House of Commons Hansard Debates for 20 Dec 1988

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Column 393

Steel, Rt Hon David

Steinberg, Gerry

Stott, Roger

Strang, Gavin

Straw, Jack

Taylor, Mrs Ann (Dewsbury)

Taylor, Matthew (Truro)

Thompson, Jack (Wansbeck)

Turner, Dennis

Vaz, Keith

Wall, Pat

Wallace, James

Walley, Joan

Wardell, Gareth (Gower)

Wareing, Robert N.

Welsh, Andrew (Angus E)

Welsh, Michael (Doncaster N)

Wigley, Dafydd

Williams, Rt Hon Alan

Williams, Alan W. (Carm'then)

Wilson, Brian

Winnick, David

Wise, Mrs Audrey

Worthington, Tony

Wray, Jimmy

Young, David (Bolton SE)

Tellers for the Noes :

Mr. Allen Adams and

Mr. Jimmy Dunnachie.

Question accordingly agreed to .

Resolved ,

That this House recognises the inability of the Committee of Selection to nominate Members to serve on the Scottish Affairs Committee in accordance with Standing Order No. 104(2) ; welcomes the continued scrutiny of the Scottish Office by the Committee of Public Accounts, and the extent to which other select committees have been and will continue to be able within their orders of reference to take evidence from the Scottish Office and associated public bodies on matters arising in Scotland, and to report thereon ; and notes that other

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Parliamentary means exist for the consideration of Scottish affairs, including the Scottish Grand Committee, particularly in its consideration of Matters relating to Scotland and Estimates for which the Secretary of State for Scotland is responsible.

10.53 pm

Dr. John Cunningham (Copeland) : On a point of order, Mr. Speaker. I understand that in tonight's debate the hon. Member for Eastwood (Mr. Stewart) referred to me. He did not give me notice that he intended to do so, but I have given him notice that I intend to raise this point of order. I understand that he used a phrase which went something like this : "Jocks running around like headless chickens," and attributed it to me. I want the hon. Gentleman to understand that, if I had referred to those events, I would have used much more colourful language. I ask him to accept that he has no evidence for attributing that phrase to me, and I hope that he will withdraw it.

Mr. Allan Stewart : Further to that point of order, Mr. Speaker. I fully accept that I was mistaken, and I wish to withdraw my reference to the hon. Member for Copeland (Dr. Cunningham), with apologies.

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Welsh Rate Support Grant

10.54 pm

The Secretary of State for Wales (Mr. Peter Walker) : This is the first debate particularly involving Wales for some 18 years which has not had the benefit of the attendance of our former colleague Brynmor John. I know that I speak for hon. Members on both sides of the House in expressing our deep regret at his death and his loss to Parliament.

He was a distinguished Minister and an articulate parliamentarian. He represented his constituency and Wales with great enthusiasm. To all of us who had the privilege of knowing him he was a civilised, kind and compassionate man. We deeply regret his premature death. For the past few years he had not been in good health, but, typical of Brynmor, he remained optimistic, enthusiastic and energetic in all that he tried to do. His death was a great blow to his colleagues on the Opposition Benches who looked upon him, correctly, as a distinguished member of their party, but, like all great parliamentarians, he was a considerable loss to the House. I beg to move,

That the Welsh Rate Support Grant Report 1989-90 (House of Commons Paper No. 32), a copy of which was laid before this House on 8th December, be approved.

I hope that it will be for the convenience of the House if we take with it the following motions :

That the Welsh Rate Support Grant Supplementary Report 1988-89 (House of Commons Paper No. 33), a copy of which was laid before this House on 8th December, be approved.

That the Welsh Rate Support Grant Supplementary (No. 2) Report 1987-88 (House of Commons Paper No. 34), a copy of which was laid before this House on 8th December, be approved.

That the Welsh Rate Support Grant Supplementary (No. 3) Report 1986-87 (House of Commons Paper No. 35), a copy of which was laid before this House on 8th December, be approved.

