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Standing Committee Debates
Local Government Bill

Local Government Bill

Column Number: 087

Standing Committee A

Tuesday 28 January 2003


[Mr. Derek Conway in the Chair]

Local Government Bill

8.55 am

The Chairman: I am sure that the Minister for Local Government and the Regions can think of no better way to mark his birthday than to be with us in Committee. I congratulate him and the hon. Member for Burton (Mrs. Dean) on a very special day. We will try to make it enjoyable for them.

Mr. Philip Hammond (Runnymede and Weybridge): On a point of order, Mr. Conway. You may have read speculation in the press about the possibility of a challenge by the Fire Brigades Union to the Government's proposal to bring forward in Committee an amendment repealing section 19 of the Fire Services Act 1947. I understand that the basis of that challenge would be that the Government failed to carry out the necessary adequate consultation before making legislative proposals.

One way to air the issues behind this particular legislative proposal adequately and thus perhaps to head off a judicial review challenge would be for adequate time to be provided in this Committee for the consideration of any proposed Government new clause. Have you had any approach from any members of the Committee about the possibility of reconvening the Programming Sub-Committee to ensure that adequate time is available to debate any such Government new clause? It would allow the Government to protect themselves against the charge of bringing forward measures that have not been adequately reviewed and considered.

Mr. Edward Davey (Kingston and Surbiton): Further to that point of order, Mr. Conway. I support what the hon. Member for Runnymede and Weybridge (Mr. Hammond) has said. The Programming Sub-Committee should meet to consider the point he makes. It is important that these matters are fully considered so that a judicial review can be headed off. May I further add that it would be helpful if the Government could table early any related new clauses so that they could be considered by the Committee and others outside it well before we debate them formally? While we suspect that the new clause will be simple, it should be before the House as early as possible.

The Chairman: Clearly what the courts do is not a matter for me in the Chair. However, I am sure that the usual channels will have noted what has been said. If there is request to reconvene the Programming Sub-Committee the Chair will co-operate with that.

The Minister for Local Government and the Regions (Mr. Nick Raynsford): Further to that point of order, Mr. Conway. First, may I thank you for your kind good wishes on this auspicious day? Secondly, as the Committee will be aware, the timetable for the Committee proceedings was announced in the full

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knowledge that the Government intended to move the repeal of parts of section 19 of the Fire Brigades Act and that was certainly taken into account in the timetabling. The judicial proceedings, which we believe are unjustified and without merit, do not hinge on whether the Committee has sufficient time to debate the issue. I honestly do not believe that hon. Members' request for additional time to debate this would have any bearing on the judicial proceedings if they were to be countenanced.

Clause 4

Imposition of borrowing limits

Amendment proposed [21 January 2003]: No. 6, in

    clause 4, page 2, line 26, after 'the', insert 'aggregate level of'.:—[Mr. Hammond.]

Question again proposed, That the amendment be made.

The Chairman: I remind the Committee that with this we are discussing the following amendments:

No. 28, in

    clause 4, page 2, line 26, at end add

    'and the allocation of a share in such aggregate limits to individual local authorities.'.

No. 7, in

    clause 4, page 2, leave out from beginning of line 27 to end of line 2 on page 3 and insert—

    '(2) No regulations may be made under this section unless—

    (a) the Secretary of State has consulted such representatives of local government as appear to him to be appropriate;

    (b) he has laid before each House of Parliament a report explaining the reasons why he considers it necessary that the regulations be made; and

    (c) the report has been approved by resolutions of each House of Parliament.

    (3) Sections 117(1) and (2) do not apply to regulations made under this section.'

No. 49, in

    clause 4, page 2, line 27, leave out subsection (2).

No. 29, in

    clause 4, page 2, line 28, leave out from 'authority' to end of line 29 and insert

    'where he considers that the local authority has not, in setting a borrowing limit under section 3(1), had proper regard to the requirements of section 3(2).'.

