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Financing of Political Parties

Mr. John Spellar accordingly presented a Bill to regulate the financing of political parties by requiring disclosure of the source of donations, by the prohibition of donations from overseas, and by the publication of accounts: And the same was read the First time; and ordered to be read a Second time upon Friday 3 March, and to be printed. [Bill 47.]

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Orders of the Day

Local Government Finance (Wales)

3.43 pm

The Secretary of State for Wales (Mr. John Redwood): I beg to move,

That the Local Government Finance Report (Wales) 1995-96 (House of Commons Paper No. 140), which was laid before this House on 2nd February, be approved.

Madam Speaker: I understand that with this it will be convenient to discuss the following motions:

That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (Wales) 1995-96 (House of Commons Paper No. 141), which was laid before this House on 2nd February, be approved. That the Special Grant Report (Wales) 1995 (House of Commons Paper No. 142), which was laid before this House on 2nd February, be approved.

Mr. Redwood: The motions allow total standard spending of £2,782 million for local government in Wales in 1995-96; an increase of 3.24 per cent. and an increase well ahead of inflation. The motions represent £15.1 million more than that which I announced on 29 November 1994, as the amount includes extra money for the police following the consultation. That takes the total increase to £87 million, when compared with the equivalent spending this year. It brings the increase to £600 million--or 30 per cent.--since 1990-91 which is well ahead of inflation at 21.3 per cent. That gives the lie to some of the criticisms that were made ahead of the debate to the effect that we had cut spending or been mean. Here is another large increase for the people of Wales and the services provided by their local government.

Mr. Alan W. Williams (Carmarthen): The Secretary of State has mentioned a figure of £2,782 million, and Hansard tells us that on 14 December 1994, talking about the budget for Wales, he said that £2,767 million represented an increase of 2.7 per cent. However, I have a letter here from the chief executive of Dyfed county council saying that that £2,767 million is in fact £48.9 million less than the local authority budgets for this financial year. What the Secretary of State portrays as an increase of 2.7 per cent.--rising today to 3.2 per cent.--is really a cut of 1.8 per cent. below the existing level of expenditure. Can the right hon. Gentleman explain what is wrong with the chief executive's arithmetic?

Mr. Redwood: There are two ways in which the chief executive could be wrong. First, we must adjust for the change in functions. I was very careful about what I said, and if we compare like with like we see the increase that I have described. Perhaps the council's figures were not properly adjusted for the change in functions.

Secondly, as I have said, we must compare like with like. We must compare the total suggested to the House last year with the total suggested this year, or we could compare budgets with budgets. But we must not confuse the figures or we shall get a silly answer. I am comparing

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like with like, and making the right adjustments for the new range of functions that local government is undertaking.

Mr. Barry Jones (Alyn and Deeside): Does the optimism of the Secretary of State's opening statement presage an intervention, or even a subvention, for the benefit of the hard-pressed local education authority in Clwyd? The possibility of major cuts in teacher numbers and the problems facing the county in providing for special needs are causing deep concern there. Will the right hon. Gentleman deal with those issues?

Mr. Redwood: Willingly; I shall speak in detail about Clwyd's budget later. I know that concerns have been expressed, but I believe that there are easy ways in which Clwyd could find the money that I believe its schools need and deserve, and I hope that the county councillors will look more carefully and find the right answer for local people.

Mr. David Hanson (Delyn): The chief executive of Clwyd county council has said that as a result of the grant figures before us Clwyd will face a cut of £8 million--about 4 per cent.--because inflation has not been included in the settlement at the proper rate. Schools and many parents in my constituency and elsewhere are appalled at the consequences of the settlement and have urged me to vote against it. What justification can the Secretary of State offer me to take back to them?

Mr. Redwood: I shall explain later where I think the money can come from to provide high-quality education in Clwyd. That is what I want, and I am sure that it is what Opposition Members want, too. Given the generosity of the settlement, the solution lies in the county's hands.

The notional amounts report adjusts this year's county figures for the creation of self-standing police authorities from 1 April 1995. I propose to use those adjusted figures to measure increases in 1995-96 for capping purposes. The counties have been consulted on those figures and agree that they are accurate.

