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Lord Hanningfield: Perhaps I may clarify one issue and quote an example used in my authority. It has used capital expenditure to replace a great deal of street lighting. It has a limited term and will therefore have no end. The Government agreed to that. But here we have an example of an item which could be revenue or capital. It is an expensive, physical item, but needs replacing after 30 or 40 years. It is ultimately worthless, but that is down to capital expenditure. The Minister in his comments could have been excluding such expenditure, which has sometimes been considered as capital expenditure.

Lord Rooker: I thought that street lights were a capital asset. I am not a local government expert. In my view, the lights should be changed sooner than 30 or 40 years. I suspect that it is an old-fashioned authority that has such old street lighting. There will be a lot of glare in the sky from it, contrary to policy, causing light pollution particularly in rural areas.

In my view, it would be capital expenditure but the authority is replacing capital stock. It is not a question of selling it off. They are replacing capital stock from a loan and it would be further capital expenditure. It is like replacing the capital goods in one's home when they reach the end of their life. The fridge goes to Mr Meacher's fridge mountain and one buys another fridge. That was not meant in any derogatory fashion—it just popped out! It could be an iron but the fridge just popped out!

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I want to make a general point on Clause 10 because of the stand-part Question. It must not be looked at in isolation. The clauses come as a package—Bills are always like this and we deal with the clauses one at a time. Clauses 9, 10 and 11 hang together. I have explained that Clause 9 defines the capital receipts as the sums received when property is sold. Clause 11 will allow rules to be made about the use of such sums and Clause 10 enables us to make regulations about property sales receipts which are in a non-money form.

When property is sold, the payment received usually takes the form of cash. But of course payment may be made in kind, as I have mentioned. One property might be bartered for another and no cash is used in the exchange. However, the present capital finance system has always recognised the need to deal with non-money receipts. It will be important under the new system in relation to housing receipts. As I shall explain, Clause 11 envisages that certain restrictions will be placed on the use of receipts from the sale of council housing property, but local authorities often dispose of housing land in return for non-money receipts; for example, in exchange for other property.

Major disposals could therefore fall outside the rules to be made under Clause 11, so non-money receipts must be brought within the definition of capital receipts. Clause 10 enables that to be done. Regulations will provide that where sale proceeds consist of property or other benefits, a cash value will be placed on whatever is received. The regulations will say how that cash value is to be determined. The authority will then be treated as obtaining a capital receipt of that amount. That is wholly consistent with the arrangements under the present system. People outside, such as treasurers in local authorities, understand how the system is working.

As under the present rules, an exception will be made where housing property is sold in exchange for housing nomination rights. It is a wholly exceptional case and that is fully understood by those in the system. Land or dwellings may be sold in exchange for nomination rights and it is considered to be quite normal. That exception is granted and will be continued.

I hope that, given the initial statement in answer to some of the points made on Monday, we will put this matter to bed. But if there are any further points, I shall do my best to answer them.

Lord Smith of Leigh: I want to clarify one point. A number of authorities, including my own, have facilitated the acquisition of sporting facilities by putting land into the deal. They may have acquired a share in the new facility or use in kind in the buildings. Is that caught up by the non-money receipts?

Lord Hanningfield: Before the Minister answers, perhaps I may add to that. We are looking to regenerate the centre of Basildon—something dear to the Minister's heart because it is in the Thames gateway. We are putting in land and will have capital receipts for housing and sports facilities. We would not

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therefore want to be caught up in a new regulation which would prevent that investment into the regeneration of Basildon.

Lord Rooker: As far as I am aware, there will not be a change in the rules. In other words, we are not changing that part of the present system for those facilities. If I am wrong, I will be corrected, but I have every reason to believe that I am right.

Baroness Hanham: I see lots of nodding from the advisers behind the Minister and I am grateful to him for putting that on the record. It will be understood that we will want to look at his answer and perhaps return to it.

The Minister said that everyone out there understands all of this. I will take his word for it but I want to give another example. Let us say that contractors, as part of a contract, agree to provide a new civic recycling centre. It is capital expenditure on the new centre and it is run by contractors. At the end of the contract, who owns the capital? Is it a non-money capital receipt by consideration if it goes back to the council or is it considered to be outside those regulations?

The trouble is that as regards many areas the Minister's explanation begins to raise many additional questions, particularly when the services of many councils are provided by contractors. There may be improvements to a swimming pool, for example, and capital input into a swimming centre. That will be run by the contractors and may or may not come back to the council afterwards.

We can go on looking at examples and the Minister will struggle to answer them all today.

Lord Rooker: That is a fair example because it takes us back to what we discussed on Monday. We are talking about a package because there is both capital and a service. It would depend on how the deal was set up. One assumes that if ultimately the property were owned by the council, the price paid originally would reflect that. If it were not ultimately to be owned by the council, the price would reflect that also.

I said on Monday that as regards PFI contracts, one could not separate out the capital and the service and the package would be the total. However, the price of the package would be dependent on its contents. That would be taken into account, subject to whatever deal the council has done on who will own the asset at the end of the life of the contract. That is covered by the answer I gave on Monday about not splitting PFI contracts. They are set up as a package.

Baroness Hanham: I do not want to come back on the Minister's reply. I am grateful to him for having gone to the trouble of putting it on the record and we will take it from there. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Baroness Hanham moved Amendment No. 43:

    Page 5, line 23, at end insert—

"( ) 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.
( ) Regulations under this section in respect of disposals consideration for which consists 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."

The noble Baroness said: The Minister touched on this matter, but as I am not about to be done out of my amendment I shall move it anyway.

The amendment is necessary to test again—it was originally moved in another place by my honourable friend Philip Hammond—the Government's intentions over non-money capital receipts. Following the debate in the Commons, the Minister, Nick Raynsford, wrote to Mr Hammond assuring him that the provisions under Clause 10 would not relate to housing nomination rights. He told my honourable friend that his amendment was not the right way of proceeding and that the matter would be better dealt with under the regulations—more regulations—in Clause 11.

On 7th March, he concluded that the regulations were not ready but that they would provide that when an authority's contribution to pooling was calculated any consideration in respect of housing nominations would be excluded.

The regulations have now been produced and it appears under Section 16(4)(a) that the matter is now covered. However, it would be helpful to have further reassurance on the matter in Hansard. Although the Minister gave a couple of sentences of reassurance in his previous reply, I would ask him specifically to address this amendment so that we can have it clear. The amendment gives the Minister an opportunity to do so.

Clause 10 deals with the disposal of non-money capital receipts. It states that the sales proceeds obtained both in cash and in non-monetary form, such as, presumably, housing nomination rights, be subject to the new highly controversial proposals for pooling.

We will come on to the whole question of pooling. The Minister has told me that housing nomination rights will be outside that, but I should be grateful to have that formally on the record. I beg to move.

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