HC Deb 30 January 1996 vol 270 cc653-4W
Mr. Hargreaves

To ask the Secretary of State for the Environment when he plans to publish further details of the Government's proposals for the extension of challenge funding to local authority capital spending. [12981]

Mr. Gummer

The challenge funding concept has proved itself as one of the best approaches for funding elements of local authority spending. This is a chance to see how it might work when applied to the major areas of councils' capital expenditure.

Following my announcement on 30 November 1995, Official Report, column 1338, that the Government wish to build on the success of the challenge concept, I am today issuing to local authorities and other interested parties a consultation paper seeking views on one option for applying this approach to the funding of mainstream local authority capital expenditure.

Our proposals would give the more enthusiastic local authorities the opportunity to bid for a share of a capital challenge fund of up to £250 million and to supplement this with private sector cash. Local authorities will be able to decide their own priorities, so, for example, those who want to improve run down inner-city areas or enhance the rural environment will get more cash if they put their backs into developing imaginative projects and partnerships. All have the chance to do this. The best projects will be targeted with the most resources, bringing with it all the benefits of value for money, and the chance to get local people and businesses involved in projects that ultimately use their money.

Our consultation paper sets out ideas for a challenge fund to support capital spending across all services. In particular, it invites comment on the option of proceeding with a pilot scheme to test a mechanism for distribution a proportion of total credit approvals for capital expenditure in the 1997–98 financial year. This pilot would build on the competitive approach already taken to funding elements of local authority capital expenditure, and would offer local authorities greater freedom to decide on their own spending priorities across the board.

We will consider carefully all comments made in response to the consultation paper before deciding how best to proceed. A pilot scheme, if undertaken, would inform decisions on how to build on the competitive element which is already part of the capital financial system to enhance local accountability and value for money.

Copies of the consultation paper have been placed in the Library of the House.