Mr. Speaker : I take it that that is the wish of the House.

Mr. Walker : Hon. Members will by now have had the opportunity to examine the reports and my statement to the House on 8 December. Therefore, I do not intend to repeat the details. The settlement for 1989-90 provides a fair and reasonable basis for local authorities to plan their budgets. All the main indicators in the

settlement--provision for relevant and current expenditure and grant--are increased by more than the projected rate of inflation for the year. It offers the real hope of moderate rate increases if councils can restrain expenditure to realistic levels shown in the settlement.

It is also important to recognise that provision for capital spending is well ahead too, at 8.2 per cent. Taking account of current and capital together over the two years for which I have been responsible for local government in Wales, provision for local authority expenditure has increased by no less than £298 million, or 15.4 per cent.

Tonight is the last occasion on which we shall plough through the rate support grant process. No longer will we have these supplementary reports, sprinkled liberally with jargon of an intensity to make the sponsors of the Campaign for Plain English give up in despair. From April 1990 we move to the new arrangements under the Local

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Government Finance Act and there will be an opportunity to debate my proposals for that financial year in due course.

The settlement includes provision of £9 million towards the revenue expenditure which district councils will incur in preparing for the new system. This is about double the Committee of Welsh District Councils' first estimate but, in fairness to it, its first estimate was based on inaccurate detail, I am glad to say pointed out by us. We disagree with their current revision up to £11 million, but I hope that the figure on which we have agreed will prove sensible. In addition, capital allocations of £10.3 million have been distributed for next year. That sum is precisely equal to the amount that districts say that they expect to spend in the coming year on capital projects related to community charge preparation. It has been distributed in accordance with a method developed and recommended by the Committee of Welsh District Councils, and I am grateful for the manner in which the councils are preparing the arrangements for the new form of local taxation.

Local authorities in Wales know that they have an essential role to play in the task of building the economy of the Principality and strengthening its social framework. I am anxious that central Government and local government should continue to work together to ensure that those vital tasks are carried forward. Positive efforts have already been made, and the initiatives that have been taken are bearing fruit, but there is no time for complacency. We face the major challenge of the single European market in 1992, and county and district councils have a significant contribution to make in meeting that challenge.

Perhaps the councils' most important contribution lies in taking steps to ensure that the services that they provide encourage businesses in their areas to expand and develop. It is local government's attitude to planning, to the education of the work force and to the provision of essential infrastructure that underpins economic regeneration. I am confident that the good work being done by local councils in Wales in those vital areas will continue to bear fruit.

Economic development will, however, be hindered if councils fail to see that very large rate burdens deter potential investors and damage confidence. The need for further economic progress is one of our reasons for introducing the national non-domestic rate in 1990, which I believe will benefit business in Wales.

Taking aggregate Exchequer grants and rate rebates together, the Government have, in the 1989-90 settlement, contracted to meet 67 per cent. of councils' relevant expenditure. They have demonstrated a degree of commitment to meeting the needs of Wales which should now be matched by a determination on the part of local authorities to ensure that rates are held down to levels that provide the necessary services efficiently and at reasonable cost. That can best be achieved if they are lean and fit, and alert to the needs of their communities and the opportunities for progress that are open to them.

I am glad to say that the need for efficient provision of services has been recognised and acted upon by local authorities in Wales. Much has been done by them and by the Audit Commission to identify potential cost savings, but much more needs to be done to translate that potential into reality. The Audit Commission has identified possible efficiency savings of £42.4 million a year in Wales ; only 28 per cent. of those savings have thus far been realised. In

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taking their search for savings further, I trust that councils will ensure that they secure the substantial benefits achievable through opening up appropriate local authority services to the benefits of competition. I congratulate them on the progress they have made to date, but I think they will agree that there is still a great deal more to be achieved.

