§ Lord Grantleyasked Her Majesty's Government:
Whether they acknowledge that the development of projects under the private finance initiative involving local authorities or other public bodies may be adversely affected by recent decisions by the Court of Appeal concerning the powers of local authorities to establish companies and issue guarantees under Section 3 of the Local Government Act 1972; and whether they will engage in consultation with interested parties to determine whether legislation to clarify the position would be desirable.
The Minister of State, Department of the Environment (Earl Ferrers)The issues in the recent Appeal Court judgments will not arise in connection with the private finance initiative. The financing of companies undertaking PFI projects for local authorities should be on the basis of the companies' business prospects and should not require local authority guarantees. Her Majesty's Government are not aware of any other legal factors which could affect PFI projects involving local authorities, but have indicated their willingness to consider any specific concerns brought to their attention.