Application of Part Iv

Part of Orders of the Day — Clause 37 – in the House of Commons at 11:45 pm on 6th November 1989.

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Photo of Mr David Hunt Mr David Hunt , Wirral West 11:45 pm, 6th November 1989

It is a question of getting the balance right. Part IV of the Bill is designed to redress the balance between spending from allocations and receipts to ensure not only that needs are met, but that those authorities that generate receipts get a reasonable benefit from doing so.

The hon. Member for Torfaen (Mr. Murphy) pointed out that my predecessors highlighted the fact that similar amendments in the past would have resulted in a cut of £900 million in credit approvals. That means that £900 million less would be targeted on the authorities that need to house the homeless. No doubt the answer would be simple to the hon. Member for Newham, North-West (Mr. Banks)—let local authorities spend the receipts, but do not cut the credit approvals. That may be the Labour party's response, but it is not the response of any party which aspires to responsible control of public expenditure, and it certainly will not be this Government's response.

We have heard a lot about local authorities being unable to spend their own resources on their own priorities. Let us be plain about what those resources are. They are the proceeds of assets which the local authority has sold, the original purchase of which was mainly financed by borrowing. The cost of that borrowing has been, and often still is, supported by the national tax payer through housing subsidy, Government grant and the like. Why should that continue once the asset has been sold? We are not taking the resources away, but simply saying that it is right that some of them should be used to repay the authority's debt.

12.15 am

It is not as if we are stopping local authorities using any of their receipts for new capital expenditure, because next year local authorities will be able to spend nearly £4 billion from their receipts. That is a huge sum in anybody's terms.