The special grant report will enable me to pay grants totalling £19.5 million to the new unitary local authorities in Wales that will be elected on 4 May. These grants meet in full the local authority associations' estimate of the running costs of the new authorities in their shadow period. I want them to get off to a good start and I hope that, if nothing else, Opposition Members will welcome our generosity in not only meeting the bill in full but meeting it by way of grant, so that there can be no question but that the money will be there to do the job.

I have consulted the local authority associations on the formula for distributing the grants and they have endorsed it. Total standard spending of £2,782.1 million includes £315.8 million for the new police authorities and £124.4 million for community care; £156 million will be paid as police grant to authorities by the Home Secretary, which the House has already approved, and the balance of £159.8 million will be provided by standard spending assessments. I propose to provide £2,466 million in aggregate external finance, an increase of 2.4 per cent on the 1994-95 level. This will comprise £1,718.3 million in revenue support grant, £520 million in distributable

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non-domestic rates and £227.7 million in other revenue grants. It accounts for about 89 per cent. of total standard spending, compared with about 80 per cent. in the English equivalent settlement. That means that Welsh council tax payers will continue to benefit from substantially lower levels of tax than their counterparts in England as a result of the settlement. I hope that Opposition Members will weigh that up carefully before thinking about voting against the proposal.

A new non-domestic rating list will come into force on 1 April. That shows an overall increase in rateable values for Wales of 18 per cent., reflecting the relative improvement in property values compared with London and southern England since the last valuation. That shows that the Welsh economy is doing relatively well, and that it is growing fast during a strong recovery.

The levels of rates raised from the new list must by law be the same in real terms as the rates raised in 1994-95. To counterbalance the rise in values, the poundage will fall from 44.2p to 39p next year. Some ratepayers' valuations have risen by considerably more than the compensating decline in poundage since the last valuation. As my right hon. and learned Friend the Chancellor announced in his Budget, we have acted to limit the real rate rise in 1995-1996 to 10 per cent. for any given property and 7.5 per cent for smaller properties, usually occupied by smaller businesses. The cost of this will be met in part by phasing in rate reductions for those who gain from the revaluation and in part by a £25 million Exchequer contribution. Around 60,000 ratepayers in Wales will be assisted by the transitional arrangements.

The aim of the police funding formula is to distribute resources fairly to police authorities in Wales and England, taking account of each area's need for police services. The settlement represents an increase of over £30 million for Welsh police authorities compared with police budgets for 1994- 95. It gives the new authorities a sound base for providing high-quality services in their first year. It also shows how disappointing Welsh Labour local government has been in meeting the needs of the police when it had the freedom to do so. I withdrew that freedom with great reluctance, but the decision represented by this budget is extremely popular in Wales, especially south Wales, where it gives a big boost to the police force. I want the authorities to concentrate on appointing more constables and sergeants to patrol our streets and detect criminals. I do not wish to see the money spent on too much extra management or new offices. I look to the new police authorities to spend it wisely in line with the public's wish for effective crime control and reassurance.

I thoroughly disagree with the Labour party in its contention that £87 million more is not enough. Next year the counties will have sufficient money to pay for the teachers currently employed and, if they wish, they could recruit some more. LEA schools in Wales began this financial year with balances of £47.6 million. That was money given to schools in past years, and they still have considerable balances.

I remember an early visit which I made as Secretary of State to Clwyd to see a new development project. I was greeted by a crowd of chanting pupils from a local school, who had been permitted to do so by teachers and Labour

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councillors--perhaps they had even been organised by one or two of them. They shouted that the settlement that year was too low. When I tried to discuss the matter with the pupils, I discovered they did not know how big the budget was, how much it had gone up by, or how the county proposed to spend the money that Parliament had voted. I felt that those pupils had been manipulated by people out to play politics with their lives in a quite disgraceful way. Imagine my interest in discovering that Clwyd LEA schools had £5.2 million in unused balances at the start of this year--hardly evidence that past settlements, which have been criticised, have been mean. If the schools spent that money next year, it would have the effect of increasing their delegated budgets by almost 5 per cent.

