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Mr. Hammond: My hon. Friend is right. Many prudent local authorities throughout the country that have become debt-free will find themselves in the same position as Macclesfield.
Dr. Brian Iddon (Bolton, South-East): Is the hon. Gentleman saying that in some authorities housing capital receipts should be spent on things other than housing, when his own party during my time in this place has been headlining the need to spend more money on housing, both in the south and south-east and in other regions of the country?
Mr. Hammond: No. What my noble Friends have suggested in the amendment is that the Secretary of State should have a power to direct the use of those receipts, to secure that they are indeed used for housing or urban regeneration purposes. That is the thrust of the amendment, under which the Secretary of State would have the power to direct that up to 100 per cent. of the capital receipt could be used by the authority for a purpose specified by the Secretary of State.
Mr. Gummer: Does not that mean that the difference between the amendment and the Government's position is not a financial difference, but a difference about who makes the decision? Would it not be true that any houses built anywhere are necessary, given the very large deficit? In those circumstances, would it not be better for the Government to allow the local authority to make decisions about its local needs?
Mr. Hammond: That is precisely the point that I seek to make. The Minister's synthetic anger—to use one of his favourite phrases—about matters of privilege is just that: synthetic. That is not the issue tonight.
During Monday's debate and before, the Minister argued that it is somehow unfair and even bizarre to allow debt-free authorities to keep and control their housing capital receipts. It is common sense: if one sells an asset and has no debts, one would expect to be free
to use the proceeds. Equally, if one sells an asset against which one has borrowed, one cannot reasonably expect to be free to dispose of the proceeds as one wishes. People throughout the country would understand that as the normal way of the world—the way things work.The Minister speaks as though debt-free status was a freak of nature. It is not. Many local authorities have worked hard to become debt-free. Many more local authorities aspire to that status, only to find now that the prize is kicked beyond their reach. The Minister says that councils' housing stock is a national asset. Of course we accept that some of it has been built and maintained, in part at least, by Government grants, but those have been grants. The Government cannot change the rules retrospectively. The care and maintenance, the enhancement and improvement, and sometimes the original provision of the housing stock, have also been funded by tenants and council tax payers, especially in local authorities that have been in negative housing subsidy for years.
The stock belongs to local authorities and local communities, not to central Government, and the capital receipts from sale of that stock should belong to the local authorities for the benefit of their local communities. What does the Minister plan to do next? Does he plan to attack the cash balances of authorities that have been prudent in managing their resources and their assets, and have accumulated cash balances? Is that his next step?
Mr. Raynsford: Does the hon. Gentleman believe that there should be any mechanism for redistribution between authorities, or does he think that resources should simply rest with the authority that receives the receipts?
11.30 pm
Mr. Hammond: I suggest to the Minister that in the current housing crisis, every authority receiving capital receipts could use every penny in its area. Let us be clear that authorities are receiving these capital receipts because they are disposing of housing stock. In my opinion and that of my hon. Friends, that implies an immediate need to replace that housing stock. I suggest to him that every authority could use every last penny of the capital receipts that it receives for entirely appropriate purposes in its own area. I also suggest to him that it is appropriate to fund the programmes that the Government have rightly and understandably introduced, and that the Deputy Prime Minister has announced, through general taxation. That is an appropriate way of funding those programmes.
Mr. Raynsford: Does the hon. Gentleman agree, therefore, with this statement:
- "local Government needs to be granted a far greater degree of financial autonomy . . . Of course, there are important limiting factors on how far these additional freedoms can go. There will always be a vital and active role for central Government in providing mechanisms of redistribution that ensure a degree of territorial equity, as well as in enforcing broad financial stability"?
Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Gentleman, but we must not have conversations in the Chamber. If hon. Members want a meeting, they should go elsewhere and not interrupt proceedings here.
