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Baroness Maddock: There was considerable discussion about this issue in another place. I realise that the regulations had not then been circulated and now that we have seen them the issue has become clearer. However, I hope that the Minister can say briefly how he sees the provision sitting in with overall government housing policy. I want to hear him say that in no way will councils which choose to provide their affordable housing in this way be penalised by anything in the Bill or the regulations. There was concern in another place and it would be helpful to hear a wider explanation.

Lord Rooker: For the avoidance of doubt, I do not believe that pooling is controversial. I put that on the

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record to start with. Pooling happens now and we shall come to a modest technical adjustment of pooling in the Bill.

Baroness Hanham: Perhaps I may say that there is pooling and pooling; and there is controversy and controversy.

Lord Rooker: In answer to the noble Baroness, Lady Maddock, we have no intention of operating the provision to penalise local authorities seeking to provide affordable Housing. Far from it. We want them to do more in that regard. And I accept the need for a further explanation in Hansard because when the Bill was debated in another place the draft regulations were not available.

As I said when we discussed the previous group of amendments, non-money receipts take various forms. In addition to receiving an asset, service or benefit, there is the further option to which I have just referred. It is of particular relevance to housing and it is the disposal of land in return for the right to nominate the occupiers of certain properties; typically to occupy some of the units to be built on the land sold.

Although it does not say so in the regulations and I would not know the answer off the top of my head, I presume that somewhere there must be a formula. When land is being disposed of as an asset for well under market value and there is a reason for that, I know that authorities need to come to government for sanctioning because during the past 12 months such instances have come across my desk and those of other Ministers. Nine times out of 10—or perhaps 10 times out of 10—the reason is because that is the value nominalists have put on, for instance, nomination rights.

We do not want to penalise local authorities for that. We want to take things away from the narrow, old-fashioned Treasury view of looking at a single transaction. One would obviously be receiving less than the value of the objects one was selling, if not the full market value for the land. To any customer, one is saying, "No, we will take less than the so-called market value because we are going to get something in exchange for that". That is, nomination rights. They would not otherwise be available on the open, unregulated market.

Under the present system, housing nomination rights are by regulations exempted from the set-aside requirement. That is 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 so that development of social housing can take place and to reap the benefits in the form of nomination rights. We have no wish to end such sensible arrangements. They encourage good partnerships between local authorities and registered social landlords and are all part of a proper prudent financial process and a proper housing policy process of ensuring that assets are used to best effect to provide housing for people in need.

We accept the intention behind the amendment. We agree that the current exemption should continue under the new pooling arrangements. The right place

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to deal with such an exemption is secondary legislation rather than on the face of the Bill. That gives us greater flexibility and means that we can respond more easily to changes in circumstances, or to changes in local authority and registered social landlord practice.

Members of the Committee will have seen, in the draft regulations made available, that Regulation 16 indicates how we plan to deal with non-money receipts, and the question of housing nomination rights. The regulation is broadly modelled on the existing regulations in the current system. That requires an authority to place a realistic cash value on the benefit that it receives in return for its property. In the case of relevant housing revenue account disposals, the pooling regime would apply to that notional sum, just as though the authority had been paid in cash. For housing nomination rights, the notional capital receipt is nil, thus exempting housing nomination rights from pooling. It is important to put a value on the disposal if the value is not the market value; otherwise, you would get crazy finances. The notional capital receipt later converts to a nil amount so that an authority is not penalised.

Having put that explanation on the record, I hope that it assists the noble Baronesses opposite and local authorities, as it is a vital part of their activity.

4 p.m.

Baroness Hanham: I thank the Minister for that. I apologise for pursuing him to the extent of making him read out the whole of his explanation. It has been an important matter that has received a lot of attention in another place. The Minister's explanation, which is now on the record, will be nothing but helpful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 44 not moved.]

Clause 10 agreed to.

Clause 11 [Use of capital receipts]:

Baroness Hanham moved Amendment No. 45:

    Page 5, line 25, leave out subsection (1).

The noble Baroness said: I shall speak also to Amendment No. 47 and, briefly, on Amendment No. 50. As I said in my previous amendment, the Minister in another place advised my friend Philip Hammond that his amendments on housing nomination rights would be best dealt with under the regulations in Clause 11. Of course, they now have been. We have already discussed the fact that regulations now exist for housing nomination rights and also, more specifically, for the pooling arrangements for capital receipts. Amendment No. 45 will mean that these regulations would fall. As I am sure the Minister is quite aware, the amendment, if it were agreed, would blow the whole clause out of the water. Many would feel that to be a very good thing, since, in effect, the pooling proposals involve a confiscation of money raised by an authority from its disposal of assets.