Mr. Martyn Jones (Clwyd, South-West): The Secretary of State knows that schools which manage their own budgets have to keep balances. The district auditors would be down on them like a ton of bricks if they did not. If the Secretary of State is so keen on giving money to the police because they face cuts under the present SSA arrangement, does he not realise that Clwyd faces cuts in teacher numbers under the present SSA arrangement? Will he treat the education of children in Clwyd in the same way as the police force in Clwyd?

Mr. Redwood: I do not propose to take powers away from Clwyd county council to decide how much should go to the schools. That is an important local democratic power. I am entitled to argue about how schools should carry out their functions when they argue that I have not given them enough money. I am about to demonstrate that there is plenty of money if the schools choose the right priorities in line with those of the electors whom some Opposition Members represent.

Sir Wyn Roberts (Conwy): I am sure that my right hon. Friend is aware that in addition to the reserves that the schools in Clwyd have, the county has balances of some £6 million.

Mr. Redwood: My right hon. Friend is ahead of me in the argument that I am about to make to the House. The Western Mail tells me that spending the balances is not the answer. Yet it is money voted by the House for local government which has not been spent at a time when I am told that more money should be spent on education.

Mr. Ron Davies (Caerphilly): The Secretary of State said that schools have their own accumulated budgets. I ask him a simple question. Will he confirm that the latest advice given to schools was contained in circular 294, which says:

"the ability to make savings in one year and deploy them in the next (e.g. to purchase a piece of equipment) is an essential feature of schemes of local management."?

Is that the advice that he gives to schools?

Mr. Redwood: Of course schools should budget wisely. Of course they have some powers to save for the things that they most want. But when we have balances of more than £5 million, or 5 per cent. of the annual delegated schools budget, and schools tell me that they do not have enough money, I am entitled to ask why they do not spend some of that balance on the things that they say are most needed--enough teachers paid at the rate for the job.

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The Labour party has run a wicked campaign to alarm school governors, parents and pupils.

Mr. Davies: I put a specific question to the Secretary of State. I am surprised that he did not answer it. The largest school in Clwyd, which has a budget of more than £2 million, has an accumulated budget of less than £40,000. That is well within acceptable levels. If the Secretary of State is so concerned about accumulated budgets in schools in Wales, why on earth has he not responded to the county authorities in Wales, which for the past 12 months have asked him to spell out his policy? The Welsh Office has promised those people for the past 12 months that the Secretary of State's guidelines will be published to explain what procedures he expects them to take. If he now criticises them, why did he not accept his responsibility 12 months ago and give schools the advice that he magically expects them to follow now?

Mr. Redwood: There is a great deal of delegated power in the system, I believe rightly so. I see that once again Opposition Members want to centralise everything. We give considerable scope to the local authorities to decide on priorities. We then give scope to the schools to decide on their priorities. I do not attack schools or local authorities unless they tell me through the elected representatives on the Opposition Benches that they do not have enough money. Then I ask where all the money has gone and whether they have some money that they could use for those priorities. Opposition Members have been busy saying that the Government will not provide for the teachers' award in the settlement when they do not even know what the pay award is. I do not see how they can possibly judge that it cannot be afforded out of the settlement.

Mr. Roy Hughes (Newport, East): Does the Secretary of State admit that the balances are not transferable from one school to another? Some schools have done badly and others, admittedly, have a surplus. If the funds were held by the local education authority at county hall level, they could be distributed to where the need was greatest. The Secretary of State talked about pupils demonstrating. I have received a letter from Mr. McCarthy, the headmaster of St. Gabriel's Roman Catholic primary school in Newport, and from a host of parents expressing great concern about losing teachers from the school. What am I to say to them? Am I to say that there are surpluses in other schools in the county? That is not the answer.

Mr. Redwood: The rest of my argument will help schools that do not have large balances. The aggregate balances are large, so my point applies to quite a large number of schools within the county. There is other money, which I shall reveal in a minute, which will also help.

Mr. Paul Murphy (Torfaen): I am grateful to my hon. Friend the Member for Newport, East (Mr. Hughes) for making the point about balances in schools. On local authority balances, the Secretary of State knows as well as I do that district auditors, under Labour and Conservative Governments, always advised local government to hold reasonable balances. What sort

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of reasonable balances does the right hon. Gentleman suggest that Clwyd and other county councils should have? What is his definition?

