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Mr. Cash: In terms of choice, is not there a great deal to be said for allowing local authorities to make their own decisions as to the extent to which they spend money? Furthermore, that does not apply merely to capping, but to the contents of the Bill. If local authorities had the opportunity to make up their own minds and council taxes thereby increased, would not councils get into difficulties?
Mr. Curry: My hon. Friend is entirely right, but the fact is that local authority expenditure is about
25 per cent. of public expenditure. Despite all the glorious words that may be uttered on this subject, I have yet to be persuaded that any Government are likely to say that they wish not to have a view on what constitutes the correct amount of public expenditure in that regard. My hon. Friend and I will have an opportunity to debate these matters soon when we see the next revenue support grant from the Government. We shall see to what extent they wish to honour their words in that regard.
When the Secretary of State was challenged by my hon. Friend the Member for Stratford-on-Avon (Mr. Maples), he accepted that the receipts generated interest which helped to defray interest on outstanding local government loans or helped to reduce council tax, and that if they were spent, council tax would go up. The right hon. Gentleman said:
Earlier, in answer to a question from my right hon. Friend the Member for Fylde (Mr. Jack), the Secretary of State had said:
It may be right to increase public expenditure--Ministers would argue that it is necessary--but the House has a right to know how that is to be reconciled with the departmental and Government expenditure plans, especially as the Government are so anxious to show the hair on their chest in the matter of fiscal austerity .
Mr. Pickles:
Surely it goes further than that, and Shelter is right to suggest that without substantial subsidies, which Labour Members have said they oppose, rents will rise by £6 a week.
Mr. Curry:
I was most interested in the calculations made by Shelter and the Chartered Institute of Housing, and we shall have to explore those issues extremely closely, because mobilising money will have consequences.
Are the new borrowing permissions to be added to the public sector borrowing requirement? Do they affect departmental cash limits? Labour has made a rigid
commitment on cash limits. Will the Government tolerate an increase in PSBR or pretend that it does not matter? If it is real public expenditure, and departmental totals are fixed, where will the compensating cuts be made?
Labour Members have constantly spoken of mobilising capital receipts, as though they were some sort of financial Home Guard to be called out in cases of emergency. In fact, the legislation mobilises absolutely nothing. It does not allow local authorities to spend their receipts; that is the last thing that it does. It does not give councils their money back. It envisages a totally Government-controlled operation.
As far as the naked eye can see, the legislation simply issues wholly conventional supplementary credit approvals. Local authorities can do absolutely zilch unless that nice man the Secretary of State--John, as I suppose he would be called these days--comes along with the permission to borrow.
The legislation leaves a mass of questions unanswered. The Minister did not mention new capital receipts, which are at least £1 billion a year, and I suspect that the departmental estimates are that if set-aside were not to be required in the future, that could be expected to increase public expenditure by up to £2 billion a year. What happens to future capital receipts? Will they simply be locked up, as Labour Members say existing ones are? Are we to use the existing ones back to back, as it were, against credit approvals, while still leaving the new ones locked up?
The Secretary of State has singularly failed, from both sides of the House, to answer that question. What about phasing? When is the process to start? I think that the Minister said that the first tranche would be in this fiscal year. Will it be a five-year programme? Some people are talking about £200 million or £250 million in the first tranche; at that speed, it will take 20 years to honour the pledge to mobilise the £5 billion that has been talked about.
The Minister went some way towards answering the question about the link to regeneration and training. I welcome that link and consider it sensible. She said that local authorities would have to present coherent plans, and I hope that she will insist on that. I hope that she will pay attention to the extent to which such plans are compatible with and will add to existing regeneration programmes.
Many local authorities may have money under the single regeneration budget, with estates renewal programmes and transfer programmes under way. It would be silly not to try to incorporate those as a coherent whole, allowing the sum of the parts to add up to more than would be the case if each element were counted separately. It would be common sense to ensure that the programmes were genuinely integrated.
