HL Deb 17 September 2003 vol 652 cc917-26

3Clause 11, page 5, line 32, leave out paragraph (b)

The Commons disagree to this amendment for the following reason—

3A Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further reason trusting that this reason may he deemed sufficient.

Lord Rooker

My Lords, I beg to move that the House do not insist on their Amendment No. 3, to which the Commons have disagreed for their reason numbered 3A.

I do not need to remind noble Lords that the Commons reason relies on the privilege of that House to determine matters relating to the financial arrangements of the country. That is only right and it is the principle on which relations between this House and the other place rest. However, we now have a further amendment before the House, Amendment No. 3B, which will be moved and spoken to by the noble Baroness, Lady Hanham, in due course. First, I beg the indulgence of noble Lords to make the following comments.

It will be apparent to anyone who reads this along with the previous amendment that the new amendment is designed to have the same effect as Amendment No. 3; namely, to remove the power of the Secretary of State to pool a proportion of housing capital receipts. As we all know, this is a vital issue which, over the past few months, has been discussed at some length at every stage in the proceedings of the Bill. It goes to the heart of the housing capital finance system.

To put it simply, Amendment No. 3B would remove the ability of central government to redistribute and allocate housing resources on the basis of need. It would put an end to this fundamental principle of capital finance, which of course was introduced by the previous administration and has been in place since 1990.

Without pooling, we would probably have to continue to operate a redistribution mechanism based on the principles underlying the current system. This could be only a partial solution. However, Clause 11, which we have been considering, introduces a system which is simpler, fairer and more transparent. I have used the word "fairer" quite deliberately because it would remove the unfair anomaly which exists at the moment. This anomaly gives special treatment and special benefits to one category of local authority in a purely arbitrary way. These are the authorities—around 40 of them—which are able, because of the mechanics of the system, to retain the housing capital receipts that arise in their area.

It is simply wrong that some authorities should have more spending power than others, regardless of housing need, simply because they happen to be rich in right-to-buy receipts or are debt-free. This is the fault of the present system which our pooling proposals address.

As noble Lords will know, I do not accept that the situation in which those authorities find themselves is the result of good financial management or good planning. It is neither of those. We are talking here about funds generated solely by the decision of tenants to buy their own house, not by any action of the local authority. And we are talking about a level of funding determined not through any assessment of need, but by the mechanics of the housing market, in particular in parts of the country where house prices are buoyant.

There is no justification on intellectual or moral grounds to exempt one category of authorities from their proper contribution to the country's housing need. It goes without saying that redistribution must apply to all if it is to be fair to all. Without it, affordable housing for key workers, decent homes and market renewal for low-demand areas would all be put at risk. Without redistribution, local authorities with debt, with lower capital receipts and with a greater housing investment need will lose out. That would disadvantage most of the nearly 260 authorities with housing stock.

Let me take at random five authorities which will be damaged by the amendment. Liverpool, Wigan, Milton Keynes, Solihull and Islington will all be worse off if the amendment is allowed to stand in the Bill.

There is a simple question before us today. Do we in this House accept that fairness in the allocation of funds should be paramount based on principle and transparency? Or do we believe that funding should fall where it arises, which of course is wholly down to an accident of history or geography?

Finally, I know that noble Lords have been concerned that the debt-free authorities will have made plans to use the receipts generated by their tenants. We recognise that—the point has been put very forcefully—and we have offered such authorities very generous transitional arrangements. This is the right response to the concerns of those authorities rather than removing the important new provisions that the Government initially proposed in the Bill. If in due course the matter should be pressed to a Division, I urge the House to reject Amendment No. 3B.

Moved, That the House do not insist on their Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A—(Lord Rooker.)

Baroness Hanham

rose to move, as an amendment to the Motion that the House do not insist on their Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A, leave out from "disagreed" to end and insert ", but do propose the following amendment in lieu thereof"— 3B page 5, line 33, leave out from "receipt" to end and insert "to be used by the receiving authority in accordance with directions by the Secretary of State

The noble Baroness said: My Lords, there have been a number of debates on the retention and pooling of capital receipts arising from right-to-buy sales. I do not propose to weary the House by rehearsing the arguments in great detail, but I am hound to say something in view of the fact that the Minister got his say in first. No doubt he will also have an opportunity to get his say in last.

