|Previous Section||Home Page|
That the Local Government Finance (Amendment) Report (Wales) 1993-94 (House of Commons Paper No. 169), which was laid before this House on 31st January, be approved.
That the Local Government Finance (Amendment) Report (Wales) 1994-95 (House of Commons Paper No. 168), which was laid before this House on 31st January, be approved.
The Second report puts right a mistake in the description of the basis for distributing the distributable amount for 1993-94 which was approved on 8 February 1993. I can assure the House that the amendment in this document does not affect the money that authorities should receive.
I announced my provisional settlement proposals to the House on 30 November last. I have given careful consideration to the representations that I have received on the level of the settlement and the views of the local authority associations in coming to my final decisions. I believe that my provisional proposals remain appropriate.
I propose to set total standard spending for 1994-95 at £2,704.8 million. That includes a sum of £86 million for care in the community- -an increase of 4.2 per cent., or more than £100 million extra cash compared with 1993-94.
Mr. Win Griffiths (Bridgend) : The Secretary of State said that the figures in the reports were in a sense provisional at the end of last year, but that he feels that nothing has happened to change his view. Will he tell us what impact he believes the pay settlements will have on the spending that he has allowed local authorities? It seems to me that there must be a cut in staff and services if they are to keep within the sums of money that he made available at the time when he was not aware of the settlements.
Mr. Redwood : I am grateful to the hon. Gentleman for posing the central question. I hope that during my remarks I will satisfy the House, if not all Labour Members, that the settlement proposals are fair and will mean that good quality services can be delivered by councils throughout Wales, and that they offer enough money to avoid sacking essential staff. They certainly offer enough money to avoid sacking any teacher who is needed in the classroom. I do not want to see that happen. I trust that hon. Members do not, too. It is up to local authorities. I believe that the extra grant--the extra spending permission--means that a good quality education can be delivered to children in Wales without it in any way being jeopardised by the proposals. I shall illustrate later the fact that local government has considerable flexibility to spend wisely and well. It has resources at its disposal to do a good job.
Column 877the various salary review bodies would be making a recommendation that was almost twice the current rate of inflation?
Mr. Redwood : I did not know the exact amount of the recommendation, but I assumed that some pay increase was likely. I have made an increase in grant, which I am just about to explain to the House, and which will go some way to meeting the requirements of local authorities. They have other assets and resources. I will illustrate them later.
I propose to provide £2,419.2 million in central Government support towards this spending, an increase of 3.3 per cent. on 1993-94. Opposition Members will see that is a good rate of increase compared with the current rate of inflation. The support package will comprise £1,740.1 million in revenue support grant, £464 million in distributable non-domestic rates and £215.1 million in other revenue grants. More than £89 in every £100 of Welsh local authority expenditure on revenue account will be funded by central Government support. That generous level means that Welsh council tax payers benefit from substantially lowered levels of tax than their English counterparts. Welsh taxpayers should continue to benefit from relatively low levels of tax next year, assuming sensible budgeting decisions.
The revenue settlement is matched by the substantial local government capital settlement for 1994-95 which I announced on 30 November. This totals £503 million in capital grants and credit approvals, a 4 per cent. increase on 1993-94. It means welcome permissions to improve capital stock in housing, education and other crucial local government service areas.
The Welsh non-domestic rate poundage--or business rate--for 1994-95 will increase by 1.8 per cent. in line with inflation to 44.8 p. That modest increase, coupled with the transitional arrangements announced in the Budget, will be of considerable benefit to business. About 20, 000 business ratepayers who faced the largest increases following the 1990 revaluation will benefit by £5.3 million from the transitional changes.
This is a decent settlement for local government in Wales. It gives local authorities an additional £100 million to spend when the low level of inflation is helping them to keep down the cost of providing their services. The £86 million that I am providing for care in the community is an increase of almost £50 million on 1993-94 and will enable local authorities to build on the introduction of the service in 1993-94. Since the 1990-91 settlement, revenue resources for local authorities have increased by almost £530 million, or 27 per cent. My provisional settlement proposals were met by some criticism that they could lead to substantial increases in council tax levels. Increases as high as 15 per cent. were suggested. Most local authorities have yet to set their budgets, but I am glad to report to the House that press reports indicate a far more modest level of increase.
