HC Deb 21 July 1982 vol 28 cc388-9
11. Mr. Kenneth Lewis

asked the Secretary of State for the Environment whether he has any plans to review the 4 per cent. cash limit for income of local government expenditure in 1983–84, in the light of present and prospective wage and salary measures and the probable inflation rate for this period.

Mr. Heseltine

I met the local authority associations on 19 July and heard their arguments for an increased cash provision for local government current expenditure in 1983–84. In considering the Government's response I shall take into account current and prospective pay and price levels in local government.

Mr. Lewis

Does my right hon. Friend agree that there are two kinds of council, the stupidly extravagent and the sensibly economical, and that most of the latter are Conservative-controlled? Does he appreciate that in the past two years many Conservative councillors have followed his policy of being extremely hard in making economies in their spending? Will he therefore promise that he will not penalise them in the next year, as it is important that those who have helped him should now have his support?

Mr. Heseltine

I am grateful to my hon. Friend for giving me the opportunity to reassure him that I have tried consistently to recognise the co-operation that I have received from the more prudent local authorities, by expecting them to make fewer economies than those at the other end of the spending scale.

Mr. Kaufman

Does the right hon. Gentleman intend in the next financial year to maintain the GREA exemption for local authorities that spend above his ceilings? Secondly, in view of the great uncertainty that prevails among local authorities about their finances in the current year, will he state categorically that he does not intend to impose a mid-year hold-back penalty on local authorities in this financial year?

Mr. Heseltine

Certainly, it is important to give the clearest and earliest indication to local authorities of the Government's view about their expenditure plans for 1983–84. The right hon. Gentleman will be aware that we have already announced a hold-back exercise for the current year and I shall shortly be making the Government's final views known in respect of any additional hold-back.

Mr. Bulmer

Is my right hon. Friend aware that it costs more than £25 million per year to pay local government employees' wages and salaries physically, but that if they were to accept credit transfer half that money could be saved? Will he see what can be done to encourage local authorities to follow that course?

Mr. Heseltine

My hon. Friend makes an interesting point. Clearly, we wish to encourage anything that will save unnecessary expenditure which adds nothing to the quality of service provided.

Mr. Cryer

Is it not nonsensical for the Department to try to make local authorities cut expenditure when it knows full well that the result will be more people on the dole due to a deliberate act of Government policy, which in turn will mean that the Department of Employment will be paying much more unemployment benefit and the DHSS much more supplementary benefit? Is it not better to give local authorities the money to provide the services so as to keep people in jobs?

Mr. Heseltine

The hon. Gentleman will be well aware that he has seen only one side—the wrong side—of the argument. High levels of expenditure with consequent high rates destroy far more jobs than they create.