Clause 5 - Temporary borrowing
Local Government Bill
10:00 am
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I did not table this amendment with any aggressive intention. It was simply to clarify the issue. My perception is that in attempting to shoot down the amendment the Minister has pointed to a number of problems. I am sure he is right that a prudent local authority would take all those considerations into account, but in addressing the last clause he has invited us to look at the case of the maverick imprudent local authority. He used Hackney as an example, at least in its past incarnations. But there is a concern that an authority could use the short-term borrowing provision to borrow money that in practice it was not going to receive during the period. In effect, it would then be using borrowing to finance revenue expenditure, which is not the Government's intention.
I take the Minister's point about prudent accounting practice requiring the writing off and charging to revenue accounts of uncollected amounts. In the local authority's accounts those amounts will be charged to a revenue account, but I take it that that does not mean that simply because an amount has been charged to a revenue account it is no longer collectable and enforceable against the debtor. I would expect a prudent local authority to charge to a revenue account an amount that had not been collected during the reasonable period in which it was supposed to be collected, but at the same time to continue to pursue the debtor. In that sense it would remain an amount due to the authority even though it had made appropriate provision for it in the revenue accounts.
The Minister said that the term ''reasonably expected'' was vague and incapable of precise interpretation. I frequently say in Committee that I am not a lawyer and I shall now say that I am not an accountant, but I would have thought that the term
''reasonably expected'' was the type of phrase that accountants regularly had to deal with in deciding how properly to treat an amount; whether it was reasonably expected to be received. That is not a telling charge against the amendment as drafted.
I accept, however, that the Minister has made a better argument in dealing with receipts at the year-end, where he is right that some receipts would not be received within the period. I merely hoped that the Minister would take on board the issue underlying the amendment and seek to deal with it in another way. He has not shown any sign of being persuaded that there is an issue to address. I am not going to press the amendment for various reasons, including the defect in relation to year-end that the Minister has pointed out, but I hope that he will consider tightening the clause before Report stage. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5, as amended, ordered to stand part of the Bill.