Mr. Redwood: Of course there should be prudent balances; it is right that auditors discuss that with the county councils. It is for the finance specialists on the county along with their auditors to satisfy themselves about what is prudent and what is wasteful. There is a level of balance that is excessive and could be better spent on the services that are Parliament's primary intention in voting the money.

Mr. Alan Williams (Swansea, West): The right hon. Gentleman has already accepted that there should be some balances and he has said that those balances should be prudent. How does he reconcile his present argument that he must tell the schools what to do with the Government's argument that they are leaving it to the governors and the parents to decide what to do?

Mr. Redwood: The right hon. Gentleman should not confuse the issue. I have already made it clear that, unlike Labour Members, I believe in the maximum of delegated power. We have backed that view with our actions. [Hon. Members:-- "Not in this settlement."] All I am saying is that if Labour Members and Labour councillors criticise the settlement because there is not enough money, I am quite within my rights to explain why I think that there is more than enough money in the settlement and to explain how very easily the teachers can be paid and can provide a good quality of education.

Mrs. Ann Clwyd (Cynon Valley): Will the right hon. Gentleman explain, because I am a little confused and I am sure that some of my colleagues are, too, exactly what he means by the word "prudent"? Will he spell out what he means?

Mr. Redwood: I have already dealt with that point. It is a matter for the judgment of individual counties based on their budgets and their requirements, and for the auditors who obviously comment on these matters. I believe that the aggregate level of balances, both in the schools of Clwyd and in county councils around Wales, is considerably higher than is needed for a prudent balance. I want now to make some progress with my argument--

Several hon. Members rose --

Mr. Redwood: I want to make a little progress with my argument and I shall then take interventions if hon. Members still think that there are problems with my analysis. I am sure that they will not think that because it is a carefully constructed analysis of the budget position that their authorities face. When we decided on the increases--

Several hon. Members rose --

Madam Speaker: Order. The Secretary of State has made it clear that he will not give way yet.

Mr. Redwood: When we decided on the increase in cash for local government next year, of course we took account of the need to pay teachers more. It is not some new development that has taken us by surprise. I also took

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account of all other relevant points about the budgets and requirements of Welsh local government in framing the settlement. I expect education to be a high priority for county councils next year; that is what the people of Wales clearly want.

The average results in schools in Wales are still too low. They are lower than those in England, lower than those in Scotland and lower by far than those in Japan. Tests on pupils with an average age of 15 years and eight months in England and Wales have shown that only one quarter could calculate correctly the total in the decimal sum 2.6 minus 4.12 plus 6.3 minus 0.44 without a calculator.

Mr. Jon Owen Jones (Cardiff, Central): We shall find out how good the Secretary of State is at percentages. What is the percentage of the total budget of schools remaining in the balance?

Mr. Redwood: I have already answered that point; the hon. Gentleman was not listening. It is about 5 per cent. of the delegated schools budget. I have given the £5.2 million figure for Clwyd. I am saying that that figure is higher than it need be; it means that there is money there to help.

I go back to the point about levels of competence. I am sure that hon. Members in their more honest moments would agree that levels of competence in both English and arithmetic need to be raised as a matter of urgency in many Welsh primary schools so that secondary pupils have mastered the basics before moving on to other studies. The tables show that the schools that receive most money per pupil often produce the worst results. They warn against the idea that all that is needed is more money. What is needed is more ambition for the pupils, better teaching and more stretching assignments.

Mr. Ron Davies: The Secretary of State must understand that we expect answers to our questions because the people to whom he refers are our constituents. I must press him on what he considers to be "prudent". Does he understand that in Mid Glamorgan, for example, although there are balances, 85 per cent. of the budget is held by fewer than a quarter of the 45-plus secondary schools? Nothing in the Secretary of State's local management of schools arrangements will allow him, under the proposals that he now puts to us, to take money from the schools that have balances and give it to those running a threadbare economy. He must answer that question before he proceeds.

Mr. Redwood: I do not want to take money away from the successful schools. I simply stress than many of them have good money--

Mr. Alan Williams: Which ones are successful?