Clwyd council and Cardiff city council are reported to be proposing a reduction in their council taxes. South Glamorgan county council and the Vale of Glamorgan borough council are reported to be planning increases limited to 3 per cent. or below. That shows that it can be done and I hope that other councils will look after the interests of their taxpayers.
Column 878On 14 December, I announced my provisional capping criteria. I will give careful consideration to local authority budgets and make my capping decisions in the light of all the information available to me when I have received it.
May I commend Welsh billing authorities for their better than expected performance in collecting the council tax? They estimate an overall surplus on collection funds of £17.6 million as at 31 March 1994, which translates into an average £18 reduction in council tax for a band D dwelling, which could be passed on to taxpayers in their 1994-95 bills or allows the council more flexibility in its general finance planning.
Local councillors have considerable flexibility in their budgeting. The sums of money that I am describing are large. Revenue and capital spending combined of more than £3,000 million is many times the amount spent by quangos in Wales, outside the health service, and represents a large share of my total budget for Wales.
[Interruption.] I hope that Opposition Members are not suggesting that I should cut spending on health--that is a vital service, which I thought they also supported.
Flexibility is increased by the payment of rate support grant and distributable non-domestic rates as a block grant. It is for local authorities to decide how to spend the money that they are given, in line with their priorities and with local needs. Councils can raise income through fees and charges ; they have balances which they can choose to spend or retain ; and they have assets which they use for service provision or sell to raise capital. They have large administrations, which they should always be looking to make more effective. In education, there are surplus places to be removed, there is energy to be used more efficiently and there are ancillary services to be contracted out, if that can provide better value for money for local taxpayers.
Mr. Ted Rowlands (Merthyr Tydfil and Rhymney) : I apologise for interrupting the Secretary of State. No doubt he is aware of the serious problems facing the South Wales constabulary and its funding by local authorities. Is there any hope that he and the Home Office Minister responsible might get around the table with the police and local authorities to sort out the problems? People are seriously worried about the growing crime problem and the lack of policemen on the beat. I hope that he will agree to that request, which I have made on behalf of many of my constituents and many people in other constituencies.
Mr. Redwood : I am about to come to the subject of the South Wales police, but I shall answer the hon. Gentleman's question directly. I and my hon. Friend the Under-Secretary of State for Wales are always willing to discuss with local government matters relating to local government finance, and have done so during the months leading up to the settlement. My hon. and right hon. Friends at the Home Office are always willing to discuss police matters, if they are important and warrant a ministerial meeting. There was such a meeting recently, and a Home Office Minister discussed that very issue.
The last thing I want is for local authorities to skimp on the police. The budget problems of the South Wales police have been much in the news. Recently published Audit Commission profiles show that the South Wales constabulary's expenditure per head of population is above average for comparable forces and that more police are on
Column 879duty there than in similar forces. I trust that local authorities and the police authorities will make sensible decisions about future services.
Most of the issues that have been raised tonight are for the police authority, and I hope that it will get on with its job. Where necessary, police stations should be kept open and enough policemen should be made available for beat duties and detection work.
Mr. Roy Hughes (Newport, East) : Wherever blame lies as regards the South Wales constabulary, surely it would be madness to merge the Gwent and South Wales forces at this unfortunate time. Gwent has a very good record and we want it to stay like that.
Mr. Walter Sweeney (Vale of Glamorgan) : Does my right hon. Friend agree that the fact that the Home Office planned to allow £7 million extra for the police budget in Wales whereas local government has chosen to allow only £2.2 million is a disgrace and reflects very badly on the running of the police authority and the chairmanship of the committee involved?
Mr. Alun Michael (Cardiff, South and Penarth) : In that case, can the Secretary of State explain why in England we can get a straight answer from the Secretary of State for the Environment and the figures for standard spending assessments for the past five years, this year and next, but we cannot get the same information for Wales from either the Home Secretary or the right hon. Gentleman?
Mr. Redwood : As the hon. Gentleman knows, standard spending assessment calculations for England are carried out on a slightly different basis from those for Wales, which we set out in the report. Local authorities should have the maximum flexibility to make their own decisions. It is therefore a matter for local debate whether the community values its police service enough and whether that service needs more money to do a good job or the authority should take a look at how it is being run.
responsibility--can produce figures for England. The right hon. Gentleman cannot produce them for Wales. Why? Surely it is because he is not providing the money to Welsh local authorities.
