HC Deb 23 November 1977 vol 939 cc1513-8
13. Mr. Newton

asked the Secretary of State for the Environment what representations he has received about the rate support grant for Essex in 1978–79; and what replies he has sent.

20. Mr. MacGregor

asked the Secretary of State for the Environment if he will make a statement on the rate support grant for 1978–79.

22. Mr. Madel

asked the Secretary of State for the Environment if he is satisfied with the current methods of calculation that are used in deciding the rate support grant for counties with rapidly expanding populations.

23. Mr. Hurd

asked the Secretary of State for the Environment what formula he proposes to adopt for the distribution of the rate support grant for the coming financial year as between shire and metropolitan counties.

Mr. Shore

The rate support grant settlement was announced at the statutory meeting of the Consultative Council on Local Government Finance last Friday, 18th November. The main terms of the settlement were given in my answer to the parliamentary Question by the hon. Member for Chester-le-Street (Mr. Radice) on the same date. The full text of my statement is in the Library.

The method used for distribution of the needs element of rate support grant is based on a regression analysis of needs in each local authority area, but any resulting redistribution between authorities is limited by provisions for a four-year damping of the results and by a safety net which restricts any loss of grant arising from the use of the new formula to a particular local authority area to an amount equivalent to a 2p rate. The system takes account of the needs that may arise in a local authority area as a result of expanding population.

In formulating the terms of the settlement, I have taken account of the many representations I have received in the past year from local authorities and Members of Parliament, and I have already informed Essex Members that I would be very happy to meet them now that the terms of the settlement for 1978–79 have been announced.

Mr. Newton

I thank the right hon. Gentleman for the assurance at the end of that answer. Is he aware that there is considerable confusion about the operation of this so-called safety net, and that Essex calculates that its ratepayers have lost £3 million more than they should have done if the Minister meant what he said on Friday? Will he further acknowledge that, whatever he may say about taking account of the needs of an expanding population, the people in Essex and elsewhere will feel that the Government have wholly forgotten their needs?

Mr. Shore

I assure the hon. Gentleman that the population growth is reflected in the needs formula. Furthermore, if there is any confusion in people's minds on how the safety net will operate, that will be quickly and speedily elucidated when we lay the relevant rate support grant orders. We shall be in touch with the various town halls and county halls concerned.

Mr. MacGregor

Will the right hon. Gentleman accept that this continual switching of parts of the rate support grant under the present Government from rural to inner urban areas has put county councils such as Norfolk in an extremely difficult position in the past few years, especially as they have been both trying to maintain services and seeking to protect ratepayers from excessive rate increases, bearing in mind that there are often areas with below-average incomes? Is it not clear that this difficulty will continue next year, owing to the fact that inflation has been underestimated and also the fact that there have been further concessions to London?

Mr. Shore

I believe that it is right—this is not only my belief, but it was that of the Conservative Secretary of State for the Environment in his time—that the distribution of local authority grant should be based on the best possible assessment of need. That is what we have been trying to do. It means that there will be a distribution from authorities which are assessed to have lower needs to those authorities which are assessed to have greater needs. That is bound to happen. I ask the hon. Gentleman not to exaggerate. I am glad to say that there is an increase in the amount of money being given to Norfolk. Many hon. Members have still very much in mind the great difficulty that we experienced last year, with the admittedly sharp reductions felt by most authorities.

Mr. Madel

Is the Minister aware that before the adoption of his policies of giving extra help to inner cities, counties such as Bedfordshire have over the past 20 years taken large numbers of London's overspill and have provided jobs and education in order to help solve the problems of the capital city? Therefore, is there not an unanswerable case for counties such as Bedfordshire to be given an increase, in real terms, in rate support grant to enable them to do the job which for 20 years central Government have told them to do?

Mr. Shore

The needs of counties and districts in cases of the export of population from elsewhere will be reflected in the size of the needs element granted to Bedfordshire.

Mr. Hurd

Is it no tclear that for most shire counties, particularly for Bedfordshire and Oxfordshire, this will be another year of tightened belts? Therefore, will the right hon. Gentleman prevent his ministerial colleagues making foolish speeches and issuing circulars that lead people to expect improvements in services, for example, in the teacher-pupil ratio, while at the same time denying the resources on which such improvements must be based?

Mr. Shore

I do not accept that at all. My right hon. and hon. Friends go round the country making entirely sensible speeches, as one would expect. In the case of Oxfordshire, there was a substantial reduction last year in absolute terms in the amount of grant available. This year there will be an increase in the needs element for Oxfordshire. Therefore, that authority will not be under an intolerable strain.

Mr. Moonman

Since the Secretary of State says that he is prepared to meet Essex Members, is the door still open and will he be prepared to consider further representations? If these matters are being argued on the basis of need, he will no doubt be aware that Basildon has a considerable rate of unemployment.

Mr. Shore

I am not reopening the question of this year's settlement, but I should be only too willing to meet hon. Members from Essex so that we may discuss whether there is any way in which we can assist them in their problems in the following year. There is a cycle in the rate support grant, and it becomes increasingly difficult to alter that cycle as we approach the statutory meeting, and certainly after that meeting has taken place.

Mr. Stephen Ross

Is the right hon. Gentleman aware that the settlement will cause my constituents great anguish, because even before we begin we shall have to find a 2p rate? Is he also aware that his promises for next year will also fall on deaf ears, because we were promised action last year? What hope can we hold out to constituencies such as mine, in the Isle of Wight, that authorities will be able to maintain their social services and educational services to a sufficient standard in the coming year?

Mr. Shore

That is ultimately a matter for the local authorities. I wish to make it plain that this year we envisage, across the country as a whole, a situation in which local government spending will continue to be stable. We are not envisaging cuts across the country as a whole.

Mr. Newens

Is my right hon. Friend aware that education and other services in Essex have already been severely cut back in the teeth of opposition by many Labour representatives at county level? Is he further aware that the safety net, so far as one can see, will not prevent the need for inordinate increases in the rates to maintain depleted services? Can he offer some hope of a further change, even in the present year?

Mr. Shore

It is counties such as Essex—and there are others, including some metropolitan districts—which have benefited from the safety net. But for the safety net this year, the rate settlement would have had a harsher effect. Therefore, we have tried to take account of the problem. The 2p figure will probably mean a 4 per cent. increase in rates. I do not think that that will impose an intolerable burden on county councils and other authorities.

Mr. Heseltine

When the right hon. Gentleman suggests that he is helping counties this year by the new formula, does he not appreciate that he is only building on last year's injustices? In practice, 14 shire counties will receive less cash in 1978–79 than they did in 1976–77, despite dramatic increases in prices since then. Does he further understand that if he had treated shire counties in the same way as he has treated urban areas in the past three years, shire counties would in 1978–79 receive £350 million more in a year than they would otherwise do? This is the nature of the scale of hardship imposed on shire county ratepayers.

Hon. Members

Hear, hear.

Mr. Shore

Before Conservative Members chorus "Hear, hear", I would advise them to have a word with the hon. Member for Hornsey (Mr. Rossi), the hon. Member for Hampstead (Mr. Finsberg) and the hon. Member for Birmingham, Hall Green (Mr. Eyre), because they might take a rather different view of the appropriateness and correctness of the right balance to be struck between the assessment of need in different parts of the country. If the hon. Member for Henley (Mr. Heseltine) is asking whether I think the urban and metropolitan areas should be denied the figure of £350 million, I think he is mad.