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Matthew Green (Ludlow): The Minister should be careful about what he says. We cannot take away something that is not there. Language needs to be used more carefully. Is he saying that Brent is an area of low house prices, which is why it is where it is? His argument was that places in London and the south-east would be the beneficiaries of the Opposition's amendment. Is he suggesting that house prices in Brent are very low?

Mr. Raynsford: I am afraid that the hon. Gentleman does not understand the issue. There is a relationship between house prices and house values, and that is one of the important elements, but there is also housing need. Brent is an area of enormous housing need. The scale of the capital receipts that the borough receives is not proportionate to the scale of housing need in that area. Brent is one of the boroughs that will gain substantially from our proposal for a proper redistributive system that applies universally.

It should be remembered that the redistribution mechanism already applies. It applies to all authorities except those that are debt-free. The Liberal Democrats are essentially saying that they want to help very affluent, mainly Tory authorities in the south-east at the expense of areas such as Brent and a number of others. That is an extraordinary comment on a party that tries to claim that it has some pretensions to a concern for social justice.

Mr. Hammond: The Minister will recall that in Committee we offered an opportunity to ensure that right-to-buy receipts were recycled into housing in the local authorities involved, and he rejected that opportunity.

Does the Minister at least accept that at a time when one of the most pressing housing issues facing the Government and authorities in the south-east is affordable housing for key public-sector workers, there is a close correlation between high house prices and the need for such housing?

Mr. Raynsford: Indeed. That is exactly why we have increased investment by two and a half times the amount we inherited, and why we have been concentrating on the provision of new housing in areas of stress—particularly in areas where that can be achieved with good use of brownfield sites, such as the Thames gateway—while also investing in improving

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housing stock in areas of less demand, where serious problems are caused by property in poor condition and the fact that people are living in unsatisfactory houses. We have a responsibility to do both those things.

We are certainly keen to expand the housing supply in areas of need, and that is part of the programme. Our objective, however, is to be fair in the allocation, not arbitrary. The problem with the hon. Gentleman's position and that of his party is that the allocation system that the Conservatives supported—although they did not support it in 1990—would arbitrarily give huge buckshee benefits to certain areas simply because they happened to be receipt-rich and with relatively low needs, while denying other areas that were receipt-poor or whose needs were too high to be met from the receipts that they had.

Mr. Hammond: Is the Minister suggesting that, having sequestered my local authority's right-to-buy receipts, he expects nurses, policeman and school teachers who are needed in Surrey to commute daily from the Thames gateway around the M25? Is that his grand strategy for the future of the south-east?

Mr. Raynsford: No, it is not. As the hon. Gentleman will recall, I used the Thames gateway as an example to highlight the importance of using brownfield sites; but of course we are looking at brownfield sites elsewhere. What I am sure the hon. Gentleman does not want is indiscriminate building on greenfield sites in his area. That would be an entirely undesirable policy—a policy that was, as it happens, supported by the hon. Gentleman's party when it was in government: it let rip with development by private developers throughout the south-east, and particularly in the Thames valley.

Dr. Phyllis Starkey (Milton Keynes, South-West): Will my right hon. Friend confirm that one of the areas that would be disadvantaged by this measure is Milton Keynes? Will he join me in urging Milton Keynes council, which is of course controlled by the Liberal Democrats, to devote some of its efforts to educating Liberal Democrat Front Benchers here, to ensure that the party is not saying one thing in Milton Keynes and another in Westminster?

Mr. Raynsford: My hon. Friend is absolutely right. Milton Keynes is another of the areas that stand to lose if the amendment supported by the Liberal Democrats is passed. Of course, it is not the only one; a number of other areas stand to lose. Liverpool stands to lose substantially, as do Sutton and Basildon.

