HC Deb 08 December 1976 vol 922 cc427-9
1. Mr. George Gardiner

asked the Secretary of State for the Environment if he will make a statement on the rate support grant for the coming financial year.

20. Mr. Gow

asked the Secretary of State for the Environment whether he will make a statement about next year's rate support grant.

The Secretary of State for the Environment (Mr. Peter Shore)

I have already done so.

Mr. Gardiner

Will the Secretary of State accept that the likely increases in rates in many areas will be well beyond the ability to pay of many people who will be unable to increase their income to cover them? Does he also accept that further substantial increases will bankrupt many small firms? Will he acknowledge that, particularly in local authority areas bearing the heaviest burdens, the consequence of a cut-back in services must be a cut-back in those administering them?

Mr. Shore

I hope that the rate support grant settlement that I have announced will not have those dire consequences. If hon. Members look at rate increases for the years since 1973, they will find that this is by no means the most horrifying figure that can be recalled. The effect on particular authorities is always difficult to judge because we make a national settlement. I accept that there will be difficulties in some areas and that some services will have to be cut.

Mr. Gow

Although I congratulate the Secretary of State on his courageous reduction in the rate support grant, will he tell the House frankly that this reduction will mean substantial cuts in local authority expenditure? Does he accept that the average rate increase of 15 per cent., of which he spoke, will spell bankruptcy to businesses and real and grievous hardship to many ratepayers?

Mr. Shore

I do not believe that my settlement justifies words of the kind used by the hon. Gentleman. On the other hand, I acknowledge that this is a severe settlement—that is the word I used—but it is also a carefully calculated settlement. I do not want anyone to have any illusions about what we are anticipating. We anticipate that in 1977–78 there will be a reduction in real terms of about 1.6 per cent. in overall expenditure compared with the outturn for 1976–77. That figure will be consistent with what we originally planned in the White Paper at the beginning of the year.

As I have said on every possible occasion, at the consultative council and elsewhere, the reduction in expenditure which we anticipate is consistent with the wastage figures nationally and well within the range of annual wastage which all local authorities experience. Except in certain circumstances, they will be able to absorb the reductions.

Mr. George Rodgers

Does my right hon. Friend agree that present circumstances warrant the encouragement of municipal enterprises? Does he agree that in many local authorities, and certainly in many Conservative-controlled areas, considerable reward is gained from such activities as the hiring out of deck-chairs and squash courts? Is not this a golden opportunity to extend municipal enterprises?

Mr. Shore

From their experience of local authorities, hon. Members on both sides of the House will agree that local authorities can and do operate services and enterprises over a wide area. The only thing I want to add is that it is essential in the present circumstances that such enterprises should be successful and that their cost should not simply fall on the rates.

Mr. Speed

What figure is the Secretary of State using for the average annual wastage rate that he believes will cover the redundancies?

Mr. Shore

The figure for the average annual wastage is about 5 per cent. The figure in my mind is about 1 to 1½ per cent. It is nearer to 1 per cent. than to 1½ per cent.