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Mr. Alan Williams (Swansea, West): I apologise for croaking my way through just a few comments in the aftermath of cold. The nub of the debate was an exchange between my hon. Friend the Member for Caerphilly (Mr. Davies) in his opening speech and the Secretary of State. My hon. Friend pointed out that when we take out of the settlement the special amounts for the police and for community care, we are talking about an increase of 0.4 per cent. at best. Immediately, the Secretary of State rose to his feet and his answer was, "It is all right because inflation has fallen to 2 per cent." It seemed strange that the Secretary of State could put forward such a proposition. He was saying that it was all right because the rate of inflation will be only five times higher--instead of six or seven times higher--than the extra money being provided. Most of us know that it will be six or seven times higher at some time during the year. That is what it is all about--the authorities were first entrapped and then virtually strangled for years as far as resources are concerned.

My own county has absorbed £6 million in cuts in the past three years by using up some of its reserves. The Secretary of State said that we should not worry about the increase in teachers' pay because the provision is enough to cover it. How can he say that before he knows what the teachers' pay increase will be? The provision was set long before he could even have had prior warning of what the increase would be--which no doubt he has now.

The Secretary of State has no accounting or statistical grounds to say that an increase of one fifth of the rate of inflation will enable local authorities to cover an unknown and significant--although most of us would say inadequate--increase in teachers' pay. I have to declare an interest as my wife is a teacher. We have to recognise that the consequence of today's announcement is either cuts in teaching staff or larger classes, leading to a reduction in the standards of education provision.

I caution hon. Members about the idea being pushed by one Conservative Member about lifting the cap. Let me make this cautionary point about what the Secretary of State has said about the 89 per cent. central provision. If the Government decided to fund the teachers' pay rise by lifting the cap, a 1 per cent. increase in local authority

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costs would mean a 9 per cent. increase in the council tax because of the ratchet effect, so councils would be blamed for the fact that the Government have under-provided.

I now come to another peculiar proposition that the Government have suddenly dug up. The Secretary of State has been thoroughly briefed. He mentioned reserves in addition to school reserves. His case was that the reserves will be the solution for this year. What is the Secretary of State actually saying about reserves? We know that the Government always say that to be in debt is wrong and will criticise those irresponsible councils which get into debt--of course, they are not Conservative councils according to the Government--yet the Minister stands at the Dispatch Box to announce increased borrowing powers to get councils deeper into debt.

What about the concept of reserves? Are they good or bad? The Secretary of State does not really know. He cannot make up his mind. Are the schools which have no reserves virtuous because they used them up to meet previous cuts in resources, or are the schools with big reserves being prudent? The Secretary of State will not give us any guidance. He depends on his concept of a prudent level of reserves, but he gives no indication of what it is.

We understand that there is a difference between certain reserves. We know that big reserves are good in grant-maintained schools because the right hon. Gentleman has told us so, but the Government will not tell us whether those reserves are good in other schools. We assume they cannot be good, because the Government are telling them to use them up. That is the illogicality of our position. I made an intervention about information technology. Is it not anomalous that at Question Time the Secretary of State will stand up and say, "Look at what inward investment in information technology and electronic engineering has meant to Wales," but, at the same time as his right hon. Friend the Secretary of State for Education has announced a scheme in England to make extra information technology facilities and equipment available in English schools, he has flatly refused to do the same in Wales, which, according to him, will be hoisted by the boot laces by the electronics and information technology industries?

The Secretary of State is a mass of inconsistencies. He had the cheek to say to my hon. Friend the Member for Caerphilly--I know that it was a jocular comment--that my hon. Friend leaves the shadow Cabinet to make the tea. We all know very well that the Government will not let the right hon. Gentleman leave the Cabinet to make the tea.

Dr. Howells: Because he would poison it.

Mr. Williams: No, because while he was outside he would sell the kettle. Is that not what they are advocating? They are telling schools to spend the money that they put aside to buy equipment. That is what the Secretary of State said. I have never heard such financial absurdity. I will go with relish into the Lobby to vote against it.

6.28 pm

Mr. Win Griffiths (Bridgend): The consistent theme from the Opposition has been the dire straits into which the local government settlement has put local authorities in Wales. There is no doubt that all my hon. Friends have consistently made a plea for the Government to

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reconsider the settlement, which will result in a cut in the services which local authorities in Wales will be able to provide. We heard from the right hon. Member for Conwy (Sir W. Roberts) the novel suggestion that county councils could, as they go out of existence, run down their reserves with impunity. Has it not occurred to the right hon. Gentleman that immensely important education, social, highways and transportation services will have to be provided by the new unitary authorities? It will be prudent of county councils, as it will of district councils, to maintain balances that can be handed over to the new authorities.

