House of Commons Hansard Debates for 14 Jun 1989

Mr. Taylor : The debate on these amendments directly follows our previous debate and raises very much the same concern about the poor subsidising the very poor. The Minister has failed to resolve an argument that continues to rage and that severely worries tenants of council houses, namely, the effects of the ring-fencing of accounts. The amendments aim to add to the list of items allowed through the housing revenue account. They would

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alleviate the problems caused by the Government's phasing out of rent subsidies and the ring-fencing of the HRA. The arguments for tackling the problems have already been put by the Opposition and I am well aware that the Minister is not prepared to accept what we believe will be the impact of what he is doing. Nevertheless, the people are worried and generally the people are right.

The amendments would break the ring fence and remove the new poverty trap now being created. In fact, they are aimed at helping the Minister out of the pit that he has dug for himself because both impose a cash limit and both, especially No. 212, would reduce to nothing as council-owned homes are sold or transferred to outside management if the Government's policy is successful. It is not an open-ended sum of money ; it is directly related to housing held by a council and to the costs that may be involved. Although the amendments break the ring fence, they do so in a precise and limited way.

I hope that the Minister will seize this opportunity to save himself from the difficulties in which he will otherwise find himself. It is almost an act of generosity, and I hope that he will accept the amendments.

Mr. Trippier : I was fascinated with the hon. Gentleman's remark that people were generally worried and that people were generally right. I find that odd. Presumably it is part of the twisted propaganda put out by the SLD. I shall seek to correct the hon. Gentleman in as brief a time as possible. He well knows that the whole purpose of not allowing money from the general rate fund in any way to subsidise the housing revenue account is to draw a clearer correlation between the management efficiency of that housing authority and the tenants that it is meant to serve as its customers.

It is illogical for the hon. Gentleman to table such an amendment. He appears to have plucked a figure out of the air. There is no reason or justification for that figure and, indeed, he did not attempt to give one. I can comfort him by saying that there is no necessity for the amendment, and I hope that he will be good enough to convey that to those who, as he put it, are generally worried.

Mr. George Howarth : During the last debate the Minister said that he would give me an opportunity to intervene, but he did not. He now speaks of plucking figures out of the air. By how much does he expect the private rented sector to grow during the next few years? As yet he has singularly failed to give any information on that.

Mr. Trippier : It would be hazardous for any Minister, of any Government, standing at this Dispath Box to be so reckless as to put a figure on that. It is the same sort of answer that the right hon. Member for Blaenau Gwent (Mr. Foot) gave when he was Leader of the Opposition, when he consistently refused to say what he thought the level of unemployment would be in X years. The hon. Gentleman's question was stupid and unworthy of him.

Mr. Howarth : The difference between the current position and that when my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) was Leader of the Opposition is that last year the Government implemented an Act with the major purpose of expanding the private rented sector. The Minister must have a target in mind because it is clearly a central objective of Government policy.

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Mr. Trippier : I do not understand why the Government have to set a target. With the largest public housing stock and the smallest private rented housing stock in the western world, it is clear that the position must be reversed. The balance is out of kilter. Even though this Government are efficient in introducing, developing and pursuing their policies, it is bordering on the ludicrious for the hon. Gentleman to suggest that since the Act took effect on 1 April there must have been such a dramatic incursion into the private rented sector that the results should be shown two months later. Mr. George Howarth rose --

Mr. Trippier : The hon. Gentleman knows that in Committee I was keen to allow him to intervene as many times as he wanted. We have debated these matters in the past and I have no doubt that he will return to them on other amendments. I want to respond to the SLD amendments.

Mr. Howarth : The Minister said that the proportion of private rented sector stock is too small. A few months ago the Government enacted legislation with the specific objective of increasing that proportion. The Minister must have some idea of what he expects that legislation to achieve during the next few years. That is all that I am asking him to tell the House.

Mr. Trippier : Obviously, we can estimate what we want to be developed through the housing association movement--

Mr. Soley : That is the public sector.

