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Lord Bassam of Brighton: I am grateful to the noble Baroness for raising these issues. In making some of her comments, she is perhaps reading too much into the Government's intentions. I shall take a little time to go through this significant and complex issue.

The removal of rent rebates and rent rebate subsidies from HRAs will create surpluses on the housing revenue accounts of many English and Welsh authorities. Clause 91(1) provides that these will be paid directly to the Secretary of State or the National Assembly, as appropriate.

Amendment No. 182, which requires the Secretary of State and the National Assembly to keep separate ring-fenced accounts of the amounts paid to them, and

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to pay those amounts into local authorities' housing revenue accounts, is not necessary. We think it will add an extra layer of bureaucracy.

The Government agree that it would be wrong for council housing either to subsidise or to be subsided by the general council tax payer. The Minister in another place made a clear commitment that the resources captured through the pooling of HRA surpluses should and will be used for housing purposes.

We have repeatedly made the point—we made it clear in November 1999 through our consultation paper The Handling of Rent Rebates under Resource Accounting; again in the Local Government White Paper in December 2001; and in the Explanatory Notes to the Bill—that our intention is to use the pooled surpluses towards providing HRA subsidy to those "deficit" authorities in England whose assumed expenditure on their housing stock exceeds their assumed rental income.

Section 80(2) of the Local Government and Housing Act 1989 means that those 18 English authorities which at present have a housing element surplus exceeding their rent rebate subsidy entitlement currently have to transfer an equivalent amount to their general fund. By repealing Section 80(2), Clause 91 will ensure that, subject to any transitional arrangements to protect council taxpayers, such authorities will pay the surplus into the pool. Once the transitional arrangements are ended, none of the notional HRA surplus will be paid into the general fund. That will stop the current subsidy of the council tax by council tenants. So it creates a fire wall.

There is no need to provide a separate mechanism for the payments of these amounts to local authorities housing revenue accounts because the surpluses will be paid to authorities as part of their HRA subsidy, which is paid into the housing revenue accounts. As the housing revenue account is ring-fenced, this will prevent such resources simply being absorbed into the general council budget.

The requirement to account separately under Clause 91 for the sums paid by authorities to the Secretary of State or the National Assembly for Wales is an unnecessary bureaucratic burden which would increase administrative effort at no advantage to local housing authorities themselves.

Amendment No. 182 would also require the Secretary of State to pay out to local authorities' housing revenue accounts for a year an amount not less than an estimate made before the start of the financial year. I am sure the noble Baroness will appreciate that the final amounts of HRA surpluses to be collected will not be known with certainty until final audited data are available from authorities after the end of the financial year. The amounts due to those authorities in deficit may also change during the year—for instance, as interest rates change. Tying payments to authorities to estimates made before the beginning of the year would not be a sensible or prudent way to proceed. It could disadvantage authorities and the national taxpayer.

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I hope that, with those assurances and the reassurance that we are committed to using the sums paid to the Secretary of State or the National Assembly for Wales, the noble Baroness will feel able to withdraw her amendment.

[The Sitting was suspended for a Division in the House from 5.8 to 5.22 p.m.]

Baroness Maddock: I thank the Minister for taking time to respond. I still have a query. Under the new regime the Treasury seems to be getting a greater proportion of money to do with what it wants.

Lord Bassam of Brighton: I am not quite sure how the noble Baroness works that out. I have given a very clear explanation as to how the mechanism will work. I need to hear a little more on how the noble Baroness sees it working.

Baroness Maddock: I did my best to explain as we were going along. If the Minister would like to look again at what I said, it may be that he can clarify the point further. However, the provision seems to replace one system with another from which the housing revenue account will not necessarily benefit, but in which the Treasury's element changes. The calculations supplied to me, which use figures supplied by the Government, show that the Treasury will still get something like 660 million, with which it can do what it wants. I understand that it is a problem. I understand what the Government are trying to do and that they do not want anything too bureaucratic. We were assured when this issue was debated in another place that all the figures will be there at the end of the year, and audited, and one could look at them. I hope that the Minister will be able to look again at this matter and to give me some further information, perhaps in a note afterwards. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 91 agreed to.

Clause 92 [Housing Revenue Accounts etc: adaptation of enactments]:

Baroness Hanham moved Amendment No. 183:


    Page 49, leave out lines 19 to 27

The noble Baroness said: I speak to Amendments Nos. 183, 185 and 186. They deal with Clause 92, about which we have considerable concerns. We believe that the new changes to be made in Part 6 of the Local Government and Housing Act 1989 are drawn too widely. Our fears are further consolidated by the report of the Select Committee on Delegated Powers and Regulatory Reform. It commented:


    "Clause 92(1) inserts a new section 87A in Part 6 of the 1989 Act, which enables the Secretary of State/the Assembly to amend, repeal or re-enact any provisions of Part 6 and to make incidental and similar provision (including amendments of Acts). Orders by the Secretary of State are subject to affirmative procedure. There is no limitation or indication in the bill as to the purposes for which the power is to be used. The reason given for the provision in the Explanatory Notes accompanying the bill, paragraph 241, is that it will, 'provide a mechanism whereby . . . changes to the HRA may be made as and when required to reflect new circumstances or to improve the financial arrangements for local authority

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    housing'. The ODPM's memorandum provides little further explanation (paragraphs 110 and 111). The Committee considers that this delegation is too wide and that it would be appropriate only if its extent were limited on the face of the bill to specific provisions in Part 6".

