Abolition and Capitalisation of Certain Subsidies and Contributions

Orders of the Day — Housing (Scotland) Bill – in the House of Commons at 6:15 pm on 29th March 1988.

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'.—(1) No subsidy or contribution shall be made under the following provisions of the Housing (Scotland) Act 1987 (the "superseded provisions")—

  1. (a) section 200 (slum clearance subsidy);
  2. (b) section 254 (contributions towards improvement grants, repairs grants and grants for fire escapes);
  3. (c) section 255 (contributions for improvement of amenities);
  4. (d) section 296 (contributions towards certain other expenses)
in respect of any expense or expenditure incurred by a local authority on or after 1st april 1989.

(2) No claim for subsidy or contribution under any superseded provision in respect of or towards any expense or expenditure incurred by a local authority before 1st April 1989 shall be entertained by the Secretary of State unless—

  1. (a) it is received by him before 1st October 1989; and
  2. (b) any information reasonably required by him in relation to any such claim is received by him within two months after the receipt by him of the claim.

(3) Where two or more periodic payments of a subsidy or contribution under a superseded provision would, apart from this subsection, fall to be made on or after 1st April 1989, these payments shall be capitalised and made as follows—

  1. (a) if one or more earlier such payments have been made before that date, the Secretary of State shall, instead of making the remaining instalments, pay an amount equal to the appropriate percentage of the relevant capital amount;
  2. (b) if no earlier such payment has been made before that date, the Secretary of State shall, instead of making any such payments, pay such amount as appears to him to be equal to the appropriate percentage of the relevant expenditure.

(4) In subsection (3) above— the appropriate percentage", in relation to a relevant capital amount means the percentage specified in or under the superseded provision in relation to the subsidy or contribution to which the capital amount relates and, in relation to a subsidy or contribution, means the percentage specified in or under the superseded provision in relation to that subsidy or contribution;the relevant capital amount", in relation to a subsidy or contribution, means the sum of—

  1. (a) such amount as the Secretary of State considers would, on the date of his payment under subsection (3)(a) above, be payable by the local authority were they then to repay a loan, repayable over twenty years, taken out by them from the Public Works Loan Board to meet their expense or, as the case may be, expenditure in respect of or towards which the subsidy or contribution was made; and
  2. (b) any other amount which he considers would be then payable on such repayment of that loan;
"relevant expenditure", in relation to a subsidy or contribution, means the expense or expenditure in respect of which the subsidy or contribution was made.

(5) Payment made under subsection (3) above shall be—

  1. (a) applied in reduction or extinguishment of such debt (whether then payable or not) of the local authority as the Secretary of State thinks fit; or
  2. (b) made to the local authority; or
  3. (c) partly so applied and partly so made.

(6) Payments made to a local authority under subsection (5) above shall be applied by them in the repayment of such debt and in such a manner as the Secretary of State directs.

(7) Notwithstanding the repeal by this Act of section 254 of the Housing (Scotland) Act 1987, subsection (4) of that section (obligation upon local authority to pay to the Secretary of State sums recovered by them in consequence of breach of conditions of improvement grant or by way of voluntary repayment of such grant) shall continue to have effect in relation to expense incurred under that section by a local authority prior to 1st April 1989, being expense in respect of which contributions were made under that section.

(8) After paragraph 1 of Schedule 16 to the Housing (Scotland) Act 1987 (which, amongst other things, requires a local authority to carry to the credit of its slum clearance revenue account any slum clearance subsidy payable to them for that year) there shall be inserted the following paragraph— 1A. — Paragraph 1(b) above is subject to section [Abolition and capitalisation of certain subsidies and grants] of the Housing (Scotland) Act 1988 (abolition and capitalisation of, amongst others, slum clearance subsidy).".'.— [Lord James Douglas-Hamilton.]

Brought up, and read the First time.

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West

I beg to move, That the clause be read a Second time.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

With this it will be convenient to take Government amendment No. 103.

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West

The new clause will abolish a number of specific Exchequer subsidies and contributions with effect from 1 April 1989, which will be replaced by Exchequer support through the revenue support grant system. The principle of the clause has been agreed with and is accepted by the Convention of Scottish Local Authorities.

First, the clause terminates specific Exchequer contributions to expenditure incurred by local authorities on housing improvement and other grants with effect from 1 April 1989. The clause also deals with what is to happen to the future payments to which we are committed for up to 20 years and which result from past awards of these grants and the debt repayments to which they have given rise. Finally, it deals with what is to happen to expenditure incurred by a local authority before 1 April 1989, in respect of which no periodic payment has been made by that date.

To meet the wishes of COSLA, the clause is drafted in such a way as to enable the Secretary of State to buy out the Government's obligations by capitalising the amount of future payments which would be due to a local authority. The amount payable is to be paid by the Secretary of State to redeem outstanding debt with the Public Works Loan Board, where that exists. But the clause is sufficiently flexible to enable special arrangements to be made for Orkney islands council and Ross and Cromarty district council, which have a total debt to the PWLB of less than the expected capitalised sum. It also enables the amount to be paid by the Secretary of State to include any sum which a local authority might be obliged to pay for the early repayment of loans.

I should make it clear that the new clause will not at all affect the present arrangements for local authorities giving improvement and other grants to indviduals. Only the way in which the Government fund these grants will be changed under this clause.

Photo of John Home Robertson John Home Robertson , East Lothian

I can confirm that the local authorities have no objection to the new clause. They only express the rather optimistic hope that the Secretary of State will exercise his discretion under the new clause reasonably.

Photo of Mr Archy Kirkwood Mr Archy Kirkwood , Roxburgh and Berwickshire

Let me raise as part of the principle of capitalisation some of the issues that we discussed in Committee. I refer, in particular, to the capitalisation of the amenity charges that are levied by the Scottish Special Housing Association on tenants who are owner-occupiers of former SSHA-tenanted stock. I sought to raise the matter in Committee and it is relevant to the abolition of capitalisation of certain subsidies and contributions contained in new clause 8.

I hope that the Minister will not rule out the fact that capitalisation can take place on the amenity charges, which would allow Scottish Homes—as it will become—to enter into an agreement with local authorities to capitalise the charges so that the local authority receives a sensible amount of money which will enable it to maintain the amenity of the common grounds that are currently maintained by the SSHA by levying charges on the residents who were former tenants and are now owner-occupiers. The matter was raised directly in new clause 15. Unfortunately, it was not selected, but I am sure that the Minister will see its relevance to new clause 8.

Photo of Lord James Douglas-Hamilton Lord James Douglas-Hamilton , Edinburgh West

With the leave of the House, I shall reply briefly to the hon. Gentleman. He raised the matter in Committee and he is aware that there have been discussions with Midlothian district council and the SSHA, and that we have found a way forward. Obviously, we shall be glad if a similar way forward can be found for his council in the discussions that it is now having with the SSHA. We hope that they come to fruition in due course.

Question put and agreed to.

Clause read a Second time, and added to the Bill.