Mr. Trippier : I do not want to enter that debate again. The hon. Member for Hammersmith (Mr. Soley) has never accepted that the housing association movement is in the private rented sector. It does not really matter how he defines it ; what matters is the way that we define it because we are subject to parliamentary questions. We regard it as being within the private rented sector, but with Government subsidy. If we link the housing association rented sector with the private landlord, it is difficult to predict precisely what the figure might be--

Mr. Soley rose --

Mr. Trippier : No.

Mr. Soley : I wish to correct the Minister.

Mr. Trippier : I am sorry, but it is not a correction. The hon. Gentleman well knows that there is a difference of opinion between the Opposition and the Government.

Mr. Soley rose --

Mr. Trippier : If the hon. Gentleman would just calm down for a moment, I shall give way to him. There is a difference of opinion between the Government and the Opposition about how to define the housing association movement. In all the statistics that we publish, we make it clear that it is in the private rented sector. The public rented sector covers council houses in the ownership of local authorities.

Mr. Soley : I do not dispute that there is disagreement between us, but when I have tabled questions the Minister has seen fit not to answer them but to ask the Housing Corporation to do so. The Housing Corporation does not

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share the Minister's view on the definition of a housing association. I want that to be clear, not because I disagree about the differences between us but because it should be understood that not all parliamentary questions give the same answer as the Minister. Answers sent indirectly through the Housing Corporation are different.

Mr. Trippier : I respect the spirit in which the hon. Gentleman made his intervention. I have never been, formally or informally, approached by the Housing Corporation about the matter. If it disagrees with our definition of the private rented sector, I accept that that difference should be ironed out. Perhaps as a result of the hon. Gentleman's intervention the Government and the Housing Corporation will discuss it, but I have received no representations from it thus far.

Mr. George Howarth : It is important that we are given the information for which we are asking. For the purposes of argument, I accept the Minister's definition that the housing association movement can be considered as part of the same parcel as the private rented sector. Will he predict, by his definition, by how much he expects its housing stock to increase over the next few years?

Mr. Trippier : In saying by how much I expect it to rise, I must make it clear that it is my opinion. It is hoped that there will be a net increase in the housing association sector of at least 35,000 houses a year. We shall have to wait and see whether that target is attained. I suspect--my hon. Friends can draw comfort from this--that it might be exceeded, which is precisely the reason why I gave that figure. To have given a higher figure would have been rather reckless, would it not?

Under the budget-making provisions of clause 67, which we introduced in Committee, local authorities will not be required to avoid a deficit on their housing revenue account. We may not have made that clear in Committee, because I cannot remember us specifically dealing with that point.

Clause 67 requires authorities to formulate proposals that, so far as they can foresee, will not result in a deficit, and they must keep them under review, taking reasonably practicable steps throughout the year to avoid a deficit. However, if, despite their best endeavours--perhaps because of outside changes--a deficit arises, it is simply carried over to be cleared in the next financial year. Therefore, the flexibility that the hon. Member for Truro (Mr. Taylor) is seeking is built into the system. There is, therefore, no need for a last-minute balancing contribution from the rate fund. The HRA merely starts the following year showing a deficit.

I hope that I have reassured the hon. Member for Truro and that he will withdraw the amendment.

Mr. Matthew Taylor : The point that the Minister made at the end introduces flexibility, not autonomy, which cannot be a policy of a council. If it were, it would have to disguise it.

We debated the same issue on amendment No. 212. There is no advantage in the House having two votes on the same issue, but put in different ways, so I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.

Mr. Soley : I beg to move amendment No. 182, in page 145, line 16, at end insert

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(c) expenditure insofar as the Secretary of State determines that it relates solely to the welfare of the occupiers of houses and other property ; or

(d) expenditure insofar as the Secretary of State determines that it relates solely or primarily to the provision of a service or services for the benefit of persons who are not occupants of houses and property within the account.'.

