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7 Jan 2003 : Column 49—continued

Mrs. Angela Browning (Tiverton and Honiton): Forty-five local authorities already demonstrate excellent prudential management because they are debt-free, yet clause 11(2)(b) seeks to prevent them from being able to manage those assets and to decide their priorities for them. The Minister wants to sequestrate them and spend them on local authorities who have not managed their budget well. Surely that is not about devolving responsibility to local government.

Mr. Raynsford: No, I am afraid that the hon. Lady has got completely the wrong end of the stick. Some authorities happen to be debt-free because of good fortune, not good financial management. Some happen to have inherited assets. For example, a number of new towns have housing stock that they did not have to incur debt to acquire. Others may have been remiss in meeting responsibilities in their area, so they simply have not incurred debt. The suggestion that there is an absolute parallel between efficient management and debt-free status is not accurate. Also, the provision for capital receipts applies to all other local authorities where a proportion of receipts currently has to be set aside. We are ending that provision, and instead there will be a pooling mechanism. If it is right that all other authorities in the country should be part of a pooling mechanism, I can see no logical reason why debt-free authorities should not be part of it too. She does some special pleading, but she will have to do better.

Mr. Tony McWalter (Hemel Hempstead): As a Member for a new town, I think that my right hon. Friend should be aware that concern about clause 11(2)(b) does not come only from Members on one side of the House. The Bill incorporates a system by which a new town is considered to have been given a wonderful windfall, which means that its borough council must pay #10 million a year back to the Treasury from its own resources by 2010. The idea that that is fair falls badly on the ears of my constituents, who live in a town that is 50 years old and whose entire fabric is falling into disarray, as the Select Committee has recognised. My right hon. Friend should be aware that these matters cause anger among Members of all parties.

Mr. Raynsford: I must tell my hon. Friend that to some extent he has misunderstood the arrangements, which will ensure that there is continued increased investment in housing—I know that that is dear to his heart. We have already increased housing capital investment by a factor of two and a half since we came to office. My right hon. Friend the Deputy Prime Minister will make a further announcement when the communities plan is announced later this year.

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On capital receipts, where an authority needs to spend for the reasons that my hon. Friend outlined, those needs will be taken fully into account when we determine the sums to be made available. There is no reason at all why he should be afraid about a loss of spending capacity in an area that genuinely needs to spend on housing and intends to use its capital receipts for that purpose.

There is a different issue concerning authorities that have received substantial capital receipts but not applied them to housing investment. For example, Ashford has received more than double the amount in capital receipts in the past three years that it has spent on housing investment. When there is a genuine need for housing investment, it is curious that authorities with considerable assets but no apparent enthusiasm to spend them to meet housing need can keep their council tax down by using those sums for other purposes. It is therefore right to have a mechanism to make the best use of those receipts to meet the needs that arise.

Mr. Patrick Hall (Bedford): My right hon. Friend mentioned incentives. Does he accept that a debt-free housing authority such as Bedford borough council views the prospect of the withdrawal of the local authority social housing grant as a disincentive to invest in the social housing sector? It earmarked all its capital receipts for housing on the basis that an equivalent sum would be repaid for use in the general capital account. Will he address that possible loss of incentive?

Mr. Raynsford: As I told my hon. Friend the Member for Hemel Hempstead (Mr. McWalter), we have already made it clear that authorities with a genuine need to spend on housing investment can look forward to the new framework with confidence. We intend to take those needs into account when we determine the arrangements that will be announced by my right hon. Friend the Deputy Prime Minister when the communities plan is introduced. However, there is no reason for local authorities to feel nervous about any reduction in housing investment. We are seeking to increase investment and make sure that assets are used for that purpose. As my hon. Friend the Member for Bedford (Mr. Hall) heard me say, we are obviously concerned about authorities that have received substantial receipts but have not used them for necessary investment.

Barbara Follett (Stevenage): I thank my right hon. Friend for assurances that new towns such as Stevenage will not lose much-needed housing money. However, does he realise the effect that delaying the announcement of the amount that they will receive in capital receipts is having both on their ability to plan ahead and his stated aim of devolving power to local authorities? It is taking power away from local authorities, and there is a lot of resentment in Stevenage about that.

Mr. Raynsford: I fully understand the concerns voiced by Stevenage—indeed, I met a delegation from there. However, I put it to my hon. Friend in the nicest possible way that perhaps she could tell her colleagues in Stevenage that, according to our records, it has received #14.4 million more in capital receipts over the past three

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years than it has applied to housing investment. Her colleagues may wish to consider that before making more representations.

Mr. Geoffrey Clifton-Brown (Cotswold): While the Minister is commenting on the redistribution of pooled housing capital receipts, will he also comment on clause 90, which redistributes the surplus from some local authorities' housing revenue accounts to local authorities that have managed their housing revenue accounts badly and are in deficit? How is that amount of redistribution justified in the Bill?

Mr. Raynsford: The hon. Gentleman should remember that the current framework for housing revenue accounts was introduced by his party when it was in government and contained precisely that provision. The only difference was that the housing revenue account framework that his party put into effect included housing benefit in the housing revenue account. That has caused considerable anxiety and resentment among local authorities and we are removing the provision. We are introducing proper resource accounting, an approach that I believe the right hon. Member for Haltemprice and Howden (David Davis), who leads for the Opposition and previously chaired the Public Accounts Committee, strongly recommends. That is the purpose. We are separating benefit from the housing revenue account. I hope that the hon. Gentleman welcomes that.

The new duties imposed in part 2 are no more than any well-managed local authority would do anyway, but by making those duties statutory, we are making it clear that we will accept nothing less than sound budget setting and monitoring and prudent financial management. Although most local authorities manage their affairs scrupulously and well, and many achieve very high standards, as the Audit Commission's work testifies, it remains the case that a small number of badly managed and poorly performing local authorities tarnish the good reputation of local government. It is in everyone's interests that those authorities turn around their performance and strive to match the standard of the best. That is what the comprehensive performance assessment and follow-up process are designed to help achieve, and that is why we make no apology for including the part 2 provisions in the Bill.

Various mechanisms to make grants are provided for in part 3, including a wide-ranging power to give greater flexibility in making grants to local authorities for any purpose. The new power will allow Government to pay grants without imposing undue conditions—another way in which we are working to reduce red tape and bureaucracy.

Mr. Edward Davey: Can the right hon. Gentleman tell the House what parliamentary scrutiny of those grants there will be?

Mr. Raynsford: The hon. Gentleman cannot have it both ways. If he favours local government being able to operate without unreasonable central control, he must support measures that allow greater flexibility in grant-making powers. If he wants detailed central control, he

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will argue for the retention of detailed parliamentary scrutiny of each individual grant, many of which are of very small sums indeed.

This measure will be subject to parliamentary scrutiny, because our departmental accounts will continue to be the subject of full parliamentary scrutiny, and it will ensure—[Interruption.] I am surprised that the hon. Gentleman makes light of that. Parliamentary scrutiny of departmental accounts is an important part of the responsibilities of this place. That is the proper way of doing it, rather than minute point-by-point scrutiny of every single grant, however small, to individual local authorities, which is required under the current legislation. I should have thought that the hon. Gentleman would welcome our approach, which tries to streamline the procedure and cut out unnecessary bureaucracy.

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