Clause 18 - Local authority companies etc
Local Government Bill
2:45 pm
Mr Christopher Leslie (Parliamentary Secretary, Cabinet Office; Shipley, Labour)
I would prefer statute to be drafted in a certain way, but it is sometimes drafted in a repetitious manner so that it does not exclude any possibilities and avoids loopholes. That brings me to the point made by the hon. Member for Cotswold. The broad purpose of the clause is to preserve and continue the current system. The current system prevents local authorities evading capital controls by operating via companies, and that principle will be preserved in the new system,not only for the prudential limit, but for the national economic reasons limit, which we discussed under clauses 3 and 4.
The hon. Gentleman asked about borrowing safeguards, the auditing regime and protection from fraud. The company laws, including the Companies Act provisions, will apply to local authority companies just as they do to any other limited company. That law contains perfectly adequate protections relating to the auditing of accounts and other matters raised by the hon. Gentleman. Local authority companies do not need to be treated in the different way suggested.
It is important that, if a company is controlled by a local authority and has significant borrowing or significant liabilities, they can be classed and held together with those of the local authority, so that it can properly calculate its liabilities and be certain that it can afford to service the borrowing undertaken in respect of all its activities. That is the simple purpose of the clause. I hope that I have helped to answer some of the points that have been raised.