HC Deb 11 June 1975 vol 893 cc383-4
2. Mr. Budgen

asked the Secretary of State for the Environment what measures he plans to ensure that Her Majesty's Government's policy that the limit of 1½per cent. growth in local government spending in 1976–77 is adhered to.

The Secretary of State for the Environment (Mr. Anthony Crosland)

We have already issued, or are issuing, the circulars needed to ensure that every authority is clearly aware of the inevitable restraints on local authority expenditure. I am exploring in the rate support grant negotiations and with the new consultative council the consequences of these restraints for individual programmes.

Mr. Budgen

Although local government expenditure is now equivalent to about 20 per cent. of the gross domestic product and is the fastest growing area of Government expenditure, and although the latest Treasury report indicates that the borrowing requirement this year will be between £10 billion and £12 billion is it not the case that if the Minister does not curb local government expenditure now, this country will tip over the brink into hyper-inflation?

Mr. Crosland

I have made my views on local government spending clear and in recent weeks I have articulated them rather firmly. Therefore, the hon. Gentleman will know my views on the general subject. I agree that local government spending has been increasing faster than total public expenditure, the gross national product and, indeed, any measure one can take, and that the increase that has occurred in recent years simply cannot continue under present economic circumstances.

Mr. Rooker

Does my right hon. Friend accept that before the social services are cut at local level there may be a moratorium on ostentatious spending, such as the hospitality accounts of local councils? Although my right hon. Friend may, while eating a meal at the expense of the ratepayers, have described the cost of that as trivial, the ratepayers do not see it that way.

Mr. Crosland

The character of the meal which I enjoyed on that occasion was not a matter for my decision; it was a matter for the decision of the local authority whose guest I was. On the general point, there is of course, quite naturally and rightly, as my hon. Friend says, criticism of excessively lavish hospitality. I accept that and agree with it. But as regards cuts in social services, no, there is no reason why there should be cuts in local government services. What we are asking for is not a cut in local authority services but a containment of the rate of increases.

Mr. Speed

Is it not clear that the increase in local authority spending in the current year is at least twice the Government's target of 4½ per cent., and does not this make the 1½ per cent. increase target for next year almost impossible to achieve?

Mr. Crosland

No, Sir. I hope to make an announcement on the first point in the hon. Gentleman's supplementary question. It looks to me as though the spending increase will be above 4½ per cent., but nothing like double 4½ per cent.

On the second point, I have made it absolutely clear to local authorities that to the extent that they overrun the agreed increase this year, they will be worse off next year than they would have been.