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Mr. Edward Davey: With this amendment, the House of Lords has effectively called the Government's bluff. When we debated this matter in detail in Committee, the Minister gave examples—not many, as he did not have
many to give—in which he alleged that debt-free authorities used receipts from the sale of council houses for non-housing purposes. He suggested that some of the money was being used to subsidise council tax levels, and that some was being used for other council projects unconnected with housing. The amendment would give the Government power to ensure that councils used the money for the purposes the Government wanted—for housing, presumably. So the Government's bluff has been called. If they wish to ensure that the money is retained in the housing sector, within the overall housing policy envelope, they now have the means to do so.
Mr. Raynsford: The hon. Gentleman will remember that, essentially, our debate of two nights ago was about a very simple argument: whether fairness, involving redistribution, should in this case be given precedence over receipts simply resting where they happen to fall, through the accidents of history and geography. We challenged him to say whether he was on the side of fairness, and of redistribution in favour of deprived areas such as Liverpool, or whether he would like to allow receipts simply to fall in the area in which they were accrued, because house prices happened to be high. Is he now confirming that he is against fairness and in favour of the accidents of history and geography?
Mr. Davey: I am grateful to the Minister for trying to answer my point, but in fact he answered it with a completely different argument. I shall come to redistribution, but I should point out that he did not seek to deny that point in Committee; he used examples of authorities that did not use receipts for investment in housing. Such examples have been shown not to be relevant by the amendment before us; the argument has been well and truly won.
My speech will be relatively short because what I said two nights ago still stands and has not been affected by events, and because I agree with many of the comments of the hon. Member for Runnymede and Weybridge (Mr. Hammond). That said, it would have been good if the previous Conservative Government had allowed local authorities to keep receipts from council house sales so that they could have invested in affordable housing. However, we do not want to return to the sorry history of the Conservatives' many failures in this area.
One key principle that works against the Government's position is that of prudent financial management and proper fiscal incentives for local authorities to run down their debt. In an earlier exchange, the Minister tried to redefine that principle by limiting it simply to prudent financial management, thereby excluding the incentive to move to debt-free status. At no point during our debates on this key fiscal principle—it is certainly important to us, and, indeed, to the Conservatives—was the Minister able to point to any other aspect of the new regime, or of previous statutes, that would provide such an incentive for local authorities to move to debt-free status. The Chancellor of the Exchequer ought surely to be keen on such an incentive.
Mr. Raynsford: The hon. Gentleman is eliding two different concepts: prudent financial management and
debt-free status. There will be many cases in which it is prudent to borrow to achieve benefits that would not otherwise be achievable for the residents of a given area. Alternatives such as the private finance initiative—his party is not terribly keen on the PFI—might not necessarily be the best way to invest, if a borrowing alternative exists that will achieve the objective. Does he agree that such a situation is possible, and if so, that it might be prudent—I am not saying that it definitely would be—for an authority to take such a decision?
Mr. Davey: The Minister knows that we do not disagree with that overall point, given that we support the capital regime that the Bill puts in place. That does not mean, however, that no incentive should exist elsewhere in the system to move to debt-free status. The two concepts can exist side by side; the point at issue between us is that the Minister is excluding one of them.
On the Minister's point about fairness, I agree with the hon. Member for Runnymede and Weybridge. In terms of redistribution, it is important that areas with low resource bases and real needs get funds from central Government, but that is not what the Minister is trying to do here; rather, he is trying to take money from other local authorities. As we know, local authorities in many areas—rich or poor—are cash-strapped; that is why the council tax has been going up so much. The Minister ought to have some sympathy and compassion for such local authorities. Redistribution is needed, but it should come from central Government.
Sir Nicholas Winterton: The hon. Gentleman is making an extremely good case, but will he also deal with this point? As a debt-free authority, Macclesfield is going to lose out, in that housing maintenance and other projects and budgets will go into deficit. Affordable, low-cost housing is often funded through the money that housing associations receive from the Housing Corporation. In the foreseeable future, Macclesfield will further lose out, in that the money that its housing associations receive through the Housing Corporation for low-cost, affordable housing projects will be dramatically reduced.
Mr. Davey: The hon. Gentleman is on to a good point and helps to explain why some debt-free authorities feel so passionately about the issue. Many of them worked hard to attain their good position because they wanted to meet some of the Government's own targets—on decent homes, for example.
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I know that Three Rivers district council, which I referred to on Monday, worked hard at all aspects of its finances to reach a good position, meet the standards and provide more affordable housing for its key workers. It was a policy target for the council, but the problem is that the Government are changing the rules when councils have worked within them. There is a degree of retrospection, because housing policy has to be considered over a period of years. I am particularly concerned about the retrospection involved in the grab of money from the debt-free authorities.
Another important principle is the balance between centralism and localism. The Bill was sold to us as one that would liberalise local authorities, offering them
freedoms and flexibilities. Yet this week we have already heard that one of the key freedoms and flexibilities for authorities judged excellent and good under the comprehensive performance assessment—namely, no danger of capping—is being removed. We now know that another key financial freedom that existed under the old system is going to be removed. The Government are making it worse than it was under the system that they inherited from the Conservatives.I want to touch on the point about privilege, which the Minister focused on in his remarks. He is interpreting the principle oddly. As I said in my intervention, it is not about tax or overall spending going up or down, but about redistribution. I recall when the Minister was in opposition and the Conservatives were passing the poll tax. I am sure that his party, like mine, worked as hard as it could in the other place to defeat that appalling Conservative measure. If the House of Lords had insisted that the poll tax should fall, I doubt whether he would have been too worried—
Mr. Davey: The Minister says that it did not, but that is not relevant to my point. He would have supported the House of Lords. Will he tell us whether he would not have wanted the other place to defeat the poll tax if it had the opportunity to do so? On those sorts of matters, the issue of privilege is not so significant.
The issue of privilege has moved on. We have seen various reforms to the other place—introduced by the Minister's Government—to give it greater legitimacy, so they say. Under his Government and the previous Conservative Government, the House's role in public finance and scrutiny of the public purse has been reduced to a myth. The House does not control the Executive over finances and the Minister knows it. We do not have proper debates on the estimates. We have only three days a year under Standing Orders to debate them, and when we do, we do not really debate the estimates, but the Select Committee report. On one of those days, I had the temerity to ask a Treasury Minister about the estimates before us, but that Minister had not even been briefed to answer the question. That shows how the House does not really scrutinise expenditure. The idea of praying in aid privilege when the House has virtually given up any role in financial scrutiny does not bear analysis.
I believe that it would be right for the House to agree with the other place tonight. We have won the argument in principle and in practical examples, and it is time that the Government listened.
Mr. Gummer : It may help if I provide an analogy. If the Government were bringing forward a decision to penalise debt-free Ministers and redistribute their money to Ministers who had not been as careful with their finances, would it stand any examination? The problem is simply this. The difference is not about fairness. If the Minister were saying that local authorities' needs should be examined and, where they have resources far beyond those needs, they should be redistributed, the House might be prepared seriously to listen to his argument.
What the Minister is saying is that it is axiomatic that local authorities that are debt free do no have acute housing needs.
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