HC Deb 10 June 1981 vol 6 cc402-4
22. Mr. Dubs

asked the Secretary of State for the Environment what is the total sum of money he expects, based upon the latest information available, to allocate in rate support grant to local authorities in London in 1981–82; and how this compares with what they would have received if the earlier rate support grant formula had still been in operation.

Mr. King

At the time of the rate support grant last December, London authorities were estimated to receive £1,316 million in grant in 1981–82 against £1,424 million which they would have received if the previous system had operated in 1981–82. As a result of their expenditure considerably exceeding the Government's guidelines, they are likely to lose in excess of a further £100 million. However, my right hon. Friend has requested a revision of budgets, and I hope that London authorites will be able to bring back their expenditure into line with their targets, and thus minimise any loss of grant.

Mr. Dubs

Given the amount of money that London local authorities are losing in the current financial year through the Government's policies, will the Minister accept personal responsibility for obliging some London boroughs to have a supplementary rate later this year?

Mr. King

Whether a supplementary rate will be required later this year will entirely depend on the spending policies of each local authority. The spending of local government at present is probably closer to the all-time record in real terms than it has ever been in the history of this country. I do not believe that it is impossible for local government as a whole to achieve the reduction in targets that we have set it. If that is done the reduction in grant that each local authority suffers will be minimised and there will be no need for significant supplementary rates.

Mr. Squire

While accepting completely the desirability of local authorities complying with Government guidelines, as they have under previous Governments, does my right hon. Friend agree that London in particular has suffered, first, from a major shift of resource in one year, and, secondly, from the adoption of guidelines which, in London perhaps more than anywhere else, in 1978–79, have been particularly pernicious?

Mr. King

I have recognised that, as London has gained in previous years, this year London has lost some share of grant. The impact of that switch will be affected by the degree to which economies can be made this year to minimise what would otherwise be consequential grant changes.

Mr. Kaufman

I refer to the right hon. Gentleman's reference to revised budgets. Will he now give straight answers to the questions I put to the Secretary of State, which the Secretary of State dodged and avoided? First, with reference to paragraph 9 of the draft circular, will he say whether that paragraph stands and whether he intends to send auditors in to local authorities to check their inflation assumptions when they differ from his own? Secondly, with reference to paragraph 10 will he tell us under what legal authority he has sent out this blackmailing circular to local authorities, threatening to deny them rate support grant unless they knuckle under to his orders to make returns by 31 July? Thirdly, will he confirm that the rate support grant applications that have already been submitted are valid and stand? May I have precise answers to those three questions.

Mr. King

I recognise the ability of the right hon. Gentleman to extract the maximum amount of political excitement out of a rather boring technical circular to treasurers. [HON. MEMBERS: "Boring?"] I shall deal with the three questions that I have been asked. The first is whether grants will be paid if a revised budget form is not received. If the right hon. Gentleman cares to study the operation under both Governments of the grant claim system, he will see that no grant can be paid to any authority unless it returns its application form. That is the standard way in which grant is paid. The House would be the first to complain if it were done otherwise. There is no more significance to that sentence than that. I am sorry to have to kill that issue before the right hon. Gentleman gets excited.

The next question deals with the inflation assumption and whether there will be a change. This matter is under discussion with the local authority associations. The right hon. Gentleman will understand that there is a distinction between volume and inflation. It is not correct, as was suggested by one authority, that we are seeking to impose the Government's view of inflation. At the end of the year it will be necessary to ensure that a fair apportionment has been made between volume and inflation. Anyone familiar with the normal method of Government financial management will know why that is so. The circular is a technical circular for treasurers. It is not some new draconian step by my right hon. Friend the Secretary of State. Although some people appear to have misunderstood it, if the right hon. Gentleman cares to check with the associations he will find that they are now rather better informed.