The amendment is important and draws attention to the Government's ring- fencing proposals. It is not the amendment that I should have liked to be selected, but there are winners and losers and I did not get the precise wording that I should have liked. Again, because of the way in which the Government have handled the Report stage, I fear that the House will be unable to give sufficient attention to the ring-fencing debate.

The amendment aims to clarify the point that expenditure on the welfare functions of housing and services to the private sector, such as advice to private tenants, improvement grants and agency schemes, will not be debited to the housing revenue account.

The amendment raises the principle and practice of ring fencing. Under their ring-fencing proposals, the Government are saying that the ratepayer or, in future, the poll tax payer must not subsidise rents. The only fair aspect of their proposals is that they are saying that the reverse should not apply. The proposals have serious consequences. They will increase rents and reduce subsidies available to council tenants in some areas. As a consequence, council tenants will feel a further squeeze on their finances.

6.15 pm

We are trying to get the Minister to clarify the Government's housing revenue account policy. Will the HRA be limited to matters relating to buildings or will it include services? Should not the poll tax payer, rather than the council tenant, bear the cost of services that are provided for the benefit of the community? Let me take the example of an advice service to private tenants. Many local authorities are arranging for private tenants to be represented in one form or another, to deal with harassment and such matters. If the charge for such services is to be debited to the HRA, problems will arise. It is logical to allow expenditure on such matters from poll tax revenue as they are a general service to the public. One cannot help suspecting that such costs will be debited to the HRA, which will limit services available to people and, at the same time, increase councils' housing costs.

We believe that the ring-fencing proposals are unfair. The taxpayer generously and properly subsidises people who want to buy houses through grants in the form of income tax relief and grants for houses that they buy from the public sector.

The Minister will remember the slip that he made late at night some months ago when we were debating the squalid Rent Officers (Additional Functions) Order 1989, which reduced a person's housing benefit if he was in a house that was considered to be too large. The Minister said that the taxpayer should not subsidise a spare room. I asked him how many spare rooms he had in his house and how much subsidy he received through mortgage tax relief. He replied, "That does not apply because I do not receive housing benefit." That is how the Minister avoids such questions.

I appreciate that Labour Members are asking the Minister embarrassing and difficult questions, but the

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reason why we press them is that we know, when proposals such as those on ring fencing are introduced, that a general attack is being made on council housing in an attempt to push up rents. In areas where rents have been subsidised from the rates--soon to be the poll tax--rents have been kept to a reasonable level. I hope that the Minister will not start talking about some rents being unreasonably low. In Committee, he was unable to define the words "unreasonably low". Tory and Labour-controlled authorities charge relatively low rents compared with other areas.

Most people connected with housing, outside the Government, are trying to find some definition of affordability, which is what matters. The Government have got themselves into a crisis on housing because they have never considered that definition. There is a lack of affordable accommodation for rent or sale. That problem is biting most on people who are trying to rent or buy. Under proposals such as ring fencing, councils are being increasingly constrained, thereby increasing rents and worsening the crisis. That is why we shall press the amendment today, although, sadly, it will not receive the attention that it deserves.

Mr. Allen McKay : I did not realise how important the amendment was until it was explained. I read it and reread it and wondered what it was about. It is about matters such as the housing advice centres set up by local authorities. Housing advice centres exist purely and simply because of the housing crisis in certain areas, which is a crisis in people's lives. The benefit for council tenants of having the right to buy, to which the Minister referred, has gone sour for many people who have found that they cannot afford the houses they have bought. Under the Housing Act 1988, local authorities cannot buy back the properties. The only alternative is to put the property on the open market and then to depend again on the local authority for housing.

Houses are not easily available. Local authorities have decided to set up housing advice centres, where advice is available for the residents of the area and people who want to come into the area. They can obtain advice on where houses are available and the waiting time for houses. It would be wrong for such centres to be included in the housing revenue account.