The Secretary of State said today, as he did on ITN lunchtime news yesterday, that a lot of money is available. My right hon. Friend the Member for Swansea, West (Mr. Williams) reminded us that the Secretary of State could not have included sufficient money to cover the pay review body's settlement for teachers, which will not be announced until later this week. It would have been impossible for the right hon. Gentleman to anticipate last December the fine-tuning in January and to know exactly the review body's recommendation. He does not know the figure any more than local education authorities, even though all have tried to make budgetary provision for that pay increase.

None of the education authorities in Wales has wholly provided for the anticipated 2.9 per cent. pay increase. All will have to dip into their balances to make up the shortfall. Some authorities have already told schools that they are expected to provide some of the extra funding. Other authorities may be able to do so out of the fabled, fabulous balances that they are supposed to hold. When the Minister replies, I hope that he will say if he knows anything more about today's school balances compared with the figures thrown about at the start of this financial year. My bet is that most schools have already used their balances to purchase better equipment or more books and for other purposes. The consistent message from virtually every Welsh council is that the budget represents a cut over last year.

The Secretary of State was at pains to stress that one must compare like with like and the settlement for this and last year. Local authorities must consider the money that they had to spend this year and that which the right hon. Gentleman is making available for next year. Whichever indicator one uses--the TSS, AEF, SSA or other initials that come to mind in respect of local government spending--it is clear that there will be a real terms cut this year. Although there will be extra money, it will buy less. The same is true of education and housing authorities.

My hon. Friends the Members for Merthyr Tydfil and Rhymney (Mr. Rowlands), for Delyn (Mr. Hanson) and for Pontypridd (Dr. Howells), and my right hon. Friend the Member for Swansea, West pointed out that the message from north, south, east and west Wales is that more money is needed. The same is said beyond Wales--the hon. Member for Newbury (Mr. Rendel) brought the same message from the Liberal Democrats.

The Secretary of State can say as much as he likes about extra cash, but it will not buy the same in the current financial year that it did last year. Cuts have been made over several years. Over the past three years, Mid

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Glamorgan has had to make savings of £34 million. This year, authorities throughout Wales are being stretched on the rack and are falling apart.

Today I received two letters from Clwyd, over which the Secretary of State took so much time to salivate in his criticisms. Mr. Edward Williams of ysgol Morgan Llwyd wrote:

"Teimlwn bod ein pobl ifanc wn haeddu gwell."

That means, "Our children deserve better." The Federation of Welsh Schools commented that teachers are fed up trying to hold together a system that is falling apart around them.

Pupil-teacher ratios are a good indicator of the economic climate in education. From 1979 until 1990, pupil-teacher ratios in secondary schools fell year on year--from 16.8 pupils per teacher to 15.3. In 1993, ratios began to creep up, to 15.7 pupils per teacher. In primary schools, the ratio was at its lowest in 1984, when it was 21.5 pupils per teacher. By 1993, it had increased to 22.1. The situation is worsening inexorably.

Judging from the cash available, there has been an increase in district budgets of 1.1 per cent., but when one considers what can be bought, that represents a reduction of 2.5 per cent.--£11 million less than what is needed for a standstill budget. Compared with district council spending last year, there will be an overall cut of nearly 6 per cent.

The number of homeless in Wales is increasing and the state of its housing stock is worsening. Current new builds are probably only half the number required. The Government signed up to the United Nations housing strategy-- a declaration, as far as Wales was concerned, that there would be houses for all by the year 2000. The money given to local authorities or to Tai Cymru will probably allow only 40 per cent. of that target to be achieved. In the year that the Government signed that document, they have already admitted failure. There will be deeply damaging cuts in both industrial and rural Wales. The Secretary of State was at pains also to stress that he had fully catered for improved technology, to help bring the new unitary authorities into being--and we applaud him for that. He has catered in full also for the shadow authorities' budget. However, when it comes to financing possible redundancies, the right hon. Gentleman has provided £3.5 million, which must be borrowed.

The Secretary of State is on record as saying that he expects very few workers to lose their jobs, even though at one time he talked about a 5 per cent. loss which he thought would mainly be accomplished by natural wastage. There are huge differences in the numbers who are likely to lose their jobs and the terms on which they will lose them.

