Local Government Bill

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Mr. Hammond: My hon. Friend the Member for Poole has raised an important point. I was looking at the narrow point about transfers to registered social landlords and thinking specifically about housing. My hon. Friend's point was about the wider issue, which, if we defined it, would be the use by a local authority of an asset that it holds for its own purposes, but which would be injected into some other partnership. If the Minister is to resolve this problem, he must find a way for such a transaction not to be treated as a disposal. Perhaps the answer would be for the local authority to grant long leases at nominal rents and premiums, or something along those lines. That issue must be resolved.

I was concerned to hear the Minister use the word ''evasion'' in what turned out to be the false closing of his speech. He talked about wanting to make sure that whatever method he put in place to ensure that the arrangements whereby local authorities dispose of land in exchange for housing nomination rights, it would not be used as a vehicle for the evasion of capital receipts pooling.

The term ''pooling regime'' is bizarre; there is nothing in the Bill about it. In fact, it is a levy by the Secretary of State on local authorities. There is, however, no reference to pooling anywhere. I wonder whether the Minister's words are carefully chosen and whether he intended to imply that some level of disposals for housing nomination rights would be acceptable. The example that he gave, however, referred to a local authority's always disposing of its assets for nomination rights, rather than for cash, and he described that as evasion. [Interruption.] I think that if he reads the record he will find that he did. That description implies that there will be a quantitative limit on the ability of local authorities to carry out such transactions.

I take what the Minister said as I think it was intended—as a genuine recognition that regulation 16 as it is drafted is not right and that the power under clause 10 must be used differently. It would be appropriate to withdraw the amendment, but will the Minister assure the Committee that before Report he will come back with a revised draft regulation? It would not be satisfactory if we left a bad, sweeping power in clause 10. That would be an example of precisely the thing about which we are concerned—a badly drafted regulation has been recognised in a ministerial assertion, but there is no remedy in sight. We would, in any case, need to have a substantive debate about that issue some months down the line after a new regulation is drafted. I hope that the Minister will be able to reassure the Committee.

Mr. Raynsford: I cannot give the hon. Gentleman an absolute guarantee that we will be able to produce revised regulations in time for Report stage, but that is only because of the considerable number of other pressures under which we are working. I undertake to write to the hon. Gentleman, setting out our thoughts on how we might address this conundrum and I will copy that letter to all Committee members. I hope that the hon. Gentleman will accept that as an indication of our good faith.

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Mr. Hammond: I am grateful to the Minister, but the key thing is that having flagged up our concern, which the Minister has effectively acknowledged is legitimate in the context of the regulation as it is drafted, we need to see how the Government intend to use the power before the parliamentary passage of the Bill has finished. If that cannot be done before Report Stage, it should be done before the Bill is considered in the other place, so that we have the opportunity to debate it during the parliamentary progress of the Bill, rather than during a debate on a statutory instrument.

Mr. Davey: I have been listening closely to the hon. Gentleman's remarks. He has done the Committee a great service by bringing the matters to the Minister's attention. The Minister has responded positively.

With respect to overall housing policy, much of which is contained elsewhere in the Bill, the Government are effectively giving large subsidies to councils that are transferring their stock to registered social landlords. It appears that the Government were going the other way.

Is the hon. Member for Runnymede and Weybridge concerned, as I am, that there may be a lack of consistency in the policy? When the Government draft the regulations, about which he teased out information, they should bear that in mind and ensure that authorities that seek to promote registered social housing in that way are not disadvantaged but, if anything, encouraged.

Mr. Hammond: The hon. Gentleman is right. In fairness to the Minister, he has implicitly recognised that draft regulation 16 cuts across the intention of Government policy. For that reason, he has indicated that he will consider redrafting it. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

3.45 pm

Mr. Hammond: I have a very quick question, which is less important but not entirely redundant as a result of what the Minister said. Would the Minister clarify whether the powers under clause 10 can be used retrospectively—I know that that is an emotive term—to catch disposals and non-monetary receipts for which a local authority had contracted prior to the legislation coming into force? I see that all the members of the Minister's support services have carefully averted their eyes. If he cannot get the answer that he needs at this moment, perhaps he would be kind enough to write to me.

Mr. Raynsford: The hon. Gentleman asks a good question. Let me say right away that it is not our intention that the provision should have retrospective effect, as I shall make clear in the debate on the next clause. On the specific issue as to whether, technically, there might be a problem, I shall seek further advice and write to the hon. Gentleman.

Mr. Syms: I have just one further small point. Sometimes, when a county council decides that it has a surplus school in a village, it is not entirely clear who actually owns it. Many schools were set up by local

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charities that may have predated the county council or were provided by local landowners, so there is often endless debate as to what can be done with an asset or whether it is legitimate for the county council to sell it. I hope that the Minister takes that into account before he drafts the policy.

Mr. Raynsford: I remind the hon. Gentleman that county councils are not housing authorities. It is unlikely that they would have an asset of that nature that could be treated as a housing capital receipt and, therefore, the provisions are not likely to apply.

Question put and agreed to.

Clause 10 ordered to stand part of the Bill.

Clause 11

Use of capital receipts

Mr. Hammond: I beg to move amendment No. 66, in

clause 11, page 5, line 4, at beginning insert

'Subject as provided in subsection (2)'.

The Chairman: With this it will be convenient to discuss the following amendments:

No. 59, in

clause 11, page 5, line 4, leave out from 'State' to end of line 5 and insert

'shall not in any circumstances interfere in the use of capital receipts by local authorities.'.

