Clause 11 - Use of capital receipts
Local Government Bill
3:45 pm
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
This is one of the most important clauses in the Bill. The large number of amendments that have been tabled bear witness to the intensity of interest in it. They have all been grouped together, which is perhaps inevitable if a clause is relatively short and has a focused purpose.
I think of this clause as the expropriation clause. It drives a coach and horses through the Government's claim that the Bill is about giving freedoms to local authorities. The Transport, Local Government and the Regions Committee said clearly that it should be deleted from the Bill. It is another piece of the Government's plan to siphon off resources from good, prudent councils and hand them to Labour-controlled councils, including the odd basket case.
The power in subsection (2)(a) allows the Secretary of State to direct the use of non-housing receipts for purposes of either capital expenditure or debt reduction. Draft regulation 17 is permissive in that it allows either. Would the Minister confirm that the intention is that the Secretary of State should be able to specify by regulations to either subsection (2)(a)(i) or subsection (2)(a)(ii) and that it is merely an expression of his current generosity of mind that the draft regulation allows either debt reduction or capital expenditure?
The power in subsection (2)(b) is the power to sequester housing receipts from local authorities. In the terminology of the guff that the Government put out and Ministers repeat at the Dispatch Box, that is called redistribution. There is nothing in the Bill about redistribution. It mentions an amount equal to a part or a whole of a receipt being payable to the Secretary of State. That is sequestration by any other name. The redistribution will be entirely at the discretion of the Secretary of State at a later stage. The Minister might like to comment on a report that the Minister for Housing and Planning said—outside of Parliament—that of the 34 debt-free authorities that make up the capital receipts group, only one, Barking and Dagenham, is an authority likely to be considered to be in housing need by the Government. There is likely to be a wholesale redistribution away from that group of authorities to another, more favoured, group.
I shall spell out how I understand that the provision will work. The Minister will have the pleasure of correcting me if I am wrong in saying that 75 per cent. of right-to-buy receipts will be sequestered by the Secretary of State. Of other housing receipts, including large-scale voluntary transfer receipts, 75 per cent. will be sequestered after taking into account certain allowances that give local authorities an opportunity to reinvest part of the proceeds in housing and urban
regeneration before the Secretary of State takes his cut. If that scenario is right, I cannot square it with the comments that the Minister made in the last debate, when he told the hon. Member for Kingston and Surbiton that when we came to this debate we would see that clause 11 would not remove the funding that local authorities might wish to reinvest in housing within their areas. If the source of that funding is right-to-buy receipts, the proposal, together with the draft regulations, would remove 75 per cent. of it from the authority and give it to the Secretary of State to be used in his absolute discretion.
Some of the amendments are alternatives to each other, and some seek to probe the Government's reasoning behind the drafting. Our initial reaction is to oppose the provisions of the clause, especially subsection (2)(b). However, we are realists and, in order to move forward, we think that it is worth exploring what the Government are trying to achieve and what their objections to the present system are, in order to establish whether there is any scope for compromise. Unless the Minister demonstrates a willingness to alter his position, we shall vote against the clause on stand part, because the suggestion that the Secretary of State can take one community's assets and move them elsewhere in the country is wrong in principle. Money raised from the sale of council houses should stay in the community and be spent according to locally determined priorities for housing and urban regeneration.
The Opposition do not accept the argument that borrowing, supported by central Government, has necessarily funded the provision and upkeep of authorities' housing stock. Some authorities have received negative housing subsidy for decades, and all authorities, whether they originally received housing subsidy or not, will have invested substantial amounts of their own tenants' money and, in some cases, council tax or, before that, ratepayers' money in that housing stock. The proceeds of sale of those housing assets should be reinvested locally and should not become part of a national resource, to be directed around the country on the Secretary of State's whim.