| Previous Section | Index | Home Page |
Ms Armstrong: I may take more interventions later; meanwhile, I suggest that Conservative Members keep listening, because that will help them to understand what I have been saying.
Conservative Members appear to believe--I deduce this from the new clause itself--that there is no prudent or sustainable strategy for reducing local authority borrowing. Yet the position in local government is fairly healthy. Local authorities' debts have remained steady in recent years; at the end of 1996, they represented only 13 per cent. of general Government debt, and 7 per cent. of GDP.
It is important to allow local authorities themselves to decide how best to manage their debt and their investments, in conformity with good Treasury management practice and the need to achieve best value for money for the local taxpayer and rate payer. By insisting on publication and submission to the Secretary of State of a debt reduction strategy, the new clause would undermine the work that local authorities are already doing, thus necessitating extra spending and more paperwork. That would be undesirable, and unnecessary for local authorities.
Mr. Pickles:
If, as the hon. Lady says, local authorities already have a coherent strategy for reducing debt, what is the problem with announcing what that strategy is?
Ms Armstrong:
The hon. Gentleman's problem is that he lacks patience. I am about to explain to him what local government already does, and why what he seeks would impose more bureaucratic burdens. The former Administration said that they wanted to reduce
Sir Paul Beresford:
We already have the bureaucracy associated with BCAs. Now we suggest a parallel system similar to it. That will indeed double the bureaucracy, and it would not be necessary, but for the fact that the Government feel the need to genuflect in the direction of their manifesto commitment on capital receipts--even though none is being released.
Ms Armstrong:
Perhaps the hon. Gentleman believes that political parties need not think about their manifestos. The Bill meets our commitment in that respect.
It is far from obvious what the obligation to prepare a five-year strategy for debt reduction would require a local authority to do. The Chartered Institute of Public Finance and Accountancy already gives guidance to local authorities, building on section 45 of the Local Government and Housing Act 1989, which requires local authorities to make a Treasury management policy statement. I note that no Conservative Minister in the past seven years, when issuing SCAs, thought it desirable to require local government to produce such a strategy. In fact, existing controls on borrowing appear to have been accepted as perfectly adequate.
Mr. George Stevenson (Stoke-on-Trent, South):
Has not my hon. Friend just put her finger on the bogus nature of the new clause? The previous Government extended the use of SCAs with no such debt reduction requirement. There is surely a world of difference between extending SCAs to stimulate the housing market and meet a need, and issuing SCAs, as the Conservatives did, simply to reduce Government support to local authorities.
Ms Armstrong:
Absolutely. That is why I began by pointing out that the hon. Member for Christchurch had difficulty keeping a straight face.
Local authorities already have a statutory duty to set aside a fixed proportion of their net debt each year from revenue--known as the minimum revenue provision. I see no case for further restrictive controls or further bureaucracy.
The new clause is flawed because it would act on supplementary credit approvals but not on basic credit approvals. As the hon. Member for Mole Valley(Sir P. Beresford) said, basic credit approvals authorise the bulk of new local authority borrowing each year, so much of local authority debt would not be covered by the new clause.
May I deal briefly with the point made by the hon. Member for South Cambridgeshire (Mr. Lansley), who is no longer in the Chamber, about debt-free authorities? Debt-free authorities will not be disadvantaged or penalised by this measure. They will be free to take up credit approvals if they so wish, and they may choose to use them to meet housing need, without ceasing to be debt free, by spending money that they have set aside to meet their debts. That matter is clear because we have been through it several times in Committee, and most Committee members are now clear about the position of debt-free authorities.
The new clause is undesirable and unwanted. I urge the House to reject it.
Mr. Chope:
I am disappointed with the Minister's response, because the new clause was tabled to try to help the Government. The Minister demonstrates the Government's inability to come to terms with the fact that there is more than one way to have a debt reduction strategy. She talks about phasing the payments and ensuring that local authorities pay so much capital back each year, but another debt reduction strategy is asset realisation--[Interruption.]
