HL Deb 10 February 1970 vol 307 cc825-30

3.26 p.m.


My Lords, I beg to move that this Bill be now read a second time.

Moved, That the Bill be now read 2a. —(The Earl of Listowel.)


My Lords, this is a general powers Bill to equip this important County Council with statutory powers to carry out its many functions. Among the powers for which the Bill asks are powers to borrow money—including borrowing abroad— and powers to lend money, and it is on the latter powers to lend money that I wish to make a brief comment. The powers of lending asked for in the Bill go rather wide, and a good deal wider than Parliament has granted in previous Bills for local authority lending. The lending powers asked for in the Berkshire County Council Bill are set out in Clauses 35 and 39. Clause 35 would allow the County Council to lend to any local authority—and I stress "any local authority"—and Clause 39 would allow the County Council to lend to any person.

The recent precedent in this field is the powers given to the Dudley Corporation in the Dudley Corporation Act 1969, but the lending powers in that Act were a good deal narrower than the powers asked for in this Bill. I think your Lordships will find it relevant to recall that, when the Dudley Corporation Act was being considered in another place, attention was called to the extent of the lending powers. That Act, as originally drafted, would have allowed the Dudley Corporation to lend to any local authority, but as a result of the action taken by the Commons the lending powers were limited to—and I quote from Section 109 of the Dudley Corporation Act: (a) (i) an authority of which the Corporation is a constituent member; or (i) an authority to which the Council appoint representatives; or (iii) a member authority of a consortium of which the Corporation. is also a member; or (b) the sum lent by the council is part of a larger sum borrowed by the Corporation by way of a stock issue, bond issue, foreign loan or issue of bills for their own needs and for the needs of another local authority seeking to raise money by the same means. The limitation imposed was, as noble Lords will have observed, that the local authority to which they lent should be one with which the Dudley Corporation had a direct intimate relationship. I suggest that the guiding principle was evidently that, as Dudley Corporation were going to pledge the creditworthiness of the ratepayers of Dudley in order to raise the loan, they should limit their lending-on to other people to borrowers whose credit they knew was completely sound and as good as their own. This implied that they should not lend to any local authority anywhere about which they would not necessarily know very much. I suggest that this is a sensible limitation, and that other local authorities seeking statutory powers in Private Bills for borrowing and lending should work within it. I suggest, in particular, that this might apply to the Berkshire County Council Bill. I would also suggest that Clause 39 of the Bill, to which I have referred—the power to lend to any person—should be considered in this light as well.

Finally, my Lords, I should like to make clear that I am entirely in favour of giving the Berkshire County Council— and, indeed, any other local council—all the powers they need to carry out their important and arduous duties, but I believe that the limitation in lending which I have suggested not only is sound in principle but would avoid the possibility of a difference of opinion occurring between this House and another place.

3.31 p.m.


My Lords, the noble Lord, Lord Nugent of Guildford, has raised the fundamental points about this Private Bill, and they are, of course, points that will affect other Bills that are before Parliament at the moment. I do not think that the Government will find themselves in serious disagreement with the noble Lord, though we might put the emphasis slightly differently on some aspects. Perhaps I may look first at the provision which enables the county council to lend money to local authorities. I would remind the House again that there are nearly 20 Bills which will be affected by this, and which will have a similar provision, if not exactly the same one.

As the noble Lord explained very clearly, the background to this is that local authorities who want to borrow money, particularly if it is from abroad, naturally get better terms by borrowing a large amount, and to take advantage of this they want to be able to act together with other local authorities. Of course, one way of doing this is for one authority to borrow a larger amount than it needs for its own purposes and to lend on some of that total sum to its partners in the enterprise. This seems absolutely reasonable, as I am sure the noble Lord and the House will agree.

