§ Mr. McMasterTo ask the Secretary of State for Scotland (1) how the additional borrowing consent allocated by him to(a) Renfrew district council and (b) Strathclyde regional council following the floods of December 1994 impact on their budgets for 1994–95; how will consent for general services borrowing impact on future years' revenue expenditure on loan debt charges; how additional housing borrowing consent for Renfrew district council will impact on future years' housing revenue account expenditure on loan debt charges; how the additional loan charges will be taken into account in allocations of aggregate external finance to each authority in future years; how this formula is likely to impact on (i) the council tax and (ii) the annual rent levels of chargepayers and tenants; how it will impact on successor unitary authorities; and if he will make a statement;
(2) if he will define the concept of top-slicing as it is applied to the (a) capital and (b) revenue budgets of Scottish local authorities, in relation to the general services, specific services and housing services grants awarded to regional and district councils; how this concept will apply to the proposed unitary authorities; and if he will make a statement.
§ Mr. KynochAny additional borrowing required to fund the extra flood-related housing capital expenditure by Renfrew district council approved by my right hon. Friend will result in loan charges which will require to be met from income generated through the housing revenue account, primarily from rents. The precise impact will depend on the decisions taken by Renfrew district council in managing its housing debt which at 1 April 1994 totalled some £134.4 million. In accordance with the formula agreed with the Convention of Scottish Local Authorities, expenditure on loan charges arising from housing investment is taken into account as relevant expenditure when determining the amount and distribution of housing support grant. However, given that Renfrew district council's debt per house is well below the Scottish average and that the council has generated a healthy surplus on its housing revenue account in each of the last four years while holding rents below the Scottish average, it is unlikely that the council or its successor authority will qualify for housing support grant.
The impact of any additional borrowing to fund the extra flood related non-housing capital expenditure by Strathclyde regional council approved by my right hon. Friend will in the period up to 31 March 1996 be a matter for the council itself to determine. From 1 April 1996, the loan charges arising from any additional borrowing by the regional council will be taken into account in calculating the loan and leasing charges of its successor councils which are supported by aggregate external finance. The provision to support loan charges on borrowing to fund non-housing capital expenditure is effectively top-sliced from the AEF total.