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Today's announcement and the self-financing reform means we can go much further. My plans set the self-financing settlement with a 7 per cent. discount rate at a level which will give councils, after they have met the spending needs to manage and maintain their existing homes, the capacity to fund 10,000 new council homes each year from 2014-15-a five-fold increase in the council house building programme in the current
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year; this would generate over 20,000 jobs and over 1,000 apprenticeships. Councils will be able to build new homes without increasing local authority borrowing once the self-financing settlement is in place.

I am looking to establish as part of this consultation whether local authorities have the will to use this funding capacity to build new homes to help meet local housing needs. The response of local government to this challenge in the consultation will help us determine whether our lead option of a 7 per cent. discount rate is appropriate for the final terms of the self-financing settlement.

The Government are totally committed to completing the Decent Homes programme and recognise that £3.2 billion of works are still needed to meet their Decent Homes commitment. Meeting this investment need will therefore be a central element of their decisions on investment priorities at the next spending review.

Self-financing will fundamentally change the relationship between central Government and local authority landlords. It both strengthens local accountability and creates a more strategic relationship between local authorities and central Government. Today's consultation makes proposals for improving the accounting and financial framework within which self-financing will operate. This will provide assurances that, there will be sufficient safeguards for tenants and local and national taxpayers, under a devolved financing system.

The settlement will provide councils with the resources they need for effective management of their housing without recourse to further borrowing. Because of this, we will set a cap on the borrowing each local authority can service from the HRA, based on the opening debt. The prospectus sets out details for the calculation of this cap. It is a fiscally prudent deal which protects the interests of tenants and taxpayers.

This is a once and for all settlement. Any major future policy changes would need also to take into account the financial consequences as an additional consideration and funding transaction. If this plan and the terms set out in the prospectus are broadly accepted by local authorities, this devolved system of financing and accountability could be in place by 2011-12 through a voluntary agreement between Government and councils. If not, legislation will be required, delaying implementation by at least a year.

I hope local authorities will seize this opportunity for radical reform of the HRA subsidy system which they have long criticized, and this opportunity to build new council homes for their local communities.

In order to assist councils in examining the potential of this self-financing deal for their housing services and tenants, CLG officials will be available to meet and explain the proposals during the consultation period.

I urge all local authorities to examine carefully the plans I am publishing today, and to respond fully to our consultation. The consultation will run until 6 July.

Council Tax

The Parliamentary Under-Secretary of State for Communities and Local Government (Barbara Follett): This statement concerns council tax and the action the Government propose to take in relation to authorities that have set excessive budget requirements for 2010-11.

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Yesterday my Department released figures showing that the average band D council tax increase in England next year will be 1.8 per cent.-the lowest ever average increase. This is welcome news for council tax payers and has been made possible by concerted action by both Government and local authorities.

The Government have ensured that all authorities overall have benefited from good grant increases during the current three-year settlement period, with above inflation grant increases in all of the years of the current three year settlement-including an increase of 4 per cent. overall in 2010-11. This, combined with rigorous enforcement of the "new burdens doctrine" and action to cap excessive council tax increases in previous years, has helped ensure that 2010-11 will see the lowest average increase in council tax since its introduction in 1993-94.

Local government has also played its part. It is clear from the figures that most authorities have behaved responsibly and taken into account the effect of their 2010-11 increases on council tax payers. A number of authorities have frozen or reduced their council tax. In many cases, they will have made tough choices about local priorities and delivered efficiency savings to do this. I commend these authorities for working hard to keep demands on council tax payers to a minimum.

Nevertheless, it is important to ensure that council tax payers are protected from excessive increases. All authorities are aware that the Government are prepared to use its capping powers to achieve this. In my statement to the House on the provisional local government finance settlement made on 26 November 2009, I made clear we would take action against excessive rises where necessary. I restated this in a letter to all local authority leaders dated 9 December 2009.

Where council tax payers are faced with excessive increases it is right that we should once again take action to protect them. I am therefore setting out for the House the action that we are proposing.

