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8.50 pm

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): This evening sees the annual ritual of special pleading by hon. Members who are concerned about the finances of their local authorities. However, our ritualistic complaining belies a serious problem--the precarious position of Welsh local authorities. Furthermore, their difficulties are no fault of their own. For the past five or six years, heavy expenditure cuts have been imposed on local government year on year. One is tempted to ask where it will all end.

It is no secret that central Government view local government with distrust and even disdain. That could be because there are so few Tory-controlled councils in Wales. The process has continued for some 18 years, and the House has passed countless pieces of legislation curtailing the powers of local government. There have been more than 100 such measures in the past 18 years, in a steady, unrelenting erosion of local government powers and responsibilities.

It is small wonder, therefore, that that has gone hand in hand with ever-deepening cuts in local government finance. The dead hand of central Government is truly upon local government, and it is time that we all realised what is happening.

It has been said that, if we want people to act responsibly, we should give them responsibility. The corollary to that is that we have witnessed diminishing powers, financial support and morale in local government. This year's settlement, alas, is no exception to the general rule.

Conservative Members may seek to intervene and make the point that some 80 per cent. of standard spending is provided by the Exchequer in comparison with a lower figure for England, but that simply underlines the fact that Welsh local government is even more in the ever- tightening grip of the Exchequer.

Mr. Alex Carlile (Montgomery): Does the hon. Gentleman agree that, in the neighbouring parts of rural Wales that he and I represent, the big lie that local authorities are to blame for cuts in local services is no longer believed by anyone?

Mr. Llwyd: That is absolutely true, and it will be further understood in the coming weeks and months, and rightly so. There is no doubt that, when people say that central Government have been judged unfairly, they are talking palpable nonsense. If central Government had even a modicum of respect for local government, they would redress that balance. I agree entirely with the hon. and learned Gentleman.

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Welsh local authorities are responsible authorities--not for them flagship projects, but rather a real concern for the delivery of everyday essential services. Even the most basic ones are under threat from this year's settlement. When one meets representatives of local government, they often ask where the cuts will stop.

My authority and that of my hon. Friend the Member for Caernarfon (Mr. Wigley) is a case in point. I met the chief executive of Gwynedd council last week. The picture he painted, although realistic, was a dismal one. I shall not repeat what the right hon. Member for Conwy (Sir W. Roberts) said earlier, as his figures were accurate.

Put simply, the council requires £119.9 million in 1997-98. The spending limit set by the Secretary of State is £115.7 million, and the council will receive only82 per cent. of that, or £95.3 million, in rate support grant. Therefore, the council will need to cut its budget by more than £4.2 million to meet the Secretary of State's figure.

Should Gwynedd spend up to the maximum, £20.4 million would have to be raised from council tax, which would mean an increase of 11.3 per cent. The right hon. Member for Conwy made a reasonable argument. It would be totally unreasonable to expect the council to impose a large increase in council tax following a 25 per cent. increase last year. There is only so much that people can suffer in any part of Wales and throughout the British Isles.

Thankfully, Gwynedd, like many other councils, received a special additional grant of nearly £2 million from the Welsh Office. However, that is for the current year, and it will not be available for 1997-98. Gwynedd has resolved to attempt to keep the council tax increase low, or at least to the average for Wales--between8 per cent. and 9 per cent. There will be a shortfall of £4.5 million, and the council has resolved to make cuts amounting to £4 million and to find the remaining £500,000 from the balances.

As it is a highly responsible authority, Gwynedd will seek to find as much as possible of the money for the deficit by cutting administration and seeking to be still more efficient. It must be remembered, however, that last year the same council cut £1 million in administrative costs, so the future will be bleak.

The council has agreed that there should be a 6 per cent. cut over all departments, and some departments will have to face additional cuts. I do not like scaremongering, but Gwynedd is considering cutting teaching jobs, which account for a large part of the education budget. That will be inevitable.

