Schedule 1 - Capital finance: parish and community councils and charter trustees
Local Government Bill
3:00 pm
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.