I remember a recent contribution I made. The authority to which I belong decided, quite a while ago, that it no longer wanted to be responsible to the treasurer and the treasurer's department. I suspect that the Minister has the same inclination in his present job. At the same time, the authority wanted nothing from housing, which rightfully belonged to housing, to go back to the treasurer's department. That is where we come to the previous argument. I have not been convinced by what the Minister said. If the Minister had said that tenants who are now paying rent would not have an increase in their rents, except as a result of increased costs on housing, I would be more than satisfied. However, when we went through that exercise with the treasurer, we had to leave in place matters that, rightfully, belonged to the housing account, such as the various levels of subsidy, but we had to take out such matters as housing advice centres and the cost of grass-cutting in private areas, which at that time were borne by the housing revenue account. If anyone had a grumble, it should have been the council tenants. If the Bill

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seeks to bring such matters into the housing revenue account, it is entirely wrong. The Government should accept the amendment.

Mr. Trippier : The hon. Member for Hammersmith (Mr. Soley) seemed to miss the point continually, as he did in Committee. At present, subsidy from the general rate fund bolsters the housing revenue account. I have no doubt that he is embarrassed by the sizeable sums we see in inner-city areas generally, not just in inner London. The general ratepayer, soon to become the community charge payer, is finding that money. The hon. Gentleman never says anything about that and the weight that falls on the shoulders of ratepayers. With ring-fencing of the housing revenue account, the system will be different. We are talking about new housing subsidy coming, as I have tried to make clear, from the taxpayer. If one strips the cant out of the hon. Gentleman's contribution, he is on to quite a fine point. The examples he gave would be on the margin of the ring fence. The same is true of the interesting examples given by the hon. Member for Barnsley, West and Penistone (Mr. McKay).

The best way to give a simple definition is the way in which I tried to give a definition in Committee. Landlord functions which are provided for local authority tenants--and it might assist the hon. Member for Barnsley, West and Penistone to say that I would not use the example of housing advice centres which are available for a wider audience--would come within the housing revenue account. However, the hon. Member for Hammersmith was on to a good point because it is extremely difficult to say exactly what falls within that definition. He will recall that we took the view in terms of sheltered housing that the warden of sheltered housing provided a welfare function, whereas maintenance--and the only example I could think of at the time was changing light bulbs--would be a landlord function.

We have decided to have negotiations and discussions with local authority associations on all those points and we have also decided that the new regime will begin from 1 April 1990, with the situation as it is. We will run it for a year to see how successful it is. Negotiations with the local authority associations may mean that we are able to change the proposal in another place. I personally doubt it. Opposition Members should welcome the fact that we have decided, because of the complications and the marginal matters on the fringes of the housing revenue account, to deal with the proposal in that way.

Mr. Soley : That is an interesting response. The Department's talks with local authorities have not advanced, but I understand, from what the Minister has said, that he intends to continue with them. He seems to be slightly open-minded on the matter and I welcome that. I am always grateful for small mercies. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 69

Directions to secure proper accounting

Amendment made : No. 278, in page 74, line 33, leave out subsection (2).-- [Mr. Trippier.]

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Clause 70

Housing Revenue Account subsidy

Mr. William O'Brien (Normanton) : I beg to move amendment No. 183, in page 75, line 8, at end insert--

(4) A local housing authority shall be informed of the result of any determination made under this section or section 71 below not later than 31st December of the year prior to the year to which the determination relates.'.

Madam Deputy Speaker : With this, it will be convenient to consider the following amendments : Government amendment No. 44. No. 187 in, page 75, line 31, at end insert--

(5) The Secretary of State shall serve a notice on each local housing authority informing it of the amount of housing revenue account subsidy (if any) payable to it in any year and of the assumptions he has made in calculating the said amount.

(6) A local housing authority may appeal against the amount or assumptions referred to in a notice served under subsection (5) above and the appeal shall be determined by an independent person appointed by agreement between the Secretary of State and the said housing authority.'.

