Clause 11 — Use of Capital Receipts

Part of Local Government Bill – in the House of Commons at 11:30 pm on 17th September 2003.

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Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government) 11:30 pm, 17th September 2003

As the hon. Gentleman will realise if he thinks about the matter, in the areas where the capital receipts are being generated, empty houses could be a solution to the problem. In areas where capital receipts are being generated because house prices are high, our problem is precisely that there is a total dearth of available and affordable housing to house the very public sector workers whom the Government desperately need if they are ever to deliver on their myriad promises to improve public services.

The Minister argues that local authorities with large housing capital receipts do not need housing reinvestment. He ignores the fact that those receipts are being generated by the sale of council houses, which must then be replaced. He also ignores the fact that the areas with high house prices and high housing demand are, in the present crisis, the very areas in which the need for new investment in affordable housing is at its greatest. I suggest to him that the real housing crisis today is in those areas—precisely the areas that he has tried to paint as leafy and suburban, without real housing need and not deserving of the ability to reinvest capital receipts in their own area for the benefit of local people and local communities.

If the Government's agenda of public service improvement, or even maintenance of basic public services, is to stand a chance of being achieved in those areas, the Minister had better support the reinvestment of those funds in the affordable housing that is so vital for key public sector workers.

The Minister argues that receipts have been diverted from housing. Our principled objection to clause 11(2)(b) is that central Government should not interfere in local authorities' disposal of their capital receipts. Whatever he may say, our noble Friends have sought to achieve a compromise, and have addressed his concern. Even at the price of compromising on the principle that central Government have no right to interfere with these receipts, they have proposed a power for the Secretary of State to direct that they be used for specific purposes, the clear understanding being that the power would be used to ensure that the receipts are spent on housing investment, housing repairs and urban renewal.

The Lords, then, have sought to compromise; but they have insisted on challenging the Government's demand to levy what is effectively a tax on the housing capital receipts of well-managed, prudent local authorities. The Government say that it would initially be 75 per cent., but the Bill does not restrict it to that level: it could be increased to 100 per cent. by secondary legislation.

All that the Government have done by insisting on the original clause is to show that their rhetoric about freedom and flexibility for local government is precisely that—empty rhetoric. They have shown their hostility to prudent management of local authority finances and their indifference to local authorities and local communities that have worked hard to become debt-free, and reconfirmed their hostility to the right-to-buy policy that has given hope and opportunity to millions—a policy that the Government, and the Deputy Prime Minister in particular, have sought to erode, restrict and undermine.

I urge my hon. Friends and Liberal Democrats who value the principle of local authority freedom to vote to retain the Lords amendment, and send the Government a clear message that we will not give in to this assault on prudent, well-managed authorities by an increasingly imprudent and cash-strapped central Government.