What a pleasure it is to return to the deliberations of the Committee after a short break, during which I have been able to follow the proceedings with interest.
The new clause deals with the Board of Public Works Loans Commissioners, commonly known as the Public Works Loan Board or PWLB. It is a statutory body, which dates back to the Public Works Loans Act 1875. With the diligence for which the Committee is rather quickly gaining a reputation, I know that hon. Members will have had a look at that Act. Just in case anyone left it in their office before rushing to do their work in Committee, I brought a copy of the Act with me. I have also brought the record of the Second Reading of that Act, which established the principles that we are discussing today and which the then Chancellor of the Exchequer introduced. I will give a prize by the end of the Committee’s consideration—I do not mean this afternoon—for any Member who can tell me who the Chancellor was on that occasion. He said, saliently:
“What the Government aimed at was, in the first place, to secure the Treasury against inconvenient, inexpedient, and irregular calls being made upon it through the Public Works Loans Commissioners.”—[Official Report, 24 May 1875; Vol. 224, c. 800-01.]
If it were still the case that the commissioners were doing that in practice, there might not be a case for the measures in the Bill.
The PWLB consists of 12 commissioners appointed by the Crown to administer the making of loans to local authorities. Commissioners are independent of the Government and are unpaid—indeed, unpaid by statute. Under section 4 of the National Loans Act 1968, which I also have with me, the PWLB sets a statutory lending limit, which is currently £70 billion. The existing level of debts amounts to about £64 billion. During consideration in the House of the Bill that became the National Loans Act, the then Chief Secretary to the Treasury made it clear that, even at that stage—noting that most of the legislation being dealt with was made in the previous century and therefore “is no longer relevant”—the purpose of the body was to secure the public interest in respect of loans taken out by public bodies. That referred not only to local authorities but to nationalised industries, which were dealt with in some detail in that consideration. Increasingly, those public bodies have become local authorities.
Since 2004, however, decisions on such borrowing have been fully devolved to local authorities. In my judgment that was an enlightened decision and, as I cast my eye around the Room to see the source of that enlightenment, my eye descends on the right hon. Member for Greenwich and Woolwich, who, as the Minister at the time, introduced the legislation that empowered local authorities to make decisions about investment and the associated loans in a fresh way. The system is, in essence, one of self-regulation. Local authorities regulate the regime and are now free to finance capital projects by borrowing without requiring Government consent, provided that they can afford to service the debts out of their revenue. That qualification is critical. When the right hon. Gentleman introduced the legislation—again, I have the record of his contribution on that occasion—he made it clear that that important check secured the public interest, as the Chancellor of the Exchequer in 1875 and the Chief Secretary in 1968 were so keen should be the case.
As a result, the decision-making functions of the PWLB commissioners became, in practice, obsolete. Local authorities were responsible for their own decisions on whether to borrow and how much. Further, the day-to-day operations of providing loans are now carried out by the Debt Management Office, or DMO, which is an Executive agency—