Powers have been granted fairly readily to councils who sought a similar power restricted to lending on money to their own county districts. But the point which I think the noble Lord mainly has in mind is that the Bills deposited in the present Session, with one exception, put no restriction on the local authorities to which the money may be lent. As the noble Lord has said, a similar situation arose in the last Session over the Dudley Corporation Bill, and, as he described to us, the Bill came to us in an amended form which incorporated what has now become famous as the Dudley Clause. This meant, as he said, that joint authorities can be in the consortium, and that means, as I should perhaps explain, police authorities, water authorities, sewerage authorities and bodies of that kind. Under the Dudley Clause, they had to be authorities with which the corporation was in some kind of consortium— and, of course, this included an association for the purposes of borrowing. So as the noble Lord has said, they are wide powers indeed. The Committee which considered all this took a similar view, and the corporation is now doing as we recommended.

My Lords, my right honourable friends the Chancellor of the Exchequer and the Minister of Housing and Local Government take the view that the Dudley Clause is quite wide, and that it is an appropriate form for this provision to take. The scope for borrowing is quite good, and it is not unduly restrictive. My noble friend the Minister of Housing and Local Government is therefore writing to the authorities whose Bills contain similar provisions drawing their attention to what happened in the case of the Dudley Bill last Session, and I expect that my right honourable friend will report in another place in the same sense. But, of course, the decision is for Parliament itself, and I do not think my right honourable friend will press it unduly. The view is not that the local authorities are not appropriate bodies; it is simply that the Dudley provision seems adequate.

The noble Lord was also concerned, I think with Clause 39 of the Berkshire Bill, although he did not actually specify it. This clause extends to the investment powers which, as he said, can go beyond a local authority to persons who have certain specified securities: that means Treasury bills, trustee stock and so on. The real point here is that if the authority had some money which was temporarily available—in other words, which it could not use for expenditure at that particular moment—it could make a short-term loan to people with these kinds of security. I should like to emphasise that the money has to be paid back within twelve months, and if the person concerned does not pay it back the authority would redeem the securities and get its money back. In other words, it is a short-term and very sale power of temporary investment. I ought to say also that the powers in this clause have already been granted to three other corporations. The Government do not object to this power in the case of Berkshire because, apart from anything else, it adds to the authority's flexibility in dealing with financial matters; and, of course, as is also important, it may enable them to make a good bargain on behalf of the ratepayers. But it still does not seem to the Government that it is essential for the authorities to have this power.

May I emphasise again, my Lords, that this is a matter which the House itself will want to decide through the Committee which will consider these matters, and I think, therefore, that we ought now to allow the Bill to go forward and to be examined by the Committee. The Promoters of the Bill should then explain why they want these powers. I am sure that the Committee will take careful note of what has been said this afternoon, and that the Bill will have proper examination.

3.38 p.m.


My Lords, in reply to this short debate I should like to say a few words about the procedure of the House on Unopposed Private Bills, which I hope will be helpful both to the noble Lord opposite and to the noble Baroness who has spoken for the Government. There are no Petitions against this Bill, and it will therefore be considered by the Committee on Unopposed Bills. The House will be aware that this Committee has the power to amend or delete clauses from any Bill that it considers; and I shall personally ensure, of course, that the Committee takes careful note—and this merely confirms what was said by the noble Baroness—of what has been said in the debate this afternoon, especially with regard to the provision in Clause 35, giving power to local authorities to lend money, and to the provision in Clause 39, which gives power to make temporary loans. These were the two clauses with which the noble Lord, Lord Nugent, was particularly concerned. I shall certainly make sure that the Committee is fully seized of all the points that have been made on these clauses.

The Promoters will no doubt adduce evidence to justify the powers that they are asking for, and I should expect that the Government Departments interested in these provisions will report their views on them. There are, as has already been mentioned, a number of other Bills coming before the House in the future which contain similar provisions to those in Clause 35 in this Bill seeking power for the authorities concerned to lend money to other local authorities. The remarks I am making now in respect of this Bill will of course apply equally to the other Bills after they have been read a second time.

On Question, Bill read 2a, and committed to the Committee on Unopposed Bills.