I can understand the Tories' supporting the amendment, as it will generally favour their affluent south-east strongholds, but I fail to understand why the Liberal Democrats want to harm so many areas that they control. It is either the result of a sudden burst of masochism, or an example of their being highly confused and not quite knowing what they are doing. Because they are saying one thing to one group of people and something else to another group, they forget the plot and vote for something that will have catastrophic consequences for many Liberal Democrat authorities—including Milton Keynes.

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4.15 pm

Mr. Bercow: It is always a particular pleasure to joust with the Minister but the endless tergiversations and chameleon-like behaviour of the Liberal Democrats could readily absorb all the time available for debate today, and it does not seem very profitable for us to allow that to happen. The question that I would like answered is the question that I did ask, not that which I did not. Can the right hon. Gentleman simply tell me on a non-partisan basis what assessment he has made of the effect of the change made in the previous Parliament on policy towards the use of capital receipts from the sale of council houses on the level of interest repayments on local authority debt?

Mr. Raynsford: I cannot because the hon. Gentleman is asking some rather odd questions. There was no change of policy in the previous Parliament on the application of right-to-buy receipts. We have constantly said that it is right that right- to-buy receipts should be made available for and used for housing need to the extent that we operate a redistributive system, a system that, as I have said, we inherited from the previous Government. That system has remained in place since 1990. It is now being changed because of this Bill, but there has been no other change in policy.

There may have been changes in policy on some of the detailed points about the level of discount that will apply. Of course, there have been significant changes in interest rates because of the Government's prudent management of the economy, which results in a substantially better position in terms of all those people paying interest. That is to everyone's advantage. All those matters can be taken into account by economists, who will no doubt come up with a sophisticated answer to the hon. Gentleman's question, but there is no policy change along the lines that he has proposed.

Mr. Hammond: Before we move on, can the Minister confirm who he thinks controls Basildon council?

Mr. Raynsford: I was referring to a number of authorities. There are many areas that are affected, including some Tory-controlled areas. Of course, the Tories are being a bit foolish in favouring the interests of their south-east heartlands at the expense of some of their other councils, which happen to have rather greater housing needs. No doubt the voice of Essex will be heard in due course, telling us that we should be fairer to Essex and insisting on the redistribution of capital receipts to favour Basildon. That is certainly a policy I would be happy—

Several hon. Members rose—

Mr. Raynsford: I must make progress.

The amendment would remove the proposed replacement for set-aside and end redistribution. We would, therefore, no longer be able to recycle housing capital receipts fairly. The alternative to a redistribution system is higher taxes, less investment or cuts in other programmes. Affordable housing for key workers, decent homes, market renewal in low-demand areas would all be put at risk. Without redistribution, the majority of local authorities—those with debt, with

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lower capital receipts and with greater housing investment need—will lose out. That would be irresponsible and indefensible.

Without pooling, we would probably have to continue to operate a mechanism based on the principles underlying the current system. That could be only a partial solution and would lack the transparency and simplicity of pooling. Debt-free housing authorities rich in right-to-buy receipts would retain the benefit of their housing capital receipts regardless of housing need and be able to use receipts for whatever purpose they saw fit. I mentioned earlier the interesting example of Mole Valley being a classic illustration of that.

Agreeing to the Lords amendment would perpetuate the anomaly inherent in the current system and disadvantage most of the nearly 260 local authorities with housing stock. I have quoted a number of the authorities that are affected. Let me repeat that there are currently around 40 debt-free authorities with housing stock in England. Under our proposals, pooling will apply to a proportion of their housing capital receipts, not all of it, and it will not apply to other capital receipts.

That does not mean that those authorities will have no resources to use. On the contrary, they will have access to all their other receipts and indeed to 25 per cent. of their housing capital receipts, and they will have the additional allocations that come through the new framework for distributing funding. Those depend on decisions by the regional housing boards, which will make recommendations to Ministers in a month or so, so I am not able to anticipate the precise allocations at this stage, but additional sums will be allocated in relation to need and some of those debt-free authorities will certainly be likely to qualify to some extent under those rules.

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