Altogether, in capital and revenue, we are talking about not even hundreds of millions but billions of pounds, figures perhaps beyond the comprehension of ordinary people. It is interesting to express them in terms that people understand. My proposals for the forthcoming year mean that local authority expenditure in the Principality will be some £37 per week per household in Wales, of which £25 will come from the Government grants, £7 will come from business and £5 from the domestic ratepayer. That vast local authority expenditure will provide vital services for the Principality, but the sums involved are very substantial. As I said when I made the original announcements, I have never known an occasion when local authorities or Oppositions, be they Conservative or Labour, have applauded any rate support grant system or settlement for any year. When one looks in balance at the inflationary trends, when one looks in balance at what is going on and when one looks in balance at what will happen in Wales compared with other parts of the United Kingdom, one cannot complain about a situation in which each household in Wales will benefit from expenditure of £37 a week by local authorities, £25 of which will come from Government, £7 from business and £5 from the domestic ratepayers.

The settlement is a good one for Wales. It will make it possible for local government to meet its obligations in providing efficient services, while keeping rate increases low. I commend my proposals to the House.

11.6 pm

Mr. Barry Jones (Alyn and Deeside) : The Secretary of State referred to our late colleague, Mr. Bryn John. He spoke about him most sincerely and with insight. That is appreciated by the late Bryn John's right hon. and hon. Friends. He was exemplary as a constituency Member and he always guarded the interests of Pontypridd fiercely. I had the pleasure of serving in the last Labour Government alongside him. He was a superb Minister. He was very decisive, he was always well-informed and he was a civilised man. He was a strong Minister and was always on top of his brief. He always gave a lead. We knew him, too, as a man rooted in his family and in his community, which he loved. Nobody denied that he had integrity and courage- -plenty of it--as well as independence and culture. He valued his Welsh heritage. It is no exaggeration to say to the House that he was a truly good man and a very disinguished parliamentarian. [ Hon. Members :-- "Hear, hear."]

I know that the Secretary of State has not read the document because he has allowed paragraph 9 on page 30 to go out. It says : "These formulae comprise two straight lines : one of slope 3.5 PGRE below the threshold and one of slope 5 PGRE above it." I could not expect him to read that, but he has put his signature to it and he deserves what he is going to get.

The Welsh counties do not see the settlement as the Secretary of State does. The Welsh counties together are

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not an overtly political group, although they are shrewd and professionally advised. They are perturbed by the settlement. I shall summarise their worries. They were

"bitterly disappointed that the Secretary of State had ignored their views as expressed in response to the Provisional Settlement and subsequently".

They cannot understand

"how a settlement fixed in the context of comparatively low inflation and interest rates in the summer could still be considered reasonable in the circumstances which now exist".

They also say--and I agree :

"The Settlement falls short by some £37.6m or 2.1 per cent. of the amount needed to deal with identified higher costs and the increase in the GDP deflator from 4 per cent. to 5 per cent."

They also point out :

"Providing for this minimum shortfall is likely to reduce the overall rate of grant from 64 per cent. to a little over 62 per cent. and to cause rate increases to be some 4 per cent. higher than they might otherwise have been."

That is why, according to the Welsh counties, the settlement is not a good one, although the Secretary of State has just said that it is.

The Government have conveniently overlooked the higher costs arising from the legislative pressure of, for example, the Education Reform Act, which enables the local financial management of schools and the reform of the curriculum. Where in the settlement are the prospects for more teachers in our high schools and our primary schools? Where are the prospects for halting closures and cuts in the nursery sector, for the widespread repair, refurbishment and decoration of our schools, and for the desperately needed textbooks, scissors, equipment, stationery, glue, erasers, pencils and Biros, which the worried young mothers and fathers, the parents of the youngsters at school, are looking for? Why does the settlement leave the counties in trouble when paying the police and firemen at 8 per cent., and the lecturers at 6 per cent.?

The Welsh district councils are responsible and representative. They say that despite the efforts that the councils, counties and districts will make to reduce costs, which will involve real cuts in services, spending in 1989-90 is likely significantly to exceed Government provision. They say that they face a stark choice between reducing services and service costs and increasing local district rate levels above the 6 per cent. predicted by the Welsh Office. Boroughs and districts will face great difficulties this year in bringing their average local rate levy increases down to the single figure that the Secretary of State wants and predicts.

