Infrastructure Bill [HL] — House of Lords, 2015-02-09
Topic: Government Operations
Susan Kramer (Liberal Democrats, Centre to centre-left): My Lords, I beg to move that this House do agree with the Commons in their Amendment 23. In discussing Amendment 23, I will also include Amendments 34, 40 and 48. The Board of Public Works Loan Commissioners, commonly known as the Public Works Loan Board or PWLB, is a statutory body that dates back to the Public Works Loan Act 1875. It comprises 12 loan commissioners appointed by the Crown to administer making loans to local authorities. The commissioners are independent of government and unpaid by law. Under Section 4 of the National Loans Act 1968, the PWLB currently has a statutory lending limit of £70 billion. The current level of debt amounts to £64 billion. The original role of the loan commissioners was to approve and issue central government loans to certain categories of permitted borrowers. Under the 1875 Act and subsequent legislation, the commissioners have the power to refuse a loan on the basis of lack of security, and to appoint a secretary who can hold security and to whom the powers of the commissioners can be delegated. The commissioners are also required to issue an annual report to Parliament setting out details of loans advanced by the PWLB However, since 2004 decisions on borrowing have been fully devolved to local authorities under the prudential regime. As part of the local authorities’ self-regulated regime, local authorities are free to finance capital projects by borrowing without requiring government consent, provided they can afford to service their debts out of their revenues. This means that the decision-making functions of the PWLB commissioners are essentially obsolete. Local authorities are responsible for their own decisions on whether to borrow and how much. Further, the day-to-day operations of providing loans are now carried out by the Debt Management Office—the DMO—which is an executive agency of HM Treasury The commissioners’ functions and powers are delegated to the secretary of the PWLB, who is a civil servant at the DMO. The highly regarded prudential regime means there is no scope nowadays for the commissioners to exercise influence or discretion over lending to local authorities. The Government are therefore considering whether to abolish the Public Works Loan Board while ensuring that permitted borrowers, mainly local authorities, will continue to be able to access central government loans in the same way as now The purpose of including the PWLB in Schedule 1 to the Public Bodies Act 2011, which is what these amendments achieve, is to confer on the Government the power to make an order under the Public Bodies Act that would abolish the PWLB and transfer its functions to an eligible person, as defined in the Public Bodies Act. Let me assure noble Lords that the abolition of the PWLB, and the succession arrangements, will be subject to proper parliamentary scrutiny under the Public Bodies Act process. This proposal is purely about governance reform. The PWLB abolition will not impact on the prudential regime or local authorities’ existing loans with the PWLB, and local authorities will be able to undertake new borrowing from the successor body, as now, at rates that offer good value for money. Interest rates will continue to be a policy matter for HM Treasury Following the commencement of the provisions in this clause, the Government plan to publish a consultation document providing details of their proposals for abolition and succession, as required under the Public Bodies Act. After taking into account responses from the consultation, both Houses will have the opportunity to scrutinise the draft legislation, which will of course be accompanied by the explanatory document, as required by Section 11 of the PBA. Abolition of the PWLB would remove bureaucracy and align the accountability for lending to local authorities with DMO’s existing responsibilities for day-to-day operational management. This is in line with the Government’s wider efficiency and modernisation agenda I am conscious that these amendments are so uncontroversial that this may be the last moment that I am on my feet in a discussion on the Infrastructure Bill. I would like to take this opportunity to thank my noble friends Lady Verma and Lord Ahmad, who have been stalwart in leading significant parts of the Bill. I thank your Lordships all across the House. The Bill has involved many different departments; individuals with different specialisation and Peers who have followed different issues have had to co-ordinate and manage across the complexities. They have done so brilliantly. I think we have collectively improved the Bill. It has also involved working closely with the other place. This is also an opportunity for me to say particular thanks to the Bill team, which has had to deal with some of the most extraordinary complexity in managing this whole process. Frankly, I think it has done it brilliantly I will of course wish to respond if issues are raised by any other Members of the House, but I did not want to lose the opportunity to say thank you, since I am aware that the amendments I am moving are so technical and uncontroversial that this may be my last time to speak. I beg to move.