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Housing Needs Expenditure

Volume 113: debated on Wednesday 1 April 1987

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asked the Secretary of State for the Environment if he has any plans to allow local authorities to spend more than 20 per cent. of their capital receipts from council house sales on housing needs; and if he will make a statement.

I have no immediate plans to alter the rule whereby local authorities can spend the whole of their receipts from council house sales, provided they do not use more than 20 per cent. of them a year for prescribed expenditure.

Would it not be a splendid idea with the coincidence of this question with National Housing Week to double the limit for prescribed expenditure to 40 per cent. to give a real initiative to housing authorities? Secondly, would it not be important to build on the consensus on the need to involve housing associations, building societies and other financial organisations to put together a committee that again could build on the consensus and enable us to solve the housing problem by using all the financial resources that are available, which are obviously considerable?

The Labour party and the Conservative party—the Government—both agree that there should be overall control of local authority capital expenditure. The Liberal party, and the Social Democratic party—the alliance—have not made clear to me what their view on that is. If that is the case, an increase in the prescribed proportion of receipts would result in a reduction in capital allocations. That would be unproductive. It would make life harder for housing authorities in deprived areas in inner cities. Although the hon. Gentleman does not really care about the details, it would probably make life harder for Leeds than will leaving the percentage as it is.

Is my right hon. Friend aware that, given the improvements in the economy since this policy was introduced, for which my right hon. Friend the Chancellor of the Exchequer rightly took credit last month when introducing the Budget, it is increasingly difficult to defend or understand the 20 per cent. limitation? Is it not high time that it was revised upwards to at least 30 per cent.?

I am sure my hon. Friend realises that what matters is gross provision. That has increased from £2,669 million last year to £2,922 million in 1987–88, a big increase. As for dividing the gross provision between allocations and the use of capital receipts, the issue is whether the resources go to the more deprived areas or to the less deprived areas. I think the House will feel generally that the right way to help deprived areas is to make available to them the bulk of the capital allocations, rather than to increase receipts.

In view of the supplementary question asked by the hon. Member for Melton (Mr. Latham), surely there can be no justification for preventing local authorities from spending 80 per cent. of their own money, which they have been forced by the Government to accumulate, when there is desperate need in areas such as Leicester for improvements, repairs and maintenance, and when the council has had 50 per cent. of its funds taken from it by central Government.

The hon. and learned Gentleman may not understand the system. Allowing an increased proportion of receipts to be spent means that local authorities go out and borrow more. Local authorities are indebted in total to the extent of over £30 billion, and any increase in spending will lead to an increase in debt. The Government do not mind a bit whether spending takes the form of so-called capital receipts or of increased allocations. The point is to determine the best way of helping authorities in need. Is it receipts, or allocations? I would have thought that the hon. and learned Gentleman would look to the interests of his constituents and realise that allocations will be of more use to them.

Where a council has a good record on selling council houses and has been sensible about its spending and its rates, will my right hon. Friend let such councils make individual representations to him to allow the 20 per cent. to be exceeded if that council has a number of derelict homes that urgently need repair?

I would dearly like to have the sort of slush fund suggested by my hon. Friend, but I fear that that would be the wrong way to proceed. I must repeat that, if the House wants more money to be allocated to the major areas of housing stress and housing repair problems, the right way to do so is to reduce the prescribed proportion and increase allocations. However, I am not proposing any change.

In view of the obvious anger, if not dismay, felt on all sides of the House, will the Secretary of State reconsider Government policy on local authority capital receipts? Is he not aware that many Conservative as well as Labour authorities regard this policy as unnecessarily restrictive, especially since their money is involved? Will he contact the Conservative councillor to whom I spoke in Coventry yesterday when I opened a sheltered dwelling scheme—Quniton Lodge—who said, "We would like to build many more of these schemes and we have the money to do so, but the Government will not let us spend it". That is the case in many authorities around the country—Labour and Conservative alike—which need only one word from the Minister—yes—to allow them to spend their money to provide houses, especially for elderly and disabled people. How can it be right to have a fiscal adjustment of £6 billion in the Budget and to continue with this stupid control?

I read, even though the hon. Gentleman may not have done so, the Labour party's policy for local government finance. He made it absolutely clear that the Labour party believes in controlling the total capital expenditure of local authorities. Do we agree?

It is the same point.

If we are agreed that there should be control of borrowing, is the Labour party saying that it would like to increase the prescribed proportion and reduce the amount that goes on allocations within a controlled total? That is the question that the Labour party must answer. If the Labour party answers it in the way suggested by the hon. Member for Copeland (Dr. Cunningham), it will deprive the hon. Gentleman's constituency of the help that it needs.

In the light of the representations made to my right hon. Friend by both sides of the House, but especially from the Conservative Benches, will my right hon. Friend give further consideration to the matter? Will he agree to meet a delegation of his hon. Friends, not least because those of us who represent responsible borough councils — my borough of Macclesfield is the lowest-rated borough in Cheshire — are aware that they need to spend their money to provide accommodation for the elderly and for the young? Will he bear in mind that these authorities have obeyed every exhortation and request of the Conservative Government?

I would he delighted to meet my hon. Friend and any group of councillors or hon. Friends that he may wish to bring with him. I would be — [Interruption.] If the House will listen, let me say that I would be sorely tempted to agree with him. However, if I were to do so the result would he that the most deprived areas of the country, including Leeds, Whitehaven, Workington and South Shields, would suffer because they would receive less in allocations because more would be going to my hon. Friend's constituency.