Mr. Redwood : That was a fatuous remark. I have already answered the underlying question. Local authorities should have the maximum discretion and should be answerable for their decisions to local electors, who want good police and education services. The money is there for authorities to do it if that is their wish.
Alongside skimping on the police, the last thing I want is for local authorities to reduce the number of teachers if they are needed to teach pupils. I am delighted to report
Column 880that education standards in Wales have been rising during the past few years, following the introduction of the national curriculum and our other reforms. As I said recently, we have much further to go and more progress to make. That is very much at the top of my agenda and that of my right hon. Friend the Secretary of State for Education. Local authorities in Wales reduced the level of rent arrears by more than 10 per cent. between 1990-91 and 1992-93, but more progress must be made. Since 1987, the number of vacant local authority dwellings has also decreased. Those are the cuts that I want--cuts in the number of empty houses, in rent arrears and in tax arrears, so that the money is there to spend on the services that people want. I am pleased to report that care in the community has in general been introduced successfully. It is a good example of a major service being given to local government so that local rather than national democracy can determine the details of its future. How that flies in the face of Opposition criticisms that we always take important decisions away from local government. Care in the community will be one of the fastest growing services in the public sector during the decade to come, and we have entrusted it to local government.
Mr. Gareth Wardell (Gower) : By defining community care--by that I mean social care as opposed to health care--in a certain way, the Secretary of State might be seeking to increase the proportion of our vulnerable population who are pushed into the means-tested category. He must be careful that he does not end up by defining health care in one way and social care in another and thus denying health care its proper role. That can clearly be seen from the fact that elderly people are being discharged into the community--as he knows because he has heard it from me before-- without the necessary facilities for the disabled. His Department has decided to put the disabled facilities grant in the basic credit allowance, where it must compete against other local authority priorities. Why does he not put it back into the special credit allowance?
Mr. Redwood : Opposition Members speak with forked tongues. They say that they want local government to be more responsible and more trusted and to have more freedom, and when I provide that freedom, they complain that I am not telling local government what to do. I do not intend to lay down every detail. I too happen to believe that the disabled should be a high priority. The money is available, and in my settlement for next year I have explicitly recognised the needs of the disabled by providing a substantial increase. I hope that local government will respond by doing the decent thing. I want elderly people to be looked after well. If they can be cared for at home, well and good, but the necessary facilities must be available.
Mr. Dafydd Wigley (Caernarfon) : Does the right hon. Gentleman know that, during the current winter, an increasing number of homes for the elderly, particularly nursing homes in the private sector--in referring to the private sector, I make no value judgment--are experiencing difficulty in filling beds as a result of the policy that is being pursued in this field? Does he realise that in some cases only half of the beds in a home are occupied and that therefore people are vulnerable because they are uncertain as to whether their home--their only home--will remain
Column 881in existence? May we have an assurance that there will be coherent planning to ensure that the transition to care in the community will not make anyone vulnerable in this way?
Mr. Redwood : That is exactly what the authorities are asked to ensure. Of course, they must have sensible plans so that beds and facilities are always available for those who need them. In a way, the fact that more elderly people are now being looked after in their own homes is an indication of the success of the concept of care in the community. We have arrested the very rapid growth in the number of permanent residential places that we saw before the policy was introduced.
As we now see, local authorities, despite some gloomy warnings, have, in general, managed well in the first year of their responsibilities. They have examined thousands of cases, and many people have been helped to make decisions about their own future. Many are able to continue living, as they wish, in their own homes. This has meant a fall in the demand for residential care, which was increasing rapidly in previous years. It is the duty of the relevant authorities to plan future provision so that everything will work smoothly for those most in need.
I trust that local authorities will respond positively to this settlement. I believe in good local government. I believe that councils have an important role to play. I am disturbed if I learn of cases of alleged impropriety or irregularity in their financial performance or in their accounting. I trust that all parties in the House will unite not only in believing in local government but also in agreeing that local government should set and maintain the highest possible standards of conduct when spending the very substantial sums of money that parliament votes to it.
