Deputy Prime Minister written question – answered on 30th March 2006.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

To ask the Deputy Prime Minister how the proceeds from the sale of council houses are allocated.

Photo of Yvette Cooper Yvette Cooper Minister of State (Office of the Deputy Prime Minister) (Housing and Planning)

A council is required to pay to the Government (i.e. pool") 75 per cent. of its receipts (less its costs and various allowances) from right to buy sales or any other scheme where the tenant intends to use the property as their principal dwelling. It may keep the remaining 25 per cent. to spend on capital purposes.

Councils that were debt free on 31 March 2004 benefit from a transitional regime following the introduction of pooling from April 2004. In 2004–05 they were allowed to keep 75 per cent. of the amount they would otherwise have been required to pool; in 2005–06 50 per cent. and in 2006–07 25 per cent.

Since 1997 the Government have consistently invested more in housing than it has received in pooled capital receipts. In 2004–05 the amount paid to Government from all housing receipts (not just right to buy) was £1.7 billion. The amount invested in housing was £4.1 billion i.e. almost 2 ½ times the amount. The ratio of amount invested to amount set aside is expected to increase substantially in the future.

Pooled capital receipts collected from debt-free and with-debt authorities are treated differently. Pooled capital receipts from debt-free authorities, that is, local authorities that had no long term outstanding borrowing on 31 March 2004 come to the ODPM, where they are used to support sustainable communities projects such as new social housing and decent homes. Pooled capital receipts from debt-free authorities, that is, local authorities that had long term outstanding borrowing on 31 March 2004 go to the Treasury, where they are recycled as investment, for instance as capital investment in housing as described above.

If the disposal of the council house is not to somebody who intends to use it as their principal dwelling and is not through the right to buy, the local authority may use their capital allowance to extinguish up to 100 per cent. of the capital receipt for use on the provision of affordable housing or regeneration within the local authority. In 2004–2005, £23 8 million of capital receipts were extinguished in this way for retention by local authorities.

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