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Mr. Leslie: I stand by the comments that I have already made. Local authorities must ensure that certain activities and properties are not exposed to risk. They can already obtain good and competitive forms of capital. Mr. Hammond: I understand the Minister's point, but the key point is that an asset is not at risk unless one defaults on loan payments. What is the current lending rate of the Public Works Loan Board? The Minister tells us that it is invariably cheaper. Perhaps we can test that against our experience of what is available in the marketplace. Mr. Leslie: I cannot give the hon. Gentleman chapter and verse about the various rates and offers from the PWLB off the top of my head. I believe that it is usually cheaper. It can pass on those benefits to authorities. If another borrowing opportunity came along that was cheaper than the PWLB the local authority could take it, but it could not necessarily secure it on particular property. The charge would be on the revenues across the authority. That would be the safest and most prudent way to secure that form of borrowing. There is still a great deal of freedom here, but we have to enshrine a certain measure of protection for local people who need and enjoy those essential assets. Kali Mountford (Colne Valley): Does my hon. Friend recall the case of Allerdale, where the borrowing was against a particular asset? When that deal collapsed because the borrowing was outside the scope of the asset that it was borrowed against, it affected all local authority borrowing for a good 10 years afterwards. The rate of local authority borrowing against assets doubled for that period. Mr. Leslie: There are good grounds for having our rules and statutes, not least in case history probably before my time in this place. I understand that the case of Allerdale involved giving an unlawful guarantee on the loan that was undertaken. It was not specifically an issue that affected the borrowing in a more general sense. It is important to have this principle because certain essential local authority services and properties should not be exposed to the risk of a default. The Column Number: 204 opportunities for borrowing in the normal processes with this rule continuing are the safest to protect the interests of local people.Mr. Hammond: I suspect that if local authorities test the marketplace they might find that it is difficult for them to borrow in the way that suits them best if they cannot do it secured on a specific asset when they are borrowing for the project. They will not be able to project finance on it. Would the Minister undertake to find out what the current rate offered by the PWLB to local authorities is and to let members of the Committee know? Normally, when the Minister says that he does not know something, the cavalry come charging in and a few minutes later his memory improves and he is able to answer. If he could give us that information, we could form our own judgment about whether he is correct, and it will invariably be cheaper than what is available from the private sector. Mr. Leslie: Yes, I can certainly provide a note to the hon. Gentleman and to other members of the Committee on the exciting topic of the rate that the Public Works Loan Board offers. Mr. Clifton-Brown: I should like to challenge the Minister's assertion that the rate and terms available from the Public Works Loan Board are always and invariably cheaper. The national Fire Service College is in my constituency. It is locked into a 20-year loan with the PWLB at rates in double figures, which causes it considerable embarrassment. How does that contrast with the Minister's statement? Mr. Leslie: I do not know whether the position would be any better if the loan was secured on a particular fire station or property, which would give a certain amount of risk exposure to that essential facility. I would question the sense of securing that borrowing against an essential asset. I will provide the note on the PWLB rate. The hon. Member for Runnymede and Weybridge asked whether the receiver powers would be the same as at present. They will be, although there is a change to the threshold so that the default powers cannot be triggered if the debt is below £10,000. The present threshold is £5,000. The hon. Member for Poole (Mr. Syms) asked whether bonds would be affected. They will not be affected by the clause, which relates only to borrowing. It does not prevent the use of bonds to raise cash, but it means that they would have to be secured on all the local authority's revenues. I hope that that answers his question, but I do not think that it does. Mr. Syms: May I ask for clarification of the phrase,
Does it mean that if an authority owed an amount to a bank, it would have to repay it by charging across the whole range of its charges—rents and everything else—so that council tenants and everyone else would have to pay a contribution? In other words, the authority would have no choice and the repayments would fall not only on the council tax payer but also on people from whom it might be taking rents. I am trying to get at the meaning of the Column Number: 205 term ''indifferent''. Does it mean that the authority cannot discriminate?Mr. Leslie: All borrowing is to be charged indifferently on all revenues of the authority. That means that in the event of a default on a loan—which, incidentally, has never happened—the lender could look at the entire revenue stream of the authority for reimbursement. I hope that that answers hon. Members' questions and that the clause can stand part of the Bill. Question put and agreed to. Clause 13 ordered to stand part of the Bill.
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