Local Loans (Hansard, 30 June 1983)

§ The Economic Secretary to the Treasury (Mr. John Moore)
I beg to move, That the draft Local Loans (Increase of Limit) Order 1983, which was laid before this House on 22nd June, be approved. This is the first such order under a provision of the Finance Act 1982. The procedure is well-established. Any regular attender of the debates—I am delighted to see that the hon. Member for Blackbourn (Mr. Straw) is present—will know that the House is asked periodically to raise the limit on lending by the Public Works Loan Commissioners to local authorities. The procedure laid down by last year's and previous Finance Acts is that a sum is set—in this case £16,000 million— of which Parliament may approve the release in tranches of specified sums. The first of four tranches of £4,000 million was provided in last year's Finance Act. Tonight, we are dealing with the second tranche under the Finance Act 1982.
I should like to emphasise to my hon. Friends that we are talking only about making sure that the Public Works Loan Board has funds to lend. We are not authorising any increase in the capital expenditure of local authorities. That is subject to quite distinct control. The order does not affect public expenditure in the slightest. Whether local authorities meet their borrowing needs from the commissioners or from the private lending market, the public sector borrowing requirement remains the same. The order does not affect the amount that local authorities can borrow from the commissioners, as that is subject to regulation by quotas set by the commissioners on the advice of the Treasury. The order simply makes it possible for the commissioners to carry on lending.
The commissioners still have about £1,380 million in hand. That is one third of the tranche approved last year and may at first sight appear to be a substantial sum to have left but under quota entitlements already set by the Treasury local authorities may draw some £1,600 million more from 1 July than they were able to do up to the end of this month. In addition, authorities can convert their variable rate loans to fixed rate loans, and a contingency of some £1,000 million must be set aside for that purpose. Of course, authorities may take up much less of their allowances than they are entitled to. The point is simply that the Public Works Loan Board must be able to fulfil its existing commitments, so it is prudent for the Government to seek an additional tranche tonight.
I think that the whole House will join me in thanking the Public Works Loan Commissioners for the service that they render with skill and dedication entirely voluntarily, and the staff of the Public Works Loan Board who support their work.

§ Mr. Jack Straw (Blackburn)
This is the first occasion on which the hon. Gentleman has spoken as Economic Secretary to the Treasury, and I offer him the congratulations of the Opposition on his appointment.

§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
I second that.

§ Mr. Straw
Many of my colleagues held the Economic Secretary in great esteem during his time at the 793 Department of Energy, and we shall hold him in similar esteem in future if we do not disagree on too many occasions.
The sums mentioned in the order are extremely large, and at first sight it might appear controversial that a Conservative Government should make an order to double borrowing from the Public Works Loan Board from £4,000 million to £8,000 million. However, as the Economic Secretary explained, the order does not lead to an authorisation of double the capital lending, but simply authorises the board to lend money subject to ministerial approval and approval by the House. In view of that, and in view of the courtesy extended to me by the Economic Secretary when he answered my questions about this matter outside the House, I need not detain the House further, especially as we had extensive discussions on the general principles in a debate on 11 May 1981, and again in Committee on 17 June 1982.