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6.34 pm
The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford): It is always a pleasure to listen to my hon. Friend the Member for
Welwyn Hatfield (Mr. Evans). I can advise him that there is no need to watch his lips--we can hear him quite emphatically and clearly.
My hon. Friend repeated the key points of an unpleasant story, the facts of which are well known, and so they should be. It is a private and local grief, and a tragedy for the local people--the tenants and the residents who will have to pay if the council has its way--whom my hon. Friend has championed.
We know that it is a difficult situation. The story is well known and has been clearly related by my hon. Friend. In essence, in 1987, the council took certain planning decisions relating to a retail development in its local authority area. Slough Estates plc, the owners of the Howard centre, a nearby shopping development, considered that it had not been treated fairly and challenged the council's decisions.
Recently--for the benefit of my hon. Friend, I should like to repeat that it was very recently--we heard that, last year, the council was offered an out-of-court settlement of £16 million. We were not aware of that at the time. No application for assistance in regard to the offer was received by my Department, so no decision could be made on a request that was not asked.
The case went to court. Slough Estates successfully sued the council and damages were awarded to the company amounting to £49 million. As my hon. Friend pointed out, those damages were exacerbated by certain actions.
In January, the council applied to my Department for a supplementary credit approval, to release £15 million of invested capital receipts. Under the capital finance system, that money can be used only with a credit approval. We have a firm policy of not issuing SCAs outside certain specific, targeted programmes--for instance, for reorganisation costs. Outside those programmes, SCAs can be given only in the most exceptional circumstances.
We considered Welwyn Hatfield's case extremely carefully, but we concluded that there was insufficient justification for issuing an SCA. Consequently, we turned down its application. Such an approval would lead to an increase in the public sector borrowing requirement. In order to meet our objectives for the public finances, that would have to be balanced by increases in Government revenues from taxation.
My Department gets a number of requests for SCAs each year from authorities facing unplanned demands on their budgets. If we gave way in the case of Welwyn Hatfield, we would be expected to do so in other cases. There would be substantial public expenditure consequences if we met even a proportion of the applications.
My hon. Friend has, however, offered an eminently sensible suggestion--large-scale voluntary transfer of the housing stock. It is a well-proven scheme, which works extremely well and is extremely successful and popular. LSVT increases investment and improves the condition of the existing stock in every case. Housing transfers are not rare, although Welwyn Hatfield council might say that they are, nor are they exotic or an emergency measure. They are becoming a normal, common, well-recognised way of meeting requirements in housing for tenants, with tenants' consent. They are accepted by authorities and councils of all political complexions.
Housing transfer is not just a solution for now, but provides long-term benefits for the future. Public expenditure will always be limited. Housing authorities will never be able to spend as much as they might like in repairing and improving their stock. Private finance is not subject to the constraints of public expenditure. LSVT provides a stable financial future for the upkeep of tenants' homes.
Under the new Housing Act 1996, a local housing company can be set up as the new social landlord to own the stock, in which both local authority and tenants can hold substantial stakes.
Since 1988, 53 local authorities have transferred their stock, generating more than £3.7 billion in private finance. To borrow a saying, "Watch my lips: more than £3.7 billion in private finance." Receipts generated from transfers under the 1997 LSVT programme are expected to be around £350 million, involving 17 local authorities.
Last autumn, we introduced measures that included a three-year holiday from the 20 per cent. LSVT levy that is normally charged on transfers. Welwyn Hatfield is debt free. It no longer has to set aside any of the proceeds from future sales of assets. It would, therefore, have available 100 per cent. of the receipts from the transfer, including the extra 20 per cent., if it transferred within the holiday. The council would not need to touch its invested capital receipts and it would continue to receive the interest on those investments and on anything left from the transfer receipts.
We have increased the size limit for transfers to any one landlord from 5,000 to 12,000. Those such as Welwyn Hatfield with a stock below 12,000 would, if they so wished, be able to negotiate a transfer in one single action, thus saving on administrative costs and keeping the tenants together under one landlord. Tenants like LSVTs because of the benefits that they bring: for example, an accelerated programme of catch-up repairs; guaranteed rent levels for up to five years; much better management--in this case, much, much better management; and closer and real tenant involvement in management.
For the obvious reasons cited by my hon. Friend, transfer would be a sensible policy for Welwyn Hatfield. In fact, it would be sensible irrespective of the court case, in the present circumstances, because transfer brings private investment to the stock and generates resources for the council, which it could use for the benefit of its tenants and the local citizenry.
Labour Welwyn Hatfield has got itself into a corner and that is its own fault. The council now has a way out, which has been suggested by my hon. Friend. I congratulate him on championing the cause of his people, his residents, his citizens and his council tax payers. I only hope that, for a change, the councillors take the very broad hint that has been laid before them by their Member of Parliament.
Question put and agreed to.
Adjourned accordingly at twenty minutes to Seven o'clock.
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