Clause 86.—(PRECEPTS BY RIVER AUTHORITIES.) (Hansard, 18 July 1963)

§ Sir K. Joseph
I beg to move, in page 83, line 9, to leave out "or replacement fund" and to insert: replacement fund or sinking fund". With permission, Mr. Deputy-Speaker, may we take Amendments Nos. 91 and 93 at the same time?

Mr. Deputy-Speaker
Yes, if that be the wish of the House.

§ Sir K. Joseph
This group of Amendments provides for a river authority to make contributions to a sinking fund maintained by it by way of precept in two circumstances. In the first place, to provide for a sinking fund maintained for any of its transferred functions—the House will remember that the transferred functions are financed by precept—and, in the second, to enable it to 865 make contributions to a sinking fund, set up as a result of its new functions, but in the period prior to the inauguration of charging schemes. The House will remember that, before charging schemes are effective, all new functions, too, are financed by a combination of licence charges and licence fees plus the difference made up by precept.

§ Mr. C. Hughes
I must say that the term "sinking fund" in the context of this Bill gives us a rather sinking feeling. A sinking fund in relation to the transferred functions concerning land drainage, and so on, I understand, already exists under the rivers board. Perhaps the Minister will confirm that it will, therefore, be a question of transferring or, at least, renaming the sinking fund relating to the transferred functions in the name of the new river authority.
What will be the purpose of the sinking fund relating to the new conservation functions? As I understand, it has been suggested throughout our discussions that there will be adequate funds to meet the initial expenses of the river authorities in relation to staffing hygrometric schemes, and so on. What is the purpose of the second sinking fund concerning the new functions?

§ Sir J. Joseph
When works are embarked upon they will be financed, under authorisation by the Minister, by way of mortgage, with temporary borrowings until the mortgage is organised, if necessary, and a sinking fund will have to be set up to provide for the repayment of the borrowed money. It is to service a sinking fund set up because of new works on account of new functions started between the second appointed day and the starting of the charging scheme that will call for a precept to bridge any difference between the money provided by way of licence fees and ad hoccharging schemes and the obligations of the river authority. It is necessary for them to be able to fill this gap by way of precept and the Bill as drafted only allows them to do so to serve a replacement fund.

§ Mr. Wainwright
What amount of interest will be charged on any money loaned by the Government to the river authorities? Supposing that the river 866 authorities find that their income does not cover their expenditure, who will be responsible for their financial state?

§ Sir K. Joseph
I am sorry for the hon. Member. He has not had the privilege of attending seventeen sessions upstairs on the Bill, otherwise he would know the answer to that question.
The Government will not normally lend money to the: river authorities. They will raise their money, as river boards do now, and they will pay the "going" rate of interest. They will receive into their water resources account—a special account to serve their new conservation function—the income which they get from licence fees and charges. They will be under the obligation from year to year to balance their account so that that income will suffice to meet their outgoings, including the interest on their loans. They will make their charging scheme in the light of the outgoings which they expect to have to meet. There is, of course, the obligation on them to have their charging scheme approved by the Minister.

§ Mr. Temple
I beg to move, in page 83, line 22, to leave out from "to" to "any" in line 24 and to insert: the amount specified in paragraph (a) of this subsection any amount required to be provided in that financial year by way of new working capital, and there shall be added to, or (as the case may be) deducted from, the amount so specified". The object of this Amendment is to give river authorities the power to build up a working balance. The principle of a working balance was well established under the Rating and Valuation Act, 1925, in respect of county councils and it seems only reasonable that the same principle should be followed for river authorities.
I know that it can be construed that the Clause could be manipulated by river authorities to give them a working balance, but it would not be right for the Bill to leave this House, recognising that working balances are necessary and having regard to the mechanism of Clause 36, assuming that river authorities could manipulate the Clause to give themselves 867 a working balance. It would be far more correct for this House to recognise that a working balance is necessary and to let us have everything above board and to let us have no trouble with the district auditor. I hope that, for these reasons, the Amendment will be acceptable to the House.

§ Mr. Corfield
We do not altogether agree that the arrangements in the Bill do not permit the running of working balances by river authorities. Nevertheless, I know that the river boards are concerned about this matter. We are a little doubtful about some of the argument. However, we accept with goodwill the concern of the river boards and we are willing to accept the Amendment.