No. 69, in

clause 11, page 5, line 4, after 'use' insert 'by a local authority'.

No. 70, in

clause 11, page 5, line 5, leave out 'a' and insert 'that'.

No. 60, in

clause 11, page 5, line 6, leave out subsection (2).

No. 61, in

clause 11, page 5, line 6, leave out from beginning to end of line 22.

No. 67, in

clause 11, page 5, line 6, leave out 'in particular'.

No. 51, in

clause 11, page 5, line 7, leave out from beginning to end of line 10.

No. 62, in

clause 11, page 5, line 11, leave out from beginning to end of line 12.

No. 3, in

clause 11, page 5, line 11, leave out from 'requiring' to 'of' and insert

'such amount as the Secretary of State shall specify, being not more than 20 per cent.'.

No. 40, in

clause 11, page 5, line 12, at end insert—

'(c) make provision requiring an amount not exceeding sixty per cent. of a capital receipt to be used only to meet capital expenditure in connection with the local authority's functions under part II of the Housing Act 1985 (provision of housing).'.

No. 63, in

clause 11, page 5, line 12, at end insert—

'(2A) Regulations made under subsection (2)(b) may only include the following in relation to payments to the Secretary of State—

(a) in relation to the disposal of dwellings, the maximum amount that can be specified is 25 per cent. of the capital receipt; and

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(b) in relation to the disposal of any other asset, the maximum amount that can be specified is 15 per cent. of the capital receipt.'.

No. 39, in

clause 11, page 5, line 14, after '2(b)', insert 'and 2(c)'.

No. 25, in

clause 11, page 5, line 15, after 'of', insert 'an interest in'.

No. 41, in

clause 11, page 5, line 20, leave out subsection (5).

Mr. Hammond: This is one of the most important clauses in the Bill. The large number of amendments that have been tabled bear witness to the intensity of interest in it. They have all been grouped together, which is perhaps inevitable if a clause is relatively short and has a focused purpose.

I think of this clause as the expropriation clause. It drives a coach and horses through the Government's claim that the Bill is about giving freedoms to local authorities. The Transport, Local Government and the Regions Committee said clearly that it should be deleted from the Bill. It is another piece of the Government's plan to siphon off resources from good, prudent councils and hand them to Labour-controlled councils, including the odd basket case.

The power in subsection (2)(a) allows the Secretary of State to direct the use of non-housing receipts for purposes of either capital expenditure or debt reduction. Draft regulation 17 is permissive in that it allows either. Would the Minister confirm that the intention is that the Secretary of State should be able to specify by regulations to either subsection (2)(a)(i) or subsection (2)(a)(ii) and that it is merely an expression of his current generosity of mind that the draft regulation allows either debt reduction or capital expenditure?

The power in subsection (2)(b) is the power to sequester housing receipts from local authorities. In the terminology of the guff that the Government put out and Ministers repeat at the Dispatch Box, that is called redistribution. There is nothing in the Bill about redistribution. It mentions an amount equal to a part or a whole of a receipt being payable to the Secretary of State. That is sequestration by any other name. The redistribution will be entirely at the discretion of the Secretary of State at a later stage. The Minister might like to comment on a report that the Minister for Housing and Planning said—outside of Parliament—that of the 34 debt-free authorities that make up the capital receipts group, only one, Barking and Dagenham, is an authority likely to be considered to be in housing need by the Government. There is likely to be a wholesale redistribution away from that group of authorities to another, more favoured, group.

I shall spell out how I understand that the provision will work. The Minister will have the pleasure of correcting me if I am wrong in saying that 75 per cent. of right-to-buy receipts will be sequestered by the Secretary of State. Of other housing receipts, including large-scale voluntary transfer receipts, 75 per cent. will be sequestered after taking into account certain allowances that give local authorities an opportunity to reinvest part of the proceeds in housing and urban

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regeneration before the Secretary of State takes his cut. If that scenario is right, I cannot square it with the comments that the Minister made in the last debate, when he told the hon. Member for Kingston and Surbiton that when we came to this debate we would see that clause 11 would not remove the funding that local authorities might wish to reinvest in housing within their areas. If the source of that funding is right-to-buy receipts, the proposal, together with the draft regulations, would remove 75 per cent. of it from the authority and give it to the Secretary of State to be used in his absolute discretion.

Some of the amendments are alternatives to each other, and some seek to probe the Government's reasoning behind the drafting. Our initial reaction is to oppose the provisions of the clause, especially subsection (2)(b). However, we are realists and, in order to move forward, we think that it is worth exploring what the Government are trying to achieve and what their objections to the present system are, in order to establish whether there is any scope for compromise. Unless the Minister demonstrates a willingness to alter his position, we shall vote against the clause on stand part, because the suggestion that the Secretary of State can take one community's assets and move them elsewhere in the country is wrong in principle. Money raised from the sale of council houses should stay in the community and be spent according to locally determined priorities for housing and urban regeneration.

The Opposition do not accept the argument that borrowing, supported by central Government, has necessarily funded the provision and upkeep of authorities' housing stock. Some authorities have received negative housing subsidy for decades, and all authorities, whether they originally received housing subsidy or not, will have invested substantial amounts of their own tenants' money and, in some cases, council tax or, before that, ratepayers' money in that housing stock. The proceeds of sale of those housing assets should be reinvested locally and should not become part of a national resource, to be directed around the country on the Secretary of State's whim.

 

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Prepared 28 January 2003