Clause 2 - Control of borrowing
Local Government Bill
2:30 pm
Mr Nick Raynsford (Minister of State (Local and Regional Government), Office of the Deputy Prime Minister; Greenwich and Woolwich, Labour)
I hoped that I had made the distinction clear. Any imposition of a national limit, as the hon. Gentleman recognises, would be in the wider economic interests of the country. In such a situation, it is perfectly possible that the new limit, which could be below the individual local authority's own prudential limit, could cut across existing contractual relations. Such relations may have been entered into responsibly and entirely properly because the authority was satisfied that it would have the ability to repay the loan from revenues that it would receive—it may be well within its prudential limit.
In such circumstances, if the authority could make a good, strong case, it would seem churlish and unwise not to be able to make an exception. I hope that the hon. Gentleman will acknowledge that such an exception would be made only in good faith, and not to bail out an authority that had acted irresponsibly.