Local Authorities: Release of Capital Receipts (Hansard, 9 June 1997)

§ The Parliamentary Under-Secretary of State, Department for the Environment and Transport (Baroness Hayman)
My Lords, the Local Government (Supplementary Credit Approvals) Bill lays the basis for the Government's capital receipts initiative. The Government will ensure that any resources released are available to local authorities to use in support of priority schemes which represent good value for money and meet key objectives. These objectives will be set out in a consultation document which will be available shortly and will be sent to the local government associations, local authorities in England and to other interested parties.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for that Answer. Is the noble Baroness aware that it satisfies some in your Lordships' House from all round the Chamber, including myself, who persistently pressed the previous Government to put such a policy into operation to enable local authorities to provide more housing for rent? Is the Minister aware that had the previous Government continued with the policy that they inherited there would have been approximately 600,000 more houses available today to let to people who are in trouble and who need low cost rented housing that is usually provided by local authorities?

§ Baroness Hayman
My Lords, I am well aware of my noble friend's longstanding concern in this area which is shared by many local authority associations and individual local authorities. We are anxious to reverse a policy which caused great damage both to the construction industry and to the interests of people in this country who are living in inadequate housing.

Viscount St. Davids
My Lords, what are the implications for the public sector borrowing requirement of the release of these funds?

§ Baroness Hayman
My Lords, we have always recognised that these plans had public expenditure 758 implications. We are committed to the phased release of capital receipts from council house sales, and equally to prudent economic management.

§ Lord Barnett
My Lords, will my noble friend clarify that reply? Is she saying that the Treasury has approved this measure and that it will not count against the public sector borrowing requirement, or that it will and the phasing will mean there will be only a small amount each year for many years?

§ Baroness Hayman
My Lords, the phasing is one of the issues on which we shall consult.

Noble Lords
Oh!

§ Baroness Hayman
My Lords, I am glad to have thrilled those on the Opposition Benches. I point out to my noble friend that the manifesto commitment clearly indicated that there were public expenditure implications and therefore we would have to consider the phasing of the release of these assets. I remind my noble friend that the manifesto commitment stated that, capital receipts from the sale of council houses received but not spent by local councils will be reinvested in building new houses and rehabilitating old ones. This will be phased to match the capacity of the building industry and to meet the requirements of sound economic management".

§ Lord Ezra
My Lords, will the noble Baroness kindly confirm that when the funds are released a due proportion will be made available for the improvement of existing housing stock because at least 10 per cent. of it is in urgent need of repair? There is no way in which new houses can be found to replace these old and inadequate houses.

§ Baroness Hayman
My Lords, I very much take the noble Lord's point. We have to consider the priority areas for spending which will certainly include plans for badly needed repairs to dilapidated stock.

Lord Bruce of Donington
My Lords, will my noble friend confirm that the effect of this step on the public sector borrowing requirement in the immediate future will be nil; and that it will take some little time for the expenditure on wages and various other factors of cost to filter through in detail to the consumer market, by which time unemployment will have been reduced and there will be further taxation revenues exactly because of the Government's new steps?

§ Baroness Hayman
My Lords, my noble friend is absolutely right to point out that there is an important additional benefit as well as the housing benefit involved in the proposal; namely, it can feed into our strategy to reduce unemployment and to get a skilled workforce back to work, which in turn will generate receipts in terms of income taxation.

§ Lord Skelmersdale
My Lords, can the Government explain how they can solve the basic conundrum that in general those local authorities with the most capital receipts have the least need for housing?

§ Baroness Hayman
My Lords, it is a conundrum, but we believe that it is possible to solve it by having a 759 balanced strategy which looks at both the areas where the receipts have been generated and those with the most housing need and balances the two demands.

§ Lord Stoddart of Swindon
My Lords, is my noble friend aware that she should not take lectures from the wastrels opposite about public expenditure bearing in mind that the expenditure on housing will be highly desirable expenditure whereas the party opposite used thousands of millions of pounds to no good use, not least on the BSE crisis which they brought about themselves?

§ Baroness Hayman
My Lords, I shall certainly note my noble friend's advice. I am sure that I can have plenty of lectures from this side of the House before I need to listen to that side.

Lord Bowness
My Lords, perhaps I may return to the problem to which the noble Lord, Lord Skelmersdale, referred. How do the Government propose to overcome the problem that in general where there is the greatest need there are the least receipts and vice versa? Will the Minister confirm that her balanced strategy does not involve taking away receipts from those authorities which have generated them? In some instances the spending of those accumulated receipts will reduce the authority's income by the interest lost. If that happens, does she envisage that it will lead either to higher council tax or to greater levels of government grant to those authorities?

§ Baroness Hayman
My Lords, we do not envisage that we shall be talking about greater levels of council tax. If noble Lords will consider the proposed enabling Bill, the mechanism is through supplementary credit approvals. They will allow us to make exactly those rational decisions about distribution between areas where the receipts were generated and those with the greatest need for housing.

§ Lord Dean of Beswick
My Lords, I am rather surprised that the noble Viscount, Lord St. Davids, asked the Minister to explain what effect the proposal would have on the public sector borrowing requirement. When I asked the noble Viscount a similar question from the other side, he could never answer it.

§ Baroness Hayman
My Lords, I am not sure that I should intervene in private grief.

§ Lord Hayhoe
My Lords, will the Minister reply to the specific question asked by the noble Lord, Lord Barnett, about whether there was Treasury approval for this change; and if so, for how much?

§ Baroness Hayman
My Lords, if noble Lords opposite think that the Chancellor of the Exchequer was not aware of what was in the Labour Party manifesto, they are deceiving themselves. The exact scale and timing of the expenditure has yet to be settled. In advance of that settlement, I am unable to give the precise figure to the noble Lord.