It is our contention that authorities which have prudently harnessed resources from right-to-buy sales, or successfully promulgated the right-to-buy policy, and ended up debt free, either through prudence or good management, should not be put under pressure and have their capital receipts sequestered—which is how it was put in the other place—by the Government. It is proposed that those capital receipts should be snatched from them and given to authorities which the Government decide need them more than the authorities which got them together and harnessed them. The Minister referred to some authorities that would be disbenefited if the money was not pooled.

My knowledge is that these capital receipts amount to £120 million, which is not a great deal of money within the Government's capital allocation policy.

Lord Rooker

My Lords, let us get the figures right. It is £1.2 billion, not £120 million. We estimate that approximately £1.2 billion of housing capital receipts will he pooled.

Baroness Hanham

My Lords, I disagree, but I shall not pursue the issue because it does not alter the principle of the matter.

All the way through, the Government have suggested that the Bill will give freedoms and flexibilities, but when it comes to the retention of capital receipts it stops that. A local authority cannot spend its capital receipts on what it perceives its priorities to be.

The Government seem to have the idea that local authorities that have these capital receipts will rush off and buy Rolls-Royces or do something luxurious and debonair with the money. By and large, most of them want the money to carry out small-scale key worker developments; to provide capital for the development of their properties, probably housing; or to provide affordable housing.

The difference between us is that we say they should be able to do so and the Government say, "Sorry, individual local authority, you should not he able to do that because we want your money to take elsewhere and give it to someone else". The purpose of pooling, of course, is to put the money into one pot and for the Government to distribute it, at their own inclination, to the authorities that they wish to have it.

We do not believe that the authorities that have accumulated money from capital receipts have done so through an accident of history. Most of them have made good use of the right to buy. They have drawn that right to the attention of their tenants, who were, in the past, in a position to obtain a very good discount. The Government, of course, have put their feet on that system as well.

The amendment would ensure that the Government could not take the money away at will. The local authorities that have these capital receipts would discuss the issue with the Government and come to an agreement on what they should be spent on. This would ensure that the money was spent on government priorities—for example, on key worker housing—or it may be, amazingly, that the local authority's priorities were agreed to.

That is the aim of the amendment. The Minister is correct to say that it would stop the pooling arrangement—but that is the one thing that all these local authorities are adamantly against, as is the Local Government Association. I beg to move.

Moved, as an amendment to the Motion that the House do not insist on their Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A, leave out from "disagreed" to end and insert ", but do propose the following amendment in lieu thereof"— 3B page 5. line 33, leave out from "receipt" to end and insert "to be used by the receiving authority in accordance with directions by the Secretary of State

Baroness Maddock

My Lords, I support the amendment moved by the noble Baroness, Lady Hanham. I have read with interest the debate on this issue in another place. The Minister has today reiterated many of the arguments that the Minister there. Nick Raynsford, made against agreeing to the amendment passed in this House on the use of local authority housing capital receipts.

One of the reasons given was that it would undermine one of the fundamental principles of housing finance, which allows the redistribution of housing capital receipts to areas of greatest need. Both Ministers said that. It was a principle that the Conservative government followed when they were in office. However, at that time, when the Labour Party was in opposition, my memory is that it did not believe it or support it.

We on these Benches have always stood by our views on this issue. We believe in local government autonomy. We believe that decisions should be taken closest to those they affect, by elected people who are closely involved in their communities. We accept that this means that different authorities, facing different circumstances and different issues and having different histories, will come to different conclusions and find themselves in different positions. That is what devolution is all about.

Throughout the passage of the Bill the Government have said that they will sign up to greater local autonomy and incentives for councils that have prudent financial administration. We all agree with that. The amendments the Government are opposing go along with those principles, whereas the Government's view does not; it is against those principles.

The noble Lord, Lord Rooker, has reiterated the point made by the Minister in another place that accepting the original amendment would deprive housing authorities in areas of high housing stress of the resources they need to fulfil pressing demands for housing. It is the Government's choice about how they wish to use this money.

The noble Baroness, Lady Hanham, referred to the figures and the finance. This matter is not as straightforward as the Minister said. We had considerable discussions in Committee, when I moved complicated amendments with complicated information, much of which was gathered from the Committee proceedings in another place. To a great degree, these were brushed aside and we still do not have clear financial figures. That is also true of the debate in another place.

Why cannot the Government use the high rises there have been in the stamp duty take as a result of the increase in house prices over recent years? That really would be redistribution of housing money. I think there would be some justification for that, given the lack of supply within the housing market. The lowest number of homes built since 1924 has led to high house prices.

