Local Government and Public Involvement in Health Bill

The hon. Gentleman said that he was grateful for my giving way. I am grateful to him for intervening, because it gives me a chance to draw breath. As I will go on to explain in more detail, in the diverse world of commissioning and in the light of the greater co-operation and the partnerships between local authorities and other public, private and voluntary sector organisations, the issue of the types of organisations that are owned by local authorities is complex. The idea of a council owning a company has been around for many years. Interestingly, the definition is partly based on companies legislation and partly on part V of the 1989 Act. A local authority company is in some ways different from what one might in lay person’s terms describe as a company. The next part of my speech explains the answer to the hon. Gentleman’s question. I am sure that he will support the measures when he has heard the explanation. I am grateful that he has stayed awake to listen to what I am saying. Tens—if not hundreds—of millions of pounds of public money is backed up in these organisations, so it is important that we explain the measures and seek the support of the House. There are no longer direct constraints on borrowing by companies or similar entities that authorities own, but any transaction by such an entity that increases or reduces the revenue resources of the authority will still need to be taken into account under the prudential regime, since it will affect the amount of borrowing that the authority can afford to service. The borrowing of that organisation is ultimately underwritten by the local authority and, therefore, the taxpayer. There are implications not just for the local authority and the council tax payer, but overall for public sector borrowing requirements and therefore for the central tax payer. The borrowing regime currently relies on a different set of accounting definitions, which are provided in the Chartered Institute of Public Finance and Accountancy ““Code of Practice on Local Authority Accounting in the United Kingdom: A Statement of Recommended Practice””, which is known in the trade as SORP. I have a copy of the document and I am tempted to say that if the Opposition push their amendments in later groups, I will read it out.