Things are even worse than that might suggest. Welsh Office predictions for district councils' spending at the level that the Government want show that all but seven districts out of 37 could face local rises of more than 10 per cent. Welsh Office figures show that 19 Welsh districts--half the total number--could face local rate levy increases of between 14 and 21 per cent. for the district part of next year's rate.

Welsh Office figures show that a number of district councils will have particular difficulties setting next year's local rate and determining the level of local services. There are three such districts in Clwyd--Colwyn, Delyn and Glyndwr. In Gwynedd, most districts are affected : I name Aberconwy and Arfon. In Dyfed, the districts of Carmarthen and Llanelli face especial difficulties. In West Glamorgan, the districts of Lliw Valley and Swansea face problems, as does the Vale of Glamorgan in South

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Glamorgan county. In Mid Glamorgan all six districts face major difficulties ; particularly hard hit will be Ogwr and Taff-Ely. In Gwent, problems face Blaenau Gwent, Monmouth, Newport and Torfaen. Overall, the Welsh associations believe that unless substantial cuts in services or savings in costs are made by councils, next year's average rate increase could be about 4 per cent. more than that predicted by the Welsh Office. If, as may happen, it is less in practice, that will be because local authorities have achieved savings, cut services or found reserves and balances to reduce their rate levies.

I remind the Secretary of State of the deep disappointment felt in the Welsh districts at his inability to come up with more money to help them face up to the challenge of the poll tax. That rankles in Wales. Even now, I ask him to reconsider, because the districts feel badly let down. No one in Wales wanted the poll tax, and the Secretary of State has told districts to implement it without providing them with the money with which to do so.

Our criticism of the settlement centres on its lack of realism. In the main, the right hon. Gentleman has today proposed the settlement that he promulgated as long ago as July. Its defect is that it has not been adjusted for the steep rise in the rate of inflation and interest rates or for the hike in wages and salaries. Our county and district councils are now stranded, sold short and facing demands to do much more on insufficient capital.

The settlement fails to provide for the higher costs arising from the legislative pressures of the poll tax and the Education Reform Act 1988 and from the increasing number of elderly and handicapped people who need ever more provision from social services departments. The settlement is at least £37 million--an important 2.1 per cent.--short of the amount needed to deal with identified higher costs. There is insufficient money to help the county and district councils to advance schemes to regenerate their local economies and to provide more jobs for local people. There is not enough money to tackle homelessness and the rapidly deteriorating and ramshackle housing in many valley communities.

The Opposition do not recognise the settlement that the Secretary of State outlined, nor do the counties or the districts, and soon our people will not. The settlement is a missed opportunity to repair and enhance the partnership between central and local government. It is a major disappointment which, because of its financial miscalculations, guarantees rate increases substantially higher than they might have been.

We have no hesitation in asking the House to reject the settlement and the Secretary of State to think again.

11.16 pm

Sir Raymond Gower (Vale of Glamorgan) : I should tell the hon. Member for Alyn and Deeside (Mr. Jones) that the settlements made by the Labour Government were not always favourable to local government. During their latter three years in office, rate support declined by 16 per cent. in real terms. The hon. Gentleman should not criticise what, on balance, is a great effort to assist local authorities to meet their obligations.

The settlement that my right hon. Friend the Secretary of State has presented to the House is justified because there are disadvantages in many areas of Wales that merit

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the support that has been given to the Principality. The amount provided by the Government is a high proportion of the total required, which means that a smaller burden will fall on the domestic ratepayer. But my right hon. Friend will be aware that the collapse of some of the industrial fabric, due to our former dependence on a narrow industrial base, has created peculiar problems. His support for rates in Wales is amply justified when compared with the support that is given to many other parts of the United Kingdom.