The Government have chosen, in their arcane way, to interpret TUPE--the Transfer of Undertakings (Protection of Employment) Regulations 1981--in such a way as to exclude a large number of local government workers. As is often the case when the Government interpret the directive's demands, they have got it wrong. This is another instance in which they would be well advised to come to a new accommodation with local government workers to make sure that the redundancy scheme is properly financed. How many people's redundancies can be financed on a £3.5 million scheme? Very few, I would guess.

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In addition to local government reorganisation, the Welsh Office is proposing that contracting out be reintroduced in Wales much sooner than in England, where the Department of the Environment is proposing a reasonable delay of 18 months to enable the new authorities to settle in before moving to compulsory competitive tendering. In Wales, however, some authorities have to begin the job six months after reorganisation, some a year after and many 18 months after. Bearing in mind the difficulties that local authorities will have with their budgets, will the Secretary of State extend the period before local authorities have to examine the problems that CCT will cause them? Finally, I deal with efficiency. The Welsh Office's own expenditure plans showed efficiency savings of 2 per cent., 2 per cent., 1.5 per cent. and 1.7 per cent. for 1992-93. All of a sudden, in 1993-94, the planned efficiency saving was 5.6 per cent. Will the Minister tell us exactly what savings were achieved that year?

Let us examine staff numbers in local government and the Welsh Office. Whereas Welsh Office staff have declined in number by 82 since 1979--a reduction of just over 3 per cent.--local government staff have declined by nearly 14,000, or about 6 per cent., which is double the number of redundancies. By any measure, local government has already shown itself to be more efficient.

The settlement proves that the Welsh Office, by having 15 press officers and quadrupling its publicity expenditure, is trying to sell the impossible in Wales. We shall be left with crumbling and under-resourced schools, exhausted and over stretched teachers, frenzied fund-raising parents trying to get money for the basics in our schools, impoverished housing stock, houses unfit for habitation, growing repair lists, growing numbers of homeless, roads increasingly potholed and taking longer to repair and overstretched social services. The needs of children and the elderly will not be met, and it will all be down to a settlement that is wholly inadequate for the needs of the real world. We shall vote against the settlement proposals.

6.43 pm

The Parliamentary Under-Secretary of State for Wales (Mr. Gwilym Jones): We have heard the traditional claims that this or that is going wrong and that we are heading for disaster or crisis. One need only turn to the previous year's debate or that of the previous year or the one before to realise that the same claim has been made again.

Let us analyse today's debate. It is clear that it has been a low-key, even -tempered debate about how local government in Wales is proceeding in the final year before our popular reorganisation. The only thing that we have not heard is a positive alternative from Opposition Members, including the hon. Member for Bridgend (Mr. Griffiths), whom I can at least congratulate on broadening the debate more than any of his colleagues, either today or in previous debates on Welsh affairs. However, the hon. Gentleman will have to pay more attention to the facts. I assure him that we have given careful consideration to compensation for local government reorganisation and have included appropriate funding for the costs that are likely to arise in the coming financial year.

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Nor has the hon. Gentleman studied his housing brief. He certainly has not read the interim house condition survey, which was published last year and which outlined the continuing improvement in housing in Wales. No doubt he will examine it more closely in future. The settlement gives local government in Wales an additional £87 million to spend--a total of more than £950 for every man, woman and child in Wales. It provides more money for the police--a fact widely welcomed by police authorities--and for care in the community. In addition, there is £43 million to fund the costs of local government reorganisation and a generous increase in the local government settlement for the forthcoming year.

Welsh local authorities are responsible for very large budgets. All but one county council have budgets of more than £150 million. They have flexibility to manage their budgets as they see fit and will be setting their budgets at a time of low inflation, which means that their money will go much further than last year or previous years. They can use accumulated reserves to fund expenditure if they consider it prudent to do so.

In his opening remarks, my right hon. Friend the Secretary of State pointed out that there is always room for efficiency savings in large-scale organisations. Given the discretion available to them, I cannot accept Opposition Members' argument that the settlement will not enable local authorities to protect the front line or, most important, functions. They can protect those functions if they have the will to do so.

Central Government support will account for about 89 per cent. of total standard spending. Local authorities will have increased scope for raising revenue locally, which they have sought in the past. At the same time, Welsh council tax payers will pay considerably less for their council than their counterparts in England and Scotland. Those on income support or low incomes can qualify for benefit up to 100 per cent. of their council tax bill.

