Local Government Finance (England) Special Grant Report (No.90) (HC611)

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Dr. Whitehead: Some of the hon. Gentleman's suggestions are rather utopian. The prudential guidelines will not be a panacea for all local authorities' concerns about whether they have the funds to borrow for what they want to do. Nevertheless, they are a substantial step forward in ensuring that they have different strings to their bows and different options available to them: the outcome that the hon. Gentleman wished for in respect of funding capital programmes. In future, PFIs will be among several options for local authorities, which may take options based on their analysis of what is to their best advantage and how capital schemes can be funded over the period for which they want to be supported while they are building capital projects and so on.

Raising funds by bond issue is a much more expensive way of funding for capital than the route that would be taken, especially under the prudential guidelines, of borrowing from the Public Works Loan Board.

Mr. Moss: Paragraph 5 of the Minister's informative note states that Departments have annual allocations of PFI credits that may not be exceeded. The total in the 2000 spending review came to £4 billion over what I calculate is a three-year period. Does that mean that there is an annual limit of, say, £1.3 billion on the credits, or is there a rollover of underspent credits by Department by year? Is the list in annex A a list of those authorities that started PFI schemes perhaps last year and new authorities with new schemes starting the current year or next year, too?

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Dr. Whitehead: The list covers those schemes that have already been endorsed. As it says in paragraph 5 of the note, the allocation of PFI credits is an allocation that may not be exceeded. The limits of total capital investment that can be supported relate to a limit against which local authority PFI bids need to be assessed. If that limit has been exceeded, the programmes that are announced—obviously those programmes will take place over a number of years—have to fit in with the total amount of credits that have been announced as available.

To answer the hon. Gentleman's specific questions, yes, rollover is possible and use in advance is also sometimes possible. The system is reasonably flexible. That brings me to the precise point that he raised about the firefighters' uniforms proposal for London, which was a capital bid under PFI. There were questions about whether the replacement and renovation of uniforms constituted a capital bid of the type that the PFI scheme had been set up to fund, but it was scored in terms of the PFI funding that was available for fire brigade capital programmes. He should remember that it was considered in the context of other bids, which were also important. I can understand people who were disappointed about that bid taking it as though it were in isolation, but it was set against other bids that had succeeded and were also for important measures. The authority can put that bid into a future year's allocation if it so wishes.

In terms of the response to the new dimension of emergencies that the hon. Gentleman mentions, I hardly think that £53 million is a trifling sum for decontamination and protective equipment. It is by no means the total sum that has been suggested as appropriate, as he quite rightly points out. That sum was allocated at an early stage to allow the fire service to get on with the procurement of the equipment under the arrangements, jointly entered into with the Department of Health, that made it the lead authority on mass decontamination. I very much welcome that early funding. I hope that he will do the same.

Mr. Foster: I am conscious that there is shortly to be a Division in the House. If the only issues to which the Minister has yet to respond are mine and if it would

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help the Committee, I would be happy if he wrote to me, particularly on the assurance about local government funding.

Dr. Whitehead: I can very quickly give the hon. Gentleman the assurance that he requires. Any new financial system will not leave local authorities stranded as far as PFIs are concerned. Indeed, the commitments that have been entered into on the funding for the revenue consequences of PFI borrowing will continue and will ensure that the local authority, having entered into that PFI deal, will have the necessary funds available to discharge its responsibilities under it. That is right.

Mr. Moss: I want to take the Minister back to the question that I posed a moment ago about the limit on PFI credits. The figure on the 2000 spending review was £4 billion. How much of that total ring-fenced allocation of credits has been taken up in years one and two?

Dr. Whitehead: I cannot give the hon. Gentleman the exact figure. I will be happy to write to him about that. As I understand it, the vast majority of that funding has been taken up precisely because more authorities with properly validated applications have applied for it than there is money to give to local authorities annually by allocation.

We have had an exhaustive examination of the report. I believe that the case has been examined thoroughly and that the report represents a way forward by choice for local authorities. It is necessary to approve the report to ensure that the funding to local authorities for their commitments continues and I hope that the Committee will endorse it. I commend it to the Committee.

Question put and agreed to.


    That the Committee has considered the considered the Local Government Finance (England) Special Grant Report (No. 90) (HC 611).

        Committee rose at twenty-five minutes past Five o'clock.

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The Following Members Attended the Committee:

        Gale, Mr. Roger (Chairman)
        Anderson, Janet
        Brazier, Mr.
        Clark, Paul
        Crausby, Mr.
        Cunningham, Dr. Jack
        Foster, Mr. Don

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        Knight, Jim
        McNamara, Mr.
        Moss, Mr.
        Sawford, Phil
        Simon, Mr.
        Stringer, Mr.
        Whitehead, Dr.

        The following Member also attended, pursuant to Standing Order No. 118(2):

        Francis, Dr. Hywel (Aberavon )

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