Local Government Bill

Part of the debate – in the House of Lords at 7:15 pm on 10th July 2003.

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Photo of Baroness Maddock Baroness Maddock Liberal Democrat 7:15 pm, 10th July 2003

My Lords, the intention of my amendments, which are grouped, is similar, although they are couched differently.

Clause 11 gives the Secretary of State the right to pool capital receipts—75 per cent of receipts from the sale of council houses and 50 per cent from other assets. We debated that in Committee and the noble Lord, Lord Rooker, argued that authorities' receipts from right-to-buy sales were a windfall and that the income does not arise from active asset management but from tenants' decisions to buy their homes. To many of those involved, that does not justify sequestration of all the receipts for redistribution.

Local authorities are under constant pressure to provide new, affordable housing and to make the necessary investment to bring houses up to the decent home standards. The more homes that an authority sells, the greater the need for use of capital receipts. Our amendments are a compromise. They are intended to try to persuade the Government that if local authorities are going to use the receipts for housing purposes, they should not be sequestered by the Government and redistributed.

The noble Lord, Lord Rooker, also argued that redistribution is an essential part of the housing capital finance system. It is a complex system that already incorporates an element of redistribution, but it is rather different: it does not take money from local authorities to redistribute it; it just does not distribute so much money in the first place.

There is concern about the matter. Even if the Minister is not minded to agree to any of our amendments—they may not be perfectly worded—I hope that he will agree to the principle. Even if he does not, those who will be affected want to know how the Government intend to roll forward their proposals. How will the pooled housing capital receipts be redistributed? We understand that those figures will not be available until the autumn. Many people also fear that the Government may take real money away from authorities and that any funds returned will be in the form of approval to borrow rather than actual grant.

The Government have made transitional arrangements. We understand that in the first year 75 per cent of what authorities pay into the capital receipts pool will be returned to them, provided that it is spent on housing; and that that will fall to 50 per cent and 25 per cent in succeeding years.

I am also grateful to the Minister for a copy of the letter that he sent to the right reverend Prelate the Bishop of Guildford, in which he outlines a little more of his thinking. He states:

"It is wrong that a local authority rich in receipts with a relatively low housing need uses those receipts to artificially reduce their council tax while a less fortunate authority with far greater housing need is starved of funds".

I do not think that any of us disagree with that statement, but I remind the Minister that we have built the fewest number of houses since 1924 in this country. It is not houses in the private sector that make up the reduction. We have been building similar numbers of homes in the private sector year on year. However, it is in the public sector that housing has not been built. The right reverend Prelate goes on to say that without pooling receipts for all authorities, the alternatives are either higher taxes, less investment and cuts in other programmes. The programme has been cut for at least the past 20 years.

If the Government are short of money, I would remind the Minister that since this Government came to power, house price increases have meant that their take from stamp duty has been extra billions every year. Therefore, I do not find a shortage of money a compelling argument.

I hope that the Minister will look at this favourably. It seems to me that because of the cutbacks in social housing, every authority is having a problem providing affordable homes, particularly for key workers. They should be allowed to keep that money if they are investing it in affordable housing.