Draft Public Bodies (Abolition of Public Works Loan Commissioners) Order 2019

Peter Grant Excerpts

Monday 3rd February 2020 General Committees

[Peter Grant (Glenrothes) (SNP)]

I am pleased to contribute to the debate. The primary legislation under which the draft order is being brought forward—the Infrastructure Act 2015—relates almost exclusively to England and Wales, but the section about the public works loan commissioners extends to the whole United Kingdom, so those of us who represent Scottish constituencies have a keen interest in it.

I have a concern almost instinctively any time I see anything being done to return influence to Ministers, because, frankly, my people do not trust this Government. I am suspicious of any central Government who want to take influence back, whether to Ministers, to civil servants or to both. I am always interested to know why that needs to be done, and what difference it will make.

Paragraph 8.3 of the explanatory memorandum refers to the “effectiveness” of the new system, stating that

“Ministers will be able more directly to influence delivery, including addressing any issues that occur, and the implementation of policies.”

Can the Minister explain whose policies are being implemented? The whole point of having different councils in different areas is that different people might have different policy priorities. Is this a way for the Treasury to influence what does or does not get built to suit its priorities, rather than those of elected local governments?

That might seem fanciful, but some of us can remember the days when the UK Treasury controlled practically all borrowing by local authorities throughout the United Kingdom. I was a councillor at the time, and it was quite obvious that decisions about what councils were allowed to borrow, and what they could do with their borrowing, were not about controlling the public finances, but about imposing somebody else’s agenda on councils in Scotland. At that time, the district council of which I was a member had two Conservatives among its 40 members. The regional council of which I was a member had no Conservatives; there were more Communist than Conservative councillors. Effectively, the big capital spending priorities of that council, one of the biggest in the country, were determined more by decisions taken in Whitehall about what it was allowed to borrow than by local decisions. I seek assurances from the Minister that that will not be allowed to happen. To put some meat on those assurances, perhaps he could give an example of the kind of influence over the implementation of policies that he envisages the order being used for that cannot be exercised now.

Secondly, although I accept that there is an accountability issue when the functions of a Government Department are exercised by an arm’s length organisation, I am not sure that resolving the lack of accountability of the Public Works Loan Board would have been at the top of my list. Instead, we could talk about Her Majesty’s Revenue and Customs or the Prison Service, certainly in England and possibly in Wales as well. It is interesting that the Government are sometimes happy to have an accountability gap between who is responsible for policy and who is responsible for operational management. Do the Government accept that, if there is a lack of accountability in relation to the Public Works Loan Board, there is also a lack of accountability in relation to the operation of HMRC? Can we expect proposals to make it more accountable?

My final concern relates again to whose priorities will be implemented. We have already seen the Government prepare to remove not only local discretion but the discretion of the national devolved Parliaments on decisions about the allocation of money from the shared prosperity fund, which replaces the European funding that has been coming into the UK for many years. At the moment, in Scotland—I understand that the situation is similar in Wales—the national devolved Parliament has a significant influence over how those funds are allocated. The only objection that I have heard from Government Members about that is that sometimes the Parliaments of Scotland and Wales have different priorities from that of the United Kingdom, but that is why we have devolved Parliaments. If we could be sure that everybody’s priorities were the same, we would need only one Government; we would need only one MP, because we would not need any kind of discussion about priorities.

I look for an assurance that the measure, while seeming to be about making loans approval more efficient and accountable, is not yet another example of enabling central Government to decide, by the back door, what local authorities are allowed to do. I await an absolute assurance from the Minister; I hope he will tell me where he might imagine there would be a different decision as a result of the new set-up. I will then decide what to do. At the moment, there is a possibility that I will divide the Committee.

--- Later in debate ---

[John Glen]

It is helpful to put this in context. The rate was a function of the prevailing gilt rates last year, and the change brought it back to the level of the previous year, so we should not see this as a great leap in interest rate that will have a major effect. It is questionable whether the advantageous window offered by the relationship to the historically very low gilt rate was creating a different sort of behaviour. Again, that is outside the scope of my comments. I am happy to look at these matters, which are under ongoing review.

Let me turn to the hon. Member for Glenrothes’s remarks. He expressed general concern about any Government Minister taking control of anything, because he has no confidence in the Government. This is not a matter of Government Ministers overruling local authorities; the change is a reform of governance, with no practical effect on local authorities. It is based on the prudential code; decisions on borrowing and spending are devolved, and that continues. The Government consulted on this in 2017, and found widespread support for it. I am told that when the commissioners have met annually to sign off the annual report, they have said that they were keen for this SI to pass. The SI is quite complicated because it makes many references to primary legislation, and was delayed because of the events of recent years.

[Peter Grant]

I am interested to hear the Minister say that there is no practical effect on local authorities. The Government’s explanatory memorandum claims that the process will become more effective for local authorities. Is that not a practical effect? Does the Minister intend to reply to my question about whose policies will be implemented more effectively?

[John Glen]

The process is more effective in so far as the ceremonial role, which did not meaningfully alter any decisions on the ground, is transferred to the Treasury. There, we can ensure that we have a quorate body meeting to oversee the borrowing, but it will not make any different arbitration decisions, because the existing group of commissioners do not make those decisions. I am sorry that there has been a misunderstanding, but the order is not a power grab by the Treasury.

Transferring the powers of the public works loans commissioners to the Treasury will place that crucial function on a secure platform, enabling the continuity of lending for essential local capital projects. Those investments are often fundamental to quality of life and economic development, and by passing the SI, we will enhance the robustness and resilience of the lending facility, thereby supporting local authorities in such endeavours. I hope that the Committee has found the sitting informative and will join me in supporting the Order.

Question put.