HC Deb 30 June 1980 vol 987 cc1261-3

'For section 8 of the Act of 1971 (borrowing powers) there shall be substituted the following section— 8.—(1) Subject to the following provisions of this section the Authority shall have power to borrow such sums as it may require for performing its functions. (2) The Authority's power to borrow sums in sterling otherwise than by way of temporary loan shall be limited to borrowing from the Secretary of State, or with the consent of the Secretary of State from the Commission of the European Communities or the European Investment Bank, any sums which the Authority may require for capital purposes or for fulfilling a guarantee entered into by the Authority. (3) Except as provided by subsection (2) above, the Authority may borrow any sums it has power to borrow under subsection (1) above from the Secretary of State or, with the consent of, or in accordance with a general authorisation given by, the Secretary of State, from any other person (and whether in sterling or in currency other than sterling). (4) The Secretary of State shall not give any consent or authorisation for the purposes of subsection (2) or (3) above except with the approval of the Treasury. (5) A statement in writing by the Secretary of State to the effect that the approval of the Treasury has been given for any such consent or authorisation shall be conclusive evidence of that fact in any legal proceedings. (6) The aggregate amount outstanding in respect of the principal of any money borrowed by the Authority under this section and the initial debt shall not exceed £200 million.'.—[Mr. Tebbit.]

Brought up, and read the First time.

Mr. Tebbit

I beg to move, That the clause be read a Second time.

Again, this is a relatively uncontroversial clause whose purpose is to clarify the borrowing powers conferred on the Civil Aviation Authority by section 8 of the Civil Aviation Act 1971, and to increase the authority's borrowing limit from £125 million to £200 million. This clarification is necessary as a result of an amendment to section 8 of the 1971 Act by the Civil Aviation Act 1978, which did not fully take account of the provisions of the Statutory Corporations (Financial Provisions) Act 1975. The latter removed the restrictions on the CAA as to the source and the terms of its foreign currency borrowings.

As presently worded, section 8 of the 1971 Act thus appears more restrictive of the CAA's borrowing powers than is the case. It is highly desirable that potential lenders of funds to the CAA should not be in doubt about the extent of the authority's powers to borrow. Therefore, the proposed clause makes those powers clear. It also simplifies the wording of section 8 of the 1971 Act.

The new section 8 of the 1971 Act inserted by the new clause does not alter the terms of the CAA's borrowing powers, and it continues to provide that the Secretary of State's consent and Treasury approval of that consent are both required before the CAA may borrow.

The proposed clause also provides in subsection (5) that a written statement by the Secretary of State to the effect that Treasury approval has been given to his consent to the CAA to borrow shall be conclusive evidence of the existence of Treasury approval. This provision is designed to ensure that lenders of funds to the CAA are not in any doubt about whether Treasury approval has been received. It should serve to eliminate unnecessary correspondence with lenders who wish the Secretary of State to assure them that Treasury approval has been obtained.

Subsection (6) of the new clause increases the CAA's borrowing limit from £125 million to £200 million. This increase is required to cover the CAA's substantial capital investment programme over the next few years. The CAA's outstanding borrowing currently totals more than £100 million and the existing borrowing limit of £125 million is insufficient to carry it through 1981. The new limit of £200 million proposed by the new clause should permit the authority to meet its needs over the next four to five years.

Subsection (6) of the proposed new section 8 no longer includes a technical provision, first enacted by section 5(1) of the 1978 Act, which enables the CAA to exceed its borrowing limit for the purposes of paying off the whole or part of the initial debt or any loan. This technical provision, which was needed to permit the authority, when close to its borrowing limit, to exceed temporarily that limit during the process of rolling over loans, is no longer required as a result of the proposed increase in the CAA's borrowing limit, and is consequently repealed.

This new clause gives rise to three consequential amendments to schedule 3, part II.

I commend this new clause to the House. The hon. Member for Hackney, Central (Mr. Davis) grappled with some of these problems, and I am sure that he, too, will welcome it.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Further consideration of the Bill adjourned.—[Mr. Berry.]

Bill, as amended (in the Standing Committee), to be further considered this day.