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Mr. Hammond: The Under-Secretary says, "Get on with it," but I want to get on with placing on record our perplexity at the allocation of time as between the first three groups of amendments and the remainder. Why the Government could not have allowed us three, four or even five hours to debate the first three groups is completely beyond Conservative Members.

The amendment carried by the Lords was originally moved in Committee by my hon. Friends and me and was supported by the Liberal Democrats—[Interruption]—and I am grateful for that support. I described clause 11 as one of the most important in the Bill. It is also the clause that gives the lie to the Government's intentions. The Minister likes to describe the Bill as conferring new freedoms and flexibilities on local authorities, but, as drafted, the clause gives the Secretary of State the power to force local authorities to hand over to him some or all of their capital receipts, principally gained through right-to-buy sales. It is a central Government tax on local authority capital receipts: however the Minister chooses to dress it up, that is precisely what it is.

We are not talking about a tax of 10, 20 or 30 per cent. The Minister has already told us about—and the regulations that he has circulated already show—the

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intention to tax the receipts at 75 per cent. As I said in an earlier intervention, there is nothing in the Bill to prevent the Secretary of State from increasing the take-up to 100 per cent.

The Minister calls that "pooling", but the word does not appear anywhere in the Bill. He says that it is redistribution of capital receipts. Of course all taxation is potentially redistributive, depending on how the Secretary of State chooses to exercise his discretion in distributing the proceeds of this tax on local authorities. Undoubtedly it is a redistribution of power away from local authorities to the Secretary of State. No matter how the Minister tries to dress that up, local authorities, the Local Government Association and Opposition politicians of all parties clearly recognise that the measure goes directly against the thrust of the policy that the Government profess to be implementing through the Bill.

Mr. Gardiner: In many respects, the hon. Gentleman may be said to be making a powerful case about how moneys should not be redistributed and about local democracy, but he is suggesting that the policy is being implemented by the Government to change the status quo. It is not. In fact, the previous Conservative Administration introduced the policy and decided that that was the way to pool and redistribute moneys—

Mr. Raynsford: And the 75 per cent.

Mr. Gardiner: As my right hon. Friend rightly says, they also introduced the 75 per cent. figure. Will the hon. Gentleman therefore explain to the House why there is so much outrage about what the Government are supposed to be doing, when what they are actually doing in this instance is maintaining the status quo and when it is the hon. Gentleman who wants to change it?

Mr. Hammond: That is an extraordinary argument. The hon. Gentleman should ask the Local Government Association why there is so much outrage. If we take his point literally, he is suggesting that if we accept the Government's proposals, nothing will change. That is simply not true. Local authorities that have been free to spend their capital receipts because they are debt-free will find that 75 per cent. of those receipts will be sequestered by the Secretary of State. They will also potentially be exposed to a 100 per cent. sequestration of their right-to-buy capital receipts. In particular the 34 debt-free authorities, which have been ably represented by the capital receipts group over the course of this long battle, will feel the impact. Other local authorities do not have access to their capital receipts in the same way, precisely because they are indebted. That is another example of the Government's determined assault on well-managed, prudent councils in order to prop up their favoured authorities, including—I have to say—the odd basket case. It is also a frontal assault on the principle of localism.

The Minister's first, and rather lame, argument, which he has already deployed this afternoon, is that local authority housing stock should somehow be seen as a national rather than a local asset. The Minister says that it was originally built, all those years ago, with central Government subsidy. He is of course right, but

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it was also built with borrowings which, by definition, debt-free authorities have repaid. The stock's value has also been maintained and enhanced by maintenance and improvements carried out at the expense of tenants and council tax payers in many of those local authorities that have been in nil or negative housing subsidy for many years.

Mr. Raynsford: Will the hon. Gentleman confirm that the authorities would have received Government subsidy both for the repayment of the debt, because that was taken into account, and also—in many cases—for the renovation and improvement of the properties?

Mr. Hammond: Some of the authorities may have done so, but many—as the Minister well knows—have been in negative housing subsidy. The value of the housing stock has been enhanced by the care and maintenance of the local authorities and their tenants over the years. It is those tenants and council tax payers who should benefit from a capital receipt by their local authority.

Mr. Edward Davey: I shall address this issue in greater detail when I make my speech, but I am sure the hon. Gentleman would agree that we should not let the Government get away with the notion that all those houses were built and maintained solely by central Government subsidy and the taxpayer. Many of them were built under local authority initiative, decades and sometimes centuries ago, as local communities acted to provide homes for the needy in their areas. The Government are trying to rewrite history, and we should not let them get away with it.

Mr. Hammond: The hon. Gentleman is right, but even if the Minister has a point about the original financing of the housing stocks, it is bizarre to try to rewrite the rules 30 or 40 years later by saying what was given as a grant is now subject to a clawback: it is as if the Government were saying, "Sorry, we forgot to tell you at the time."

Mr. Raynsford: If that is bizarre, can the hon. Gentleman tell me what was the logic of his party when it introduced this arrangement in 1990?

Mr. Hammond: I do not suggest that authorities that have access to their capital receipts should be subject to a retrospective clawback, which is what the Minister's argument appears to be.

My noble Friends targeted their amendment precisely. They sought to remove the Secretary of State's power to levy a tax on capital receipts, but would have left in the Bill the power to direct the use of receipts, either for debt reduction or for capital expenditure. We can effectively demolish the Minister's second line of argument, which he deployed extensively in Committee, that many local authorities have not used their capital receipts to the full for housing or urban regeneration. We have some sympathy with that argument. Of course, to restrict those local authorities in the use of their capital receipts would be a restriction on local freedom, but—in the spirit of compromise—we were prepared to

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meet the Minister halfway on that. We tabled an amendment that would have allowed the Minister to direct that those receipts retained by local authorities should be used for specified purposes—housing investment and urban regeneration—which would have entirely addressed the concern that the Minister outlined. The amendment was also supported by the Liberal Democrats, but the Government rejected it.

It is a fact that it is often the areas with high property values, and thus buoyant right-to-buy capital receipts, that have the greatest need for affordable housing. I make no bones about the fact that I am thinking of constituencies such as mine and that of the hon. Member for Kingston and Surbiton (Mr. Davey) in making that statement; we know that we are not in areas that are likely to be favoured by the Secretary of State's largesse when he redistributes the so-called pooled receipts. We know that as a consequence public services in our constituencies will suffer, as our public authorities are unable to employ the teachers, nurses, social workers and police officers whose employment our constituents have a right to expect so that they, too, can enjoy decent public services notwithstanding the high cost of delivering such services in the south-east. If the Minister thinks about it, he will find that there is a strong correlation between buoyant right-to-buy receipts, which, as he correctly says, indicate high housing demand and high house prices, and real need in the present context for the delivery of affordable housing.

At present, the most pressing housing issue facing both the country and the Government—who will be judged on whether or not they can improve public service delivery—is to provide affordable housing for people who will work at the kind of nationally negotiated salaries that the public services are able to offer. As the hon. Member for Brent, North (Mr. Gardiner) knows, that is a real problem in the south-east and it is worse outside than inside London, because our public sector workers do not have the benefit of London weighting, yet they often face higher living and housing costs than people who live in the outer London boroughs.

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