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Baroness Hamwee: At the risk of detaining the Committee for just another minute, perhaps I may put one point on the record. I should like to thank a voluntary organisation in London--voluntary in the sense that it is funded in part by the Corporation of the City of London but collects funds from other sources also--called Vision for London. In reporting on the successes and failures of bids in London, that organisation has produced the most accessible and one of the most helpful reports that I have ever seen. I mention that because I do not think that this is the right way to run the country or the scheme. Reporting

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on such schemes and allowing successful and, more importantly, unsuccessful bidders to understand what is going on is important.

Lord Williams of Elvel: We have come to the end of this particular argument. In the polite words, I shall read the Minister's words in Hansard and return to this at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 222 and 223 not moved.]

Clause 122 agreed to.

[Amendment No. 224 not moved.]

Clause 123 [Regeneration and development: forms of assistance]:

Baroness Hamwee moved Amendment No. 225:

Page 72, line 40, after ("guarantees,") insert--
("( ) borrowing approvals to local authorities,
( ) the raising of any capping limit to enable local authorities to meet revenue expenditure associated with financial assistance given under section 122,").

The noble Baroness said: Amendment No. 225 is grouped with Amendment No. 226 which stands in my name and that of the noble Lord, Lord Williams of Elvel. It may be convenient if we discuss the two amendments together. Concentrating briefly on Amendment No. 226, it is intended to make it entirely clear that local authorities have the power to do things for which the Secretary of State is enabling the funding to be provided--I apologise to the Committee for the cumbersome language that I have just used. It is important that all potential partners are assured that those activities are intra vires in order to allow partnerships with the private sector to take place; otherwise the private sector will be frightened off, as we have seen recently.

Amendment No. 225 has been tabled to seek assurances that the assistance that is given may include the lifting of controls on expenditure by local authorities to the extent required to enable them to play their part in partnerships for regeneration. I have mentioned specifically borrowing approvals and the raising of capping limits. I have included borrowing approvals because local authorities need permission to borrow money. I have included the raising of any capping limit because capital expenditure has revenue consequences and if revenue cannot be spent because of a capping limit, the debt cannot be repaid and that will constrain regeneration activity which involves capital expenditure. Those matters are important and need to be addressed although perhaps not in the way that I have dealt with them. However, I am afraid that I was unable to resist the opportunity of highlighting the way in which local authorities may be forced to contribute to the partnerships in a less complete way than many of them would like. I beg to move.

9.30 p.m.

Lord Williams of Elvel: I speak to Amendment No. 226. It is grouped with Amendment No. 225 to which the noble Baroness has spoken. The noble Baroness has correctly pointed out that there is some

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difficulty about the vires of local authorities to become involved in the regeneration and development of their areas. The purpose of Amendment No. 226 is to put this beyond doubt. The Committee will be aware of the recent case of Allerdale District Council v. Credit Suisse which has raised the question whether local authorities have the power to support particular forms of regeneration not specified by statute. That uncertainty has discouraged the private sector from participating with local authorities. In Allerdale District Council v. Credit Suisse the High Court ruled that a guarantee given by the district council to the developer of a recreational facility was ultra vires. As a result, the contract was made unenforceable and void.

It is clear that the companies involved took legal advice. They were advised that they should not collaborate with local authorities--this advice has been given by lawyers since--where there was uncertainty or doubt as to whether those authorities had specific powers to undertake the activities concerned. This is anomalous in view of the increasing pressure on local authorities to act in partnership with the private sector, which we support. The Committee will generally acknowledge that the ultimate aim is to secure more regeneration work undertaken on a partnership basis. There is doubt about the vires of local authorities as a result of this decision and other cases. The amendment is designed to clarify the position so that local authorities and companies, private individuals and institutions can feel comfortable about co-operating in regeneration matters.

Earl Ferrers: I deal first with Amendment No. 225 proposed by the noble Baroness, Lady Hamwee. This would extend the list of possible forms of assistance to include credit approvals to enable local authorities to borrow to fund capital projects. It would also raise capping limits to help authorities meet revenue costs.

Assistance under the single regeneration budget challenge fund is available to a range of bodies including, but not limited to, local authorities, and for both capital and revenue projects. We decided to offer a form of support that provided the maximum flexibility and was of benefit to everyone. Therefore, at present we provide assistance in the form of grants. The single regeneration budget was formed by a combination of 20 existing programmes that offered support by both grant and credit approvals. We moved to a grant-only regime having first consulted the local authority associations to ensure a simple, flexible system that could be used to fund capital or revenue projects by the range of bodies already supported under the single regeneration budget, and by the broad-based partnerships which submitted bids under the single regeneration budget challenge fund.

We believe that it would be a retrograde and unnecessary step to return to credit approvals. Most partnerships would continue to need grant to support revenue projects, or to support capital projects by private sector partners. So projects would receive a combination of grant and credit approvals. That does not mean that the Government's funding will be any bigger.

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All it means is that it would come via two routes. That would create greater bureaucracy within individual partnerships and in offices for the regions.

Decisions on capping limits are taken by the Secretary of State each year in the context of the demands on local authorities, and the interests of the national economy. Adjustments to capping limits do not generally reflect the consequences of individual decisions of various local authorities on their spending priorities, such as that resulting from an authority's successful bid for assistance under the single regeneration budget challenge fund. It would be inappropriate to use primary legislation to dictate the factors which should be taken into account.

I turn now to Amendment No. 226 proposed by the noble Lord, Lord Williams of Elvel. This would seem to provide that, once the Secretary of State has given financial assistance towards an activity falling within Clauses 122 to 125, that general function would become a function of local authorities generally.

District councils and unitary authorities already have a widely drawn economic development power under Section 33 of the Local Government and Housing Act 1989. This broad power, and other specific provisions which exist in separate legislation, allow local authorities to undertake a broad range of regeneration activities, and are sufficient to allow them to participate fully in work related to the single regeneration budget.

These clauses relate to the Secretary of State's powers to give support. He can support local authorities which spend under their proper powers. If there were any doubt about those powers, that would be a separate question. For those reasons, it would not be appropriate to include the two amendments in the Bill. I hope that the noble Baroness and the noble Lord will agree to that.

Lord Williams of Elvel: Has the Minister--I am sure that he has--considered the case of Allerdale District Council v.Credit Suisse? It is an important landmark case as to whether local authorities have the vires to make a contract, whether they have the vires to enforce that contract, and whether the other parties to the contract have the vires to enforce that on the local authority within the context of the present law? I am advised that at the moment that is not the case without clarification. That is the point of the amendment. Local authorities should, as we all agree, be entitled to enter into proper partnerships with the private sector to encourage regeneration. I hope that the Minister has considered this case carefully and can give us a proper response before I sit down.

Earl Ferrers: I would not give a proper response before the noble Lord sat down, I should wait for him to sit down. Now that he has sat down, I shall give him the response. It would have been discourteous to have us both on our feet at the same time. I should prefer to give a considered answer later about a specific case. It would be inappropriate to discuss an individual case upon which there has been a legal judgment. If I may, I shall write to the noble Lord about the matter. In general, the case to which he referred (Allerdale District

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Council v. Credit Suisse) concerned a local authority's guarantee powers, whereas the clause that we are debating relates to the Secretary of State's power to give assistance. It concerns guarantees and not regeneration. That is as far as I can go at the moment but I will consider the noble Lord's points and write to him.

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