Clause 5 - Temporary borrowing
Local Government Bill
9:45 am
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg to move amendment No. 30, in
clause 5, page 3, line 8, after 'relates' insert
'and is reasonably expected to be received within that period.'.
This is a technical amendment. Clause 5 gives local authorities the power to make temporary borrowing arrangements for managing their in-year cash flow, which is a sensible provision. The limit for borrowing for such purposes is effectively any amount due to the authority within the period, which it has not yet received. A local authority's receivables at any given time will include sums of money that will in practice not be collected. Until the Minister tells us differently, I will assume that an in-year receivable will include housing revenue account arrears, council tax arrears from previous years and 100 per cent. of the council tax due in the current year. No authority collects 100 per cent. of its council tax and some have a lamentable record of collection.
If the clause is to achieve what it intends, the additional words in the amendment are required so that the limit would be set by reference to amounts receivable within the current period and reasonably expected to be received. For example, an authority that has historically collected 96 per cent. of the council tax due will be allowed to take into account only 96 per cent., not 100 per cent. That is a sensible way to approach borrowing for in-year cash-flow management purposes; it must be based on real, anticipated receipts, not nominally receivable amounts that in practice everyone understands will not be received in full. I hope that the Minister will accept the amendment or undertake to deal with the issue in another way.