Clause 2 - Control of borrowing
Local Government Bill
2:30 pm
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
If the Government have imposed an aggregate limit on local authorities' borrowing to send signals to the market that they are addressing whatever macro-economic crises are occurring, it is important that any breaches of borrowing limits are dealt with in a transparent way. There should be an openness about the reasons for the breaches. It would be dangerous for the Government to be put in the position of issuing directions in the form of letters whizzing out from Whitehall, right, left and centre to the favoured corners of the land. There is a good macro-economic spin reason for ensuring that any arrangements are transparent.
Given the lingering suspicion about the way in which the Government distribute their largesse among local authorities, it is also important for the Opposition to see clearly the objective bases on which exceptions are established. I see no real objection to consulting Parliament about the matter. There is no reason why an order in the form of a statutory instrument should lead to inordinate delays. If it takes a Department as long to write a letter giving a direction as it often takes to write a parliamentary written answer, the delegated legislation procedure would probably be quicker.
The Minister's arguments are not persuasive. There is no obvious reason why such a significant and potentially discriminatory use of power should not be exercised by an order that is subject to parliamentary scrutiny, given that it would be a rare occurrence and that arrangements should be transparent if the limits are to have their effect for macro-economic reasons.
In the course of the Minister's remarks, he mentioned a situation in which an authority might have contractual commitments that it was in danger of breaching as a result of the imposition of Government limits. Alarm bells should be ringing in the background about that, because therein might lie a loophole in the mechanism proposed by the Government. If the measure is necessary, it must be robust. I would be worried if the Minister was suggesting that, if a local authority has entered into forward commitments—however irresponsibly—an exception could apply.