Clause 1 - Power to borrow
Local Government Bill
9:30 am
Mr Edward Davey (Kingston and Surbiton, Liberal Democrat)
That clarification was useful, as the hon. Member for Runnymede and Weybridge will, I hope, confirm.
I want to raise an issue that will overshadow all aspects of this morning's debate on the prudential capital regime. The Minister will readily admit that freedom to borrow, as laid out in clause 1, is useful only if one has the resources to back it up—to pay the interest on the debt and then, in due course, the capital. A key issue in the Select Committee's report, and in evidence that it heard from bodies such as the Chartered Institute of Public Finance and Accountancy, is that the Government have not yet made clear the regime of revenue support that they will provide for local authorities to back up the new prudential capital regime. It is all very well for us to debate and support clause 1—as we will do—and for us to say that it is great and that it clarifies the legitimacy of local authorities to borrow in those circumstances. However, the Government have not yet told the Local Government Association—or CIPFA, Parliament or anyone—what the new revenue regime will be to back up the freer capital regime. Will the Minister take this opportunity to clarify that? Many
local authority treasurers want to know what the revenue regime will be. When will the Minister tell them? He says that the new prudential regime will be in place by April 2004. To prepare for that, local authorities will need to know about the new revenue regime much earlier.