mackinlay, Andrew | Wareing, Robert N. |
| McNulty, Tony | Watson, Tom (W Bromwich E) |
| Watts, David | Woolas, Phil |
| White, Brian | Wright, Anthony D. (Gt Yarmouth) |
| Whitehead, Dr. Alan | |
| Williams, rh Alan (Swansea W) | Wright, David (Telford) |
| Wright, Tony (Cannock) | |
| Williams, Betty (Conwy) | |
| Wills, Michael | Tellers for the Ayes: |
| Winnick, David | Mr. Nick Ainger and |
| Wood, Mike (Batley) | Ms Bridget Prentice |
| NOES | |
| Ainsworth, Peter (E Surrey) | Llwyd, Elfyn |
| Amess, David | Loughton, Tim |
| Atkinson, David (Bour'mth E) | Luff, Peter (M-Worcs) |
| Bacon, Richard | McIntosh, Miss Anne |
| Baron, John (Billericay) | Mackay, rh Andrew |
| Bellingham, Henry | Maclean, rh David |
| Beresford, Sir Paul | McLoughlin, Patrick |
| Blunt, Crispin | Mates, Michael |
| Boswell, Tim | Maude, rh Francis |
| Bottomley, Peter (Worthing W) | Mercer, Patrick |
| Brady, Graham | Mitchell, Andrew (Sutton Coldfield) |
| Brazier, Julian | |
| Burnett, John | Moss, Malcolm |
| Cameron, David | Norman, Archie |
| Cash, William | O'Brien, Stephen (Eddisbury) |
| Chapman, Sir Sydney (Chipping Barnet) | ôpik, Lembit |
| Osborne, George (Tatton) | |
| Chope, Christopher | Ottaway, Richard |
| Davey, Edward (Kingston) | Paice, James |
| Davies, Quentin (Grantham & Stamford) | Paterson, Owen |
| Pickles, Eric | |
| Davis, rh David (Haltemprice & Howden) | Portillo, rh Michael |
| Prisk, Mark (Hertford) | |
| Djanogly, Jonathan | Redwood, rh John |
| Dodds, Nigel | Rendel, David |
| Dorrell, rh Stephen | Robathan, Andrew |
| Duncan, Alan (Rutland) | Robertson, Laurence (Tewk'b'ry) |
| Evans, Nigel | Rosindell, Andrew |
| Fabricant, Michael | Ruffley, David |
| Fallon, Michael | Russell, Bob (Colchester) |
| Flight, Howard | Simmonds, Mark |
| Flook, Adrian | Simpson, Keith (M-Norfolk) |
| Forth, rh Eric | Smith, Sir Robert (W Ab'd'ns & Kincardine) |
| Gale, Roger (N Thanet) | |
| Garnier, Edward | Spelman, Mrs Caroline |
| Gibb, Nick (Bognor Regis) | Spink, Bob (Castle Point) |
| Gidley, Sandra | Spring, Richard |
| Gillan, Mrs Cheryl | Stanley, rh Sir John |
| Goodman, Paul | Swire, Hugo (E Devon) |
| Gray, James (N Wilts) | Syms, Robert |
| Green, Matthew (Ludlow) | Taylor, Ian (Esher) |
| Grieve, Dominic | Taylor, John (Solihull) |
| Gummer, rh John | Taylor, Sir Teddy |
| Hammond, Philip | Thomas, Simon (Ceredigion) |
| Hayes, John (S Holland) | Thurso, John |
| Heald, Oliver | Tredinnick, David |
| Heath, David | Turner, Andrew (Isle of Wight) |
| Heathcoat-Amory, rh David | Tyrie, Andrew |
| Hendry, Charles | Walter, Robert |
| Hoban, Mark (Fareham) | Whittingdale, John |
| Jenkin, Bernard | Wiggin, Bill |
| Keetch, Paul | Wilshire, David |
| Key, Robert (Salisbury) | Winterton, Ann (Congleton) |
| Kirkbride, Miss Julie | Winterton, Sir Nicholas (Macclesfield) |
| Laing, Mrs Eleanor | |
| Lait, Mrs Jacqui | Yeo, Tim (S Suffolk) |
| Lansley, Andrew | Young, rh Sir George |
| Letwin, rh Oliver | |
| Lewis, Dr. Julian (New Forest E) | Tellers for the Noes: |
| Liddell-Grainger, Ian | Angela Watkinson and |
| Lidington, David | Mr. Mark Field |
§ Question accordingly agreed to.
§ Lords amendment disagreed to.
§ Committee appointed to draw up the Reason to be assigned to the Lords for disagreeing to their amendment No. 3B: Paul Clark, Mr. Edward Davey, Linda Gilroy, Mr. Philip Hammond and Phil Hope; Phil Hope to the Chairman of the Committee; Three to be the quorum of the Committee.—[Paul Clark.]
§ To withdraw immediately.
§ Reason for disagreeing to the Lords amendment reported, and agreed to; to be communicated to the Lords.