Schedule 1 - Capital finance: parish and community councils and charter trustees
Local Government Bill
3:00 pm
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I beg to move amendment No. 46, in
schedule 1, page 71, line 25, after 'chargeable' insert
'and reasonably expected to be received in that period'.
Mr Derek Conway (Old Bexley and Sidcup, Conservative)
With this it will be convenient to discuss the following amendments: No. 47, in
schedule 1, page 71, line 26, leave out from 'chargeable' to end of line 32.
No. 48, in
schedule 1, page 72, line 5, at end insert
'or, where the interest payable is a variable amount established by reference to a base rate or other rate of interest for the time being payable (the ''reference rate''), it would do so if the reference rate remained unchanged to the end of the fixed period.'.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
We now move on to schedule 1, and that is logical because schedule 1 relates to most of clause 19.
Members of the Committee will see that the provisions to which amendment No. 47 refers relate to temporary borrowings. Under the Bill, local authorities will have to meet
''expenses . . . in respect of the period of account in which the expenses are chargeable''.
That is fairly draconian, and we think that the provision should be more in line with reality. When local authorities make provision for expenses, those expenses should, reasonably, be expected to be received in that period, because all sorts of things can go wrong between them being chargeable and being received, and yet, if anything did, the provision would still have to be made.
Now, I am going to have a bit of fun. I will take hon. Members through amendment No. 47 slowly, because the drafting in paragraph 2(3) is pretty tautological and torturous. My hon. Friend the
Member for Poole looks puzzled; he wonders whether it is torturous and tautological; it is probably is, as torture and tautology are not mutually exclusive.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I was making a spelling mistake, but my hon. Friend corrects me.
Paragraph 2(3) says:
''Sub-paragraph (2) does not apply'',
and paragraph 2(2) says:
''A local authority may only borrow''
according to the conditions in sub-paragraphs (2)(a) and (b). That is quite straightforward. Paragraph 2(2)(a) relates to borrowing—et cetera, et cetera—
''by way of temporary loan''.
Paragraph 2(3)(a)(ii) says:
''for the purpose of meeting expenses intended to be met by . . . borrowing in accordance with approval''
so we are putting sub-paragraph (2) back in again. Having taken it out and applying it to borrowing on borrowing on borrowing, we are putting it back in again. If that is not circular and tautological, I do not know what is.
We then reach paragraph 2(3)(b). Having got borrowing on borrowing on borrowing, we get another lot of borrowing
''for the purpose of repaying money borrowed in accordance with approval under sub-paragraph (2)''—
we are putting it back in again. The provision also says where the new borrowing takes place.
The drafting of the schedule is unbelievable. I do not know what the draftsman was on the night that he drafted it, but his thought processes—or hers; I do not know—must have been racing ahead of him. The Minister must explain the schedule. My hon. Friends might have a better grasp of sub-paragraph (3) than I do, even after reading it several times, but the schedule is at best circular, and at worst completely unintelligible. Therefore, amendment No. 47 would delete paragraph 2(3)(a)(ii) and paragraph 2(3)(b).
Amendment No. 48 relates to how the principle of a loan and its interest will be dealt with. A loan will be amortised over several years with the interest calculated for each year and the capital divided by the number of years of the loan. There would be a capital repayment and an interest payment for each year—that is very straightforward. However, the schedule does not provide for a situation when a variable rate loan is taken out. That will be possible under the Government's new regime. Before the new regime, a loan would have been taken out with the Public Works Loan Board. It would probably have been a fixed loan with a high interest rate for several years. However, we are now encouraging local authorities to shop around and take out different types of loans. Variable rate arrangements will be arrived at more often, and there will be instances when local authorities will want to reschedule their loans.
I am probing the Minister, in the gentlest possible way, to tell us whether paragraph 3(2) allows sufficient
flexibility in the system. No doubt he is about to tell us.
Mr Christopher Leslie (Parliamentary Secretary, Cabinet Office; Shipley, Labour)
That was a very interesting speech by the hon. Member for Cotswold, but only because if I did not know better, which I do, it would seem as though he were walking through the Bill and looking at the amendments for the first time without being quite sure how they fit the schedule. However, I know that that could not be the case.
Schedule 1 largely re-enacts the substance of schedule 13 to the Local Government Act 1972, and the wording that the hon. Gentleman said was unintelligible comes largely from that Act. Although I was not around at the time—I was born in 1972—I think that the Act was introduced by a Conservative Administration. [Interruption.] As my right hon. Friend the Minister for Local Government and the Regions points out, at that time the country was about to be plunged into a three-day week and perhaps the parliamentary counsel had difficulty writing the provisions clearly and intelligibly as he worked under candle light.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
The Minister may not have been born at the time, or he might have been just about to be born—I cannot remember whether he had been conceived when that Bill was introduced—but does he accept that two wrongs do not make a right? This House should produce simpler and more intelligible legislation. If the drafting was wrong in the previous instance, we should take every opportunity to put it right and make it simpler on subsequent occasions.
Mr Christopher Leslie (Parliamentary Secretary, Cabinet Office; Shipley, Labour)
I can certainly endeavour to pass on those comments to parliamentary counsel.
Amendment No. 46 would put a significant constraint on the ability of parish and town councils to borrow temporarily for cash-flow purposes. That constraint is unnecessary and we resisted similar provisions under clause 5. My right hon. Friend the Minister of State dealt with some of those points. Amendment No. 47 seeks to delete provisions that would in turn raise doubts about the ability of a parish council to refinance borrowing or a loan and would also raise doubts about the ability to borrow temporarily pending the raising of a long-term loan. I am sure that the effect is accidental as the hon. Gentleman would not want to encumber local and parish councils in that way.
Amendment No. 48 is also unnecessary because paragraph 3 of schedule 1 allows the interest element to follow the charge for the year. While I can understand the direction that the hon. Gentleman is coming from, many of the freedoms for parish and town councils in the application of the rules relating to capital and borrowing are there. These provisions are carrying on. It is important that we get the accounting principles right for these councils. That is what the schedule seeks to do.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
First, I can assure the Minister that I have not just come fresh to these amendments. I might have been busy on planning matters for the past few weeks, but I have spent a few hours looking at this Bill. He has had nothing else to do but look at it for weeks and he has a team of civil servants behind him.
No wonder he knows the answer to every question. We shall look carefully to see how much extra fuel he needs from behind him. He should be careful before he starts making those sorts of accusations.
I accept that the wording on this tortuous and tautological subsection (3) has been lifted from another Bill. I make the point again that two wrongs do not make a right. George Bernard Shaw said that genius is simplicity; I would add that any fool can make it complicated. It is the easiest thing in the world to draft a clause to do what one wants and to make it hideously complicated. The difficult thing is to make it really simple while ensuring it still does what one wants it to do. That is the challenge I set for future draftsman. We have had a good canter around the schedule and I will not press the matter any further. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.