Government amendments No. 47 and No. 48.

Mr. O'Brien : Amendment No. 183 is a probing amendment. When we discussed the issue in Committee, the Minister on 18 April said that he would come back on Report with amendments similar to amendment No. 183. I take that as an opportunity to invite the Minister to accept the amendment or to assure us that provisions will be made in the Bill in line with it. If he will not do so, this is an opportunity for him to explain why the local authorities should not be informed about subsidy entitlement for the subsequent financial year by 31 December in the year preceding the point at which the new financial year starts. I ask the Minister either to accept the amendment or to explain why we are not receiving the report that he promised in Committee on 18 April.

Amendment No. 187 introduces two new provisions. In proposed clause 70(6), we are seeking to introduce some democracy into the present system. We ask that, when the Secretary of State decides on the subsidy payable to a local housing authority, it may appeal against the amount or, if no subsidy is to be paid, an appeal may be made and determined by an independent person appointed by agreement between the Secretary of State and the housing authority in dispute. We hear so much from the Government about wanting to apply democracy in many shapes. We are suggesting that the amendment will help to introduce some democracy into housing subsidies.

Each year the Secretary of State will fix the amount of the housing revenue account subsidy for each local authority at the same time as the local authority will be considering its rent increases and management and maintenance costs. The general rent levels will be determined by the rent subsidy, if any is to be paid, and by the rent increases.

The Bill gives the Secretary of State the power to make different assumptions for different authorities. The Government have suggested that they will use that power to give different levels of subsidies to different authorities. Therefore, different rent assumptions could be made for different councils. Because that is so important, I am asking the Secretary of State to give local authorities the opportunity to obtain information where there is to be a

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reduction in subsidy or where no subsidy is to be paid. Amendment No. 187 would require the Secretary of State to notify an authority of the subsidy determination and of the assumption that he has made in arriving at that determination.

6.30 pm

Under the current system of subsidy fixing, the Government make the same assumption for each authority in relation to, for example, rents. I should like to know whether the Government will stick to that or whether they are going to pick and choose. Will the Government make different assumptions for different councils, or will they apply the same principles across the board? If the former, on what basis will those different assumptions be made?

The Government could make different assumptions for different councils because they think that the rents are too low in certain authorities, because the Bill is leaving the way open for a secret or covert use of that power. That is not in the best interests either of the Government or of the local authorities and it is certainly not in the best interests of the tenants. The Minister has suggested this afternoon that the Government have the tenants' interests at heart. If so, any decision to influence the rent levels that tenants will have to pay should not be secret or arbitrary. The decision should be open and people should be in a position to ask questions about how the Secretary of State has arrived at certain decisions.

Amendment No. 187 seeks to temper the provisions by requiring the Secretary of State to tell the authority concerned why and how he has arrived at his decisions. Will the Minister confirm that that information will be available to local authorities if the Secretary of State uses the powers given by the Bill?

Amendment No. 187 also seeks to give an authority the right of appeal. Does the Minister intend to give individual authorities the right to make representations about the determination of their subsidies?

As I have said, amendment No. 183 is a probing amendment relating to the issue that was raised on 18 April. Amendment No. 187 seeks to obtain assurances from the Minister that, in determining the level of subsidy, housing authorities will have the recourse to request and to obtain information about how the subsidy determination has been made because of the influence of that determination on rents in the local authority's area.

Mr. Trippier : The hon. Member for Normanton (Mr. O'Brien) is absolutely right to say that I gave an undertaking to the Committee that I would return to this issue on Report. I said that we would table an amendment to that effect and was explicit in saying that it would be done by Christmas. If the hon. Gentleman had taken the time and the trouble to read the selection of amendments, he would have seen that we have tabled an amendment to that effect. If he had looked above that, he would have seen that his amendment interprets Christmas as 31 December. In effect, he has given us six days grace. That is incredibly generous and I was tempted to take them, to accept his amendment and to withdraw the Government amendment because probably no one would have noticed. In any case, we have discharged and honoured our responsibilities

Mr. Rooker : So why is the Minister still speaking?