No. 31, in

    clause 4, page 2, line 31, at end insert—

    '( ) A limit set under subsection (1) or (2) may not, in respect of any local authority, be set at a level less than the level of that local authority's borrowing on the date that the draft regulation is laid.'.

Mr. Hammond: At this stage I shall not press the amendments. However, we will vote against the clause on stand part. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

The Chairman: With this it will be convenient to discuss new clause 2—Imposition of borrowing limits (No. 2)—

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    '—.(1) The Secretary of State may by regulations set limits in relation to the borrowing of money by local authorities.

    (2) The Secretary of State may only make regulations under subsection (1) if the Code for Fiscal Stability, as provided for in section 155 of the Finance Act 1998, would otherwise be breached in any way.

    (3) Before the Secretary of State may make regulations under subsection (1), the Treasury must prepare and lay before Parliament a document which shall be subject to approval by a resolution of the House of Commons explaining how the Code for Fiscal Stability would otherwise be breached if limits were not set in relation to the borrowing of money by local authorities.

    (4) It shall be the duty of the Comptroller and Auditor General to examine the Treasury's document published under subsection (3) and report to the House of Commons his findings.'.

Mr. Davey: New clause 2 represents a much better approach than the Government's approach because it sets a much clearer description of the circumstances in which macro-economic reasons would trigger the Government's right to interfere in the borrowing of local authorities. As clause 4 stands, we do not know what those reasons might be, because subsection (1) says only that regulations will set guidelines for capping local authorities' borrowing for ''national economic reasons''.

''National economic reasons'' is a broad and vague term. We have had Ministers' assurances in the explanatory notes and in debates that that would be a long-stop and reserve power that would rarely be used, but we still do not know what the national economic reasons are. There has been no description or attempt to set criteria in debates, the explanatory notes or elsewhere, which seems odd. The term could cover many issues that are not necessarily relevant to borrowing. There may be economic reasons why the Government feel that they have to take some measures, but those economic reasons should be germane to the borrowing of local authorities.

That is why new clause 2 talks about the Government's own code for fiscal stability. It was provided for in the Finance Act 1998 and has been continually referred to in Budgets and pre-Budget reports. It sets out the objectives of fiscal policy and the rules by which those objectives will be met. In theory, they are binding on central Government, but, as Governments always do, they have given themselves an opt-out clause. However, the code is supposed to set the framework in which fiscal policy is to be delivered in the long term. For example, it requires the Treasury to make a long-term forecast of the fiscal position of UK plc and sets out whether the public finances are sustainable in different conditions. It has two rules that underpin the fiscal policy. There is the golden rule, which is that over the economic cycle the Government will borrow only to invest and not to fund current spending, and the sustainable investment rule, which relates to public sector net debt as a proportion of GDP.

My point is that the Government have an elaborate code and underpinning rules to direct their fiscal policy. A lot of analysis follows those rules, and it is logical that local authorities should fit into that framework. Their borrowing and fiscal actions must

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be taken into account in the Government's determination of whether they are abiding by their rules and sticking to their code for fiscal stability.

New clause 2 would not use such broad, unspecified ''national economic reasons'' that do not relate to local authority borrowing, but instead take the Government's framework for fiscal policy and include local authorities' fiscal actions within it. I do not think that it is a particularly outrageous request from the Opposition for the Government to keep to their code for fiscal stability.

Mr. Hammond: We are the Opposition.

Mr. Davey: The hon. Gentleman says that, but many people in the United Kingdom do not think that the Conservatives are a good Opposition and are instead looking to the Liberal Democrats to provide the opposition. I am grateful to him for giving me the chance to put that on the record.

The Government should accept new clause 2. It might mean that they have to treat local government with a little more respect. The Government's attitude to local authorities is that the Government should be able to set regulations when they decide that it is right, but they should treat local government with more respect and apply the same codes and rules to local government as they do to themselves. I therefore urge the Minister to reconsider.


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Prepared 28 January 2003