Ironically, the Ministers in both another place and here today said that the councils had their money not because it was generated by good financial management or good planning—a fairly sweeping statement if one has any knowledge of the wide range of local authorities in Britain today—but simply because tenants had decided to buy their houses in areas where house prices are buoyant and the stamp duty take will have been high.

The other principle broken by the ability to take capital receipts from local authorities is the retrospective nature of this course of action. The Government claim that local authorities received grants, and all they are doing is clawing the money back. But they are clawing hack money that local authorities have made over the years for a variety of reasons, money that was given to completely different administrations at a completely different time.

In another place, the Government resorted to quite a lot of political knockabout. I am glad that has not happened today, so I shall not say some of the things I was going to say. But to vote against a proposal with which one disagrees in principle does not mean that one does not recognise the sort of problems faced by some authorities that the Minister outlined.

The amendment is a compromise against the principles on which we on these Benches stand. But it gives the Government the ability to direct those housing capital receipts to be spent on housing. As others have said, few authorities in this country do not have pressing local housing problems. We have seen reduced social housing, much of which is not energy-efficient, and elderly people living in cold, damp homes. All over Britain there is a lack of affordable key worker homes. Local authorities have duties under the Homelessness Act 2002 to bring empty properties back into use. Those are some of the things local authorities have to deal with.

I have been consistent in my stance on this from my days on Southampton City Council under a Conservative Government through four years in another place under a Conservative Government, and I am saying the same things today, under a Labour Government. We have shifted our stance on this: we are supporting a compromise, and I hope that the Government will be able to do the same. We on these Benches support the amendment.

Lord Rooker

My Lords, I want to make it clear that this amendment is not a compromise. I invite anybody who wants a definition of wishy-washy Liberal Democrats to read in tomorrow's Hansard the speech we have just heard. I think the noble Baroness should be ashamed of herself and her party should be ashamed of itself for the stand that they are taking on this. Not once have either the Liberal Democrats or the Conservatives spelt out the consequences. If you oppose pooling—and I have repeatedly invited answers to this—there are only certain alternatives. They are less investment by the most needy authorities, higher taxes to make good the money that is currently retained or cuts in other programmes. Not one of them has had the guts to stand up and say which one of those alternatives they would go for, unless we are just about to hear.

Baroness Maddock

My Lords, what I actually proposed was another place from which we could get the money because I disagree with the principle of taking this money. I made that quite clear.

Lord Rooker

My Lords, the noble Baroness says she will vote for the amendment. I will give her a few examples of who will lose out if the amendment is carried. Brent will lose £2 million. I hope the Liberal Democrat candidate will go to the public tonight and say, "Our Lib Dems have voted to lose £2 million for Brent's housing". Brent has to be an authority in need. As for Liverpool—and I think the Lib Dems are in charge of Liverpool—it would lose £1.5 million as a result of accepting this amendment. Bournemouth will lose £250,000, Solihull £180,000 and Wokingham £150,000.

This is "make your mind up time". Are we concerned about using the resources of the nation based on housing need? It is no good saying everybody has equal need—they have not. I accept that they will all have needs—even in the most well off areas, there will be pockets of need. But it is a question of the scale of the need compared with the resources available. That is what we are inviting the House to accept in this pooling arrangement.

As I have said, there are alternatives. We will be depriving needy authorities of much needed investment in housing based not on a whim or a hunch but on the housing needs of the people living in those authorities. I have read out some losers and no doubt I could read out more. I invite the Liberal Democrats to think seriously about what they are doing here today.

Baroness Hanham

My Lords, I think we have finally got to the Minister. I have not seen him so exercised about anything for a very long time. We have been having very calm and balanced discussions throughout the Bill's proceedings.

I said that I would not tweak the Minister too hard about the amount of money involved, but I wish to refer to Tuesday's Commons debate in Hansard. My honourable friend Mr Philip Hammond asked the Minister to, confirm for the record that the sum involved in relation to debt-free authorities—the only ones that will be directly affected in cash terms by the measure—is about £120 million, and not £800 million, £1.8 billion or any other exaggerated Figure? Mr Raynsford responded: The figure that I quoted— which was in a previous part of the debate— was the total sum that we estimate will be brought within the pooling arrangements". Those are the billions. We are talking about £120 million. Mr Raynsford continued: That is similar to the set-aside. The figure for debt-free authorities is £120 million, as the hon. Gentleman rightly said".—[Official Report, Commons, 15/9/03; cols. 599–600.]