I am not prepared to speculate on council tax levels for 1995-96; that is a matter for individual local authorities. Council tax levels will depend on local authorities' budget decisions and their success in collection and changes in their tax base. Welsh billing authorities have an excellent record on collection, for which I commend them. I understand that they estimate a surplus of £15 million on collection funds at 31 March this year. That is very good news for council tax payers in Wales as it means that they will benefit from lower bills--a reduction of about £15 at band D in the coming financial year. Indeed, press reports suggest that at least one Welsh local authority is planning to reduce its council tax. None the less, I must tell the hon. Member for Delyn (Mr. Hanson) that it is essential for the Government to have power to protect local taxpayers from unreasonable council tax increases, especially at times when it is necessary to restrain public expenditure. Opposition Members have voiced their concern for local taxpayers in speculating on the council tax increase that will result from the settlement proposals. It seems inconsistent for them to argue for the removal of capping, which would almost certainly result in a considerable increase. They cannot have it both ways.

Mr. Hanson: Will the Minister explain why the Welsh Office knows better than the people of Clwyd, who elected 32 Labour councillors out of a total of 66 in the

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most recent election and who have previously delivered a Labour majority? The Minister's party has six councillors. Is not local democracy about letting local people decide on the local services that they want?

Mr. Jones: Capping is now a well accepted and appreciated protection. Local electors know that they have that protection in addition to the accountability that they should expect to come directly from their councillors.

Welsh local authorities have established an excellent record for prudent budgeting in recent years, and I trust that that will continue. The criteria for capping are provisional, and my right hon. Friend the Secretary of State will take all relevant considerations into account before making his final decisions.

The hon. Member for Caerphilly (Mr. Davies) reminded us that he has no policies on this matter, just as he has no policies on anything else. The proposal to abolish capping is only a consultative proposal. We all know how thin Labour's policies are; it was understandable that the hon. Gentleman should appeal to my right hon. Friend the Member for Conwy (Sir W. Roberts) to write to him and offer anything that he could possibly set up as a policy--so desperate is the hon. Gentleman to find something positive to say.

The police settlement is excellent, and is consistent with the new funding formula arrangements. It will be welcomed by the public and the new police authorities, if not by Opposition Members. It is essential for the new authorities to have a sound financial base in their first year, so that they can provide the high quality of policing that the public have a right to expect. As single-service authorities, they will have less flexibility than counties and districts in making budgetary decisions; they may also wish to build a prudent level of reserves to meet contingencies in future years. I am glad that the hon. Member for Caerphilly welcomed the police settlement. I can well appreciate the condemnation that he implied about past spending decisions and policing levels, not least in the constituency of Islwyn. The electorate of that constituency will note the disapproval expressed by the shadow Secretary of State for Wales. The spending decisions of the police forces in Gwent and South Wales were made by Labour county councillors, and the electorate should consider Labour county councillors' priorities when deciding whether to give their traditional vote to the Labour candidate yet again. Much of today's debate has been about education, especially the speeches of the hon. Members for Merthyr Tydfil and Rhymney (Mr. Rowlands), for Delyn, for Meirionnydd Nant Conwy (Mr. Llwyd) and for Pontypridd (Dr. Howells) and of the right hon. Member for Swansea, West (Mr. Williams). Their comments were very much in line with the emphasis that we who come from Wales have always placed, and will continue to place, on that important subject.

Mr. Jon Owen Jones: Will the Minister give way?

Mr. Jones: I am short of time, but I will take one last intervention.

Mr. Jon Owen Jones: I thank the Minister, because he has made an important point. He said that the police

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authorities' spending decisions were made by Labour councillors. Is he telling us that the spending decisions that led to the difficulties experienced by South Wales police authority were made by Labour councillors? That is not the impression that I have gained from the press; nor is it the impression gained by the police.

Mr. Jones: I cannot imagine where the hon. Gentleman gets his impressions from, impressionable young man though he may be. The fact is that Labour county councillors kept the South Wales constabulary desperately short of money. I know what the current impression is among the hon. Gentleman's electorate and mine in Cardiff: they welcome a 15 per cent. increase in spending for the South Wales constabulary, which will right the wrong perpetrated by Labour councillors.

Inevitably, there have been many complaints about alleged cuts in education by one or more of the eight county councils in Wales. In theory they come of age this year, but I do not think that that will be celebrated as much as their conclusion next year. What the apologists in the Opposition say confirms that those councils appear to be incapable of making their own decisions, which are forced on them by someone else every time--usually the Government.

