Expenditure Plans (Hansard, 20 January 1988)

§ Mr. Ridley

My right hon. Friend the Chancellor of the Exchequer has today laid before Parliament "The Government's Expenditure Plans 1988–89 to 1990–91" (Cm. 288).

The White Paper explains in more detail my Department's plans for expenditure for 1988–89 to 1990–91, announced in summary at the time of the Autumn Statement, and gives comprehensive information about what we have achieved through our programmes in past years, and about our targets for the future.

HOUSING

Substantially higher levels of planned gross expenditure on housing were announced in the Autumn Statement. Gross provision for housing capital expenditure in 1988–89 is now 11 per cent. higher than previous plans and £158 million higher than estimated outturn for 1987–88. In 1989–90 expenditure will be £284 million higher than previous plans. Increases on this scale have been made possible by the continuing success of the right to buy, and by the disposal of new towns land for housing, which is generating higher levels of capital receipts than previously forecast.

This year's White Paper provides more information about the housing programme than has been previously published. There is a more detailed breakdown into components of the programme and, for the first time, this detailed breakdown is extended to future years' plans. Information on the outputs achieved by the expenditure is continued from previous years and developed. The balance of planned spending between components of the programme reflects the policies set out in the White Paper "Housing: the Government's Proposals", published in 1987 (Cm. 214).

Housing Associations

Housing associations are playing an increasing role in the provision of new social housing for rent. This will be further encouraged by the increase of some £50 million in planned gross provision for the Housing Corporation in 1988–89. The Government expect some of this money to be used to attract additional investment from the private sector, thereby increasing the amount of housing which can be built for the available public resources. Details of the corporation's development programme will be announced shortly.

Local Authority Programmes

Planned local authority gross capital expenditure is £313 million higher in 1988–89 than in previous plans. After taking account of the increased spending power available to local authorities from higher levels of receipts, this leaves housing investment programme capital 760W allocations at £1,150 million. Individual local authority allocations were announced by my hon. Friend the Minister for Housing and Planning on 18 December 1987. As the figures show, local authorities are spending a growing proportion of their resources on the renovation of the existing housing stock. The plans published today reflect the Government's intention that this trend should continue and it will he encouraged. There is also a very substantial increase in the size of the estate action programme, to allow £140 million of targeted allocations. This should permit work to begin on a further 70,000 or so rundown local authority dwellings, to add to the almost 100,000 included in schemes so far. Disposals to private sector owners and managers are running at the rate of about 8,000 units a year, the target for 1988–89 has been set at 15,000 disposals.

Housing Action Trusts

A new component of the housing programme is expenditure on housing action trusts (HATs). Proposals for the establishment of these trusts are currently before the House. The Government intend to launch a pilot programme of HATs in the first instance to tackle the problems of some of the worst areas of public housing. In designated areas they will take over the ownership and management of local authority housing, implement a programme of renovation and repair and pass the property on to different forms of ownership and management. HATs will also have a role in encouraging local enterprise and employment in their areas. £125 million has been earmarked for HATs in their first three years of operation.

OTHER ENVIRONMENTAL SERVICES

Urban Development Corporations

Urban development corporations (UDCs) are planned to spend over £200 million in each of the next three years. There are now six UDCs in England. I intend to set up three more during 1988, in Bristol, Leeds and Manchester. This reflects the high priority I give to regenerating the inner cities, and the effectiveness of the UDCs in London Docklands and Merseyside in regenerating their areas. For example, three quarters of Merseyside development corporation's area was derelict initially—more than 70 per cent. of that derelict land has already been reclaimed. In London Docklands, 1987 saw the opening of the Stolport and Docklands light railway, and the signing of an agreement to develop Canary wharf.

Urban Programme and Derelict Land Grant

Despite the increased emphasis on UDCs, planned expenditure by DOE on the urban programme (including urban development grant and urban regeneration grant) and derelict land grant amounts to nearly £300 million a year. In 1987–88 local authorities' inner area programmes, supported by Government grant, are forcast to create or preserve about 31,000 jobs and support about 60,000 training places. Urban development grant projects approved since 1982 will generate over £500 million of private sector investment a gearing ratio of 4:1.During the same period over 6,000 hectares of derelict land have been reclaimed with the aid of derelict land grant.

New Towns

The new towns programme of disposals of commercial and industrial property continues successfully as the 761W private sector takes an increasingly prominent role in the future of the towns. This is reflected in the high level of forecast receipts — £311 million in 1988–89. Capital expenditure—planned at £81 million in 1988–89—is now aimed at rounding off development in the remaining new towns and bringing forward asserts for disposal. Throughout the plan period capital receipts continue significantly to exceed gross capital expenditure.

Countryside

I have increased resources for the countryside agencies and the Sports Council. Next year's increase for the Nature Conservancy Council will finance the designation of 500 sites of special scientific interest (SSSIs) and several new nature reserves. It will also cover the cost of 500 new management agreements with farmers and landowners to protect SSSIs, and 600 grants for voluntary conservation work. The Countryside Commission, is aiming to plant 2.25 million trees in 1988–89, in addition to those planted in the aftermath of the 15.16 October storm. Their increase in funding will allow the commission to make a start on a major programme to upgrade the nation's footpaths by the end of the century. Next year's increase for the Development Commission will enable it to continue to develop its successful job creation programmes in support of the rural economy. The increases for the Sports Council will enable it to undertake more work in areas of high priority need in the inner cities, and in particular to increase participation among young people. The council's expenditure is "pump priming" and so will help to stimulate additional private sector involvement.

Local Environmental Services Capital

Gross provision is £627 million per annum for 1988–89 to 1990–91. Capital receipts generated by local authorities on LES have risen sharply in recent years and forecast receipts have accordingly been revised upwards to £542 million per annum.

British Waterways Board

The British Waterways Board external financing limit (EFL) is increased by £1.6 million. This is intended to preserve the real value of the grant for 1988–89. Efficiency savings are expected to flow from the preparation of the waterway plans for the board's network, and the implementation of the MMC report.

Water Authorities

Water authorities continue to reduce real operating costs and this, taken with increased profitability, will enable them to finance large increases in investment proposed in their 1987 corporate plans, with a slight reduction in borrowing. Capital expenditure has already grown in real terms by 40 per cent. since 1980–81 and is currently running at about £1 billion. Further major growth is now assured in programmes to improve water and sewage treatment and to renew underground assets.

Property Services Agency

On PSA's civil accommodation programme, disposal and property repayment services (PRS) receipts are planned to increase by £86 million in 1988–89 and £136 million in 1989–90, enough to allow expenditure increase of £60 million and £74 million and net reductions of £26 million and £62 million in these years. Some of the increase in expenditure is needed to meet unavoidable demands, 762W such as higher rents to be paid to landlords. But enough will remain to carry out priority major new works and to halt the deterioration in the condition of the civil estate in 1988–89 and start making inroads on the backlog of maintenance work in 1989–90.

Local Authority Capital Expenditure, England

Gross provision for capital expenditure by local authorities under the main local authority capital cash limit, DOE/LA1, is £5,173 million, £246 million higher than the equivalent provision for 1987–88. Under the Local Government, Planning and Land Act local authorities have two main sources of capital spending power: capital allocations issued by the Government and a prescribed proportion of their capital receipts. Capital allocations on DOE/LA1 in 1988–89 will total £2,625 million, broadly similar to this year. Because local authorities are continuing to generate more capital receipts, particularly under right to buy, their potential spending power from capital receipts will be £300 million higher than in 1987–88, at about £3.6 billion. The Government's plans take account of the fact that in aggregate local authorities do not make full use of their potential spending power.