We are all pleased to see the amount of support that my right hon. Friend has announced for the valleys initiative. It is one of the biggest contributions that he and the Government could make to improving the fabric of life in the worst-affected parts of Wales. Does he believe that the councils will be able to make adequate provision for the initiative out of the amount that has been allocated to them under the rate support grant? I want the valleys initiative to succeed brilliantly, but I believe that the local authorities may need even more support if that is to be achieved. This goes to the nub of the problem of running local government. Such an initiative cannot be accomplished by central Government alone. It will require formidable support from local authorities and other bodies.

I agree with my right hon. Friend that the settlement is helpful, and I hope that it will enable the authorities in Wales not to levy excessive rates. On some occasions there have been excessive rates. I hope that that will not happen on this occasion because it would not be justified.

11.19 pm

Mr. Richard Livsey (Brecon and Radnor) : I wish to add my tribute to the late hon. Member for Pontypridd, Brynmor John. He was a compassionate man and a champion of Wales and his constituents. I got to know him when we were both agricultural spokesmen. He was well-informed and was always pleased to discuss matters with me at any time of day or late in the evening. He was a kind man and was friendly to me as a newer Member. I appreciated that. We feel his loss deeply.

There is no doubt that the rate support grant settlement is well behind inflation, although last July it was level pegging. Inflation next year is predicted at about 8 per cent. and the settlement will not match that. That must be a worry for local authorities affected by rate support grant. Inevitably, it will affect the level at which the rates are set, particularly when one takes account of the current high level of interest rates. What seemed reasonable in July seems doubtful now and will be untenable in 1989. A shortfall can be identified. About half the cost of setting up the poll tax collection system is allowed for in the settlement. Therefore, the settlement is not high enough. Why is it not higher?

The Secretary of State mentioned the national non-domestic rate. Many small businesses in Wales, particularly in rural Wales--shops, filling stations and so on--will be badly affected by the national non-domestic rate. People will be complaining about having to pay poll tax as individuals and the national non-domestic rate as a business. That will hit them hard because many of the businesses are finely balanced in terms of viability. They do not have the same volume of business as that found in some urban areas. However, some of the more rundown urban areas are also struggling. There is no doubt that it

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will prove to be an unpopular measure, particularly when one realises that the non-domestic rates will be aggregated--collected in Cardiff and inadequately redistributed to areas where rates are low and where the economic activity is not sufficient to sustain the loss of the current business rates.

I was glad to hear that the capital side of the rate support grant will be at 8 per cent. In the past it has tended to lag behind. There are worries in relation to sparsity factors in rural Wales. I suspect that some of the calculations done by the Audit Commission relate to what is known as spare school places. As I have argued before, many small schools in sparsely populated areas may have some spare places in theory. However, it is too much to ask small children to move from one community to another because alternative schools are 12 or 15 miles away.

The school buildings maintenance programme faces a crisis. Last week I visited the Oxford road school in Llandrindod Wells. It is a primary school ; 222 children attend the school. I found that the roof was leaking and that the school canteen was on the point of falling down ; it had just been propped up the week before. Too many of our schools are in a similar state. Rain is pouring on to the lunches. That is not good enough. Powys hopes to sort out that problem, but a more generous rate support grant would have been of great assistance.

Less and less support is being provided for housing. It is almost negligible now. Are Ministers able to say what grant Tai Cymru will receive on 1 April? That new body will require substantial support if it is to tackle the major housing crisis in Wales.

Sir Anthony Meyer (Clwyd, North-West) : Is there any item on which the hon. Gentleman is not prepared to spend a great deal more money, and does he have any suggestions as to where the hell it is to come from?

Mr. Livsey : The rate support grant has been declining over the years. A considerable injection of capital is required because the services that are provided to many of our communities have been run down.

Roads in Wales are among the most unsatisfactory that can be found anywhere in the United Kingdom. That is another good reason for an increase in the rate support grant in the next financial year. This is an inadequate settlement. A great deal more work needs to be done in Wales which would provide jobs for the people of Wales. They badly need those jobs.

11.27 pm

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