Clause 13 - Security for money borrowed etc
Local Government Bill
10:30 am
Mr Robert Syms (Poole, Conservative)
I, too, would like a further explanation of the clause. I presume that borrowing includes leasing. Usually, equipment such as a vehicle, fire engine or computer equipment is leased and if the amount due is not paid the equipment is simply recovered. That could not happen under the clause as the High Court would have to appoint a receiver if a sum of more than £10,000 were involved.
Like my hon. Friend, I question whether we should proceed on that basis as it would make it difficult for authorities to put bonds into the marketplace. Bonds sometimes have a preferential position in the credit arrangements, which gives local authorities an opportunity to launch a bond for a specific, perhaps limited, purpose. For example, the Greater London Authority discussed whether a better way of organising the affairs of the London Underground would be to have a bond and a public corporation, which would be secured against Underground income. Under the clause, it would be secured against the income from people in the London charging area.
I am feeling my way in the matter and I should like a little more explanation from the Minister. Does the proposal include leasing? What impact would it have on local authorities that wanted to launch bonds? What would happen if a local authority such as Bristol decided that it wanted to raise money for a tram scheme? Is it implicit in the clause that the risk would be wholly on the council tax payers in the area or could that be ring-fenced against the income or assets of the enterprise?
What the clause proposes may be a good thing but I want clarification about whether it is a liberating or a constraining part of the Bill.