Clause 4 - Imposition of borrowing limits
Local Government Bill
5:00 pm
Mr Nick Raynsford (Minister of State (Local and Regional Government), Office of the Deputy Prime Minister; Greenwich and Woolwich, Labour)
The hon. Gentleman is wrong. We have substantially increased the freedom of local government. We ended the restrictive capping regime that we inherited, we have increased grants to local government over the past six years by 25 per cent. in real terms, and we have removed a series of obligations and repressive measures that had been imposed on local government by central Government. In parallel, however, we have also said that we want a mature, new relationship with local government based on a commitment to deliver high-quality services locally and to maintain standards of community leadership
that every citizen has a right to expect from a local authority. That is the thrust of our White Paper. It is a deregulatory measure, but it also requires acceptance of the need for responsibility on all sides. We are proud to introduce it.
Amendment No. 31 is designed to introduce the condition that no borrowing limit may be imposed on a local authority below its actual level of borrowing. I have to tell the hon. Member for Runnymede and Weybridge that it is unnecessary. If an absolute figure were ever set for an authority below its present level, nothing would be achieved. The borrowing control is set out in clause 2(2), according to which an authority
''may not borrow money if doing so would result in a breach of . . . any limit for the time being applicable''.
Unless a loan breaches the limit when it is actually taken out, nothing can later make it unlawful. No element of retrospection applies, so the amendment is unnecessary and I hope that the hon. Gentleman will withdraw it.
Before I finish, I shall respond quickly to the hon. Members for Isle of Wight and for Poole, who spoke about powers to deal with national economic circumstances. The hon. Member for Poole argued that they were unnecessary and the hon. Member for Isle of Wight thought that they might be necessary, but wanted to know why the Government wanted them. The answer is a single word—prudence.
Further consideration adjourned.—[Mr. Woolas.]
Adjourned accordingly at nine minutes past Five o'clock till Tuesday 28 January at five minutes to Nine o'clock.