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Baroness Hamwee: The Minister has been extremely clear about the regime which will apply when supplementary credit approvals are given in the future. It is important that the Committee takes that point on board. The noble Lord seemed to suggest that an entirely new set of arrangements would allow local authorities unrestrained expenditure. I wish that that were the case. I do not share his views about the need for capital restraint. I suspect that it is spending restraint in general. Spending of capital is a means of investment; it is not money down the drain. It achieves something for each local authority.

However, it is important that there will still be central control. It is for the Secretary of State in the first place to issue the supplementary credit approval; other matters will follow from that. I hope that the noble Lord will not press the amendment, which I regard as regressive.

Lord Bowness: I thank the Minister for her explanation. However, with great respect, I do not find flexibility a sufficient answer. As I stated at Second Reading and when moving the amendment, we are suspicious of the Bill because it flies under false colours. It is supposed to be about the release of accrued capital receipts. It is in fact about the ability of local authorities to borrow. It is supposed to be about council house receipts. It is not in fact limited to that. Clause 2 in particular relates to borrowing.

I hear what the Minister says about individual circumstances. I hear what the Minister says about reorganisation costs. But we have not been told of any circumstances which lead us to believe that the law needs changing. The longer the periods allowed, the greater the cost to the individual council taxpayers. In another place my honourable friend Mr. Chope was accused of paranoia. I fear that I, too, may be accused of paranoia. I draw no comfort from the circumstances described at Second Reading regarding when the power will be used. In moving the amendment I quoted them; I shall not do so again.

We should have had assurances that the consequences of mismanagement by local authorities resulting in severe revenue difficulties--I fully accept that an urgent need to spend may arise; indeed it is likely to arise where there has been severe financial mismanagement--will not be imposed on council tax payers through additional costs.

We have had no answers as to whether the present period of seven years has caused any difficulty. There has been no indication of the number of applications received for longer periods. Since so much about the Bill and the clause is not clear, I wish to press the amendment and to seek the opinion of the Committee.

14 Oct 1997 : Column 404

4.5 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 109; Not-Contents, 126.

Division No. 1

CONTENTS

Aberdare, L.
Ailsa, M.
Alexander of Tunis, E.
Alport, L.
Anelay of St. Johns, B.
Ashbourne, L.
Attlee, E.
Beloff, L.
Blatch, B.
Bowness, L.
Brabazon of Tara, L.
Braine of Wheatley, L.
Brentford, V.
Bridgeman, V.
Broadbridge, L.
Brougham and Vaux, L.
Bruntisfield, L.
Butterworth, L.
Cadman, L.
Campbell of Alloway, L.
Campbell of Croy, L.
Carnegy of Lour, B.
Carnock, L.
Chalker of Wallasey, B.
Charteris of Amisfield, L.
Chesham, L.
Clanwilliam, E.
Clark of Kempston, L.
Courtown, E. [Teller.]
Cowdray, V.
Craig of Radley, L.
Cullen of Ashbourne, L.
Cumberlege, B.
Davidson, V.
De Freyne, L.
Dean of Harptree, L.
Denbigh, E.
Dixon-Smith, L.
Elliott of Morpeth, L.
Exmouth, V.
Foley, L.
Gisborough, L.
Goschen, V.
Gray of Contin, L.
Hailsham of Saint Marylebone, L.
Harding of Petherton, L.
Hardwicke, E.
Harlech, L.
Harmar-Nicholls, L.
Harrowby, E.
Hayhoe, L.
Hemphill, L.
Henley, L.
HolmPatrick, L.
Hooper, B.
Howe, E.
Johnston of Rockport, L.
Keyes, L.
Kingsland, L.
Kinnoull, E.
Lane of Horsell, L.
Lauderdale, E.
Liverpool, E.
Long, V.
Lucas, L.
Luke, L.
McColl of Dulwich, L.
Macleod of Borve, B.
Merrivale, L.
Mersey, V.
Middleton, L.
Miller of Hendon, B.
Milverton, L.
Mountevans, L.
Munster, E.
Murton of Lindisfarne, L.
Noel-Buxton, L.
Norfolk, D.
O'Cathain, B.
Orr-Ewing, L.
Park of Monmouth, B.
Peyton of Yeovil, L.
Platt of Writtle, B.
Rawlings, B.
Rees, L.
Renton of Mount Harry, L.
Renwick, L.
Rotherwick, L.
Rowallan, L.
Saltoun of Abernethy, Ly.
Sandford, L.
Seccombe, B.
Shaw of Northstead, L.
Soulsby of Swaffham Prior, L.
Stodart of Leaston, L.
Stokes, L.
Strathclyde, L. [Teller.]
Strathcona and Mount Royal, L.
Sudeley, L.
Swansea, L.
Swinfen, L.
Taylor of Warwick, L.
Teviot, L.
Thomas of Gwydir, L.
Trefgarne, L.
Vivian, L.
Waterford, M.
Wilcox, B.
Young, B.