Labour Members are commenting on the fact that a number of Conservative Members have absented themselves from the Chamber. The reason is that they wish to participate in a democratic election for an important post on a Conservative Back-Bench Committee. They will be back. I am grateful for their active participation in this debate and to debates in Committee.
I remind Labour Members that when the Bill was in Committee, speeches on the Government side were made only by Ministers; none was made by Labour Back Benchers. Indeed, there were no Scottish or Welsh Committee members, despite the fact that the Bill applies to Wales. We surmise that that was because Welsh Members might have wanted to speak, and it was clear that the Government had delivered an edict ensuring that only Government Front-Bench Members could speech.
The Parliamentary Under-Secretary of State for Wales (Mr. Win Griffiths):
You are struggling.
Mr. Chope:
We are not struggling at all. However, local authorities are struggling with the debt burden, which will increase as a result of the Bill.
We suggest that local authorities should be encouraged in the process of asset realisation. During the debate, it has been suggested that the previous Government did nothing to help reduce local authority debt. The previous Administration did a mass to reduce local authority debt, because we enabled people to buy their own council houses, which was the largest privatisation that this country had ever known. Some £20 billion was realised as a result of that process. Without that successful policy, national debt would have increased by even more than it did during the recession.
Some Labour Members talked about the net public sector debt per person. In 1979, when the last Government took office, the Conservative Government pulled this country up from virtually the worst performer in terms of net debt to one of the best, compared with other European countries. At the last general election, the only European country with a lower debt ratio was Luxembourg.
Mr. Sanders:
Was not this country's debt reduced purely because of the privatisation programme and how it related to the public sector borrowing requirement?
Mr. Chope:
We knew all along that the Liberal Democrats were against the privatisation programme. We now have the spectacle that the Government have made some obiter dicta to the effect that they may be in favour of certain privatisation programmes, but even the Liberal Democrats have not yet come round to accepting the benefits that flow from privatisation, particularly in housing--the large-scale voluntary transfer of housing to housing associations, and the sale of individual council
Mr. David Watts (St. Helens, North):
Will the right hon. Gentleman comment on the cost of bed and breakfast to the taxpayer during the 17 years that the Conservatives were in power?
Mr. Chope:
Any money spent on bed and breakfast was too much. One of the problems was that the last Government brought in measures to deal with bogus asylum seekers who came to this country--
Mr. Deputy Speaker (Mr. Michael Lord):
Order. I should be grateful if the right hon. Gentleman would now return to the new clause.
Mr. Chope:
I was looking forward to the opportunity to respond to a point made in an intervention, but I accept your ruling, Mr. Deputy Speaker that it was too wide of the new clause.
The new clause is designed to deal with capital debt reduction. I hope that the House will accept the purpose behind it. The hon. Lady's response was that it would create too much bureaucracy. She said that it would be too burdensome on local authorities to produce a debt redemption strategy, yet we know that any local authority worth its salt could produce such a strategy and should already have an asset realisation strategy, if it is to deliver what its rate and charge payers deserve. [Interruption.] I cannot hear what the Minister is mouthing from a sedentary position. I remain disappointed at her response.
I am grateful to my hon. Friends who contributed to this debate so effectively. During the last Parliament, my hon. Friend the Member for Hertsmere (Mr. Clappison) witnessed from the Front Bench the suggestions made by the Labour party, leading people to believe that a pot of gold would be released as soon as a Labour Government came to power. My hon. Friend drew attention once again to the manner in which those people were cruelly misled.
My hon. Friend the Member for West Dorset (Mr. Letwin) made another powerful speech, and effective interventions were made by my hon. Friends the Members for Brentwood and Ongar (Mr. Pickles) and for Mole Valley (Sir P. Beresford). We think that this issue is sufficiently important to divide the House. The burden of local authority debt should be brought under control and we are frightened that, under the present Government, it will run completely out of control without such a measure.
Question put, That the clause be read a Second time:--
The House divided: Ayes 142, Noes 355.
5 pm
| Next Section
| Index | Home Page |