Mr. Hammond: The Minister is seeking to grab £120 million—a relatively small sum in the grand scheme of the Government's housing programme—from about 34 authorities that have managed their affairs in such a way that they are debt-free and are situated in areas where capital receipts from housing right to buy are relatively high, which suggests a need to replace units of social housing that have been sold. He is seeking to take those capital receipts and redistribute them to areas that have been less prudent. I argue that, in many cases, such areas will be in less need of affordable housing in the present housing crisis than the areas to which the receipts accrue.
Mr. Raynsford: In the hon. Gentleman's repudiation of the concept of redistribution, why is he clearly rejecting the views set out by his own party in a document called "Total Politics", which was launched on 11 September this year? Are Opposition Members' memories that short?
Mr. Hammond: If the Minister would like a hard copy with a glossy cover, I shall be happy to send him one.
The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope): The hon. Gentleman has not read it.
Mr. Hammond: As it happens, I have read the document.
I have not repudiated arguments for redistribution. What I have told the Government is that they have a large pot of money available for funding housing need. I have told them that the proper way of funding such need is to use the resources that they have available and not try to attack a relatively small sum held by a small number of prudent and well-managed local authorities.
Mr. Pike: Does the hon. Gentleman accept that in a council such as Burnley, which has very low-value properties, we need £115 million to put right the problems that we have in respect of private sector housing, as there are currently 4,500 empty houses? The type of policy that he proposes will provide no solution to such problems.
Mr. Hammond: As the hon. Gentleman will realise if he thinks about the matter, in the areas where the capital receipts are being generated, empty houses could be a solution to the problem. In areas where capital receipts are being generated because house prices are high, our problem is precisely that there is a total dearth of available and affordable housing to house the very public sector workers whom the Government desperately need if they are ever to deliver on their myriad promises to improve public services.
The Minister argues that local authorities with large housing capital receipts do not need housing reinvestment. He ignores the fact that those receipts are being generated by the sale of council houses, which must then be replaced. He also ignores the fact that the areas with high house prices and high housing demand are, in the present crisis, the very areas in which the need for new investment in affordable housing is at its greatest. I suggest to him that the real housing crisis today is in those areas—precisely the areas that he has tried to paint as leafy and suburban, without real housing need and not deserving of the ability to reinvest capital receipts in their own area for the benefit of local people and local communities.
If the Government's agenda of public service improvement, or even maintenance of basic public services, is to stand a chance of being achieved in those areas, the Minister had better support the reinvestment of those funds in the affordable housing that is so vital for key public sector workers.
The Minister argues that receipts have been diverted from housing. Our principled objection to clause 11(2)(b) is that central Government should not interfere in local authorities' disposal of their capital receipts. Whatever he may say, our noble Friends have sought to achieve a compromise, and have addressed his concern. Even at the price of compromising on the principle that central Government have no right to interfere with these receipts, they have proposed a power for the Secretary of State to direct that they be used for specific purposes, the clear understanding being that the power would be used to ensure that the receipts are spent on housing investment, housing repairs and urban renewal.
The Lords, then, have sought to compromise; but they have insisted on challenging the Government's demand to levy what is effectively a tax on the housing capital receipts of well-managed, prudent local authorities. The Government say that it would initially be 75 per cent., but the Bill does not restrict it to that level: it could be increased to 100 per cent. by secondary legislation.
All that the Government have done by insisting on the original clause is to show that their rhetoric about freedom and flexibility for local government is precisely that—empty rhetoric. They have shown their hostility to prudent management of local authority finances and their indifference to local authorities and local communities that have worked hard to become debt-free, and reconfirmed their hostility to the right-to-buy policy that has given hope and opportunity to millions—a policy that the Government, and the Deputy Prime Minister in particular, have sought to erode, restrict and undermine.
I urge my hon. Friends and Liberal Democrats who value the principle of local authority freedom to vote to retain the Lords amendment, and send the Government a clear message that we will not give in to this assault on prudent, well-managed authorities by an increasingly imprudent and cash-strapped central Government.
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