HL Deb 26 October 1987 vol 489 cc312-3

2.50 p.m.

Lord Graham of Edmonton

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they have any advice to offer the London borough of Merton in respect of the proposal to invest? 200 million of ratepayers' assets on the Stock Exchange.

Lord Hesketh

My Lords, it is undesirable for any council to use ratepayers' funds or assets for speculative investment.

Lord Graham of Edmonton

My Lords, does the Minister appreciate that Merton Council has not abandoned its plans to do precisely that but has merely referred to a sub-committee its proposals to invest £200 million of ratepayers' assets on the Stock Exchange? Would he care to comment on how it is that an authority such as Merton, which for the past seven years has slavishly followed the Government's directions on local government, finds itself in a position where it has had to contemplate doing that which is presently on the table?

Lord Hesketh

My Lords. I am unaware of any slave-like activities by Merton Council. I am glad that Merton's scheme is now on ice, and the sooner it is finally buried the better.

Baroness David

My Lords, is what Merton was proposing to do until the events of last week any different from what a number of Labour-controlled councils have been severely criticised for doing?

Lord Hesketh

My Lords, there is a subtle difference between the two. The difficulty is that in history people sometimes forget that stock markets fall. As long ago as the 18th century the Master in Chancery speculated with court funds in the South Sea Bubble.

Baroness David

My Lords, could not both activities be called creative accounting, which has come in for such criticism?

Lord Hesketh

My Lords, unfortunately I do not have any qualifications in accountancy.

Lord Mellish

My Lords, is it not a fact that as a result of the malarky of last week on the Stock Exchange—that is all it really is—Merton has now changed its mind and is horrified at the result of dipping into that market?

Lord Hesketh

My Lords, the legality of stock market investment by councils under the present law has yet to be tested in the courts. The Government are keeping under review how best to ensure financially prudent behaviour by councils.

Baroness Blatch

My Lords, does my noble friend agree that, instead of asking the Government to give advice to boroughs such as Merton and others which are involved in this practice, the time has come for us to rally behind the Government's reforms which do away with the need for them to advise local authorities and which strengthen the accountability to the people whom the local authorities serve? It should be for the people to pass judgment on the local authorities and not for us to sit here in this House and ask the Government to give advice.

Lord Hesketh

My Lords, I am grateful to my noble friend for her remarks, and I entirely concur in them.

Lord Kennet

My Lords, will the Chancellor shortly be investing taxpayers' money in stocks, shares and bonds, and, if so, in what categories?

Lord Hesketh

My Lords, that goes very far from the Question on the Order Paper.

Viscount St. Davids

My Lords, will the Government congratulate the citizens of Merton on having £200 million to invest when unfortunate people like us in Camden find that we are short of a great deal more than that and we have to borrow?

Lord Hesketh

My Lords, I fear that part of the problem was that Merton did not have the £200 million.

Lord Graham of Edmonton

My Lords, would it not be helpful for the Minister to ask his right honourable friend to invite Merton Council into his office for a chat? When passing on that request, will he ask him to treat this Conservative-controlled council with a little more respect and less contempt than the Secretary of State showed to Labour-controlled authorities which were invited to discuss their problems with him last week and which were told that as a precondition they would have to embrace the whole of the Government's legislative programme before any discussions could take place?

Lord Hesketh

My Lords, Merton has not sought ministerial approval for any part of its scheme. I assume that it satisfied itself that no consent was required.