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Mr. Hammond: The Minister has said that authorities will continue to have access to 25 per cent. of their right to buy receipts. For clarity—and for those who have not gone through the tortuous Committee process—will the Minister confirm that he is quoting the draft regulation that he has published, but that the Bill allows the Secretary of State to take up to 100 per cent. of receipts?

Mr. Raynsford: We specify amounts by regulation rather than putting them in the Bill; therefore, there is that power. But, on a number of occasions, I have made it clear that our policy intention is not to change the percentage from the 75 per cent. that currently applies to the great majority of authorities in the country. It is an anomaly that a relatively small number of debt-free authorities get preferential treatment and it would be quite wrong for that to be perpetuated. That would be the effect of the amendment, which is why we ask the House to reject the Lords amendment and to restore the Bill's provisions as originally presented and discussed in Committee.

Mr. Hammond: The Minister is talking as if it were counter-intuitive that debt-free authorities should be allowed to keep their capital receipts. To most people, it would be intuitive that somebody in debt should use their capital receipts to offset their debt and that

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somebody not in debt should be free to use their capital receipts as they wished. Surely that is how the great majority of people would see it.

Mr. Raynsford: I disagree profoundly. In my view, it is counter-intuitive to argue that one relatively small group of authorities should be given preferential treatment and should not be required in any way to make use of capital receipts for housing purposes when all other authorities are required to do so. That is the anomaly that we are putting right.

I am glad that the hon. Gentleman raised the question of incentives for prudent financial management; we are keen on them. The new borrowing regime in part 1 will help by enabling authorities to take a broader view of their finances and to borrow without having to get Government approval at any point. They can take regular decisions as to the advantage of borrowing on a particular project or financing it by other means without their decisions being distorted by an arbitrary factor; that is, if they remain debt free, they get a particular benefit. If they are able to organise their finances while looking at the respective merits of financing and new investment, they can take sensible decisions without being precluded from considering the borrowing option.

Matthew Green: If it were the Minister's intention that debt-free authorities with housing stock should spend their money on housing, why did he not make that the law instead of taking 75 per cent. away from an authority such as Bridgnorth in my area, which is debt free and has its housing stock? If Bridgnorth undertook large-scale voluntary transfer, 75 per cent. of receipts would be taken away and spent in other local authorities elsewhere. That cannot be right.

Mr. Raynsford: Once again, the hon. Gentleman is very confused. He and his party believe that it is right to spend money on housing; we wholly agree. It is also right to ensure that allocations should reflect the needs of different areas. If the hon. Gentleman is arguing that the right way is to leave the receipts where they lie, irrespective of need, inevitably that will disadvantage substantial numbers of areas with high needs and low receipts. If he is arguing that, I wish him luck; the people of Liverpool will have an extremely jaundiced view about the Liberal Democrat proposal to take £1.5 million away from that city and from many other areas that would be badly affected by the arrangements that his party has suggested in the Lords.

Mr. Andrew Turner (Isle of Wight): Liverpool, of course, has a declining population in comparison with many areas of the south-east. However, is not the process that the Minister is introducing analogous to saying to someone who has paid off their mortgage that they must now hand some of their money to others to help them pay off their mortgages?

Mr. Raynsford: No, it is analogous to an arrangement in which someone has provided the finance for an asset. All these houses were built with very substantial Government subsidy—in many cases, meeting the full costs—and national Government have a right to have

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an interest on the disposal of that asset. That would be regarded as an absolutely normal principle in any commercial operation, or, indeed, in any public service operation.

Mr. Bercow: Unfortunately, the right hon. Gentleman's position will not do; it is as perverse as his appetite for nationalisation of local decision making seems insatiable. Does he not at least concede that where a local authority has substantial debts and some resources from the sale of council houses, it has a responsibility to use the latter to pay off the former, before benefiting from other councils' legitimately acquired funds?

Mr. Raynsford: No, the right position is that every authority—not just those that the hon. Gentleman gives as examples—should have a framework that provides an incentive to repay debt and to act prudently. That is part of the framework that we are introducing, which will be reinforced by the housing revenue account subsidy system. It will enable authorities to repay debt, but it will also recognise that many authorities still have very high housing needs that must be met. It is quite wrong that areas with high needs and few resources from receipts should be penalised, as the amendment passed in another place would do. This is a matter of social justice and fairness, and of ensuring a decent housing policy that looks after the interests of people throughout the country, rather than favouring just a limited number of areas that happen to have the good fortune of substantial receipts.

I want to put the arrangements for receipts in context. The Government are now providing some £2.5 billion in investment each year, to be allocated on the advice of the regional housing boards. Some £2.5 billion in investment—more than two and a half times the amount that went into housing in 1997–98—will address the needs in all authorities, not just in some.

Finally, we have recognised the level of concern expressed by debt-free authorities about the introduction of pooling. That is why we offered them the reimbursement of a reducing proportion of the estimated £120 million in capital receipts that they would be required to pool for the next three years: 75 per cent. in 2004–05, 50 per cent. in 2005–06, and 25 per cent. in 2006–07.

Mr. Hammond: The Minister said a moment ago that this large sum would be allocated on the advice of the regional housing boards. Will he confirm who advises on the distribution of that sum between the boards? I assume that he was referring to distribution within a region by the boards.

Mr. Raynsford: The hon. Gentleman is absolutely right. We seek a national framework to ensure a fair regional distribution overall, and we will then invite regional housing boards to make recommendations within their regions about actual distribution. The decision on the allocation between regions is ours. The regional housing boards make recommendations on decisions within regions, but they are obviously subject to the agreement of my right hon. Friend the Minister for Housing and Planning.

Mr. Hammond: So that we can see what the flow of funds looks like, can the Minister explain the

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distribution between the eight English regions, by percentage, of those funds, and the distribution by region of the £120 million in capital receipts taken from debt-free authorities? If he does not have the figures in his voluminous folder, perhaps he can get hold of them.

Mr. Raynsford: I will happily provide the hon. Gentleman with answers to both those questions by writing to him. But to ensure that he has a full and fair picture, I should remind him of a third element: what the allocations are following the recommendations of the regional housing boards. That information will complete the picture by showing where the money is going to, as well as where it is coming from.

The arrangement that I have described, which gives generous transitional support to enable debt-free authorities to adjust rationally over time, is the right way forward, rather than the removal of these important provisions. I trust that, as when the House previously debated this issue, it will recognise that it is both fair and right to continue with the framework of redistribution of capital receipts, which should apply to all authorities, rather than just to an arbitrary group that happens not to be debt-free. I ask that the House resist this amendment.

Mr. Hammond : We are now 45 minutes into the allocated time, and hon. Members will have noticed that the long summer recess has not increased the Government's appetite for the proper scrutiny of their business. We have the three most controversial groups of amendments to consider in a time-limited period of two and a half hours, and the remainder of the evening for—

4.30 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope): So get on with it.

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