HC Deb 04 February 1976 vol 904 cc1195-6
23. Mr. Ridley

asked the Secretary of State for the Environment whether losses by direct labour departments of local authorities are treated as part of the relevant expenditure upon which rate support grant is based.

Mr. Armstrong

An estimate of the interest charges generated by local authority capital expenditure, whether by direct labour departments or private contractors, forms part of relevant expenditure.

Mr. Ridley

That does not answer the question whether losses form part of relevant expenditure. Is the Minister aware that it is intolerable that ratepayers should be asked to pay more rates to subsidise an activity that is competing with them, whether in direct labour or in municipal trading? Will he look into the whole situation and have a working party or a Royal Commission investigate abuses?

Mr. Armstrong

The hon. Gentleman will know that the work of direct labour departments is regularly tested in competition with private contractors. [Hon. Members: "Oh."] Yes, it is. The hon. Gentleman had the opportunity of raising this subject in a debate a few days ago when the Government answer was given. Relevant expenditure is indeed considered and is part of the rate support grant.

Mr. Molloy

Will my hon. Friend consider encouraging local authorities to expand and improve direct labour forces to bring down unemployment and put up more houses?

Mr. Armstrong

It is indeed the policy of the Department and of the Government to expand efficient direct labour departments. I remind the House that in the long run public works departments are democratically accountable to the electorate.

Mr. Budgen

Have the Government any proposals for obliging local authorities to draw up their accounts for direct labour departments in such a way that they are all done on a common basis and so that there is no way of shifting losses to other parts of the local authority's empire?

Mr. Armstrong

The hon. Gentleman will know that, as my hon. Friend the Minister for Housing and Construction announced, we have set up a departmental working party to consider accounting and tendering by direct labour departments.

Mr. Speed

As that working party will not be reporting for at least a year, why cannot the Minister accept as an interim measure the CIPFA recommendations, which would do exactly what my hon. Friend has been asking for?

Mr. Armstrong

This question has been asked many times in the House. We have set up the departmental working party, which is a fact-finding exercise, so that we may give the right answers when we have acquired all the information we need.