Mr. Redwood: Those that are successful at budgeting. They may also be successful at teaching and educating, and I hope that they are. I do not want to take away from them money that is there to be used for educational purposes. I shall go on to identify other money that may help schools which Opposition Members say have no balances on which to draw.

Clwyd county council spends a little over half its total budget on education. If it chose to spend an extra 1 per cent. of that budget on education and 1 per cent. less on other things, that would yield £3 million, or 3 per cent. extra on the delegated schools budgets. The ideal areas

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for spending less would be council publicity, members' allowances for too many committees and working parties, and general office overheads.

Mr. Barry Jones: Has not the Secretary of State launched a mean and organised attack on Clwyd county council aimed at creating a diversion to save his skin in this matter?

Mr. Redwood: Spelling out the facts about accounted budgets is hardly a mean attack. It is the sort of analysis which Labour as well as Conservative councils should encourage in council chambers throughout Wales. The public need to know how much money is there and how it is being spent, so as to ensure that the priorities are right.

Clwyd county council also has substantial balances, as my right hon. Friend the Member for Conwy (Sir W. Roberts) pointed out. If it spent £2 million of those on education, that would produce another 2 per cent. for the delegated schools budgets. I hear that it may now be thinking along those lines.

Mr. David Rendel (Newbury): The Secretary of State said that money could be taken from councillors' allowances and expenses. Have not the Government recently introduced new measures to allow councils to pay councillors higher expenses? Do not all parties agree that it is necessary to increase, as far as possible, allowances given to councillors to ensure that we have a higher standard of councillor, which I am sure the Secretary of State would appreciate?

Mr. Redwood: The hon. Gentleman was not listening. I said that there were too many working parties and committees. That is so in the case of Liberal-Labour Berkshire council--the hon. Gentleman's council--which has massive balances that it should spend on a decent education for children in Berkshire. I am grateful to the hon. Gentleman for intervening and giving me a chance to say that.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): I am mindful of what Madam Speaker said earlier about exchanging insults, but I wonder whether the Secretary of States lives on this planet. I have in my hand a document from Gwynedd council, which says that this is the worst revenue support grant settlement in its history with a cut of £3.346 million. Unless the Secretary of State is right on everything and Gwynedd council is wrong, he must answer that point.

A second document from Dyfed council says that it is cutting school meals and charging more for them, stopping further expansion of its community education programme and giving up responsibility for the maintenance of buildings.

The settlement is an absolute disgrace and however much the Secretary of State tries to dress it up in fancy language and stupid figures, it is still a drastic cut. He must recognise that.

Mr. Redwood: Madam Speaker, £87 million extra next year is no cut or fancy figure. It is good money which I trust the House will vote for tonight. It is money that the councils need and which I want them to spend well.

If we look at Clwyd's education budget, what is even more depressing is how little of the money that Parliament votes for local authorities in Wales gets through to

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schools. In Clwyd, of a total 1994-95 schools budget of £146.5 million, only £99.6 million is given to schools for their delegated budgets. Whereas in Powys 78p in every pound of the schools budget goes to the schools to spend on what they think matters most, in Clwyd only 68p reaches the schools for teachers' salaries and other delegated items. If Clwyd matched Powys in its spending pattern for delegated spending on schools, rather than getting £99.6 million, schools would receive £114 million, which is a massive increase of 14 per cent.

Mr. Martyn Jones: The Secretary of State offered us a rather glib analysis of how much money Clwyd could save from council publicity, committee members' allowances and so on, which amounted to £1 million. I should like him to spell out in more detail how that money could be saved. I accept that Clwyd could take some money from budgets, but I hope that the right hon. Gentleman would also ensure that the district auditor did not look too unkindly at budget balances of between 1 and 2 per cent. The comparison with Powys is hardly fair because its SSA is much bigger than that of Clwyd. It has more money because it is an old rural county. If Clwyd received the same SSA it would not now face such problems. Will the right hon. Gentleman assure the House that he will allow the council tax payers of Clwyd to make a decision to increase their council tax to a level that would ensure that teachers in Clwyd do not have to face compulsory redundancy? I am sure that the people of Clwyd would accept that. It is in his gift to do so.

