§ Mr. David PorterTo ask the Secretary of State for the Environment if he has any plans to commute specific loan charge grants to local authorities.
§ Mr. PortilloWe will commute specific loan charge grants for housing and urban programme expenditure in England on 1 October 1992. The Department will pay a lump sum equivalent to the present value of future grants for each local authority to the Public Works Loan Board (PWLB), or to the local authority itself if any authorities have insufficient PWLB debt though such payments are expected to be small. Annual loan charge grants will then cease. As the commuted sums will repay local authority debt, cancelling out the loss of annual grant, the effect on local authority resources will be neutral. The commutation payment is expected to be around £4.5 billion in England, but the effect on general government expenditure will be negligible because virtually all the transfer payments involved are within general government. Similarly, the effect on the central government borrowing requirement, the public sector borrowing requirement (PSBR) and monetary aggregates will be negligible, since virtually all the commuted sums will return to the PWLB. Within the PSBR, central government borrowing on own account will be increased and the local authority borrowing requirement will be reduced by the amount of debt repayment. There is no effect on the planning total. The various transfer payments involved have been taken into account in my right hon. Friend the Chancellor of the Exchequer's autumn statement.