This is a large settlement. It is a good settlement in an era of low inflation. It gives local government in Wales the money that it needs to provide high-quality services and to get on with the job. It need not lead to high tax increases or to the redundancy of crucial workers. Well run councils will flourish as a result of this settlement, and I offer them every encouragement to do so. I commend the settlement to the House.
Mr. Ron Davies (Caerphilly) : We have just seen a new model Secretary of State. The right hon. Gentleman came to the Dispatch Box and talked about conciliation. He said that he had taken into account the views of local authorities put to him since he met them last year. He may have taken authorities' views into account, but he did not accept any of their observations. He commended Labour-controlled local authorities for their council tax and rent collection rates. He actually praised democratic local government for its value and compared it with his own quango state. He really is a new model Secretary of State, but his reality is quite different from his rhetoric.
The reality is that this is a poor settlement for local government in Wales. It has been roundly condemned, not least by the county councils, which, as the largest employers in Wales, will have to face the considerable burden imposed on them by the Government's acceptance of the public sector review body's recommendations without the additional cash to meet the awards.
This settlement represents a further step along the road that we have been travelling since 1979. The financing of local government is again circumscribed. Local government's ability to respond to the needs of the community it
Column 882serves as it and its electors deem appropriate is being curtailed yet again, and local government is losing its independence to central Government. The centralising tendency of which this settlement is a further representation is one of the most pernicious and corrosive characteristics of the modern Conservative party.
It will not be lost on anyone who is concerned with the application of the settlement that, despite the Secretary of State's earlier remarks, as the democratically controlled public sector represented by local government faces further cuts, the undemocratic sector represented by the 111 Welsh quangos has seen budget increases. In the case of the major bodies--the Development Board for Rural Wales, the Welsh Development Authority and the Cardiff Bay development corporation--the figure is more than 8 per cent. Given the succession of scandals and the aura of sleaze hanging over the Secretary of State's quango sector, I do not think anyone will deny that, in terms of value for money and financial probity, direct democratic control is a far better watchdog than the financial control systems of the Welsh Office.
The total standard spending of £2,705 million is £105 million above the settlement for the current financial year. The Secretary of State has argued that this is an increase of nearly 4 per cent. In the strictest sense, it is an increase of nearly 4 per cent., but that statistic itself is absolutely meaningless. In the current financial year, budgets--what authorities will have spent on delivering services, not on what the Welsh Office considers that they should spend--amounted to £2,688 million. Against that, next year's settlement, which we are debating tonight, represents an increase of only 0.6 per cent.
Even that is not itself a true reflection of reality. As the Secretary of State indicated, the current settlement includes provision for community care to the tune of £86 million. That is some £40 million below the Assembly of Welsh Counties' assessment of what is required to meet the needs of the community. In any event, it is not available for general spending. If that figure is removed from the spending total, the current increase is only 2.3 per cent. above the settlement for 1993-94 and, being £28 million or 1 per cent. below the current year's budgets, represents a real terms reduction of 4 per cent.
That is a measure of the cuts that the Government wish to force on local government this year. In any circumstances it would be difficult enough, but this year Welsh local government has to suffer the cumulative burden of previous years' cuts. It has also to struggle with the social and economic consequences of the recession foisted on the country by central Government, and it is expected this year to meet the costs of an unwanted, costly and unsatisfactory reorganisation of local government.
Predictably, while the Government with one hand are distorting their expenditure and creating unnecessary expense, with the other hand they are reducing the discretion available to county councils to raise their own resources. The capping limits, unfair and arbitrary as they are, are again imposing a straitjacket. All Welsh counties, for instance, are limited to a budget increase of 1.75 per cent. over 1993-94, as are the cities of Cardiff and Swansea and the borough of Newport. As my hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) pointed out, this cap of 1.75 per cent. is at the root of the funding problems of the South Wales police authority area.
Mr. Jonathan Evans (Brecon and Radnor) : Does the hon. Gentleman agree that the difficulties of the South Wales police authority are at least partly due to the authority's belief that it would underspend in the current year and the fact that its calculations were out by about £2 million? Does the hon. Gentleman agree that is at least a factor?
