HL Deb 17 May 1988 vol 497 cc183-5

2.55 p.m.

Lord Jay asked Her Majesty's Government:

What was the total of capital receipts by local authorities from the sale of dwellings in the latest financial year, and how much of this they were allowed to spend on building new rented dwellings.

The Earl of Caithness

My Lords, I apologise for the length of this Answer. The latest estimate of English local authorities' capital receipts from sale of dwellings is £1.6 billion in 1987–88; 20 per cent. of this, and 20 per cent. of unused receipts from earlier years, can be spent on capital expenditure, including building new rented dwellings. In addition, 30 per cent. of most other capital receipts from the latest year and earlier years, together with borrowing and any revenue financing, can also be used to finance capital expenditure. In 1988–89 local authorities are forecast to be able to spend £2.1 billion of housing receipts from this and earlier years, compared to the £1.9 billion they are forecast to generate this year.

Lord Jay

My Lords, what good reason can there be for preventing local authorities spending if they wish all their capital receipts on building new houses to rent, which everyone agrees are acutely needed?

The Earl of Caithness

My Lords, as I said in my original Answer, under the present system the local authorities will benefit, rather than using the method which the noble Lord suggests. I am sure that the House is aware from earlier answers, that it is central to our economic strategy that total spending by local authorities, like other kinds of public spending, should be kept within planned levels.

Lord Dean of Beswick

My Lords, is the Minister aware that if the remainder of the capital receipts was made available for local authorities to get on with the job of building more houses and renovating those that have deteriorated because of lack of financial resources, that may well prevent the Government having to set up the Housing Action Trust, which they intend to do? It may be very expensive to run and it is merely replacing the local authority function with something else which will be an unelected body.

The Earl of Caithness

My Lords, I am grateful to the noble Lord for mentioning the renovation of houses because that is equally as important as the building of new ones. As I said in my earlier answer, there is very little difference between what local authorities could spend this year from the money they generated in comparison with the existing system. In fact, they are rather better off.

Lord Cledwyn of Penrhos

My Lords, is it not the case that it costs about £11,000 a year to house people in bed and breakfast accommodation, which is often squalid and unsatisfactory? Would it not be far better to allow the local authorities to spend the money which should be at their disposal? It would cost much less—perhaps £5,000 to £7,000—than the £11,000 which is being currently spent to house people in bed and breakfast accommodation. Is it not a fact that the Government are guilty of bad housekeeping in a big way?

The Earl of Caithness

No, my Lords. However, the noble Lord will be pleased to know that we have provided additional resources totalling £53 million for specific allocations for homelessness over the past six months.

Lord Walston

Can the noble Earl tell us what happens to the remaining 80 per cent. which is not allowed to be spent by local authorities? Is it in fact spent by the Government, loaned by the Government to someone else who then spends it or is it simply put under the bed so that the money will not increase inflationary pressure?

The Earl of Caithness

My Lords, some of the receipts can be spent by the local authorities in the same year on other matters. However, as time progresses local authorities can spend 20 per cent. of the balance which they have not yet spent from previous years.

The Lord Bishop of Southwark

My Lords, can the Minister explain why the 20 per cent. restriction each year is applied uniformly across the country when in fact in London homelessness is much greater and housing and land costs are also much greater, whereas the sales of council houses and flats are fewer?

The Earl of Caithness

My Lord, it is for that, among other reasons, that of the moneys we have made available in the special allocation for homelessness, out of the £25 million that we announced in December, £13.6 million will be specifically for London. I do not have a figure for the additional £28 million which was announced on 24th March, but I shall let the right reverend Prelate know as soon as a decision is made.

Lord Mellish

My Lords, the Minister will no doubt know that many noble Lords strongly support the Government's policy of enabling councils to sell their property to sitting tenants. However, is it not economics gone stark raving mad when, having agreed that policy, the Government then will not allow the councils to build more housing for rent for those people who need it? It is absolutely barmy.

The Earl of Caithness

My Lords, I know that the noble Lord understands that local authority expenditure is taken into account in public expenditure overall. Therefore there is a need to exercise the restraints presently in existence.

Lord Stoddart of Swindon

My Lords, following the points just raised by the noble Lord, Lord Mellish, do not the noble Earl and the Government realise that restricting the number of houses that local authorities can build merely puts pressure on the housing market? That is one of the reasons why the house price spiral has now got right out of hand and threatens to be a danger to the Government's credit policy.

The Earl of Caithness

My Lords, no; that is not the case. The noble Lord's reasoning can be faulted. He has also ignored the fact that there is renovation as well as new building.