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Mr. Trippier : Because I have to answer amendment No. 187, which the hon. Member for Normanton might just have got right.

The best thing that I can say about amendment No. 187 is that it is a jolly good try and I do not blame the Opposition for having tried. However, it is based on another misconception. I entirely agree that the subsidy formula is a proper matter for consultation, and I gave an undertaking on that several times in Committee, but once the formula has been determined, its application is a matter of arithmetic. The idea behind the amendment appears to be that the proess is like a negotiation, in which an appeals process and the services of an arbitrator may be useful. However, it is not a negotiation at all : it is a simple calculation using the stated formula, and, as such, its outcome is objectively determined. Therefore, I ask my hon. Friends to reject the Opposition amendments and to support those in the name of my right hon. Friend the Secretary of State.

Mr. O'Brien : If the Minister is saying that he has taken care of our points, and to acknowledge that he promised a Christmas box to the local authority associations on that matter, I am prepared to withdraw amendment No. 183 in favour of his proposals and assurances.

On amendment No. 187, the Minister seems to be seeing things that are not there. We do not want to open up a negotiation process about the application of subsidies. However, because of the powers given to the Secretary of State in determining the level of rent subsidies, we are asking that, where there is doubt and concern and where tenants are questioning their local authorities about the level of rent increases, the housing authorities should have the right to question the Secretary of State about how he has arrived at his decision. If there is still doubt after the Secretary of State's replies, the issue should be submitted to an arbitrator who would decide whether the system was being applied fairly. That is the real purpose of amendment No. 187.

While I do not wish to seek to divide the House on that matter, I still believe that the Minister should take this issue seriously, and I ask him to reconsider the matter carefully.

Amendment negatived.

Clause 71

Calculation of Housing Revenue Account subsidy

Amendment made : No. 44, in page 75, line 12, at end insert and for any year the first such determination shall be made before the 25th December immediately preceding that year'.-- [Mr. Trippier.]

Mr. O'Brien : I beg to move, amendment No. 185 in page 75, line 27, at end insert

and--

(d) amounts which relate to expenditure in respect of houses, land and other buildings in the account incurred by local authorities prior to 1st April 1990 which was not charged to the account and which was not prescribed expenditure for the purpose of Part VIII of the local Government Planning and Land Act, 1980, and which has been made known to him by local authorities.'.

Madam Deputy Speaker : I must draw the attention of the House to the fact that with, Mr. Speaker's permission,

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amendment No. 184, which is grouped with amendment No. 185 and 186 on the selection of amendments, is to be debated separately. I want the House to understand that with amendment No. 185 we are now debating only amendment No. 186, in page 75, line 27, at end insert and

(d) the extent to which the authority has and will incur expenditure under Part III of the Housing Act 1985.'.

Mr. O'Brien : Amendment No. 185 relates to expenditure in respect of houses, land and other buildings in the housing revenue account that was incurred by local authorities prior to 1 April 1990, which was not charged to the account, and which was not prescribed expenditure. The operative words in this amendment are "prescribed expenditure" because authorities can currently use the non-prescribed proportion of capital receipts to support certain types of return. That major expenditure is capital repairs. For receipts obtained through selling housing and housing land, the current prescribed proportion is 20 per cent. Both prescribed and non-prescribed receipts can be used for capitalised repairs. The Government do not dispute that the use of both non-prescribed receipts and capitalisation, according to the current regulations, are entirely legal.

In Committee the Minister responsible for housing said : "There is a real problem here, particularly for authorities that have relied on non- prescribed capital expenditure from receipts to provide a legitimate boost to their repairs programme over a number of years."--[ Official Report, Standing Committee G, 18 April 1989 ; c. 927.]

It is accepted, therefore, that the Minister realises that there is a problem with housing repairs.