Our capping principles are that an authority's 2010-11 budget requirement is excessive if:

An authority must exceed both the budget requirement principle and the council tax principle to be subject to capping action.

Two authorities-the police authorities of Greater Manchester and Nottinghamshire-have exceeded these principles.

The action the Government have decided to take against these authorities is to cap both in advance for 2011-12. The Government are minded to propose a maximum budget requirement ("a cap") for 2011-12 for each authority at a level which is equivalent to a council tax increase of around 4.5 per cent. for each of the financial years 2010-11 and 2011-12.

The statutory process involved is that at this stage the Secretary of State "nominates" the authorities under section 52D of the Local Government Finance Act 1992 ("the Act") and decides whether to "designate"
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them in advance for 2011-12 under section 52L of the Act. In due course, the Secretary of State will designate the authorities under section 52M of the Act and propose a cap for each authority for 2011-12.

This action means that the authorities will not need to undertake rebilling in 2010-11, but council tax payers in those areas can be reassured that action is being taken to restrict these authorities' council tax increases in 2011-12.

My officials are writing to both authorities today to inform them of their nomination and of the Secretary of State's decision to designate them in advance for 2011-12. However, the authorities will not be designated and informed of their proposed caps for 2011-12 until later in the year. This will be at around the same time as the provisional local government finance settlement for 2011-12 is announced. At that point, the authorities will have 21 days in which to challenge their proposed 2011-12 caps and raise any specific issues which they feel justify a different capping level. Any challenge will be carefully considered before a final decision is taken on the capping level for 2011-12.

If an authority accepts its proposed cap for 2011-12 without challenge, a notice can be issued to the authority confirming its cap. Otherwise, a draft order will be laid for the approval of the House before any 2011-12 cap can take effect.


The Minister for Housing (John Healey): The pre-Budget report 2009: "Securing the Recovery: Growth and Opportunity" stated that:

We have now completed this review and I am today publishing a report of the review and have placed copies in the Library of the House.

All parts of the process were examined to identify where there may be scope to work more efficiently, or to streamline the process. The review makes a number of recommendations and these are summarised below.

Better information:

More effective working:

Better selection:

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We will also explore the scope for improved use of electronic working at the inquiry stage, and for the Government Offices to work with local planning authorities at an earlier stage to help avoid call-ins. We will also consider how to make the most effective use of inquiry time-for example by providing more flexibility in the way evidence is examined.

Many of the recommendations in the review can be accepted and acted on immediately, with further work to begin on exploring the longer-term recommendations. Overall the review concluded that up to £2 million a year for applicants might be saved by calling in fewer cases, inquiries could be shorter in 40 per cent. of cases (with possible savings of up to £900,000 per year for all parties involved in the inquiry process), and there are further potential time and cost savings identified that might be secured in the future.

A further parliamentary statement will be issued in due course clarifying government policy on call-in, and updating the Caborn statement of 1999.

Queen Elizabeth II Conference Centre (2010-11 Targets)

The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Shahid Malik): I am today announcing key performance targets have been agreed for the Queen Elizabeth II Conference Centre for the period 1 April 2010 to 31 March 2011.

The agency's principal financial target for 2010-11 is to achieve a minimum dividend payment to the Department for Communities and Local Government equal to the total of 6 per cent. average capital employed and a sum equal to the capital charge that applies to the building for the year concerned. Therefore, the agency's budget for 2010-11 includes a minimum dividend payment of £1,000,000. The agency is a revenue producing business and will also pay to the Department an additional £200,000 (20 per cent.) as its contribution to the Government's operational efficiency programme.

The agency also has the following targets to achieve:


Armed Forces Equipment

The Secretary of State for Defence (Mr. Bob Ainsworth): Further to my statement to the House on Monday 22 March, I am pleased to announce the next steps on three projects that will deliver vital equipment and support to the Royal Navy in the coming years and maintain a sovereign maritime industrial sector configured to meet our defence needs efficiently.

