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Baroness Hanham rose to move, as an amendment to the Motion that the House do not insist on their Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A, leave out from "disagreed" to end and insert ", but do propose the following amendment in lieu thereof"—

3Bpage 5, line 33, leave out from "receipt" to end and insert "to be used by the receiving authority in accordance with directions by the Secretary of State"

The noble Baroness said: My Lords, there have been a number of debates on the retention and pooling of capital receipts arising from right-to-buy sales. I do not propose to weary the House by rehearsing the arguments in great detail, but I am bound to say something in view of the fact that the Minister got his say in first. No doubt he will also have an opportunity to get his say in last.

It is our contention that authorities which have prudently harnessed resources from right-to-buy sales, or successfully promulgated the right-to-buy policy, and ended up debt free, either through prudence or good management, should not be put under pressure and have their capital receipts sequestered—which is how it was put in the other place—by the Government. It is proposed that those capital receipts should be snatched from them and given to authorities which the Government decide need them more than the authorities which got them together and harnessed them. The Minister referred to some authorities that would be disbenefited if the money was not pooled.

My knowledge is that these capital receipts amount to 120 million, which is not a great deal of money within the Government's capital allocation policy.

Lord Rooker: My Lords, let us get the figures right. It is 1.2 billion, not 120 million. We estimate that approximately 1.2 billion of housing capital receipts will be pooled.

Baroness Hanham: My Lords, I disagree, but I shall not pursue the issue because it does not alter the principle of the matter.

All the way through, the Government have suggested that the Bill will give freedoms and flexibilities, but when it comes to the retention of capital receipts it stops that. A local authority cannot spend its capital receipts on what it perceives its priorities to be.

The Government seem to have the idea that local authorities that have these capital receipts will rush off and buy Rolls-Royces or do something luxurious and

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debonair with the money. By and large, most of them want the money to carry out small-scale key worker developments; to provide capital for the development of their properties, probably housing; or to provide affordable housing.

The difference between us is that we say they should be able to do so and the Government say, "Sorry, individual local authority, you should not be able to do that because we want your money to take elsewhere and give it to someone else". The purpose of pooling, of course, is to put the money into one pot and for the Government to distribute it, at their own inclination, to the authorities that they wish to have it.

We do not believe that the authorities that have accumulated money from capital receipts have done so through an accident of history. Most of them have made good use of the right to buy. They have drawn that right to the attention of their tenants, who were, in the past, in a position to obtain a very good discount. The Government, of course, have put their feet on that system as well.

The amendment would ensure that the Government could not take the money away at will. The local authorities that have these capital receipts would discuss the issue with the Government and come to an agreement on what they should be spent on. This would ensure that the money was spent on government priorities—for example, on key worker housing—or it may be, amazingly, that the local authority's priorities were agreed to.

That is the aim of the amendment. The Minister is correct to say that it would stop the pooling arrangement—but that is the one thing that all these local authorities are adamantly against, as is the Local Government Association. I beg to move.

Moved, as an amendment to the Motion that the House do not insist on their Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A, leave out from "disagreed" to end and insert ", but do propose the following amendment in lieu thereof"—

3Bpage 5, line 33, leave out from "receipt" to end and insert "to be used by the receiving authority in accordance with directions by the Secretary of State"

Baroness Maddock: My Lords, I support the amendment moved by the noble Baroness, Lady Hanham. I have read with interest the debate on this issue in another place. The Minister has today reiterated many of the arguments that the Minister there, Nick Raynsford, made against agreeing to the amendment passed in this House on the use of local authority housing capital receipts.

One of the reasons given was that it would undermine one of the fundamental principles of housing finance, which allows the redistribution of housing capital receipts to areas of greatest need. Both Ministers said that. It was a principle that the Conservative government followed when they were in office. However, at that time, when the Labour Party was in opposition, my memory is that it did not believe it or support it.

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We on these Benches have always stood by our views on this issue. We believe in local government autonomy. We believe that decisions should be taken closest to those they affect, by elected people who are closely involved in their communities. We accept that this means that different authorities, facing different circumstances and different issues and having different histories, will come to different conclusions and find themselves in different positions. That is what devolution is all about.

Throughout the passage of the Bill the Government have said that they will sign up to greater local autonomy and incentives for councils that have prudent financial administration. We all agree with that. The amendments the Government are opposing go along with those principles, whereas the Government's view does not; it is against those principles.

The noble Lord, Lord Rooker, has reiterated the point made by the Minister in another place that accepting the original amendment would deprive housing authorities in areas of high housing stress of the resources they need to fulfil pressing demands for housing. It is the Government's choice about how they wish to use this money.

The noble Baroness, Lady Hanham, referred to the figures and the finance. This matter is not as straightforward as the Minister said. We had considerable discussions in Committee, when I moved complicated amendments with complicated information, much of which was gathered from the Committee proceedings in another place. To a great degree, these were brushed aside and we still do not have clear financial figures. That is also true of the debate in another place.

Why cannot the Government use the high rises there have been in the stamp duty take as a result of the increase in house prices over recent years? That really would be redistribution of housing money. I think there would be some justification for that, given the lack of supply within the housing market. The lowest number of homes built since 1924 has led to high house prices.

Ironically, the Ministers in both another place and here today said that the councils had their money not because it was generated by good financial management or good planning—a fairly sweeping statement if one has any knowledge of the wide range of local authorities in Britain today—but simply because tenants had decided to buy their houses in areas where house prices are buoyant and the stamp duty take will have been high.

The other principle broken by the ability to take capital receipts from local authorities is the retrospective nature of this course of action. The Government claim that local authorities received grants, and all they are doing is clawing the money back. But they are clawing back money that local authorities have made over the years for a variety of reasons, money that was given to completely different administrations at a completely different time.

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In another place, the Government resorted to quite a lot of political knockabout. I am glad that has not happened today, so I shall not say some of the things I was going to say. But to vote against a proposal with which one disagrees in principle does not mean that one does not recognise the sort of problems faced by some authorities that the Minister outlined.

The amendment is a compromise against the principles on which we on these Benches stand. But it gives the Government the ability to direct those housing capital receipts to be spent on housing. As others have said, few authorities in this country do not have pressing local housing problems. We have seen reduced social housing, much of which is not energy-efficient, and elderly people living in cold, damp homes. All over Britain there is a lack of affordable key worker homes. Local authorities have duties under the Homelessness Act 2002 to bring empty properties back into use. Those are some of the things local authorities have to deal with.

I have been consistent in my stance on this from my days on Southampton City Council under a Conservative Government through four years in another place under a Conservative Government, and I am saying the same things today, under a Labour Government. We have shifted our stance on this: we are supporting a compromise, and I hope that the Government will be able to do the same. We on these Benches support the amendment.

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