The hon. Member for Delyn asked me about prudent balances. The district auditor and the Chartered Institute of Public Finance and Accountancy recommend that authorities should have reasonable balances; what is reasonable in any particular case is a matter for the individual authority and its auditor. I realise that that is not in line with the hon. Gentleman's centralising tendency: amazingly, in an early intervention, he appeared to be asking for the power to decide education spending to be taken away from Clwyd county council. That must have been his local concern.

My right hon. Friend the Secretary of State has made it clear that some balances are needed for prudent management, and that it is a good idea for schools to save up for new equipment. He has also said something that is plain common sense: how can schools with £47 million in balances say that they cannot afford to pay their teachers when they have so much in the bank?

The hon. Member for Pontypridd asked me about education capital spending. The constituency example that he gave is a matter for Mid Glamorgan county council. In the current financial year, counties have received credit approvals amounting to £42.5 million for education capital spending--a rise of 11.6 per cent. on last year. Next year will see a further increase of 7 per cent., to £45.3 million. I hope that authorities will hear what the hon. Gentleman says and what we say, and will make the best possible use of the resources and capital receipts that are available. I hope that they will renovate and replace classrooms like that featured on the front page of today's Western Mail .

As my right hon. Friend the Secretary of State pointed out, county councils certainly have the financial ability to make education a priority--to provide for the pupils of tomorrow, and to provide more rather than fewer teachers. But they choose other priorities: they choose to spend the money elsewhere. My right hon. Friend reminded us that Clwyd allows only 68p in every £1 of the school budget to reach schools, and rightly contrasted that with the position of Powys, where the figure is as high as 78p. The sums that Welsh county councils are keeping back from

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schools are not small. In Clywd, the total is more than £17.5 million, in Gwent it is nearly £22 million, in South Glamorgan it is nearly £16 million and in West Glamorgan it is nearly £14 million. I am sure that parents will wish to consider how much money is being kept from their schools. They will want to decide who they trust more to make spending decisions--their local schools, or remote education committees. I think that many will believe that their schools are almost certainly better placed to make the right decisions, and will decide, for instance, to provide more teachers rather than adopting the scare tactic of slashing numbers that is so beloved of Labour education committees.

For too long, Labour has regarded Wales as largely a collection of rotten boroughs. Not long ago, an article was published in which someone said of Welsh Labour councillors that the "we know best" attitude must change. He called for Labour councillors to treat people as potential converts rather than eternal enemies, and demanded a new type of considerate councillor. Who was that far-seeing individual? It was the hon. Member for Caerphilly, in an article entitled "Call to end `Cult of Arrogance'". There is testimony from the expert himself about the way in which the Labour party has treated the people of Wales.

We have new councils this year--new, popular councils that will be close to the people. Here is the opportunity for the people of Wales to take control of those councils, and to cast away the tide of arrogance that has dominated local government in Wales for so long. This is the opportunity for councillors, who are responsive to the people of Wales, to run efficient councils and provide value for money with attractive council tax. Already, one council in Wales is talking about cutting its council tax. That could be followed by so many councils in Wales, which could ensure that priorities were right and that money went, in particular, to education so that we could have more teachers rather than fewer.

Question put:--

The House divided: Ayes 295, Noes 269.

Division No. 68] [6.59 pm


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Ainsworth, Peter (East Surrey)

Aitken, Rt Hon Jonathan

Alexander, Richard

Alison, Rt Hon Michael (Selby)

Allason, Rupert (Torbay)

Amess, David

Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Sir Thomas (Hazel Grv)

Ashby, David

Atkins, Robert

Atkinson, David (Bour'mouth E)

Atkinson, Peter (Hexham)

Baker, Nicholas (North Dorset)

Baldry, Tony

Banks, Matthew (Southport)

Banks, Robert (Harrogate)

Bates, Michael

Batiste, Spencer

Bellingham, Henry

Bendall, Vivian

Beresford, Sir Paul

Biffen, Rt Hon John

Body, Sir Richard

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Bonsor, Sir Nicholas

Booth, Hartley

Boswell, Tim

Bottomley, Peter (Eltham)

Bowden, Sir Andrew

Bowis, John

Boyson, Rt Hon Sir Rhodes

Brandreth, Gyles

Brazier, Julian

Bright, Sir Graham

Brooke, Rt Hon Peter

Brown, M (Brigg & Cl'thorpes)

Browning, Mrs Angela

Bruce, Ian (Dorset)

Burns, Simon

Butcher, John

Butler, Peter

Butterfill, John

Carlisle, John (Luton North)

Carlisle, Sir Kenneth (Lincoln)

Carrington, Matthew

Carttiss, Michael

Cash, William

Channon, Rt Hon Paul

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