Clause 1 - Power to borrow
Local Government Bill
9:30 am
Mr Nick Raynsford (Minister of State (Local and Regional Government), Office of the Deputy Prime Minister; Greenwich and Woolwich, Labour)
The hon. Gentleman raises a fair point. He will be aware that we have had lengthy and detailed discussions with the LGA and other interested parties about the appropriate basis for Government support for local authority capital investment. No decision has yet been taken, but we will, of course, decide in good time, so that local authorities can plan for the implementation of the new arrangements from April 2004. The principle is that Government support will continue on the same basis on which it has been available for the great majority of local authority capital spending. There is no intention to change that.
The additional freedoms implicit in the Bill will allow local authorities to extend their borrowing to cover unsupported projects, and the authorities will be responsible for the revenue payments. That is what would apply to any person considering their personal budgeting. If they decided to take out a new loan for some purpose for which they had no current income stream, they would obviously have to be satisfied that they had the means to repay that loan. That is a proper element of prudential planning. It is right that local authorities should have that freedom, but it would be wrong to imply that Government should provide additional support for that extra flexibility; that is not the intention. I hope that that clarifies the matter.
There are technical and complex issues involved in any change to the current revenue support framework, and we need to be satisfied that such issues are fully covered before we reach a decision. However, I give the hon. Gentleman an assurance that that will be done in good time to enable local authorities to implement the new arrangement expeditiously.