HC Deb 02 July 1980 vol 987 cc1516-9
12. Mr. Graham

asked the Secretary of State for the Environment if he will now make a statement on the discussions he is having with local authorities on the rate support grant for the current year and 1981–82.

15. Mr. Douglas-Mann

asked the Secretary of State for the Environment if he will now make a statement of the discussions he is having with local authorities on the rate support grant for the current year and for 1981–82.

Mr. Heseltine

The rate support grant settlement for 1980–81 was made last November. The settlement for 1981–82 —including the increase orders for 1979–80 and 1980–81—will be the subject of discussions in the consultative council on local government finance later this year.

Mr. Graham

Has the Secretary of State seen press reports this morning about the speech made by the chairman of the Association of County Councils? Is the right hon. Gentleman aware that the chairman urged complete opposition to the Government's proposals? Does he acknowledge that he has succeeded in uniting the whole of local government against the vindictive proposals affecting local government finance? Does the right hon. Gentleman expect or deserve the co-operation of Conservative and Labour councils when he has dismissed their reasonable, alternative proposals derisively and arrogantly, and in other ways as well?

Mr. Heseltine

The hon. Gentleman will be pleased to know that we shall table some amendments to the Local Government, Planning and Land (No. 2) Bill in order to meet some of the recent criticisms that local authority associations have put forward. I do not wish to give any impression other than that local government is concerned about the provisions of the Bill, particularly those concerning block grant. The Government's view is widely understood outside the House of Commons. We believe that incentives must be given to authorities that manage their affairs prudently and carefully, and keep to reasonable levels of public expenditure. The present method of distributing the rate support grant encourages high levels of expenditure. We have therefore decided to change from the regression analysis to the block grant mechanism.

Mr. Colin Shepherd

Does my right hon. Friend recollect that when the Labour Party came to power in 1974 it made a major shift in RSG in favour of Wales, ostensibly to recognise the increased cost of the provision of water there? Does he recall that the Welsh water authority services part of Herefordshire and Cheshire? Will he bear that in mind when deciding how best to assist local government in its funding next year?

Mr. Heseltine

As from this moment, it will be a matter which I shall never forget. It is certainly something that I shall examine when we come to make detailed assessments for next year.

Mr. Tilley

If the Secretary of State is saying that he will make the decisions about the increase order only at the time of the annual meeting of the consultative committee does he realise that that means that it will be impossible for those local authorities that have been threatened with some loss in that increase order, under the legislation that is going through Parliament now, to make proper financial decisions? Will he accept that instead of just swinging through the municipal jungle making vague threats, he has a duty to give local authorities a clear indication of what money they will have to spend this year?

Mr. Heseltine

The hon. Member will be aware that within the workings of the RSG settlement there is an element of clawback which is not totally predictable in advance to local authorities in the normal way. However, the logic of his question is that on the basis of returns of expenditure and rates, in which I do not have sufficient faith, I should make decisions about the changes that are to be made to secure compliance with the Government's public expenditure programmes. That would be an act of irresponsibility. The only way to avoid that is to get revised budgets, which I have asked local authorities to submit.

Mr. Squire

During these discussions. will my right hon. Friend bear in mind that the totality of local government expenditure, contrary to the publicity in recent years, has been, in the last four years ending 1979–80, less than the totality agreed at the date of the RSG discussions, and that this bears well and favourably on the reputation of local government?

Mr. Heseltine

Yes. My hon. Friend is perfectly right. There is a variation of between 1 and 5 per cent. between the volume forecasts and the actual out-turn. My problem is that the latest returns show a budget in excess of 5.6 per cent., and I cannot rely on that 5.6 per cent. disappearing in the way that my hon. Friend suggests has sometimes happened in the past.

Mr. Hattersley

May I remind the Secretary of State that under the Local Government, Planning and Land (No. 2) Bill he proposes plans to penalise a number of local authorities in November? When will those local authorities know that they have been chosen to be penalised? More importantly in terms of equity, when will he establish and publish the rules against which local authorities can measure whether they will incur his wrath? At present, most of them are operating absolutely in the dark.

Mr. Heseltine

I do not think that the right hon. Gentleman is right in suggesting that local authorities are operating in the dark. We have sent to every local authority a precise figure showing exactly what we believe their levels of expenditure should be to secure compliance with the Government's targets. Every authority has got that figure clearly stated. Therefore, I do not believe that there can be any doubt in the minds of many authorities as to exactly what the figures are all about.

The hon. Gentleman asks when I shall make an announcement about the precise use transitional arrangements. I shall be looking at that matter when I have secured the revised budgets, and I would imagine that we shall be talking about it some time in September.

Mr. Hattersley

Just in case anyone believes that the Secretary of State understands his own Bill, may I ask him to confirm that the precise figures for local authority expenditure are for what happens for next year and not what happened for this year, and that his answer is based on a total misunderstanding of his own Bill, which we shall be debating next week?

Mr. Heseltine

I should have to examine in detail with the right hon. Gentleman—[Interruption.]—the precise words that I used. But when he comes to check the record he will find that what I have said is totally in compliance with the existing legislative proposals.