Clause 4 - Imposition of borrowing limits
Local Government Bill
4:15 pm
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
Clause 4 is one of the most controversial clauses. It is one on which the Select Committee had something to say. In its original form, the draft Bill did not refer to the national economic reasons in subsection (1), which appeared as an additional power for the Secretary of State to set limits on local authorities.
In his evidence to the Select Committee, the Minister asserted the Government's need to be able to impose additional national limits in a macroeconomic crisis. It is good that the Government are focused on the economic cycle and the gathering storm clouds. A macroeconomic crisis may hit us at some stage. That is in marked contrast to what we heard from the Chancellor, until recently. He has not talked about the end of the business cycle in the past six or eight months. Certainly, during his first four or five years in office, he believed the business cycle had ended.
The Minister said that those powers might be necessary. As a sop to the Select Committee, he inserted into subsection (1) the phrase ''for national economic reasons'', which says nothing concrete. Perhaps the Chancellor's technical adviser could think of a more technical term than ''national economic reasons''. There is no test for their measurement and thus no basis on which to challenge the Government's assertion that they exist.
I am proud to claim no authorship of amendment No. 7, the substantive one in this group. It is the recommended, alternative version of clause 4 suggested by the Select Committee during the pre-legislative scrutiny process and it has considerable appeal.