HL Deb 24 October 1990 vol 522 cc1330-1

2.46 p.m.

Lord Boyd-Carpenter asked Her Majesty's Government:

What is the estimated cost to public funds of the error in drafting of the Housing Revenue Account Subsidy Determination 1989, and what action is being taken in respect of those responsible for the error.

The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch)

My Lords, there have been some very misleading press stories recently, making allegations of error based on a fundamental misunderstanding of the subsidy rules. There is no error of the kind alleged and the drafting of the Housing Revenue Account Subsidy Determination 1989 fulfilled the department's policy intention at that time. The department now considers, however, that the rule in question should have been tougher in certain circumstances. We might save another £2 million to £3 million by that means. We are consulting on the change.

Lord Boyd-Carpenter

My Lords, I thank my noble friend for that reply. However, is it not a fact that if the original order had been drafted as my noble friend now suggests it will be, that would have saved between £2 million and £3 million of public expenditure? Is it not quite clear that the department failed to provide for the case where overspending by local authorities should be counterbalanced by a governmental charge as is now proposed? In view of the fact that £2 million to £3 million of public expenditure is of considerable importance, will my noble friend take this matter back to the department and ask it to do better?

Baroness Blatch

My Lords, it is important to make a distinction between the £2 million to £3 million referred to by my noble friend and the allegations that have been made about £250 million. Those two sets of figures are quite separate and distinct. However, the matter could have been thought through and the point at which the subsidy cut-off was made could have gone on to infinity; in other words, the subsidy could have been phased out altogether. Had that been done when the legislation was implemented, it would have saved £2 million to £3 million. However, speedy action was taken. The situation was spotted very quickly. I am pleased to say that it is proposed that the change will come into effect on 1st April 1991.

Lord Dean of Beswick

My Lords, I do not wish to condone any mistake where the cost of that mistake has to be borne by the public purse. However, could the mistake have been made as a result of the complexity of the legislation which was being implemented? As we pointed out during the passage of that legislation in your Lordships' House, it is complicated. Is it the case that what happened was more the result of a misunderstanding than of a mistake?

Baroness Blatch

My Lords, I refute very strongly the suggestion that there was a mistake. We are not talking about a mistake; nor did I concede to my noble friend that there had been a mistake. When the 1989 Act came into effect some subsidy was left, at whatever level authorities spent. It has subsequently been thought fit that subsidy should be phased out altogether for the period between 1988 and 1990. That was an adjustment of policy and not the correction of a mistake.

Lord Dean of Beswick

My Lords, I am glad to accept from the Minister that there was not a mistake. However, I wonder why the Question was raised.

Lord Boyd-Carpenter

My Lords, is my noble friend aware that what she said was not a mistake was the failure to do what she said will now be done, and that that failure has cost the British taxpayer between £2 million and £3 million? If that is not a mistake I wonder what my noble friend regards as a mistake.

Baroness Blatch

My Lords, it is important to note that at the time the Act was implemented it was felt that some subsidy should be left in the system, at whatever level a local authority spent. It has been determined subsequently in the light of the levels of spending of some local authorities that the subsidy should be phased out altogether. It is that adjustment of policy and not the correction of a mistake with which we are concerned.