Cotswold District Council: Solar Farms — House of Commons, 2022-04-27
Topic: Government Operations
Olukemi Olufunto Badenoch (Conservative, Centre-right): I start by congratulating my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown) on securing a debate on this important topic. Borrowing rules for local authorities may not be the sort of thing that generate many column inches in the newspapers, but they really matter to the day-to-day workings of local government. In many ways, these rules are the guard rails that help to govern decisions around the investment of public funds, which is why it is vital that hon. Members have as much clarity and transparency as possible on what councils can and cannot do, as well as having the opportunity to challenge and raise instances of what they perceive to be misallocation of funds My hon. Friend is a tireless campaigner on behalf of his constituents and I applaud him for bringing the issue to the House today for discussion. First, he asked whether the borrowing in question was within the lending rules of the Public Works Loan Board. Under Public Works Loan Board guidance, a project for service delivery includes education, highways and transport, social care, public health, culture, environmental and regulatory services; police, fire and rescue; and central services. I can confirm that projects related to climate change are included in that I make it clear that the Government understand that although borrowing is necessary to deliver local priorities, it does carry risk, so it is important that it is done sensibly to keep local authorities’ finances sustainable. My hon. Friend will no doubt be aware that in recent years, a small minority of local authorities have taken excessive and unnecessary risks with taxpayers’ money. Those risks have backfired. That has been all too visible in the high-profile cases of councils that have become too indebted or have made substantial investments in projects that have ultimately proved too risky or too large On my hon Friend’s points about the scale of the borrowing that Cotswold District Council intends to do in comparison with its annual income, it goes without saying that disproportionate levels of debt expose councils to financial risk. It is not just the size of the debt that can create issues; some authorities invest in novel activities outside their areas of experience or expertise, which can lead to financial loss when the investment is mismanaged. My hon. Friend will remember what happened with Robin Hood Energy, Bristol Energy and Together Energy. While councils are sometimes very well meaning in trying to tackle important issues such as achieving net zero, we cannot forget that the energy market can be volatile, and councils need to be sure that they are getting the right advice when proceeding with such investments That is not to say that local authorities should not undertake borrowing. I want to make it clear that the Government recognise that commercial investments can be necessary and appropriate when made sensibly. Sensible investment can play an important role in helping us to power forward on issues that are central to the Government’s agenda, be they levelling up, net zero or building the homes that the country needs On my hon Friend’s point that the Government should stop Cotswold District Council borrowing this money, as he will be aware, councils have responsibility for setting out capital strategies for their area, and they will be held accountable by their communities. Local leaders should understand local issues and prioritise accordingly; it is the Government’s expectation that they should be able to make decisions that reflect the needs of their communities In making these decisions, every local authority has a duty to comply with the prudential framework by making sure that its plans are prudent, affordable and sustainable. As my hon. Friend highlighted, taxpayers should not have to foot the bill for preventable mistakes. The Government will, of course, step in where there is clear evidence that local authorities are not complying with their legal duties or acting in the best interests of their taxpayers Our focus, as my hon. Friend might expect, is on making sure that we have a system that is genuinely fit for purpose.