Municipally Funded Companies (Hansard, 21 April 1982)

§ Baroness Gardner of Parkes
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin)
My Lords, the Government are aware that a number of authorities have formed companies of this kind. It is for each authority to satisfy itself that it is acting within its powers, that its expenditure is soundly based and that it does not misuse ratepayers' money. The authority is answerable to its electorate as well as to its auditor.

§ Baroness Gardner of Parkes
My Lords, I thank the Minister for that reply Would he confirm that he is aware that the power which enables the GLC to spend this money is provided under Section 137 of the Local Government Act 1972, which enables the expenditure of a 2p rate product to be put to this use? Would he also confirm that in the case of the GLC this amounts to approximately £40 million? Can the Minister tell me whether other authorities in the country receive the same amount of money from a 2p rate or whether the expenditure available of £40 million for this purpose is unique? And in particular, in view of the Minister's recent consultative paper on local authority aid to industry, which would limit the spending under Section 137 to areas of greatest need, can the Minister inform us when there will be a decision on that point and whether he will consider placing a ceiling upon expenditure of, say, £10 million or a 2p rate, as at the moment it is such an unlimited amount?

§ Lord Bellwin
My Lords, where do I begin? So far as the sum of £40 million which is available to the GLC, using Section 137 of the 1972 Act, is concerned, my understanding is that my noble friend is right. My noble friend also asked me whether this is unique. In that this is the authority which has the largest budget, I think it is correct to say that this is the greatest sum available to any authority. I do not know of any other authority which approaches that figure. My noble friend's point as to whether or not, under the proposals in the consultation paper, one should put a ceiling on such a levy is something which we shall have to think about, in just the same way as we are being messed by very small authorities to consider putting a floor upon it. As I am sure my noble friend knows, there is the other side to it. I understand the anxiety which my noble friend has expressed. It is one with which I am sure everybody is concerned. We shall have to watch carefully what transpires.

§ Lord Avebury
My Lords, is there not a contradiction between the professed concern of the Tory Party for the freedom of local government to take its own decisions and the constant slight sniping and barracking against individual decisions of local authorities, in particular the Greater London Council, that we see in this House?

§ Lord Bellwin
My Lords, I should have thought that everybody in the country who is interested in the reputation and standing of local government is concerned about the possibility that any authority, whichever it may be, might bring into disrepute the whole of local government by an abuse of the powers which they have. All I said in answering my noble friend was that we must watch this, as we shall watch any other authority which may be taking advantage of some power that may lead them into perhaps irresponsible expenditure. However, at the end of the day the decision as to whether or not it is irresponsible will rest with the electorate and with the auditor.

§ Lord Orr-Ewing
My Lords, is my noble friend aware that the ratepayers of London have been sorely tried by profligate expenditure since Mr. Ken Livingstone took charge of the GLC? And has he considered that private financial institutions are ready to subscribe money and that it is unnecessary to depend upon public money taken from ratepayers? Has my noble friend also considered asking the GLC to consider the private supply of money for viable enterprises, which will create jobs, rather than always relying on the sorely tried ratepayers?

§ Lord Bellwin
My Lords, I have to say to my noble friend that in so far as I understand the intention of this proposal and, indeed, of like proposals by other authorities which are contemplating setting up organisations of this kind, the objective is to involve private funding as well as municipal funding. In other words, it is to pump prime; it is to encourage involvement. If it is that, I am sure my noble friend will be pleased to see that it transpires. The concern is that it would become not that but something which would be entirely municipal. Then the concern of ratepayers, wherever they may be, would be very real.

§ Lord Ponsonby of Shulbrede
My Lords, would the Minister confirm in the first place that he is aware that the Greater London Council took legal opinion with regard to the establishment of the London Enterprise Board and that that legal opinion was favourable and, secondly, that the proposals in his own consultation document would in no way limit the proposals which the GLC have made under Section 137? Finally, I wonder whether the Minister is aware that the GLC enjoys a good relationship with the London Enterprise Agency, which is a sub-committee of the London Chamber of Commerce, and that there is a very good relationship with private enterprise over this proposal?

§ Lord Bellwin
My Lords, I hope I did not suggest that the setting up of this body was other than within the vires of the GLC. I have no reason to suspect that it is not, nor did I say so. With regard to the question the noble Lord put to me about the GLC's good relationship with the London Enterprise Board, I have no reason to doubt that it is good. So far as I am aware it is. Nor is there any objection to the principle of what is proposed to be done. My noble friend Lady Gardner is concerned that the sums involved in this case are so very large in terms of the money available to the GLC that they should be spent responsibly. As I understand it, that was really the thrust of her concern.

§ Lord Byers
My Lords, I wonder whether the Minister will make it clear that there are two separate organisations here. One, with whose founding I was concerned, is the London Enterprise Agency which, as the noble Lord said, is an organisation backed by the private sector, particularly for helping small businesses; secondly, there is the Greater London Development Board, which is the child of the GLC. These are two separate organisations working together.

§ Lord Bellwin
My Lords, I am glad to confirm that is so. The London Enterprise Agency is doing excellent work which I think would be applauded by everyone in this House.

Lord Morris
My Lords, would my noble friend not agree that in all matters relating to the relationship between the Government and the governed, at whatever level, the spirit of the law is infinitely more important than the letter of the law?

§ Lord Bellwin
Would that it was always so, my Lords.

§ Baroness Gardner of Parkes
My Lords, in view of my noble friend's comment that "pump priming" is desirable, would he say that the cost of £1 million estimated for setting up the bureaucratic machinery to operate the GLEB in its first year comes within that category of "pump priming", without creating an additional job at that price?

§ Lord Bellwin
My Lords, I do not know whether the figure mentioned by my noble friend is correct. If it is correct, it is something that would trouble me very much. As a London ratepayer nowadays. indeed it does trouble me.