Clause 4 - Imposition of borrowing limits
Local Government Bill
9:15 am
Mr Nick Raynsford (Minister of State (Local and Regional Government), Office of the Deputy Prime Minister; Greenwich and Woolwich, Labour)
I shall do my utmost to retain my usual good humour, despite the monstrous travesties and hyperbole of the hon. Member for Runnymede and Weybridge, who sought to transform a modest safety net provision into a terrible, odious construct, which the Liberal Democrats find equally objectionable. I shall deal with both points of view.
New clause 2 is designed to replace clause 4(1), which would enable the Secretary of State to limit local authority borrowing if it was likely to exceed the nationally sustainable level. There are similarities between the new clause and amendment No. 7, which has been withdrawn, and links with the recommendation in paragraph 14 of the report on the draft Bill by the Transport, Local Government and the Regions Committee.
There should not be a statutory requirement for parliamentary approval before setting a national limit. If, in the unlikely hypothetical circumstances of a major financial crisis—we do not envisage such a crisis, especially while the economy continues to be as prudently managed as it is at present—it would not be appropriate for the Government to delay before taking the necessary corrective action. In any case, any action that the Government took in pursuance of their powers under clause 4(1) would be implementing policies on public expenditure that had already received parliamentary scrutiny. Nor do we believe that it is practical to specify in the Bill detailed methods for assessing national economic interests as new clause 2 proposes. We put in the reference to national economic interests in response to concerns voiced in the Select Committee to demonstrate our good will and that we will seek to use this measure only in those extreme circumstances.
Hon. Members will understand that one cannot anticipate the circumstances that may apply. Could anyone have imagined, other than in a Jeffrey Archer novel, the run of events that occurred at the time of this country's ejection from the exchange rate mechanism during the imprudent management of our affairs by Lord Lamont? Such circumstances could not have been anticipated—[Hon. Members: ''They were.'']—other than by someone with an extraordinary imagination. The total mismanagement of the economy and the extraordinary incompetence of senior members of the Government at that time are difficult to apprehend in today's more tranquil, rational and calm environment. But that happened. Therefore we should not anticipate that everything will continue for ever in the calm, measured, prudent form to which we are now accustomed thanks to the Government's good management of the economy.