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Written question asked by Lord Patten (Conservative) on Monday, 23 November 2020, in the House of Lords. It was due for an answer on Monday, 7 December 2020. It was answered by Lord Greenhalgh (Conservative) on Monday, 7 December 2020 on behalf of the Ministry of Housing, Communities and Local Government.

Local Government: Capital Investment

Question

To ask Her Majesty's Government further to the announcement by South Somerset District Council that it intends to develop a battery farm in Fareham, Hampshire with its joint venture partner Opium Power, whether there is any precedent of an English local authority investing in another local authority.

Answer

Local authorities borrow and invest under the Prudential Framework. It is a permissive system that gives local authorities wide freedoms to borrow and invest, and determine their own capital strategies, provided they stay within the legal bounds of the Framework and have regard to the statutory guidance. Local authorities remain accountable to their electorate for their investment decisions.

Government and CIPFA are clear that borrowing to invest for yield is not complaint with the objectives of the Framework. This is consistent with reforms HMT have put in place over the Public Works Loan Board (PWLB), which prevent councils planning to invest primarily for income from borrowing from the PWLB. There is no specific restriction on where local authorities can invest, but councils investing outside their area will need to ensure they are compliant with the Framework.

Secondary information

Type
Written question
Reference
HL10630
Session
2019-21
Subjects
Capital investment Local government
Link
View this Written question on www.parliament.uk