Mr. Redwood: The comparison between Clwyd and Powys does not hinge on the SSA, but on how much of the schools budget gets through to schools for their delegated purposes. The comparison is entirely fair. As to the rights of the councillors and constituents of Clwyd, I want them to make the decision. I am not taking that decision from them; I am just trying to influence it. It would be wrong of councillors to make teachers redundant when there is money in the settlement to pay for them.

We must ask what Clwyd is spending the money on that it is not delegating to the schools. The most obvious item in the education budget is the £3,256,000 spent on management and administration. That amount is 13 per cent. above the level of the next highest council. Let us say that Clwyd could save £2 million from the total of £46 million that does not get through to the schools. That would represent another 2 per cent. on the delegated schools budget. As hon. Members will be aware, I have already identified easy ways of enabling the schools of Clwyd to see their budgets boosted substantially. The county could do that next year without cutting any other county service. I have suggested a list that adds up to about £12 million. I am not saying that Clwyd needs to find all that money or that it should, but if it found a proportion of it, Clwyd could have more teachers rather than fewer and schools could make more of their own decisions about which services they need and which teachers they wish to retain and recruit.

The scope for using balances and delegating more money to schools can be reproduced across Wales, county by county.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney): Mid Glamorgan will draw no less than £8 million from

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its balances and reserves, but that will still mean a cut of £1.5 million in the school formula budgets and, the cruellest cut of all, a £1.5 million cut in the building maintenance budget. Many schools desperately need such spending because of their age and character. Mid Glamorgan has obeyed the right hon. Gentleman's instructions and taken money from its balances, but it is still encountering difficulties, so there must be something wrong with the right hon. Gentleman's formula rather than with local government.

Mr. Redwood: I am delighted that it will use some of its balances for good purposes. It can prudently do so and I look forward to it using that money. I also hope that it will look at the other items that I set out for one county, because Mid Glamorgan may find that some of them also apply to it.

As to improving run-down schools, no one is keener than I am to see the standard of maintenance and building repairs improved in those schools that need it. That is why I have made sure that there has been a generous capital settlement for education and for local government in general.

In the current financial year counties receive credit approvals of £42.5 million for educational capital spending--up by 11.6 per cent. on the previous year. For next year I am proposing a further increase of 7 per cent. to £45.3 million. I want to see that money spent on buildings of which we can be proud for the schools of Wales and I trust that Opposition Members agree with that aim.

In suggesting that councils control their central overheads, which in some cases are large, I am asking local government to do only what central Government are already doing. I told the House on 14 December 1994 that there would be a cash and real terms reduction in Welsh Office running costs for 1995-96, and similar reductions for Welsh executive non- departmental public bodies.

The local authority associations tell me that there is little room for further significant efficiency savings. In my experience, there is always room for large organisations with multi-million pound budgets to achieve savings by innovation and improved working practice. That judgment is supported by two recent reports from the Audit Commission on pay and performance, which concluded that savings of £500 million could be achieved by local government in England and Wales.

I am providing £43 million on top of the settlement in 1995-96 through special grant and credit approvals to meet the costs of local government reorganisation. As I promised, the costs of reorganisation are not a call on this revenue settlement.

Care in the community, which is another important matter, will receive £124.4 million--an increase of £38 million, or more than 44 per cent., on the current year's figure. It is not calculated for capping purposes. I have kept the November 1993 plans for care in the community, despite the further decrease in inflation, because I regard that as crucial.

Mr. Ieuan Wyn Jones (Ynys Mo n): I apologise to the Secretary of State that I was not here when he started his remarks. Does he recognise that the predictions that were made, when community care was introduced, of the number

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of people who would be cared for in their own homes, considerably underestimated the number of people who have made that choice? Is he satisfied that the increase that he is announcing will satisfy that increased demand?

Mr. Redwood: Yes; I think that it will. It is a generous increase. What matters is not the number of people who opt for a specific type of care but the total number of people who need care, whether it be in their home or elsewhere. I think that the plans do take more than fair cognisance of the likely growth in numbers. We want the policy to succeed; I am sure that Opposition Members do; I am sure that all sensible people in local government want it to succeed. A 44 per cent. increase in the amount of money for that purpose shows how important we believe it to be.

