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Local Authority Housing

Volume 170: debated on Friday 30 March 1990

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To ask the Secretary of State for the Environment what freedom he will give local authorities that dispose of all or most of their housing to new landlords to spend the resulting receipts; and whether he will make a statement.

The Government want to encourage innovative approaches to the ownership and management of subsidised rented housing and some local authorities are achieving this through large scale voluntary transfers of their housing to private bodies—usually housing associations. I am now in a position to announce decisions on the treatment of capital receipts in these cases.Local authorities who transfer all or most of their housing will be required to set aside 75 per cent. of the receipt or an amount equivalent to the debt on the housing being transferred, whichever is the greater. The remainder of the receipt will be a usable receipt as defined in the Local Government and Housing Act 1989. One way in which authorities will be able to use this part of the receipts is to secure the provision of additional low-cost housing through housing associations and the private sector. I hope they will make full use of the opportunity thus provided.In view of the potential scale of these receipts, we believe that authorities should show restraint in the rate at which they are spent. We will discuss authorities' plans for spending their receipts with them before giving consent to transfers.I know that a number of authorities have been waiting to find out what use they could make of voluntary transfer receipts. I hope that removing the uncertainty today will help those who are considering whether to pursue a transfer. Since the trend towards voluntary transfers is still at a relatively early stage, we will keep these arrangements under review to establish whether they are working satisfactorily for the Government and the local authorities concerned.I have placed in the Library a note giving our guidelines on the use of such receipts. A copy of the note is being sent to the local authority associations and other interested bodies.