COMPANIES SUBJECT TO LOCAL AUTHORITY INFLUENCE (Hansard, 13 June 1989)

§ Mr. O'Brien
I beg to move amendment No. 289, in page 66, line 50, after `aggregate', insert 'within any period of twelve months'.

§ Mr. Deputy Speaker (Mr. Harold Walker)
With this it will be convenient to consider the following amendments:
No. 290, in page 67, line 1, after `made' insert `that period of twelve months'. No. 291, in page 67, line 4, after `guaranteed', insert 'in that period of twelve months'. No. 292, in page 67, line 8, after 'owned', insert 'at any time within that period of twelve months'.

§ Mr. O'Brien
The four amendments all refer to the same principle. We request that after the word "aggregate", the words within any period of twelve months should be inserted. The purpose of the amendments is to fix a time limit for calculating business association when the local authority has made a grant or loan, or holds stocks or shares in a company. Amendment No. 289 is in line with the 12-month period specified in clause 60(3)(a), where the relationship of payment to turnover is defined.
Clause 26(3) specifically permits local authorities to invest in commercial, industrial or public undertakings and to acquire shares or loan capital in such companies. We consider that the private sector often wishes to see and values a degree of local authority involvement, especially because of the expertise that the local authority can offer.
I want to refer to the question of a company whose principal business is the disposal of waste. Obviously, local authorities, especially the metropolitan authorities, are involved in the question of waste disposal and the production of heat or electricity from waste.
We suggest that, where there is a particular involvement, the time limit for calculating business 857 association should be 12 months, as referred to in other parts of the Bill. Indeed, as was made clear in Committee, a significant amount of concern about that could be found among Conservative Back-Benchers. The hon. Member for Ealing, Acton (Sir G. Young) referred to personal associations in local authorities and to local government influence.
There is a substantial need for the Government to consider the amendment and our suggestion that references to a six-month period should be amended to read "12-month period" in order to give local authorities better opportunities for accountancy in that area of business association.

§ Mrs. Virginia Bottomley
It is important to make a distinction between everyday transactions between local authorities and influence companies and capital grants. For everyday transactions, the test in clause 60(3)(a) is only satisfied within a perod of 12 months if such payments account for at least half the company's turnover. However, the test in clause 60(3)(c) relates specifically to a company's capital base and the proportion of that which has been supported by grants, loans or other forms of support from a local authority.
It would not be appropriate to qualify that to apply only to grants, etcetera, provided within a specific period as proposed in the amendments. The test must be an absolute one because a company that has relied on a local authority's support for at least half its capital base would almost certainly be subject to that authority's influence, irrespective of when the support was provided. When that is coupled with a 20 per cent. or higher personnel link, the company would undoubtedly be subject to the dominant influence of the authority.
I strongly urge the House to reject the amendment.