Clause 8 - Control of credit arrangements
Local Government Bill
11:15 am
Mr Christopher Leslie (Parliamentary Secretary, Cabinet Office; Shipley, Labour)
What a pleasure it was to hear the hon. Member for Isle of Wight try to help the hon. Member for Runnymede and Weybridge. In many ways, he said what I was about to say about the amendments and the phrase
''capital value of the assets''.
The amendments relate to clause 8, which is mainly about the calculation of the cost of credit arrangements. It enables the details of what is inevitably a somewhat technical procedure to be covered in regulations, and we have provided the Committee with copies of the draft regulations.
As the hon. Member for Runnymede and Weybridge pointed out, regulation 5 indicates what we have in mind. The cost of the credit arrangement is to be decided as far as possible by accounting practice, rather than by special rules devised by us. It will normally depend on the amount of the long-term liability under the new contract as shown in the accounts. That will reflect the value of the payments that the authority is committing itself to make over the life of the contract. A broadly similar effect is achieved under the present system, but only with extremely complex rules and formulas in the legislation. The present principle is sound, but we hope to achieve the same result much more simply through reliance on accounting concepts.
Amendments Nos. 33, 34 and 35 suggest an alternative way of calculating the cost of a credit arrangement, by reference to the capital value of the assets made available under it. I accept the amendments in the spirit in which they were intended—as probing amendments designed to tease out what the Government mean. I will not seek to demolish them on technical grounds.