Local Authorities (Overspending) (Hansard, 4 August 1976)

§ 12. Mr. MacGregor
asked the Secretary of State for the Environment what action he now proposes to take to deal with overspending by local authorities in the current financial year.

§ 15. Mr. Peter Morrison
asked the Secretary of State for the Environment what further action he proposes to take to deal with overspending by local authorities.

§ Mr. Shore
I discussed with the local authority associations in the consultative council on 27th July what action should be taken on the projected excess in local authority expenditure of £250 million in 1976–77. Although a considerable improvement over the £350 million-£450 million forecast in May has been achieved, this figure still exceeds this year's agreed standstill in expenditure. I had therefore asked local authorities to make a further reduction in planned current and capital expenditure, both in this year and in 1977–78. This year, on capital expenditure we are expecting a further saving of £50 million, and on current expenditure the Government propose to set the 1976–77 increase Order at a level of £50 millioin below what it would otherwise have been.
In 1977–78 I shall aim for a rate support grant settlement, taking account of the remaining excess this year, on the basis that local government expenditure will conform to the agreed Cmnd. 6393 figures.

§ Mr. MacGregor
Will the right hon. Gentleman ensure that the calculations he 1707 makes about the levels of spending by individual authorities are on a fair and comparable basis between different years and different authorities, since they were not on that basis in the methods proposed hi tile original circular? Will he think again about the suggestion that those authorities that have restrained their spending in response to Government guidelines over the past two years are likely, under the method he has now announced, to be penalised next year? This will be regarded not only as unfair but as something that will not encourage local authorities to restrain spending.

§ Mr. Shore
I think that the point is well understood. At previous Question Times in the House we have had a number of exchanges on this very difficult matter. However, I must say that I have discussed this question in the consultative council as well as in exchanges in the House. I must report to the House that certainly the predominant view of the consultative council is that it would be unwise and, indeed, wrong, on the basis of existing information, for the Government to attempt to discriminate on a separate local authority basis rather than to deal with authorities, as the Government have done in the past, and particularly under measures that were encouraged by the previous Administration, on an across-the-board basis.

§ Mr. Blenkinsop
I accept completely the great difficulty of any discrimination proposal, as suggested from the Opposition side of the House. However, does my right hon. Friend agree that there are great dangers in generally condemning local authorities for overspending when very much depends upon the base line that one takes and the details of the expenditure?

§ Mr. Shore
As my hon. Friend quite rightly points out, there is a genuine difficulty in defining overspend with any accuracy, given the powers and duties of local authorities. All that we have been able to do is to agree, as it were, on aggregate figures for local authority expenditure as a whole. If the House wants the Government to go further than that and to identify and assess the needs for expenditure of every local authority in the country, and to set down limits and targets, it raises questions of the most profound kind, which would alter the whole 1708 balance of the relationship between Government and local authorities.

§ Mr. Grimond
Is it not time, however, that the whole grant system was reviewed by the Government, because in many respects the system positively encourages wasteful expenditure? Does the right hon. Gentleman agree that one of the most necessary things is that this House should cease pouring out legislation that simply lays new burdens on local authorities?

§ Mr. Shore
I entirely agree that it is time that we had a review—but that is what we have had. The Layfield Report, which covers most of these questions, is before the House and the public, and we are very anxious to have the views of the House and to debate the report at the earliest moment. I assure right hon. and hon. Members on both sides of the House that that is my wish.

§ Mr. Frank Allaun
For how long is the complete freeze on council house building programmes to last? When it ends, is it true that there is to be a cut-back in those programmes, not just next year but this year, starting immediately, in comparison with the February White Paper figures? Will my right hon. Friend give an assurance that he will stand firm by continuing to allow local authorities to build as many council houses as they can, as they are desperately needed?

§ Mr. Shore
My hon. Friend has raised a question that is slightly outside the terms of the original Question about local authority current financial expenditure. However, I willingly turn to my hon. Friend's supplementary question. The answer is that the complete freeze to which he refers is simply an administrative measure to enable us to get a new system into being. I certainly hope that we shall be able to bring that complete freeze to an end well within this month —in a week or two's time, I hope.
Beyond that, my hon. Friend asked whether there will be control over house building. The answer is "Yes". Of course there is a control over house building; that is the purpose. However, within that control my intention is that areas of priority and of housing need should not suffer a reduction in their house building programmes. We are, as it were, going back to a programme of priority in housing. It is my intention to see that 1709 as far as possible the necessary resources are available to those areas where housing need is greatest.

§ Mr. Raison
Will the Secretary of State confirm that there was an increase of 30,000 full-time equivalents in local government staffing last year? Does he recall that on 22nd July the Prime Minister urged local authorities to think in terms of staff cuts as well as service cuts? Does he agree with what the Prime Minister said, and will he back those local authorities that carry out that request and run into difficulties?

§ Mr. Shore
What local authorities are achieving is a very sharp deceleration in the number and growth of their employees. There is no question about that. In 1972 there was an increase of 80,000. In 1973, the increase was 80,000 and in 1974 it was 58,000, and so on. This year, as has been pointed out, it has come down to 30,000. That is for the year ending March 1976. In my judgment, this year wil see no increase in the number of people employed by local authorities.