§ Mr. SandersTo ask the Secretary of State for Transport, Local Government and the Regions what proposals he has to allow local authorities to borrow against the value of their housing stock; and if he will make a statement. [10127]
§ Dr. WhiteheadWe announced on 21 March 2001,Official Report, column 250W, our intention to abolish the present system of local authority capital controls. This will be replaced by a system under which local authorities would be free to borrow without obtaining Government approval; the new arrangements will apply to borrowing for housing expenditure. Legislation will be introduced as soon as parliamentary time allows.
The amount of borrowing that an authority can undertake will depend on the resources available to service debt and be subject to a Prudential Code which is currently being developed. The impact of the new freedom will, therefore, depend on what revenue resources an authority can make available for this purpose while meeting other liabilities.
There is no proposal to remove the present prohibition on the mortgaging of local authority capital assets. Loans by authorities are secured on all the revenues of the authority and that will remain the position.