I am not trying to make unreasonable points, but Gwynedd will face cuts in teaching staff, leisure, culture, planning, highways and social services. There will be direct cuts of 3 per cent. in the school budgets, cuts in home care services and the closure of some homes for the elderly. The council will also be cutting its attempt to promote the local economy--something much heralded by the Secretary of State earlier, and rightly so. Unfortunately, Gwynedd will therefore have to reverse its enlightened policy in that regard.

It grieves me that, as the hon. Member for Rhondda (Mr. Rogers) said, the least able people in society will come out worse in this spending round. Those with special needs, those who benefit from the community care budget, the elderly and the infirm will bear the brunt of

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the cuts. Coupled with cuts in education, we are taking a retrograde step in many ways, about which I am very concerned.

The Welsh Office settlement of 1.9 per cent. is, of course, below the rate of inflation--despite what the Secretary of State said. It seems that no effort is being made to ensure a fair, reasonable settlement for Welsh councils. In addition to the drastic cuts that Gwynedd faces to which I have referred, I am very concerned that it will have to make cuts in other areas that are yet to be decided. Such decisions will be made on 6 March.

Another authority that impinges on my constituency and the constituencies of the hon. Member for Clwyd, North-West (Mr. Richards) and the right hon. Member for Conwy is Conwy borough council. I have recently spoken to members and officers of that council and been told that the council will have to find cuts totalling at least 6.5 per cent.--with no service protection--of this year's budget, amounting to £5.2 million.

After taking into account pay inflation and other demands on services, a further cut of £2 million will have to be found to meet the capping target. There will have to be cuts of £2.4 million in education, £1 million in social services, £400,000 in highways expenditure and £1.4 million in other miscellaneous areas. I greatly regret that, inevitably, teaching posts are under threat.

In addition, reductions in maintenance are planned, and, since the capital programme cannot sustain capitalisation of such costs for 1997-98, there will also be a cut of £500,000 from that source. It will not be possible to recognise fully increased demands on social services to offset the proposed cuts, which will result in proposals including increased charges for a wide range of services and reduced grants to the voluntary sector. Again, that will impinge on and affect the most needy people in our society.

It is also envisaged that there will be early voluntary retirement, with staff not being replaced, increased charges, reductions in grounds maintenance, and so on. The balance of savings will undoubtedly be found through further job losses, more increases in charges, and reductions in services.

The increase in the SSA does not seem to come anywhere near recognising demographic changes and normal inflationary pressure--ignoring the fact that no provision has been made for pay inflation. A late change in the SSA has resulted in Conwy borough council having to find even cuts than those anticipated, raising further questions about the SSA model and system. Adjustments in nursery vouchers will cause more problems. Additional aggregate external finance, although much heralded by the Secretary of State, is not a substitute for increased spending power.

After it has saved £7 million, the council tax will be cut by 1 per cent.--not because the council chose to do that, but because more AEF has been put into the system. Conwy's director of finance concludes his submission to me by saying:

"All in all, the 1997-98 RSG settlement has to be one of the worst ever settlements for local government and, therefore, the local taxpayers."

In Ceredigion, the story for the council in the constituency of my hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Dafis) is equally

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serious, with cuts totalling £4.2 million required to bring the budget to within 1 per cent. of the cash limit, and a projected serious loss of jobs--at least 40 to 45 in central departments, and an inevitable consequent decline in the level of service being offered. As one might expect from a cardi council, a responsible and cost-effective authority is being forced into providing a shoestring service to the public, which is very worrying for and damaging to ordinary people who live there.

Mr. Cynog Dafis (Ceredigion and Pembroke, North): I am grateful to my hon. Friend for drawing attention to the situation in Ceredigion. It is well understood in Ceredigion that the reduction of 1p in the standard rate of income tax is being paid for by the reduction in the level of service and an unreasonable increase in council tax. That will be worse next year if damping comes to an end without any compensatory increase through an adjustment in the SSA. Will he join me in requiring that the SSA must reflect the higher cost of service delivery in rural areas?

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