HC Deb 16 November 1984 vol 67 cc376-9W
Mr. Burt

asked the Secretary of State for the Environment if he will make a statement about the Government's proposals for the administration and servicing of the outstanding debt of the Greater London council and the metropolitan county councils if those councils are abolished.

Mr. Kenneth Baker

We have taken account of representations received on our White Paper "Streamlining the Cities" (Cmnd. 9063), and our present proposals differ in several respects.

We said in the White Paper that it is not possible to construct an equitable basis for distributing the external debt of the authorities to be abolished between successor bodies and that administration of the external debt would therefore need to remain the responsibility of a single administering body in each area. There may be some exceptions to that, for which we shall make provision if appropriate, but for the most part we hold to that view. The proposal in the White Paper was that that single body should be a lead district in each metropolitan area but a specially constituted residuary body in Greater London. We have subsequently announced that we intend to establish residuary bodies for each area, though outside London it will still be possible for a lead district to take on the debt function from the outset if all the authorities concerned agree.

The White paper said that the guiding principle for servicing the debt would be that responsibility for making sufficient payments to the body administering the debt should be transferred with the asset to which the debt relates. This was the principle followed in the reorganisation carried out under the Local Government Act 1972. On further reflection, however, we believe that it would be very complicated to make such arrangemens in the present case, since there is no single body which is the main successor to each of the outgoing authorities.

We therefore now propose a different approach, which we believe will be as equitable as an asset-based attribution could be whilst being considerably simpler to arrange. The system would be as follows.

Debt servicing arrangements for assets already transferred, notably former GLC housing, would continue unchanged and would also be applied to analogous transfers made at the time of abolition.

All remaining external debt managed by the administering body would be viewed as a single sum, for which a repayment period would be calculated equal to the average of the repayment periods of all the individual amounts of debt constituting the sum. Responsibility for servicing various tranches of this sum would be attributed in three ways.

First, tranches would be earmarked as being associated with the loans, including house purchase advances, made by the authority being abolished. Bodies inheriting the outgoing authority's rights and liabilities in relation to such loans — including in appropriate cases the debt administering body itself—would be required to service an amount of debt equal to the amount outstanding at the time of abolition on the loans transferred to it.

Second, a tranche would be attributed where appropriate to the new single service authorities which are to be established on abolition. This would in each case reflect the amount of debt outstanding against the service in question at 31 March 1983, the end of the financial year immediately prior to the announcement of the Government's intention to abolish the authorities concerned, adjusted to take account of repayments and of new borrowing for capital expenditure on that service from that date to the date of abolition.

Third, responsibility for servicing the residue of the sum would be attributed to the boroughs or districts in each area pro-rata to the population at a specified date as close as possible to the date of abolition.

The foregoing arrangements are concerned with external debt. In some of the authorities to be abolished there will also be debt to internal capital funds. The White Paper proposed that such debt would be extinguished at abolition. This is still our proposal. There is no corresponding external debt, and therefore no need for the successor authorities to make contributions to the debt administering body on account of such debt.

We are very conscious of the importance of securing the interests of lenders. Under existing arrangements, all loan debt is an equal charge on the revenues of the borrowing authority. This situation will be preserved after abolition. We propose that the external debt shall be a charge on the revenues of the body administering it, while the bodies responsible for servicing the debt will be treated for the purposes of the charge on their revenues as if they had borrowed the sums involved from the administering body. In this way I believe that lenders may have confidence that their interests will be unaffected.

I shall be writing today to the local authority associations inviting them to comment on these proposals before final decisions are taken.

Mr. Hayes

asked the Secretary of State for the Environment what arrangements are proposed to maintain the existing Greater London council and metropolitan county council central data bases after the abolition of those councils.

Mr. Kenneth Baker

The GLC and metropolitan county councils have provided focal points for the collection and assembly of data on a wide range of topics which have been drawn on by various other bodies. It is envisaged that the borough and metropolitan district councils will need to continue to collect, and have access to, at least some of this information on a consistent London or country-wide basis to support the proper exercise of their enhanced functions.

To facilitate this we intend that the Local Government Bill should provide new powers for each borough or district council to assist in the collection of information on matters concerning part or the whole of the metropolitan area. In addition, where a two thirds majority of the borough or district councils in an area decide that specific information needs to be collected, each council will have a duty to collect the information and to provide it to any other borough or district or appropriate Minister on request. Finally, if any council fails to co-operate in the collection of this information there will be powers for another borough or district, subject to the agreement of the two thirds majority, to collect the information and to recover the costs from the defaulting authority.

These measures will ensure that the successor authorities are able to co-operate to maintain the London or county-wide coverage of those existing GLC and MCC data bases which they consider necessary. This will be particularly important in the field of highways and traffic management, where the Department of Transport has similar data needs, as well as land-use planning. In London it is envisaged that the London Planning Commission will also have a useful role to play in the collection and analysis of information on matters affecting London as a whole.

Mr. Hayes

asked the Secretary of State for the Environment what arrangements will be made to ensure continued running of services provided by the Greater London council and metropolitan county councils under general powers in the event of abolition.

Mr. Kenneth Baker

The Local Government Bill will provide for the transfer of specific statutory functions of the GLC and MCCs to the borough and district councils, or to other bodies. It will not, however, deal with general powers which are available, under existing legislation, to both county and district councils, or to both the GLC and the London borough councils.

Both the White Paper (Cmnd. 9063) and the more detailed paper about our proposals which we published in July referred to a number of activities of the GLC/MCCs under each power. We indicated that it would be for the successor bodies to decide how best to obtain these services for themselves. However, we suggested that they might consider joint arrangements where these would be efficient in the use of specialist staff and facilities. We have also said that there might be a role for the residuary bodies in maintaining some services of this kind for their own use and, on a repayment basis, as a service to others.

In the course of consultations on our proposals a number of these services have been suggested as suitable for retention as units, including central purchasing, scientific services, including county analysts' laboratories, general purpose computing and information facilities and systems, derelict land reclamation teams, and the GLC's specialist housing repair and improvement teams.

We remain convinced that decisions on the future of these services should properly be taken by the borough/district councils, and where appropriate other successor bodies. The Department of the Environment will, however, be prepared to use its good offices in considering how best worthwhile work of this kind might be maintained if there is a demand for this from the successor bodies. If permanent arrangements cannot be made in good time we envisage that the residuary bodies could maintain the existing services for a transitional period. In any event we expect that the ownership and operation of general-purpose computers will initially need to be transferred to the residuary bodies.

It will, of course, be essential, if the Department is to be able to help in this way, that the GLC/MCCs should authorise the officers responsible for these services to provide information to, and to enter into discussion with, the Department.