Clause 9 - Capital Receipts
Local Government Bill
3:00 pm
Ms Sue Doughty (Guildford, Liberal Democrat)
On Second Reading, I was concerned that the Minister almost implied that there was something wrong with debt-free authorities; that they were not prudent or sensible, that they did not seem to be using their money in the wisest way, and that the Government knew best. In reality, different types of councils, whether Barking and Dagenham or Stevenage, or my own councils of Guildford and Waverley, each had reasons why they chose to become debt-free. One was that they had no other way of managing their housing finance.
The Government seem to think that spending power should be redistributed from richer authorities to poorer authorities, yet the need for housing can be as great in a richer authority as in a poorer authority because of the economic nature of the area. Housing in Surrey is hugely expensive, and people pay up to six and a half times their salary to buy a modest house, compared with three and a half in other parts of the country. Such people will not be able to buy their own homes and the cost of rented housing is commensurately higher too.
Waverley council submitted a memorandum to the Select Committee. It had to consider the need for affordable housing because its finances could not meet that need. The council's housing need register had more than 1,300 families and single people. Council housing associations had 580 households that needed to transfer to another home because of overcrowding or other reasons, and 400 households were homeless or at risk.
Some Labour Members may be surprised that Surrey has homeless people. As in other parts of the country, people become homeless not because they are feckless but because of the cost of living. In 2002, the average house price was about £220,000, and it is now £270,000. Public sector earnings among the lower paid have not gone up to meet those costs and never will. Therefore, in order to use its money in the best possible way, the council decided to focus on becoming debt-free and not to spend on areas
outside housing in order to obtain the necessary leverage.
In the four years that it took Waverley council to achieve debt-free status, the borrowing forgone was about £4.2 million, yet the benefits of that will be lost if the Government proceed with the Bill. Therefore, we support the amendments. We need a recognition of why local authorities have had to go debt-free and we should trust well-run local government to understand its finances and to manage them appropriately.