HC Deb 04 February 1981 vol 998 cc274-6
3. Mr. Dobson

asked the Secretary of State for the Environment if he will make a statement on his Department's current assessment of the response of London local authorities to the rate support grant settlement for 1981–82.

The Minister for Local Government and Environmental Services (Mr. Tom King)

In the rate support grant debate I explained why it was decided to reverse in part the substantial increase in London's share of the grant in recent years. With a few exceptions I believe that most are responding sensibly and prudently, and endeavouring to make the expenditure savings the Government have called for, to avoid excessive rate increases.

Mr. Dobson

Will the right hon. Gentleman confirm that as a result of the responses of the London boroughs and the Inner London Education Authority it is becoming clear that the Opposition's estimate that £200 million of rate support grant would be lost to London in the forthcoming year is proving correct, and that the figure that the Minister was bandying about of about half that sum is not?

Mr. King

Clearly the extent of the grant loss for London will depend on expenditure decisions which are not yet finalised in a considerable number of authorities. In the present situation the amount of grant that London receives will depend on the expenditure decisions of those authorities.

Mr. William Shelton

May I tell my hon. Friend how much I welcome the new system of grant-related—Hon. Members: Question.

Mr. Speaker

Order. The hon. Gentleman can get the same information over if asks his right hon. Friend whether he is aware.

Mr. Shelton

Is my right hon. Friend aware how much I welcome the new system since it must be better to relate the grant to published criteria than to ministerial whim? However, is my right hon. Friend also aware that many of his right hon. and hon. Friends think that there should be a realistic safety net in this transitional year to avoid too exaggerated a loss by the inner London boroughs?

Mr. King

I am grateful to my hon. Friend for his opening comment. I am sure that it is right that we now have for the first time ever a system that is open to rational and proper debate, as was evident during the rate support grant distribution discussions in the House.

I understand my hon. Friend's concern about the need for a safety net. He will appreciate that while we seek to install a sensible safety net at reasonable levels of expenditure, one cannot establish a safety net that protects ratepayers irrespective of the level of expenditure incurred by individual authorities.

Mr. Douglas-Mann

As an example of rational and proper debate will the right hon. Gentleman accept that the consequence of the system of distribution of grant introduced by this Government's Local Government, Planning and Land Act is that those local government areas that were foolish enough to elect Conservative councils which loyally complied with the Government's request to cut expenditure—these included Merton and Wandsworth—have suffered the most. Has the right hon. Gentleman read the article in the Financial Times of Monday by Robin Pauley commenting on the disaster that the right hon. Gentleman has created for local government finance as a consequence of his Act?

Mr. King

The first part of the hon. Gentleman's statement is incorrect, and I do not accept the second part either.

Mr. Forman

I recognise the need to curb overspending local authorites such as the London borough of Camden, but can my right hon. Friend give any reassurances to outer London boroughs such as the London borough of Sutton which has followed and observed all the guidelines issued by central Government and has had amongst the lowest administrative overheads of all local authorities?

Mr. King

May I say something that applies to all hon. Members? We have made no secret of the fact that the rate support grant settlement is very tough. It involves a 3 per cent. volume reduction for every authority. It involves a 1 per cent. reduction of grant. Both those create considerable problems for a considerable number of local authorities. They involve, also some shift in the share of grant for London compared with the past two years. I recognise that that poses problems for a number of authorities. However, London's share of grant is still at a higher level this year than it was in any year before 1978–79.

Mr. Graham

What advice can the Minister give to London boroughs such as mine in Enfield which are Torycontrolled and which have spent the past two years faithfully following every diktat and whim of the Minister, and yet have found that they have to pay this additional London tax? Will he invite the London borough of Enfield to send representatives to Marsham Street so that he can tell his political friends that the result of their devotion to his policies has been this additional kick in the teeth?

Mr. King

The share of grant that London receives is at a higher level than in the first three years of the Labour Government. We believe that this is a fair basis for the rate support grant distribution. My advice to the London borough of Einfield and to every borough and council in the country and their ratepayers is that their interests are best served by a prudent and responsible council which seeks to minimise its expenditure, and that the long-term interests of the ratepayers will be severely jeopardised by authorities that do not follow that advice.