Overview

This bill aims to increase control over local authority borrowing and investment in England. It restricts borrowing for non-core activities, requires approval for land purchases outside council boundaries, and mandates a supermajority for high-risk commercial investments.

Description

The Local Authorities (Borrowing and Investment) Bill introduces several key limitations:

• Borrowing Restrictions: Local authorities cannot borrow from the Public Works Loan Board for commercial property acquisition or purposes outside their statutory duties.
• Land Acquisition Restrictions: Acquiring land or property outside their own boundaries requires approval from both the principal local authority of that area and the Secretary of State.
• Investment Restrictions: Investments in commercial risk-taking enterprises need a two-thirds majority vote from the full council.

The bill defines "principal local authority" as per section 69(3) of the Local Democracy, Economic Development and Construction Act 2009.

The bill will come into effect two months after receiving Royal Assent and applies to England and Wales.

Government Spending

The bill is not expected to directly increase or decrease government spending. Its impact will be indirect, potentially reducing local authority debt and preventing potentially risky investments that could lead to future bailouts.

Groups Affected

• Local Authorities: Significantly impacted by restrictions on borrowing and investment powers. They will have less flexibility in financial decisions.
• Developers and Landowners: May face difficulties in land transactions with local authorities due to increased approval requirements.
• Commercial Enterprises: Reduced access to investment from local authorities due to the stricter investment criteria.
• Secretary of State: Given increased responsibility in overseeing local authority land acquisitions outside their boundaries.

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