Lords vote on plan to pool right-to-buy receipts

Conservative and Liberal Democrat peers have led last-minute resistance to government proposals for the pooling of right-to-buy receipts.

The House of Lords voted on Wednesday – for the second time in 10 days – on the Local Government Bill, which would force debt-free councils to give 75% of the money they receive from right-to-buy sales to a national pot.

As Housing Today went to press, sources indicated that the vote would be close but the Lords was expected to back the plan.

At the moment, councils with debts have to set aside 75% of their receipts to cover what they owe and pool the remainder. Debt-free local authorities can spend their receipts how they like.

On 10 September, the Lords voted by 133 to 118 to amend clause 11 of the Local Government Bill, which contains the requirement for debt-free councils to give 75% of receipts to a national pot.

The amendment to the clause went back to the House of Commons. But it has been sent back to the Lords in its original form for this week's vote – as the government is unwilling to compromise.

This week's debate has revived controversy about affordable housing in the 50 or so debt-free local authorities, many of which are in high-demand areas.

Speaking in the Lords, Conservative peer Baroness Hanham said: "Debt-free councils feel very strongly that they have managed their affairs well and should not be penalised [by pooling receipts]. Under government plans to create thousands of new homes, the money collected from these authorities is a drop in the ocean. But for small-scale development these receipts, in good hands and prudent councils, would potentially provide greater flexibility."

But Lord Rooker, minister for regeneration and the regions, said: "[Pooling] is, and will continue to be, a fundamental principle of housing capital finance."

Waverley council in Surrey anticipates that if the bill is passed and implemented as expected next year, it would cost the council about £3m a year – money that it has committed to investing in housing. Graeme Clark, Waverley's assistant director of finance, said the council and other debt-free authorities would have been happy with a compromise that allowed them to keep capital receipts on condition that they were invested in housing.