§ 6.28 p.m.
§ Order of the Day for the Second Reading read.
§ LORD BESWICK
My Lords, I rise to move the Second Reading of this Bill. The Bill has two purposes. One is to provide a fund for the Loan Commissioners for lending to local authorities. The second simplifies the loaning procedure. The sum provided in Clause 1 is £500 million. It is expected that this will be adequate to enable the Board to meet the requirements of the local authorities within the limits laid down and the percentages already stated, until well within the next financial year. After that period, of course, Parliament will have the opportunity to look again at the situation and make further provisions suitable to the situation then obtaining and in the light of the experience gained by the operation of this Bill.
There is also provision for an amount up to another £50 million to enable the Loan Commissioners to enter into commitments for loans which will, in practice, be taken up after the expiration of the present Act. This follows the provisions of the previous Act, although the amount involved in this Bill is somewhat smaller.
198 Clause 2 dispenses with the previous obligation on the borrowing authority to execute a written mortgage before money is advanced. The new procedure, as I think will be agreed, will save both time and labour. Loans which are to be secured on revenues will be made by virtue of a simple agreement on the terms between the Loan Commissioners and the borrowing authority. On the handing over of the money, the loan will be secured automatically on the authority's revenues.
Clause 3 provides a convenient procedure for the recovery of stamp duty in respect of these loans. This Bill is really concerned with establishing machinery, and rather more efficient machinery than previously existed. Both sides will, I think, approve this machinery, although I know that a number of my noble friends would like to see the machine more fully utilised and a greater proportion of local government finance raised in this way. However, I can say that much has been done. The borrowing limits now enable local authorities to get the first £100,000 of their requirements from the Board, as against the previous limit of £50,000. In this way, some of the smaller authorities will be able to raise all their requirements. Larger authorities will be able to get up to 30 per cent. of their borrowing within a year on capital requirements if this figure is greater than the £100,000 limit. In regions in Northern and North-West England, and in Scotland and Wales, local authorities will be able to go to the Board for 40 per cent. of their requirements.
All this, I think, should be helpful and, as I have said, Parliament will be able to review the situation in about a year's time. As can be seen, like the Bill that we have just been considering, this Bill is largely concerned with the provision of finance. Though not a Money Bill, in the strict sense of being certified by the Speaker, I think that in the circumstances the House may well agree that the Committee stage should be negatived and that the remaining stages of the Bill taken as indicated on the Order Paper. In the meantime, I beg to move the Second Reading of this Bill.
§ Moved, That the Bill be now read 2ª.—(Lord Beswick.)199
§ 6.32 p.m.
§ THE EARL OF DUNDEE
My Lords, we welcome this Bill, which generally carries out what was envisaged by the White Paper of the previous Government two years ago. It was then estimated, in paragraph 18 of the White Paper, that the call on the Exchequer would amount to £200 million in the first year, rising by about £100 million each year to £500 million in the fourth year. In the previous paragraph it was proposed that each local authority should be allowed to meet the first £50,000 of its long-term borrowing needs from the Board in the first year of the arrangements, and the White Paper went on to say that it might be possible subsequently to raise that sum to £100,000. This has now been done.
As for the figure of 40 per cent. mentioned by the noble Lord, Lord Beswick, the intention in the White Paper was that in the first year local authorities should be allowed to obtain 20 per cent. of their long-term borrowing needs, and that thereafter the amount should be increased by 10 per cent. each year, until a maximum of 50 per cent. was achieved in the fourth year. Now an alternative plan, which I think is an improvement, has been decided by the present Chancellor. Instead of going up to 50 per cent., we shall go up to 40 per cent. for the areas which are most in need of this kind of assistance—that is, in Scotland and in the North of England.
The whole basis of this Public Works Loan Board borrowing by local authorities is a form of indirect subsidy which allows them to get money a little more cheaply than on the open market. It also helps the smaller authorities who might have difficulty in borrowing at all. I think that the Government have struck the right balance, and I see no reason to detain your Lordships further on this Bill, of which we entirely approve.
§ On Question, Bill read 2ª: Committee negatived.
§ Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 22), Bill read 3ª, and passed.