As the Minister accepts that the new provisions in the Bill will cause problems, why will he not say that he will definitely include past capitalisation, using non-prescribed proportions of receipts within the formula covered by clause 69(1), (2), and (3)? The Minister has said that, in the first year of the new financial regime, rents will not rise by more than they would have done under the old arrangements. However, unless full account is taken of all capitalised repairs, either rents must rise or there will be a dramatic fall in council repairs programmes for council houses. There has been a dramatic fall in the past 10 years because of the reduction in the HIP programme. If tenants, therefore, are facing a further dramatic fall in council repairs programmes, they will suffer much more than at present. Either way tenants will suffer, and it is the Government's insistence on introducing new capital controls and ring-fencing the housing revenue account that is to blame. Can the Minister say which of the options --rent increases or cuts in repairs--he supports?

In Committee the Minister raised a number of issues concerning non- prescribed receipts and capitalised repairs. The Minister accepts that capitalisation using non-prescribed receipts is a legitimate activity. That has occurred on a large scale and, unless it continues, a large proportion of repairs will not be carried out. The point is not so much from where the resources come, but that the work needs to be done. I underline the fact that repairs to council houses need to be done. The very fact that capitalisation is necessary on such a large scale indicates

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that allocations are inadequate. Is the Minister saying that capital allocations will be increased to meet all the capitalised repairs funded from the non-prescribed proportion of receipts? If that is the option chosen, will he assure us that the new definition of capital will cover works that it has been accepted would have been capitalised in the past? In other words, there will be no change in what local authorities have been doing to ensure that the necessary repairs to council houses are undertaken and will continue to be undertaken.

I estimate that as much as two-thirds of the current expenditure, using non -prescribed receipts--more than £400 million in England and at least £150 million in London--is devoted to capitalised repairs. Last year local authorities spent a total of £640 million on non-prescribed receipts. The estimated figure for 1988-89 is higher at £688 million, and the HIP returns suggest that in 1987-88 capitalised repairs totalled £812.2 million, with estimates of £878.1 million for 1988-89. Those are high figures. Much money is being used to meet the repairs demands of local authorities. It is not just Labour-controlled authorities that are spending that kind of money to meet council house repairs. Conservative and Democrat-controlled authorities, too, make substantial use of non-prescribed receipts and capitalised repairs.

6.45 pm

The proportion of non-prescribed receipts devoted to capitalised repairs varies with individual authorities. However, for many authorities, virtually all their non-prescribed expenditure has been directed towards capitalised repairs. In Waltham Forest, for example, in 1987-88 the total of non-prescribed receipts was £2.6 million out of £4.1 million on capitalised repairs. Using non-prescribed expenditure, the current estimated expenditure is £6.9 million. That was approved by the district auditor for subsidy purposes. In Greenwich in 1987-88, non- prescribed receipts were £11 million out of £21 million on capitalised repairs ; and in 1988-89 non-prescribed receipts were £9 million out of £18 million on capitalised repairs. Current year spending is at the same level as the previous year. That indicates that it is essential that the Government should consider allowing capitalised repairs to continue.

The Government are, however, now changing the rules, both for capital receipts and the housing revenue account. By forcing authorities to devote 75 per cent. of receipts remaining at April 1990 and generated after that date to repayment of debt, they have drastically depleted the available resources generated from sales of local authority assets. In other words, the change in procedure will have a tremendous effect on the local authority's ability to carry out council house repairs.

By changing the rules, the Government have placed in jeopardy a large proportion of expenditure on repairs. By some means that must be replaced. As the system is being introduced at the Government's insistence, it is up to them to replace it. The issue is not so much the method by which the repairs were paid for in the past, but meeting the cost in the future, given the serious reduction in the financial flexibility accorded to local authorities. As has already been recorded, it is an urgent matter that should be discussed between the Department of the Environment and the local authority associations.

It is up to the Minister to decide whether capitalised repairs paid for with non-prescribed receipts will or will

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