NOT-CONTENTS

Acton, L.
Addington, L.
Allen of Abbeydale, L.
Allenby of Megiddo, V.
Ampthill, L.
Archer of Sandwell, L.
Ashley of Stoke, L.
Avebury, L.
Barnett, L.
Bath and Wells, Bp.
Berkeley, L.
Blackstone, B.
Blease, L.
Blyth, L.
Borrie, L.
Boyd-Carpenter, L.
Bruce of Donington, L.
Callaghan of Cardiff, L.
Calverley, L.
Carlisle, Bp.
Carmichael of Kelvingrove, L.
Carter, L. [Teller.]
Castle of Blackburn, B.
Cledwyn of Penrhos, L.
Clinton-Davis, L.
Crook, L.
Dahrendorf, L.
Dean of Beswick, L.
Dean of Thornton-le-Fylde, B.
Diamond, L.
Dixon, L.
Donaldson of Kingsbridge, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Eatwell, L.
Elis-Thomas, L.
Evans of Parkside, L.
Ezra, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Gallacher, L.
Geraint, L.
Gilbert, L.
Gladwin of Clee, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grenfell, L.
Grey, E.
Hamwee, B.
Harris of Greenwich, L.
Haskel, L.
Hayman, B.
Healey, L.
Henderson of Brompton, L.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Hooson, L.
Howell, L.
Howie of Troon, L.
Hoyle, L.
Hughes, L.
Hylton, L.
Ilchester, E.
Irvine of Lairg, L. [Lord Chancellor.]
Jay of Paddington, B.
Jenkins of Putney, L.
Judd, L.
Kilbracken, L.
Kirkhill, L.
Lestor of Eccles, B.
Lockwood, B.
Longford, E.
McCarthy, L.
McIntosh of Haringey, L. [Teller.]
Mackie of Benshie, L.
Mallalieu, B.
Merlyn-Rees, L.
Milner of Leeds, L.
Mishcon, L.
Molloy, L.
Monkswell, L.
Morris of Castle Morris, L.
Murray of Epping Forest, L.
Nicol, B.
Paul, L.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prys-Davies, L.
Ramsay of Cartvale, B.
Randall of St. Budeaux, L.
Rea, L.
Redesdale, L.
Richard, L. [Lord Privy Seal.]
Robson of Kiddington, B.
Rochester, L.
Russell-Johnston, L.
Sainsbury, L.
Sefton of Garston, L.
Serota, B.
Sewel, L.
Shepherd, L.
Shore of Stepney, L.
Simon, V.
Simon of Highbury, L.
Smith of Gilmorehill, B.
Stallard, L.
Stoddart of Swindon, L.
Strabolgi, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Gryfe, L.
Thomas of Gresford, L.
Thomas of Walliswood, B.
Thomson of Monifieth, L.
Thurlow, L.
Thurso, V.
Tordoff, L.
Turner of Camden, B.
Wallace of Saltaire, L.
Wedderburn of Charlton, L.
Whitty, L.
Wigoder, L.
Williams of Crosby, B.
Williams of Elvel, L.
Williams of Mostyn, L.

Resolved in the negative, and amendment disagreed to accordingly.

14 Oct 1997 : Column 405

4.15 p.m.

Clause 2 agreed to.

Lord Bowness moved Amendment No. 4:


After Clause 2, insert the following new clause--

Report on approved supplementary credit approvals

(" . After section 55(3) of the 1989 Act there shall be inserted--
"(3A) The Secretary of State shall publish a report of the effect in each year of the approved supplementary credit approvals on the public sector borrowing requirement.".").

14 Oct 1997 : Column 406

The noble Lord said: The amendment asks for a new section to be added to the effect that,


    "The Secretary of State shall publish a report of the effect in each year of the approved supplementary credit approvals on the public sector borrowing requirement".
I state again, and apologise for repeating myself, that the Bill is about local authority borrowing. The Minister in another place made it clear that although the initial sums in the first year are not large and certainly not large enough to meet the hopes and aspirations that were no doubt raised by the promises originally made by members of the Government prior to the election--as was made clear in this House and another place--there is new public money involved.

The guidance issued by the department to local authorities, of which the noble Baroness was kind enough to send me a copy, invites their bid and states that,


    "The release of additional spending power in the form of supplementary credit approvals will mean that authorities will incur additional revenue expenditure to meet borrowing or liabilities under credit arrangements. Depending on the particular expenditure undertaken by an authority the cost may fall to the housing revenue account or the general fund and will be supported by the government either through additional housing revenue account subsidy or through revenue support grant".
Since the original promise in the manifesto commitment was to use unapplied capital receipts--though, had that taken place, it would indeed of itself have had consequences for the level of council tax since those receipts are not sitting idle in local authority accounts; in many cases they are earning considerable sums that can be applied in aid of the council tax--it is now only right, in the spirit of the openness promised by the Government and in the interests of good economic management, that the figures of the additional borrowing and the effect on the public sector borrowing requirement should be published.

Had the Bill set out to do what was promised rather than to facilitate borrowing, different arguments might have applied. The amendment does not in any way seek to thwart the Bill's intentions. The Government have already admitted that we are talking about new money; we are talking about borrowing. If the amounts remain as modest as the sums first announced, they should not be fearful of disclosing the effect.

If the amendment is rejected, one is left with the inevitable conclusion that, as with so much of the Bill, we do not know the whole story and the ultimate intentions behind the measure. I beg to move.


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