Terrorism top of Labours agenda as prudential bill is sidelined

27 Sep 01
A surprise bill to grant local authorities more freedom to borrow in an attempt to placate unions and put public services on a more 'level playing field' with the private sector will be severely delayed by anti-terrorism legislation.

28 September 2001

Public Finance has learnt that Local Government Secretary Stephen Byers had planned to announce a bill on the 'prudential' system of borrowing at next week's Labour Party Conference in Brighton. The announcement was due to coincide with the long-awaited debate on the use of public-private partnerships.

But, as military action following the terrorist attacks in the US on September 11 became more likely, Labour scaled down its annual conference to just two days.

News of the bill will now be postponed, as could the debate on PPPs. Members of Labour's ruling executive agreed last week that any potentially divisive rows should be avoided in an attempt to show national solidarity.

According to sources, the bill has already been drawn up and would allow local authorities freedom to borrow for capital investment without government approval. The prudential system would be governed by a strict set of criteria, such as the ratio of debt to revenue in individual authorities, and would be offered as an alternative option to the Private Finance Initiative and PPPs.

Unions have been told that hopes of squeezing it into this legislative timetable now look slim as the government prepares a 'complex and controversial' anti-terrorism bill. This will include moves to stem money laundering, new laws on extradition and plans to introduce ID cards.

Byers could simply outline the prudential rules in the local government white paper expected in December, but he will come under renewed pressure to lobby for an early legislative slot. 'Supporters of the bill have been told not to give up hope yet, but it does have to compete in a heavy legislative session. Despite the current situation, its importance cannot be underestimated,' a source told Public Finance.

Unions also indicated this week that despite the curtailing of Labour's conference they would still push ahead with opposition to the use of the private sector. Unison told Public Finance that it would be holding fringe events at the conference in Brighton but was still considering its motion opposing privatisation.

'I think people realise that events in America are going to take centre stage. That is the big issue. But it does not change our fundamental opposition to privatisation/PFI. All of that will continue. It is really a question of how we can find the appropriate time,' said a spokeswoman.


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