Mr. Davies : Coming from the party that controls the Welsh Office and has £208 million unaccounted for last year, it ill behoves the hon. Gentleman to lecture anyone. There have been cumulative expenditure problems in the South Wales police authority going back to 1988. Since then, the authority has faced underfunding of £38 million and experienced enormous difficulties.
The hon. Gentleman will know that the South Wales police authority committee, its officers and its chief constable have visited Parliament to put their cases to hon. Members representing the South Wales police authority area and to Earl Ferrers, the Minister responsible for the police. They certainly have not encountered any criticism from the Government. If the hon. Gentleman believes that there is some criticism to be made, I suggest that he takes a leaf out of the Secretary of State's book and refers the matter so that it can be properly audited. He will then see that no blame whatsoever can be attached to the members or the officers of the police authority.
Mr. Evans : Is the hon. Gentleman aware that the district auditor has suggested that there is a total lack of accountability or any proper financial control in the police authority? As the shadow spokesman for Wales, is he unaware of that?
Mr. Davies : The hon. Gentleman might well have seen a copy of the provisional report. That report was made on the same basis as the one presented to Westminster city council, which referred not to a difficulty of £2 million created as a direct result of Government underfunding of the police authority, but to the expropriation of millions of pounds to line the pockets and further the political interests of his party. However, I did not notice the hon. Gentleman's vociferous condemnation of Westminster city council or any other Tory-controlled councils.
If there is any evidence of financial mismanagement in the policy authority, it has to be properly investigated ; it has to be the subject of a proper report by the district auditor. If the district auditor finds any wrongdoing, wilful neglect or unacceptable maladministration, I shall certainly join the Secretary of State in condemning it.
I have the advantage of being condemning such maladministration, whether it applies in the democratic sector or the quango sector. Unfortunately, despite the corruption, mismanagement and fraud for which the Secretary of State is personally responsible in the quango sector, we have heard not one word of condemnation either from him or from his colleagues.
Mr. Sweeney : The hon. Gentleman has brought the case of Westminster city council into the debate, no doubt for comparison. Is not the difference between those issues that Westminster city council implemented a highly successful policy that resulted in political benefit to the party which introduced it, whereas in this case there was clearly no benefit, and the policy was disastrous for policing in south Wales?
Mr. Davies : I note the look of intense embarrassment on the faces of the Secretary of State, his Parliamentary Private Secretary and the Minister of State. The hon. Gentleman would do well to read the Official Report of tonight's debate. I am sure that he will want to reflect carefully on the justification that he has just made of corruption in local government.
Mr. Redwood : I wish to make it crystal clear to the hon. Gentleman, as I thought I had in the past, that of course I condemn fraud, wherever it is discovered and proven. That applies to my own staff and to outside bodies as well as to elected local government bodies. It must be condemned and rooted out if there is suspicion of it and it can be proven. Now that the hon. Gentleman has performed his mirrors vanishing trick with the extra billions, does he agree with two simple points--that there will be 3.3 per cent. more money available next year in central Government support, and that the RSG alone is up £71 million? Where is he spiriting it all away?
Mr. Davies : Nothing is being spirited away. The Secretary of State has raised two points and I shall deal with them both. First, he is anxious to ensure that corruption in public life is rooted out. I shall take the right hon. Gentleman at his word. I put it to him, however, that there is abundant evidence that the part of public life where corruption, sleaze and fraud flourish is that for which he is responsible. The democratic sector in Wales--the local authority sector--shows no such evidence of corruption, sleaze and fraud. If the Secretary of State wishes to root out the endemic corruption in Welsh public life, he should ensure that the 40 per cent. of his expenditure currently accounted for by quangos is brought under direct democratic control. That is how to ensure that corruption no longer exists.
Mr. Davies : With the greatest respect to the hon. Gentleman, I am replying to the Secretary of State. I know that the hon. Gentleman has only recently arrived in the Chamber ; he is what we might call a sioni-come- lately. I shall give way to the hon. Gentleman when I have dealt with sioni coed coch.
Secondly, the Secretary of State referred to a vanishing act. It is not a vanishing act. The most valuable comparison is between this year's standard spending assessment and last year's budget. The Secretary of State continues to compare this year's standard spending assessment with last year's standard spending assessment. The SSA last year bore no relationship whatsoever to the democratically expressed needs of Welsh local authorities. That is the heart of the difference between us. I see that the hon. Member for Clwyd, North-West (Mr. Richards) has regained his composure, so I happily give way to him.