The Minister spoke of a 15 per cent. limit, but there might be occasions on which it made sense in a particular area renewal programme to go a little beyond that. That would be unnecessary on other occasions, but I hope that there can be some flexibility in the way in which she applies the rules in practice, to allow the overall impact to be considered.
Mr. Hilton Dawson (Lancaster and Wyre):
Does the right hon. Gentleman understand the scale of the housing crisis? Has he any idea of the problems faced by people
Mr. Curry:
I regret the tone of the hon. Gentleman's intervention. First, it is the Labour Government who have just said that it will be possible for a part of these resources to be used for wider regeneration programmes and not exclusively for housing. If the hon. Gentleman wants to argue with his own Front-Bench team that is fine by me, but I think that for once they are right in that regard. It makes sense to see the wider picture. The history of regeneration is of trying to deal with one aspect of deprivation, finding that that does not work and having to revisit it before long. An integrated programme works a great deal better.
As for homeless people, no doubt the hon. Member for Lancaster and Wyre (Mr. Dawson) is unaware of the various initiatives for rough sleepers. The Under-Secretary of State for the Environment, Transport and the Regions has been as supportive of those as I have. We are both deeply committed to them. This is not a silly question for smirking over, but one that matters to all sensible hon. Members on both sides of the House.
Sir Paul Beresford:
Does my right hon. Friend agree that we can divide the Bill into two sections--clause 1 and clause 2? The first is a smokescreen to cover for the sort of comment that we just heard from the hon. Member for Lancaster and Wyre (Mr. Dawson)--in other words, to placate Labour Back Benchers and let them think that they are getting capital receipts instead of just a borrowing extension. On the other hand, clause 2 offers the potential for chicanery--
Mr. Deputy Speaker (Mr. Michael J. Martin):
Order. I appeal to hon. Members to keep their interventions brief. There should be no more long interventions.
Mr. Curry:
My hon. Friend the Member for Mole Valley (Sir P. Beresford) is rapidly talking himself into a position on the Standing Committee that will scrutinise the Bill. Perhaps that might bring his intervention to a somewhat premature end--it is always a threat that one can use. My hon. Friend is right. We need to examine carefully the implications of both clauses. Got right, the Bill could be a great help; got wrong, it could be a silly waste of resources. It is important to ensure that the Bill does not go badly astray.
In the normal course of events, when a local authority receives a supplementary credit approval, that would raise its credit ceiling in the housing revenue account and it could be eligible for subsidy. Will the Government follow that route or will they allow extra borrowing without increasing the subsidy? The Minister pointed out that local authorities will be eligible in the SSA system for increased allocations in relation to their increased borrowing. So that must be taken into account in the overall total that authorities will get under the revenue support grant.
The Minister covered in some degree the treatment of large-scale voluntary transfer authorities. She answered a question by saying that, as far as is understood, they will
be left out of this. I will not resume our argument about whether need has to carry some sort of local authority badge to be real enough.
"Those are the matters of concern that we are discussing with the Chancellor."
Because Labour keeps reverting to its manifesto, he went on:
"The constant concerns of Conservative Members are interest payments and money. We are concerned about jobs and houses, and that is the fundamental difference between us."
I credit him with the full quote.
"Clearly, the use of those receipts will lead to an increase in public expenditure"--
the Minister of State has accepted that--
"and we shall have close discussions with my right hon. Friend the Chancellor of the Exchequer on that matter."--[Official Report, 3 June 1997; Vol. 295, c. 171-72.]
Rather him than me. Clearly, that will be a very entertaining session, but the matter cannot be swept away like that--although it is very easy to do so. The Chancellor of the Exchequer has his public expenditure forecasts and he has a Labour party manifesto commitment which says:
"For the next 2 years Labour will work within the departmental ceilings for spending already announced."
That is the key. If public expenditure is to increase and it is to come off the Department's slate, where will the compensatory savings be made within the Department?
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