Clause 26
Housing and Regeneration Bill
5:45 pm
Alistair Burt (Shadow Minister, Communities and Local Government; North East Bedfordshire, Conservative)
I beg to move amendment No. 3, in clause 26, page 13, line 2, leave out ‘£2,300 million’ and insert ‘£1,000 million’.
Joe Benton (Bootle, Labour)
With this it will be convenient to discuss amendment
No. 4, in clause 26, page 13, line 5, leave out ‘£3,000 million’ and insert ‘£1,500 million’.
Alistair Burt (Shadow Minister, Communities and Local Government; North East Bedfordshire, Conservative)
The aim of the amendment is to elicit from the Minister an explanation of why the financial limits are as they are. I should be grateful if he could set that out.
Lembit Öpik (Shadow Minister (Housing), Department for Communities and Local Government; Montgomeryshire, Liberal Democrat)
I just want to highlight the complete pointlessness of subsection (3). Subsection (1) states:
“The current borrowings of the HCA must not exceed £2,300 million.”
Subsection (3) states:
“But an order under subsection (2) may not specify an amount of more than £3,000 million.”
As the Minister said himself, what is to stop anybody through an order changing the legislation to any amount at all? There is no prospect of subsection (3) doing anything useful. The amendments offer different sums. I think that the amount the HCA spends will end up being far in excess of £2.3 billion or indeed £3 billion. If it gets its momentum and if the house building programme that we need in this country is to benefit significantly from the investment through the HCA, the sums will have to be far higher than what has been put forward here.
The Minister, being so keen to maintain a frugalness of content in the Bill, needs to explain why subsection (3) is there. There may be an administrative reason. Perhaps there is a standard precedent in legislation of which I am not aware. But in the absence of those, while subsection (1) is meaningful, because it indicates some initial HCA borrowing limit, subsection (3) is meaningless, because it could be changed at any time.
George Young (North West Hampshire, Conservative)
I have a simple question for the Minister. He referred to the borrowings of the organisations that will form the HCA—the Housing Corporation, English Partnerships and the Commission for the New Towns—and I think he said that there were some outstanding borrowings in some of those organisations. Will those borrowings be rolled into the borrowings of the HCA, or will the HCA start with a blank sheet of paper so that the £2,300 million will refer only to liabilities that it itself incurs? Will it have responsibility for the debts of its predecessor organisations?
Robert Syms (Poole, Conservative)
I wish to make a similar point. Evidently, the organisations to which my right hon. Friend referred already have an external borrowing limit. Is the £2,300 million new money or is there a sort of net difference? Are these additional resources or are they the resources of the organisations that are forming the HCA? What are the external limits of English Partnerships, of the Housing Corporation and of the Commission for the New Towns? What I am trying to get at is this: is it new money or is it reannounced?
Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)
That was an interesting point about borrowing limits, certainly from my point of view as a former auditor and accountant. I reiterate what I have said in earlier discussions. The power of the homes and communities agency to borrow is an important part of its financial powers, because it gives it additional flexibility. I refer to borrowing either on a short-term basis from anyone or on a longer-term basis from the Secretary of State or the European Investment Bank.
Let me clarify the point made by the hon. Member for Poole. The amounts that we are proposing for the borrowing limits of the HCA are those currently available to the Housing Corporation. Those amounts were increased from those originally allowed in the Housing Associations Act 1985 by the Housing Act 1988. The agency will be a bigger agency than the Housing Corporation. It does not seem reasonable to expect the new agency to do more than the combined roles of its constituent parts while at the same time restricting its ability to borrow to less than that of its constituent parts. We have taken the view that retaining access to this amount of borrowing is reasonable, given the breadth and wide variety of work being undertaken by the new agency. It seems reasonable; it does not seem excessive. It will not be the main source of its funding. I therefore hope that the hon. Member for North-East Bedfordshire will withdraw the amendment.
Alistair Burt (Shadow Minister, Communities and Local Government; North East Bedfordshire, Conservative)
I may well do that, but before we leave the amendment, can the Minister give an indication of what the main sources of funding will be for the HCA? Where will it get its money from?
Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)
The main source of funding, as I thought I had made clear earlier, is grant in aid from central Government. That will be the main source of funding, I imagine, that the agency receives. I hope that that clarifies the matter.
George Young (North West Hampshire, Conservative)
I may have missed this, but I did not catch from the Minister whether the HCA would take over the existing liabilities of the organisations from which it is composed.
Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)
My strong understanding is that the existing borrowings will be transferred to the new agency. It is essentially a residual rump from former borrowings. I am sure that if I have got that wrong, I will be corrected, and I will make the Committee aware of that, but that is my strong understanding. It is a residual rump that is not material, but I am happy to provide clarification if I have got that wrong.
Alistair Burt (Shadow Minister, Communities and Local Government; North East Bedfordshire, Conservative)
I beg to ask leave to withdraw the amendment.