Capital powers must wait for white paper

18 Oct 01
Local government minister Nick Raynsford has dashed local authorities' hopes of early legislation giving them the freedom to borrow money for capital projects.

19 October 2001

Speaking to Public Finance, he made it clear that the widely expected financial reforms would be introduced as part of the local government white paper, due to be published by the end of this year.

Raynsford made his comments after addressing a council leaders' meeting at the Local Government Association. He ruled out any prospect of a separate bill being introduced to Parliament to set up the new 'prudential' borrowing system. He also signalled that councils should expect to wait some time for the new powers.

'It's not happening ahead of anything else. We're developing it so that we can feed it into the white paper. Legislation will then be brought forward when Parliamentary time is available,' Raynsford said.

The news will be a blow to local government leaders, who have been lobbying the government to give councils the freedom to borrow money for capital schemes without first securing Whitehall approval.

The prudential system is viewed by many as an alternative fundraising mechanism to the Private Finance Initiative. Many of those who oppose greater use of the private sector to provide public services have been pushing for the legislation as a way of slowing down the drive towards PFI.

Labour MP Louise Ellman tabled an early-day motion in Parliament this week calling on the government to reform capital controls at the earliest opportunity. She said it needed to 'create a level playing field between procurement options'.

In his speech to the LGA, Raynsford promised the white paper would outline more freedoms for top-performing councils and a 'lighter touch' inspection regime. He also pledged to cut bureaucracy in 42 areas and said officials were looking at ways to reduce the burden in a further 40.

He also revealed that the review of Best Value, announced by Local Government Secretary Stephen Byers earlier this month, would include representatives of central and local government, trade unions, the Audit Commission and the private sector.

The review group will agree new guidance, possibly in the form of a new code of practice, by April 2002. 'Our review of Best Value will not just be about removing the obstacles to delivering quality services, important though those are. It will also be about identifying opportunities,' Raynsford said.


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