HC Deb 10 March 1987 vol 112 c140W
Mr. Raison

asked the Chancellor of the Exchequer what assessment he has made of the impact on public expenditure of empowering local authorities to increase the proportion of capital receipts which they could spend from 30 per cent. to (a) 40 per cent. and (b) 50 per cent.

Mr. Lawson

At present a local authority can use 20 per cent. of its housing receipts and 30 per cent. of most other receipts for capital spending in any one year, and these prescribed proportions apply to past receipts not already used in this way in previous years as well as to those which arise during the year.

If the proportions were increased, the rate at which local authorities could use receipts for capital spending would be accelerated. With proportions of (a) 40 per cent. and (b) 50 per cent. their scope for spending from receipts would initially increase by an estimated (a) £1½ billion and (b) £2½ billion a year.

But in order to keep to the Government's overall plans for local authority capital spending, allocations related to individual local authorities' actual need to spend would have to be reduced to offsett the scope for accelerated use of receipts. If, for example, half the increased scope for spending from receipts were actually used, the room for spending from allocations would be (a) £¾billion and(b) £1¼ less.

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