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We have decided to proceed with the assessment phase for the type 26 Combat Ship, the Royal Navy's next generation surface warship; to sign a terms of business agreement (TOBA) with Babcock Marine covering surface and submarine support activities; and to commit to the initial build and long lead procurement activities for Astute Boats 5 and 6 respectively at BAE Submarine Solutions at Barrow-in-Furness.

The type 26 Combat Ship will provide the backbone of the Royal Navy's future surface combatant force from early in the next decade. We envisage it being optimised for anti-submarine warfare, providing protection to maritime task groups, the strategic deterrent, and land forces in the littoral environment though it will also be able to operate in a wide variety of other roles, able to deploy an embarked military force by boat or helicopter, undertake surveillance and intelligence gathering activities, conduct counter-terrorism and counter-piracy operations, and support disaster relief and humanitarian operations.

The assessment phase will be a £127 million, four-year contract with BAE Systems Surface Ships that will deliver a cost-effective ship specification for development and manufacture. Among other things, it will examine whole life costs, consider the potential for international export, develop tailored logistic support arrangements and produce a full ship specification for consideration prior to the main investment decision. In doing so, this work will protect skills and employment in the warship design sector and maintain a key industrial capability for the UK.

We have delayed proceeding with this work until the recent planning round was completed, and any further significant delay would increase the risk that we would be unable to maintain the maritime industrial workload at a cost-effective level once carrier manufacturing is past its peak. It would also increase the risk of our having to retire the type 22 and 23 Frigates before the type 26 is ready to replace them. However, to ensure that we can incorporate any changes to the design or concept of operations that might result from the strategic defence review (SDR), a mid-programme review point has been included as part of the work.

Secondly, as part of our ongoing efforts to deliver increased value for money and support the continued transformation of the maritime industrial sector, I am pleased to announce that we have signed a 15-year partnering agreement with Babcock Marine. We announced our intention to negotiate a so-called TOBA with Babcock Marine in 2007 following the acquisition of Devonport Management Ltd by Babcock International Group, and it has been under negotiation for many months. This agreement will guarantee Babcock Marine's role as our lead industrial partner for submarine support, maintenance and decommissioning, and our preferred supplier for engineering and other services for surface warships and submarines at Her Majesty's Naval Bases Devonport and Clyde. Babcock Marine will also continue to advise the Ministry of Defence on the initial phases of submarine dismantling options and will play a more active role in Through-Life Capability Management for the Royal Navy's fleet, ensuring maximum availability and value for money in the support of future warships and submarines.

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In exchange for this guaranteed scope of work, the agreement will deliver guaranteed savings and benefits to the Department of at least £1.2 billion over 15 years, at outturn prices. These savings will flow from performance improvement and efficiency measures enabled by long-term confidence, and will be embedded in the contracts for goods and services that will be negotiated within the framework of the agreement. I would emphasise that, because the agreement will not guarantee a specified level of work, we can be confident that the choices available in the SDR will not in any way be constrained but by proceeding now we will ensure that we can start delivering the savings envisaged as soon as possible.

The Government have also made a contractual commitment to proceed with the initial build of Astute Boat 5 and long-lead procurement activities associated with Astute Boat 6, at a total cost of over £300 million. This commitment is necessary now to ensure a consistent workload for the UK's submarine building industry. This investment will allow the timely delivery of the Astute class boats, which are the biggest and most advanced attack submarines ever ordered for the Royal Navy. Furthermore, since the same industrial skills, experience and capability are necessary to deliver the successor deterrent submarine programme, this investment will play a part in ensuring a smooth transition from the Astute programme to the successor deterrent.

These decisions demonstrate the Government's commitment to the long-term future of the Royal Navy and the UK's maritime defence industry. They will deliver vital defence capability and sustain a world class, efficient sovereign maritime industry.

I intend to make more announcements in the coming days about new and additional capability for our armed forces and defence contracts for UK industry.

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