I suggest that if the Minister disagrees with that, he disagrees with Mr Raynsford. Our understanding is that the sum is about £120 million. The amounts that the Minister has just said might be lost are to authorities which, I am fascinated to discover, have already been identified.

Lord Rooker

My Lords, I probably will not be able to come back, but so there is no misunderstanding about this, of the £120 million, the figures are for the authorities I have just quoted, so it might not seem a large sum of money. The estimated pooling of right-to-buy receipts generates £1.2 billion, of which £120 million will come from the debt-free authorities.

But the amendment affects all authorities as the set-aside will not continue, so there will be damage all round.

Baroness Hanham

My Lords, we are talking about the right-to-buy money. We are talking about money that will be scooped up from authorities which have had it in their accounts because the Minister is able to take it away from them. He has already identified and made it clear that the Government have already spent the money to be scooped up from these authorities by, if nothing else, at least allocating it to authorities, some of which he has read out.

The amounts of money that the Minister read out are not fantastic. Two million pounds will not cover much in the way of building in Brent, which would probably require £200 billion.

The Government will dictate to authorities which have raised this money in capital receipts by good careful management. They will say, "You do not need this money; by some dint or other you have managed to scoop up this money but you will not be allowed to spend it on anything".

If this is what a compromise is, we have suggested in the amendment that that money should be recognised as part and parcel of the budget and the money for the local authorities, but that they should be able to spend it in line with their priorities and the Government's recognition of those priorities. If key worker housing is not a priority in very many parts of this country—not only for authorities with big debts and big requirements—I know not what we have been talking about for these many months past. I know not what the Secretary of State is talking about when he is trying to develop all the areas in the South East.

The amendment would allow those authorities to keep the money to use it for their priorities in a way that is associated with housing. I cannot make the matter clearer than that. I believe that the proposal would be a right and proper way to deal with housing capital receipts. Therefore, I must ask the House to agree with my amendment.

4.1 p.m.

On Question, Whether the said amendment (No. 3B) shall be agreed to?

Their Lordships divided: Contents, 139; Not-Contents, 118.