I welcome the slight limitation which government Amendment No. 184 proposes to these powers and I thank the Minister for giving at least some consideration to the comments and recommendations made by the Select Committee. However, will the Minister convince me—and I need convincing—that curtailing these wide-ranging powers to apply specifically to Sections 74 to 76, 78 and Schedule 4 to the 1989 Act is a sufficient amendment? It does not go as far as we believe it should. Again, I fear that wretched word "flexibility" will be thrown back at me in reply. We have mentioned it a couple of times already. But I should like to remind the Government that there may be a time when the Minister in question is not a Labour Minister and that they may come to repent the numerous ministerial powers that are enshrined in the Bill in the name of "flexibility".

Amendment No. 185, in a similar vein, seeks to probe the wide-ranging powers set out in Clause 92(4) in relation to orders made under Section 87A of the 1989 Act. In particular, I would welcome some comments from the Minister on the purpose of paragraph (b). It could encourage inconsistency and a lack of uniformity in the Government's approach to housing finance. On what basis does the Minister intend to make different provision for different cases or authorities, and under what circumstances? Our Amendment No. 186 seeks to limit the latter to "classes of authority" rather than "authorities" in general. We believe that orders made regulating housing finance could, appropriately, differ for different classes of authority.

We do not believe, however, that it is justifiable to have different provisions within individual authorities themselves. As I said previously, we believe in equal financial measures for all so as to ensure a consistent approach and to avoid any discrimination against successful authorities in the interests of those who consistently fail to achieve. There is a delicate balance to be maintained. I look forward to hearing from the Minister that the Government recognise and appreciate the need for a uniform approach to housing finance. I beg to move.

5.30 p.m.

Lord Bassam of Brighton: I shall not read out the first paragraph of my brief because the noble Baroness did so for me. She perfectly described the score, so we shall pass on that, but it is worth raising some points that will address her issues of especial concern.

The 16th report of the Select Committee on Delegated Powers and Regulatory Reform considered that that delegated power was too wide and recommended that its extent should be limited to specific provisions within Part 6. We have carefully considered that recommendation. As we made clear in another place, there are no plans immediately to use

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the new Section 87A powers, but we considered that a broad power was right, with suitable parliamentary safeguards. Had those powers been available four years ago, when the Government first made a commitment to removing rent rebates from the housing revenue account, we could have put the proposal before Parliament straight away, as local government—and, perhaps more importantly, tenants' groups—wanted.

By limiting the power to specific provisions in Part 6 of the 1989 Act, we run the risk of restricting what can be achieved in the future, even if there is general agreement that change is necessary. However, in view of the Select Committee's concerns, we are prepared to accept that the new Section 87A powers introduced by Clause 92 should be limited. The amendment means that they will extend only to Sections 74, 75, 76 and 78 of and Schedule 4 to the 1989 Act. We believe that that is the minimum necessary to accommodate as quickly as possible desirable changes to the housing revenue account in future—subject, as appropriate, to parliamentary approval.

Amendment No. 183 would prevent the Secretary of State or the National Assembly for Wales from making modifications by order. Amendment No. 185 would prevent the appropriate person from including in such an order any consequential, incidental provisions as necessary to other Acts. As I mentioned, the Select Committee on Delegated Powers and Regulatory Reform recommended that the extent of the powers should be limited to specific provisions within Part 6. We propose to do so. The committee did not think it necessary to recommend that their extent be limited to Schedule 4 only.

We believe that it is necessary to retain powers to amend the above mentioned sections of Part 6, in addition to Schedule 4, and that will enable us, for example, to make such provision as may be necessary to give effect to the proposal for new, self-financing, arm's-length management organisations, which was announced in the sustainable communities plan.

It is not yet possible to say for certain what that proposal may require, but it may be that changes to the statutory provisions under which authorities are required to keep a housing revenue account will be needed. It may also be necessary to make different provision for budgeting and accounting by such authorities. It also likely that there will be implications for HRA subsidy, but currently we believe that we can manage with existing and proposed provisions in the Bill—in particular those in Clause 90.

Amendment No. 186 would prevent the Government making modifications by order to Part 6 of the Local Government and Housing Act 1989 for individual authorities. It would restrict different provision for different cases or classes of authority.

The amendment would hamper our power to deal flexibly with authorities in especially difficult situations. I appreciate that Kensington and Chelsea and Essex are not authorities with difficult problems—at least, not of the kind that we here seek the flexibility to handle—but other authorities may well get into

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difficulties and fall into dire and extreme circumstances. In such circumstances, it is right that we have maximum flexibility to consider special provision and enable intervention. It may be necessary to amend, for instance, the items to be credited or debited to the housing revenue account.

Part 4 of Schedule 4 to the Local Government and Housing Act 1989 already provides a power to direct that the provisions of Part 6 be excluded or modified in relation to specific authorities—so the provision already exists—or specific houses or other property within the housing revenue account. That already gives us some of the flexibility we require.

The new powers contained in Clause 92 are broader, allowing, for instance, new items to be specified for credit or debit to the HRA, giving us the maximum possible flexibility when dealing with those few extreme situations. The existing direction-making power is not subject to parliamentary scrutiny, whereas the new order-making power would be subject, in England, to scrutiny by affirmative resolution of each House of Parliament. So we have built in more safeguards.

I hope that that provides the necessary reassurance sought by the noble Baroness, Lady Hanham. She chided me earlier by saying that in the future we might have cause to repent, but presumably she envisages an alternative to a Labour government only in the form of a government from her party. I cannot believe that her party would cause us to repent in those circumstances, or that she would expect it to put us in such a position.


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