The hon. Member for Caerphilly (Mr. Davies) always comes to Welsh debates empty-handed. In all the time that I have debated with him, he has never promised more money than I have proposed. He had his chance this winter to offer more for the police, when local communities throughout Wales said that I had suggested too little. He did not take that chance. There was no shadow money for the police from the hon. Gentleman. Today he has his chance to say how much extra the Labour party would give local government in Wales if it had to make the decision.

I know that the hon. Gentleman will duck and weave again. I notice him already beginning to duck and weave because he knows that it is true. I can presume only that he never raises the cause of Wales in shadow Cabinet meetings, for fear of being slapped down by the Leader of the Opposition and the shadow Chancellor. There he sits, long on criticism, devoid of ideas, bereft of even shadow money. If he cannot deliver shadow money from a shadow Cabinet, why should anyone believe that he could deliver anything for real, were he ever in a position to try to do so?

It is odd that the hon. Gentleman does not wish to intervene. I think that he knows that it is a fair criticism. The hon. Gentleman obviously does not mention Wales in the shadow Cabinet. He goes out to make the tea instead of asking whether Wales can be given a decent place in shadow Cabinet plans. I look forward to hearing the shadow budgets. I am sure that, were they ever to leak out, we would discover that there was not an extra penny, let alone an extra pound or ecu, for Wales anywhere to be seen.

Local authorities will also receive generous capital provision next year. I announced on 14 December 1994 that that would total £525.6 million, up 4.5 per cent. on this year. I expect Welsh local authorities to act responsibly in setting their budgets. I shall consider those budgets carefully, in the light of my provisional capping principles and of all the available information.

This is a good settlement for Welsh local government. It is a delight to see that it puts Opposition Members in such good humour as I tease them about their inability to come up with anything better. It gives Welsh local government an increase greater than inflation. It gives it extra resources to prepare for local government reorganisation. It could mean more teachers in the classroom if councillors want them to be there and are determined to budget sensibly. It will definitely mean more police on the streets and more care in the community.

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I want local authorities in Wales to raise the sights of local communities, raising standards in schools and providing generously for elderly and disabled people. I commend the settlement to the House.

4.19 pm

Mr. Ron Davies (Caerphilly): If the Secretary of State had any friends, I do not think that even they would congratulate him on his performance.

Mr. Rowlands: Offer him a shadow salary.

Mr. Davies: I can hear my hon. Friend urging me to increase the shadow budget. There are no restrictions on our shadow budget; the problems begin with the restrictions that the Secretary of State is imposing on the real budget. It was interesting to note that all the detailed questions asked of the Secretary of State today have been pointedly ignored.

The thesis of the Secretary of State's argument was that unspecified schools, unnamed councillors and unquantifiable council officials had conspired together to build up unreasonable balances in Clwyd. He only managed to single out Clwyd county council and did not refer to any other counties in Wales. He suggested that the solution to the problem of local government finance in Wales could be dealt with by attacking Clwyd county council.

When the right hon. Gentleman was asked what constituted a prudent balance, he gave no answer. When he was challenged specifically on whether it was Government policy for those schools prudently to accrue balances for use in future years, he gave no answer. I cannot make the point strongly enough that those schools are following the specific advice given to them by the Government. It ill becomes the Secretary of State to criticise them for following Government policy.

Of course, Clwyd has built up balances. My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) explained what had happened to Mid Glamorgan. But the Secretary of State signally failed to say what proposals he had to meet the expenditure next year if Clwyd and all the other counties in Wales used all their balances this year. We all understand, even if the Government do not, that one can sell and spend the family silver only once. That represents exactly what the Government have done--the bonanza of North sea oil, the proceeds of privatisation and all our industry have gone. After 15 years of Tory Government, there is an increase this year equivalent to 7p in the pound on the standard rate of income tax. The right hon. Gentleman now wants Welsh local authorities to do precisely the same. If they get rid of the balances this year, next year they will face the prospect of either increasing rates--which he will not allow them to do because he will rate-cap them--or cutting deep into the body of public services. That is what the Government have been about. The Secretary of State's disgraceful speech demonstrates the fact as clearly as

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