Division No. 1
Addington, L. Blackwell, L.
Ampthill, L. Blatch, B.
Anelay of St Johns, B. Bowness, L.
Arran, E. Bradshaw, L.
Astor, V. Brittan of Spennithorne, L.
Astor of Hever, L. Brooke of Sutton Mandeville, L
Attlee, E. Brookeborough, V.
Barker, B. Brougham and Vaux, L.
Beaumont of Whitley, L. Burnham, L.
Biffen,L. Byford,B.
Caithness, E. Monson, L.
Campbell of Alloway, L. Montagu of Beaulieu, L.
Carlisle of Bucklow, L. Montrose, D.
Carnegy of Lour, B. Mowbray and Stourton, L.
Carrington, L. Moynihan, L,
Clement-Jones, L. Naseby, L.
Cope of Berkeley, L. Noakes, B.
Crickhowell,L. Northbrook, L.
Dholakia, L. Northesk, E.
Dixon-Smith, L. Northover, B.
Dundee, E. Norton of Louth, L.
Eden of Winton, L. Oakeshott of Seagrove Bay, L.
Elles, B. Onslow, E.
Elton, L. Park of Monmouth, B.
Erroll, E. Pearson of Rannoch, L.
Ezra, L Peel, E.
Falkland, V. Plummer of St. Marylebone, L
Feldman, L. Rawlings, B.
Flather, B. Redesdale, L.
Fookes, B. Rees-Mogg, L.
Forsyth of Drumlean, L. Rennard, L.
Fowler, L. Renton, L.
Geddes, L. Roberts of Conwy, L.
Geraint, L. Rodgers of Quarry Bank, L.
Glenarthur, L. Roper, L.
Goodhart, L. Rotherwick, L.
Gray of Contin, L. Russell-Johnston, L.
Hamwee, B. [Teller] Ryder of Wensum, L.
Hanham, B. St John of Fawsley, L.
Harris of Richmond, B. Seccombe, B. [Teller]
Hayhoe, L. Selsdon, L.
Henley, L. Sharp of Guildford,B.
Hodgson of Astley Abbotts, L. Sharples, B.
Hooper, B. Shutt of Greetland, L.
Hooson, L. Skelmersdale, L.
Howe, E. Smith of Clifton, L.
Howell of Guildford,L. Soulsby of Swaffham Prior, L.
Jenkin of Roding, L. Stevens of Ludgate, L.
Kimball, L. Stoddart of Swindon, L.
Kingsland, L. Strathclyde, L.
Knight of Collingtree, B. Swinfen, L.
Laird, L. Taverne, L.
Lester of Herne Hill, L. Tebbit, L.
Linklater of Butterstone, B. Thatcher, B.
Liverpool, E. Thomas of Gresford, L.
Livsey of Talgarth, L. Thomson of Monifieth, L.
Luke, L. Tope, L.
Lyell, L. Tordoff, L.
McColl of Dulwich,L. Trumpington, B.
MacGregor of Pulham Market, L. Ullswater, V.
Waddington, L.
Mackay of Clashfern, L. Wakeham, L.
Mackie of Benshie, L. Walker of Worcester, L.
McNally, L. Wallace of Saltaire,L.
Maddock, B. Walmsley, B.
Mancroft, L. Wamock, B.
Mar and Kellie,E. Wigoder.L.
Marsh, L. Wilcox,B.
Methuen, L. Williams of Crosby, B.
Miller of Chilthorne Domer, B. Willoughby de Broke, L.
Acton, L. Blackstone, B.
Ahmed, L. Borrie, L.
Allen of Abbeydale, L. Boyce, L.
Amos,B. Bragg, L.
Andrews, B. Brooke of Alverthorpe, L
Archer of Sandwell, L. Brookman, L.
Ashley of Stoke, L. Carter, L.
Ashton of Upholland, B. Chandos, V.
Bach, L. Christopher, L.
Barnett, L. Clark of Windermere, L.
Bassam of Brighton, L. Clarke of Hampstead, L.
Bhatia, L. Clinton-Davis, L.
Billingham, B. Cohen of Pimlico, B.
Corbett of Castle Vale, L. Levy, L.
Craig of Radley.L. Lipsey, L.
Crawley,B. Lofthouse of Pontefract, L.
Darcy de Knayth, B. Macdonald of Tradeslon, L.
Davies of Coity, L. McIntosh of Hudnall,B.
Davies of Oldham, L. [Teller] MacKenzie of Culkein, L.
Dean of Thornton-le-Fylde, B. Mackenzie of Framwellgate, L
Desai,L. Mallalieu, B.
Dixon, L. Massey of Darwen, B.
Donoughue, L. Merlyn-Rees, L.
Dormand of Easington, L. Mishcon, L.
Dubs, L. Mitchell, L.
Elder, L. Morgan, L.
Evans of Parkside, L. Morris of Aberavon, L.
Evans of Temple Guiting, L. Morris of Manchester, L.
Farrington of Ribbleton, B. Palmer, L.
Faulkner of Worcester, L. Paul, L.
Filkin, L. Pendry, L.
Finlay of Llandaff, B. Pitkeathley, B.
Fitt, L. Plant of Highfield,L.
Fyfe of Fairfield, L. Prys-Davies, L.
Gale, B. Puttnam, L.
Gibson of Market Rasen, B. Ramsay of Cartvale, B.
Gilbert, L. Rea,L.
Golding, B. Richard, L.
Gordon of Strathblane, L. Rooker, L.
Gould of Potternewton, B. Sainsbury of Turville, L.
Graham of Edmonton, L. Sawyer, L.
Scotland of Asthal, B.
Greengross, B. Simon, V.
Grocott, L. [Teller] Smith of Gilmorehill, B.
Harris of Haringey, L. Stone of Blackheath, L
Harrison, L. Strabolgi, L.
Hogg of Cumbemauld, L. Tanlaw, L.
Hollis of Heigham, B. Thornton, B.
Howarth of Breckland, B. Tomlinson, L.
Howells of St. Davids, B. Turnberg, L.
Hoyle, L. Turner of Camden, B.
Hughes of Woodside, L. Walpole, L.
Hunt of Chesterton, L. Warwick of Undercliffe, B.
Hunt of Kings Heath, L. Weatherill, L.
Islwyn, L. Whitaker, B.
Janner of Braunslone, L. Whitty, L.
Jay of Paddington, B. Williams of Elvel,L.
Joffe, L. Williams of Mostyn, L. (Lord President of the Council)
Jordan, L.
King of West Bromwich, L. Woolmer of Leeds, L.

Resolving in the affirmative, and amendment agreed to accordingly.

On Question, Motion, as amendment, agreed to.

4.11 p.m.