Clause 2 - Control of borrowing
Local Government Bill
9:45 am
Mr John Pugh (Southport, Liberal Democrat)
I welcome the general thrust of the Minister's endeavours. As a former council leader, I was much persuaded a long time ago that the prudential regime was infinitely better than anything that we had then. Year after year, one had to explain to the electorate that one could not publish ventures because capital permissions given by the Government did not authorise or legitimise that.
I remind the Minister that we had such an appalling regime in the past largely because of the Thatcher Government and the need to restrain the behaviour of Derek Hatton in Liverpool—and the similar behaviour of others elsewhere. That resulted in a series of limitations being imposed on all local authorities that behave in a financially prudent matter. My fear is that the Minister might currently be obsessed with the conduct of Hackney borough, and that in order to stop the Hackneys of this world he might put more limits on perfectly well-behaved local authorities. I caution him not to do that.
As I understand the drift of the legislation, the Minister is explicitly giving local authorities the power to borrow—he is putting that into law—but he is qualifying that by introducing a sequence of reserve powers in exchange for the current series of formal restraints and permissions. Therefore, on one level, the
Minister can represent this as providing more freedom and autonomy. But I wish to ask a question: under the proposed regime, what can a local authority do in defiance of the Government that it could not do under the previous regime? If that question is asked, it becomes far more difficult for the Government to represent what they are doing as a move in the direction of freedom. To draw an analogy, teenagers have general autonomy and freedom and become young adults when they can do what their parents do not want them to do, rather than when they can do what their parents approve of anyway.
The Minister must recognise that our general line of attack on the Bill would be to suggest that he needs genuinely to curb his own powers, so that in a sense he will be reliant upon a third-party judgment as to whether an authority has behaved prudently. That is what this amendment would incorporate into the Bill.
I agree that the Minister has a legitimate defence to that; he could say that he does not want to allow local authorities under any circumstances—