Election '97: LOCAL GOVERNMENT AND THE ENVIRONMENT: Councils to invest funds from selling off homes

Labour's top priorities at the Department of the Environment will concern reforming local government's powers and finances, pushing up the rate at which public sector homes are built and refurbished, and speeding up urban regeneration.

Council homes for rent will continue to be transferred to not-for-profit organisations which will seek funding for badly needed renovation and maintenance from the private sector. But Labour also believes that allowing councils to invest the money they make from selling council homes will increase the rate at which housing for low-income families is built and refurbished.

The funding formula for local government will be redesigned so that prosperous councils like Westminster get less money from central government and regional conurbations get more. That change will be in place for a November Budget this year. Local councils will be given a legal duty to promote social, economic and environmental improvements in their area.

Another priority is setting up an elected, London-wide strategic authority - provided that Londoners vote for one in a referendum. The mayor of this reborn Greater London Council will also be directly elected.

''Crude and universal council tax capping should go,'' says the manifesto, but a Labour government would give itself reserve powers to control council tax powers. And if a council is shown by the Audit Commission to be acting in an incompetent or profligate way, ''government will, where necessary, send in a management team with full powers to remedy failure".

Green issues figure in Tony Blair's introduction to the document and his list of 10 key pledges for the first five years of a Labour government. ''We will put concern for the environment at the heart of policy-making so that it is not an add on extra,'' he writes. Uta Bellion, head of policy with Friends of the Earth, said: ''There is a lack of clear targets and commitments, but we think Labour are waking up to the green cause. It is the greenest manifesto they have ever produced, and it is stronger than the Conservatives.''

There is a hint Labour might introduce "green taxes" on pollution. ''Work should be encouraged through the tax system, environmental pollution should be discouraged,'' the manifesto says. The Tory government's plans to cut the cost of the tax disc for low pollution lorries will be continued.

Labour wants renewable energy sources such as solar and wind power boosted but ''we see no economic case for the building of any new nuclear power stations".