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Mr. Chope: I am grateful for that example, but it raises concerns. Will the Minister agree to place the papers in relation to that application in the Library so that hon. Members can have a look at them? Will he confirm that the application is for a sum of £1 million or less?
Mr. Raynsford: I shall be happy to write to the hon. Gentleman to set out the full details about that case, but I used it for illustration in response to a request for an indication of circumstances other than dealing with old loan charges where the provision might be appropriate.
The commutation of old loan charge grants is a good example of the need for the clause. The previous Administration meant commutation to be neutral for local authorities, but it led to revenue losses through no fault of the authorities. Consequently, authorities are allowed to capitalise their commutation costs and borrow to meet them. It is unreasonable to impose a short amortisation period in these cases.
The clause is relevant to other cases in which revenue expenditure is capitalised. We would allow authorities to borrow for revenue purposes only in the most exceptional circumstances where it would not be reasonable for them to meet the expenditure out of their existing revenue resources. The seven-year rule means that authorities would almost immediately have to start finding large sums to repay the debt which, in some circumstances, would have unacceptable financial consequences for authorities. We are seeking more flexibility to deal with cases on their merits.
Amendment No. 4 would restrict the benefits of clause 2 to cases involving old loan charge grants. I agree that more flexible amortisation periods are needed in connection with SCAs relating to the commutation of old loan charge grants, but equal flexibility is needed in connection with other SCAs--in particular, those made possible by clause 1.
Another example for the hon. Member for Christchurch is a case where there might be significant revenue expenditure--for example, on preliminary research or consultation necessary for one or more schemes involving expenditure under the capital receipts initiative. I am not suggesting that that will be the case, but there might be circumstances in which there would be a reasonable case for the revenue costs to be capitalised. In such cases, it would be absurd if there were no flexibility to allow that or an amortisation period appropriate to the circumstances of the authority.
We would need to be sure that the authority could not afford to meet the expenditure from its existing revenue resources. Under the present law, we would tell the authority that it must find at least one seventh of the borrowed sum out of its revenue in the following year, and the same amount in each of the six subsequent years. If the authority could not cope with that revenue commitment, it would be denied this assistance.
I hope that I have made clear to the hon. Member for Christchurch that we are not dealing with a major cause of additional local authority expenditure, but with limited circumstances. We are seeking the appropriate flexibility to cope with those circumstances and to respond to the needs
of individual authorities without an unduly rigid framework. I hope that the hon. Gentleman will agree, in the circumstances, to withdraw his amendment.
Mr. Chope:
I am grateful to the Minister for his response, although I am disappointed that he did not make such a response in Committee, where he seemed remarkably coy about giving any example other than the generality of loan charge grants. We now have it on record that there is a Labour-controlled local authority that is seeking to capitalise its revenue expenditure and to pay back that capital over a period in excess of seven years. How does that fit with the Chancellor's so-called "golden rule" on public borrowing? It does not fit in with it at all.
We are anxious about the powers that the Government are giving themselves, and we shall seek to monitor vigorously the way in which the Government exercise these powers. But certainly we will not press the amendment to a vote, and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Order for Third Reading read.
Ms Armstrong:
I beg to move, That the Bill be now read the Third time.
We have had a relatively short but interesting set of debates leading to Third Reading. The Bill lays the foundation for the Labour Government to deliver on our manifesto pledge to increase the opportunity for housing need to be met through a capital receipts initiative. That is the first vital step towards the Government's objective of ending years of under-investment in housing. The Bill has been well received by local government and the housing world, which has struggled to come through those years of under-investment. Many people have suffered because their house has not been improved; others have not been able to get a house because there is insufficient housing in their area.
The Government are living up to our undertaking in Committee that the Bill's Report stage would be taken after the Budget. One of our debates this afternoon arose out of the Budget and our spending commitments for this year and the next. We are having a comprehensive spending review and examining how housing need can be addressed in the future. The Chancellor announced that significant additional capital resources are being made available to meet pressing housing need across the UK and, as part of the Government's capital receipts initiative, an additional £174 million has been provided in England this year, with a further £610 million available in 1998-99. I am sorry that the hon. Member for Christchurch (Mr. Chope) did not get a fuller response. I shall write to him to ensure that he knows the amounts allocated to each of the four nations of the UK.
Mr. Chope:
Were the allocations announced through a press notice? In what way where the allocations communicated to those concerned in Northern Ireland, Wales, Scotland and England?
Ms Armstrong:
I shall write to the hon. Gentleman about this matter. I announced the English figures at a conference last week. I am responsible for those and
Mr. Bernard Jenkin:
That makes it all the more extraordinary that the Chief Secretary to the Treasury was not able to give my hon. Friend the Member for Christchurch (Mr. Chope) a proper answer today.
Ms Armstrong:
I have dealt with that matter and I have tried to be open and honest with Opposition Members. I have said that I shall write to the hon. Member for Christchurch. The Opposition's behaviour is extraordinary. They too have been in government and I can remember many occasions when they were less than perfect. Obviously they are learning how to be in opposition and it is going to be a long learning curve.
The Government face a legacy of massive under-investment in housing throughout the United Kingdom. The capital receipts initiative should concentrate on England and Wales. When Opposition Members find out the amounts for Northern Ireland and Scotland, they will realise that although the receipts concentrate on England and Wales we know that there is real housing need in Northern Ireland and Scotland and so have extended the initiative to them. We will make announcements about the application of those resources in due course.
The Government's proposals for England were set out in the consultation paper. The Welsh paper was issued recently and I am pleased that Opposition Members have read it. The initiatives have been warmly welcomed on both sides of the House and, in particular, by local authorities.
The House will be pleased to note that, in Committee, Opposition Members were largely able to endorse and support the broad thrust of the initiative. I think that that has been true of our debates today. There have been some mischievous responses to some of our points, but I feel none the less that there was overall recognition that the level of housing need demands a response. It seems fair to us that some of the money made from the sale of council housing should go back into housing so that we invest in social housing in areas where houses have been sold and so that the nature and condition of the housing enables people to make it into a real home.
Discussions with the Local Government Association will continue so that we can ensure that the initiative continues to benefit from a genuine partnership between central and local government. We look forward to receiving views from the LGA, local authorities and other interested parties when they have had time to read the consultation paper and consider how they would best be able to implement the intent of the Bill in their areas.
The resources that will be released will enable local authorities to work in partnership with all housing providers, tenants, residents and the private sector to begin to tackle that legacy of neglect, decline and decay that is all too often the prospect in too many areas.
6.26 pm
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