§ Mr. William Shelton
asked the Secretary of State for the Environment whether he proposes to take any further action against loss-making local authority direct labour organisations; and if he will make a statement.
§ Mr. Chope
My right hon. Friend has decided to ask two more councils to submit special reports on their direct labour organisations.
The first is Lambeth borough council, whose DLO lost some £1.4 million on major new building work in the three years 1982–83 to 1984–85. The council has still not produced figures for 1985–86, although these should have been submitted no later than 30 September 1986.
The second is Burnley borough council, whose DLO lost over £110,000 on maintenance work in 1984–85, and a further £35,000 in 1985–86.
Our normal practice hitherto has been to wait for three consecutive financial failures before requesting special reports. Since authorities have over five years' experience of the operation of the DLO legislation, we have now decided to request special reports after two consecutive failures—waiting for three failures allows too long before real pressure is brought to bear to contain losses. We have therefore decided to seek a special report from Burnley without waiting for the 1986–87 results.