Column 885contribution to local government expenditure is underfunded. Will he tell us by how much he believes it is underfunded, and how much more the Government ought to be contributing towards local government expenditure?
Mr. Davies : It is a direct answer to the question. Since 1979, there has been a succession of economic failures. The Government have increased the tax burden on the British public and cut on local authority expenditure. Had we had a Labour Government for the past 15 years, we would not be in the state we are in now. That is the only answer that the hon. Gentleman will get.
Mr. Davies : I will happily give way to the hon. Gentleman again, but he must understand that I shall repeat the answer that I have just given him, so there is not much point in repeating that question.
Welsh local government is underfunded. Had we had a Labour Government since 1979, we would not have experienced the disastrous economic performance, nor the increased tax burden, nor would we have the waste, fraud and corruption of the quango state. That is the answer to the hon. Gentleman's question. If he asks the same question again, I will merely refer him to the answer I gave some moments ago.
Mr. Richards : Thankfully, we have not had a Labour Government since 1979. The question was quite specific. We were talking about the revenue support grant for 1994-95. By how much would the hon. Gentleman recommend that the Government should increase their contribution to local government?
Mr. Davies : I refer the hon. Gentleman to the answer I gave a few moments ago, as I said I would. He might find it more fruitful to represent his own local authority, whose director of finance is clearly dissatisfied with the amount of representation that he receives from his Member of Parliament. In a letter dated 10 February, he wrote to me :
"The final local government revenue settlement for 1994-95 has resulted in a position where the Borough Council's draft budget for the new year is some £200,000 greater than the council tax limitation capping figure set by the Secretary of State."
That has obviously created substantial budgeting problems for the authority. The hon. Gentleman would do his constituents a better service by making his representations directly to the Secretary of State, thus ensuring adequate funding for his local authority.
Column 886mine, but he did not relay it to me. Is it in order for him to raise the matter on the Floor of the House in such circumstances?
Mr. Deputy Speaker : The hon. Gentleman will have made his own judgment on what material to use ; he will have noted which hon. Members were present, and I assume that he made his judgment on that basis. My ruling stands.
Mr. Davies : I do not dispute your ruling for a moment, Mr. Deputy Speaker, but we find ourselves in bizarre circumstances : it appears that I should have anticipated the precise nature of the interventions of the hon. Member for Clwyd, North-West. I suppose, however, that was rather predictable, and that I should have known better.
Let me return to what I was saying about the increase in aggregate external finance. It is 1 per cent. lower than the increase in total standard spending, and there will be an increase in the percentage raised by local taxation. We must welcome the principle, which would enhance democracy and extend freedom of choice at local level ; if that principle is to be acceptable in practice, however, we need a central Government who both honour the role of local government and are themselves a Government of sound finance.
Unfortunately, the present Government meet neither criterion. The 2.5 per cent. VAT surcharge to pay for the poll tax fiasco is still with us, and from April this year the average family in Wales will pay an extra £14 per month in income tax, insurance charges and indirect tax. Moreover, if this financial settlement is approved tonight, it may mean a 10 per cent. increase in the average Welsh council tax--a rise from £328 in the current financial year to £360 in 1994-95. Perversely, if all authorities spend to their capping limits, the increase may be even higher, bringing the average council tax bill to £377.
The impact of the settlement on revenue expenditure will be both direct and severe. I shall give specific examples shortly ; but, before I do so, I wish to comment on the capital programme, which gives the clearest possible demonstration of the Government's unwillingness to respond to the proven ability of local councils to be partners in the enterprise of economic development.
In cash terms, over £13 million has been cut from the capital expenditure plans, with programmes such as housing, environmental services and roads bearing the brunt. Most significant, more than £70 million has been cut from capital programmes under local authority control to allow supplementary credit approvals under Welsh Office control for European regional development fund schemes.
As a result of those policies, projects throughout Wales have now been approved for European regional development fund funding, but have been shelved because of insufficient credit approval. What attitudes prevail in the Welsh Office to allow such a waste of both additional resources and local opportunities? Alyn and Deeside has