The present rules require part of housing capital receipts to be set aside to complete debt redemption; that is to say, the payment of money borrowed to build

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the properties initially. It has been an onerous but just-about-understood requirement since capital charges have been paid over the years as with any borrowing. The main drawback has been that where money had to be set aside it was not available to provide for capital improvements to remaining properties. As a result, other means have had to be found—more often completely inadequate ones—to try to ensure that dwellings are in reasonable repair. I should think that any Members of the Committee with any involvement in local government could point the finger at many areas that have not had access to capital resources to ensure that the properties were kept in good repair.

The elimination of debt redemption is being replaced by arrangements whereby the proportion of the receipt is handed over to the Government so that it can be used, not to help the local authority that has received it, but so that it can be "redistributed", as it is described in the Explanatory Notes, to other authorities with a "greater need" for new housing investment. Who is to decide whether there is a greater need but the Secretary of State—perhaps it will be regeneration projects in the South East? Practically every authority in the country is under intense pressure to provide new affordable housing. To take from some to give to others, when there is a need in both cases, seems complete madness.

Capital finance for housing has never been an easy matter. It was not an easy matter under the previous government; nor is it so under this Government. But for some years, it has been a balance of capital receipts and capital grants and borrowing. The proposals to play Robin Hood are unwelcome and should be rethought. In particular, the Government need to reconsider why an authority that is debt-free—like other Peers, I have been briefed on the issue by the capital receipts group—should have to hand over any of its capital receipts. There are around 34 such authorities across the country. They would wish any non-debt receipts to be retained and used for housing purposes. Indeed, they could be ring-fenced.

This is a particular point from a few authorities, but they, as others, have raised the question of the validity of the principle of these provisions. Although transitional arrangements for those 34 authorities were agreed in another place, they still do not address the main principle of the problem. For that reason, we believe that neither the regulations under Section 1 and in draft nor those in subsection (2)(b) should be agreed by the Committee. The Select Committee on the Bill recommended that the clause should be removed. I note that the Local Government Association is also against it. I beg to move.

Baroness Maddock: The Liberal Democrats have tabled an amendment in this group—Amendment No. 52. Let it suffice to say that the Minister and my colleagues and I will continue to disagree on what should be brought before the House for affirmative resolution. I shall speak to the other amendments moved by the noble Baroness, Lady Hanham.

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The amendments, which concern capital receipts, seem to me and many others to be totally against the main freedoms given in the Bill, which many support. It is opposed by the LGA, which has already been cited, and councils across the whole political spectrum, not just one political party.

As the noble Baroness said, a group of authorities are debt-free. They see themselves as having been very prudent councils and they now feel very penalised. It seems strange to people that one should give with one hand and take back with the other. It is those councils that will lose out. Many feel that they will not benefit from the pooling of capital receipts because most are not in deprived areas. Having looked at the matter in more detail, only one council could be described as being in a deprived area and would therefore get the money. Nevertheless, many such authorities are in areas where house values are high, so there is a shortage of affordable housing, particularly for key workers. It is an issue that we have debated considerably in recent months.

The Government have argued that central government have funded the provision and helped local authorities to maintain their housing. Many of the local authorities that feel aggrieved have actually received negative housing subsidies for quite a long time. I think that all authorities, over the years, have invested substantial sums, not only in the provision of new housing, but in improving existing housing, and that that has been paid for by tenants. That was certainly the case during the years in which I was a councillor on a housing committee in Southampton.

In the Statements by the Deputy Prime Minister in July 2002 he specifically said that,

    "tackling housing shortage is a national responsibility and we must all play our part—central and local government alike".

Some of the authorities that will be affected by the clause feel that they have played their part. I hope that the Minister can assure us that nothing in the Bill will prevent local authorities from using capital receipts that they want to reinvest in housing. That issue was raised in another place.

It would be helpful if the Minister could explain how the pooled receipts would be distributed. We have not heard much about that. In that respect, perhaps it would be helpful if the Minister could try to define what the Government believe constitutes housing need and how they believe it will affect distribution, as they have not done that.

With effect from April 2004, we are changing the system of allocating funds for investment in housing at regional level so that it supports the new regional housing strategy. Regional housing boards will do that. It would be interesting if the Minister could explain—perhaps not today—how the system would fit in with this part of the Bill. I will raise further points when I move another related amendment that I have tabled.

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