Below is the text of Mr Major’s written Parliamentary Answer on Local Authorities (Cash Limits) on 8th November 1988.
Mr. Yeo To ask the Chancellor of the Exchequer what plans he has for cash limits on local authority capital spending.
Mr. Major As already announced, the Government plan to introduce with effect from 1990-91 the new public expenditure planning total set out in Command 441 and, subject to the approval of Parliament, a new system to regulate the capital finance of local authorities in England and Wales about which my right hon. Friends the Secretaries of State for the Environment and for Wales have consulted local government.
The Government’s broad intention is that, with effect from 1990-91, cash limits should be applied to the sources of finance for local authority capital expenditure which fall within the new planning total. The main existing cash limits on local authority capital spending in England and Wales (DOE/LA1 and WO/LA1) apply to expenditure net of receipts. With the recent surge in receipts, and given the difficulties of predicting future levels of receipts, these cash limits are no longer appropriate as instruments of financial management and control. Subject to consultation with the local authority associations, therefore, the Government propose that these cash limits, and the associated end-year flexibility and penalty arrangements, should be discontinued with effect from the current financial year.