HL Deb 18 December 1985 vol 469 cc885-6WA
Baroness Gardner of Parkes

asked Her Majesty's Government:

If they will make a statement on the balances of the Greater London Council and the Metropolitan County Councils after abolition.

Lord Elton

My honourable friend the Secretary of State has today published a consultation paper. Copies are available in the Library.

I understand that some of the outgoing authorities, and the GLC in particular, have significant financial resources available to them which will not be required for the discharge of their functions during their remaining period of existence. Now that abolition is less than four months away I consider that it would not be appropriate for the outgoing authorities to incur significant expenditure on major new initiatives without the express support of all successor authorities in the area.

The benefit of the cash book balances of the outgoing authorities should be returned to local people. My right honourable friend is proposing that this should be achieved by distributing the balances through the residuary bodies to the boroughs and districts in the proportion in which their ratepayers contributed—that is to say, pro rata to rateable value. There will be special arrangements for certain of the new authorities to receive a share, notably the Inner London Education Authority. We hope that in most areas the residuary body will be able to make a first distribution very shortly after abolition day. A final distribution will be made once the accounts of the outgoing authorities have been closed, taking account of the best available estimate of the outstanding amounts owed to creditors and due from debtors.

My right honourable friend's intention continues to be that the residuary bodies should in general distribute in full the cash associated with capital receipts, mainly to the boroughs and districts, and that the receipts should also serve to increase those authorities permitted levels of capital expenditure. But he is proposing one change. We believe there is a good case for allowing the residuary bodies to retain the proceeds of repayments of principal on mortgages, so that they can follow the normal local authority practice of using such repayments to redeem debt. The associated spending permission would still be passed to the boroughs and districts.

These are my right honourable friend's proposals. He will consider carefully the responses of the consultation paper before taking final decisions.