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Mr. Raynsford: I must disappoint the hon. Gentleman by reassuring him that we are discussing perfectly sensible and practical measures rather than what he has described during an extraordinary flight of fancy that produced an apocalyptic vision. He began by saying that Ministers were taking God-like powers, and he described a perfectly sensible provision for making regulations to fine-tune the treatment of capital receipts as a power to make white black. Now we are hearing about shoot-outs. That is all very interesting and dramatic, but it is rather a long way from reality.
I say to the hon. Gentleman in the nicest possible way that he has been going on for much of our proceedings about the importance of ensuring that
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proper accounting practice is followed. Proper, modern accounting practice says that capital receipts should be treated as received when they fall due. That is the only reason for introducing the provision—to ensure compatibility with modern accounting procedures. I hope that he does not object to that and agrees that the clause should stand part of the Bill.
Mr. Hammond: I accept what the Minister says—that would be the proper way to treat a capital receipt in accounting terms when it fell to be received—but can he give us any comfort by saying that he is prepared to ensure that circumstances do not arise in which an amount payable to the Secretary of State by virtue of clause 11 could fall to be paid over or set off against an amount due from the Secretary of State to the local authority before that authority had received the cash in question?
Mr. Raynsford: We do not think that that will happen in practice, because in large transactions involving land and property the receipt normally comes in immediately. However, we shall take the hon. Gentleman's anxiety into account in framing the pooling regime. It is not our intention that an authority should be penalised by being required to make a payment to the Secretary of State before it is in a position to do so. With that reassurance, I hope that the hon. Gentleman will agree that the clause should stand part of the Bill.
Question put and agreed to.
Clause 9 ordered to stand part of the Bill.
3.30 pm
Clause 10
Non-money receipts
Mr. Hammond: I beg to move amendment No. 38, in
clause 10, page 5, line 2, at end add—
'( )(a) No regulation may be made under this section in respect of a disposal the consideration for which is wholly in the form of housing nomination rights.
(b) Regulations under this section in respect of disposals consideration for which consist partly of money payable to the authority or consideration other than housing nomination rights and partly of housing nomination rights may not apply section 9 in respect of that part of the consideration which consists of housing nomination rights.'.
It is necessary to look at regulation 16 in connection with this. For some reason, the regulations do not run in a chronological sequence through the Bill so regulation 16 is made under the powers given to the Secretary of State in clause 10. The explanatory notes make it clear that the intention of the clause is to provide that where a local authority makes a disposal in kind, it shall be treated as having made a disposal for money, the money being the equivalent value of the consideration in kind. If a disposal is made under value, it will be treated as having been made for money at the full value.
That bites most obviously and immediately where local authorities quite properly dispose of land to a registered social landlord at an undervalue and receive in exchange nomination rights in respect of the housing that will be built on that land. If I
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understand the Bill correctly, such a disposal will give rise to a notional receipt by the authority, which will be subject to the Government's levying regime under clause 11. That seems wholly inappropriate and contrary to Government policy.
Mr. Raynsford indicated assent.
Mr. Hammond: The Minister nods his heads, so that is not what will happen in practice. That is the essence of the concern. It seems sensible to have the reserve power against avoidance by creating non-money receipts to avoid paying the levy. I am an out and out opponent of the levy, but I am also a proponent of the theory that if we are to have law, it must not have any loopholes. Somehow we need to get sales at undervalue of housing land to registered social landlords out of this trap.
Mr. Raynsford: After the apocalyptic visions of the previous debate, I can tell the hon. Member that he has put his finger on an extremely important issue that has given us some pause for thought. I hope that I can explain why we are proceeding in this way and why his amendment is neither necessary nor helpful. We entirely agree that there must a reserve power to cover avoidance; otherwise the system simply would not work. We equally recognise that there is currently an important provision that makes it possible for local authorities to pass land at a value well below its market value to registered social landlords in order to enable development to take place and to get the benefit in the form of nomination rights. We have no wish to cut across such sensible arrangements, which are all part of the proper process of ensuring that assets are used to best effect to provide housing for people in need.
Under the present system, housing nomination rights are exempted by regulations from the set-aside requirement. We have to find a way forward, but the broad exemption proposed by the amendment would not be satisfactory because it could invite attempts at evasion of the pooling rules. The right place for dealing with this is in the regulations where it is possible to target a relaxation more precisely. The regulations do not at present include any provision of this kind. I want to make it clear to the Committee that this is a first draft and that we are looking sympathetically at options involving nomination rights that would continue to encourage good partnerships between local authorities and registered social landlords.
Mr. Hammond: It is not just that regulation 16 does not include such a provision, because the explanatory notes on it use the example of housing nomination rights to show how an authority would have to calculate an equivalent monetary value. The notes say:
''For example, an authority might sell vacant HRA land to the private sector in return for rights to nominate tenants to some of the dwellings to be developed on the site. In such a case, the authority must work out what it would have received if the sale had been for cash and apply the pooling percentage to that amount.''
Until very recently, the Department not only missed the point but specifically intended that housing nomination rights as consideration should be captured. Will the Minister tell us what caused the change and when it occurred?
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Mr. Raynsford: The Department has rightly been working on two principles. First, authorities should be aware of the value of any land that they pass across and should have an idea of how much they are giving as subsidy. Secondly, we have been keen to ensure that the new regime should not be subverted by arrangements always to seek nomination rights rather than a cash receipt or other consideration in order to evade the provisions of the subsequent clause. That is why the regulation is as currently drafted but, as I told the Committee, we are conscious of potential damage to good partnership arrangements between local authorities and registered social landlords in order to provide affordable housing in areas in which it is most needed.
We intend to revisit the matter to provide the comfort that the hon. Gentleman wants to ensure that such partnerships may continue while covering ourselves against the risk of evasion. We are not in a position to identify precisely how we will achieve that, but it is our intention. Given that assurance, I hope that the hon. Gentleman will withdraw the amendment.
Mr. Robert Syms (Poole): I have a worry. I served on North Wiltshire district council and Wiltshire county council for several years. There are times, especially in rural areas, when it is extremely difficult to provide local services. In such circumstances, it is not unusual for parish, district and county councils to put resources together to make such a provision.
The county council owned bits of land that it sometimes put into a deal, although not for a receipt but for the provision of a local service that it deemed to be a good thing for the local community. I would be worried about the value of such land that the Government would presume.
If there are no unitary authorities, it is sensible for tiers of local government to work together, which is sometimes the only way for provision to be made, given authorities' sparse resources. A community centre or a leisure centre could be provided by a town or district council because of the gift or sale of land at a reduced rate by a county council that had county farms or a bit of land at the edge of a school. I hope that the Minister appreciates our worries that the Government's possible intervention might make it more difficult for authorities to be creative when making provision for the people whom all authorities are trying to serve, albeit at various tiers.
Mr. Raynsford: I shall resume a speech that was otherwise rapidly reaching its end. I agree wholeheartedly that it is right to encourage creative relationships among different tiers of government and voluntary organisations for the provision of housing. We do not intend to cut across that. As the hon. Member for Runnymede and Weybridge said, there is a need to balance that against a loophole that would make the capital receipts pooling arrangement non-viable. I am committed to exploring ways of trying to deal with that problem in a way that does not cut across good, sensible partnership arrangements that deliver affordable housing where it is needed through the kind of arrangement that the hon. Member for Poole (Mr. Syms) described.
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