§ The Secretary of State for Wales (Mr. Nicholas Edwards)
With permission, Mr. Speaker, I shall make a statement about public expenditure provision for housing and other local authority capital spending in Wales.
First, I want to say something about the current year, 1982–83. Monitoring of capital payments by local authorities in Wales at the end of the first half year showed that there was likely to be a substantial underspend of the cash limit. The main reason for that is that housing authorities are not using their capital receipts for new capital work. To reduce the expected underspend, housing authorities have been told that they may increase their spending on house renovation in the current year without limit.
I have also reviewed the position of other local authorities, and where they appeared to be spending up to their previously expected pattern they have been offered additional capital allocations for work in the current year. Furthermore, some urban programme schemes for which provision was not originally available have now been approved and consequent additional allocations made. Altogether those additional allocations total £3.58 million.
I now turn to the provision for 1983–84. I have not yet completed consideration of the allocation of resources to particular services within my public expenditure block. However, I can now say something about the resources to be assigned to housing and other local authority capital expenditure.
In forming my conclusions I have taken account of the estimated level of local authority capital receipts in 1983–84. Hon. Members will know that as a general rule local authorities can spend their capital receipts on new capital projects, in addition to the capital allocations I make. The exception is housing, where I have previously required that only half of the housing receipts should be freely available for any capital spending, the other half being built into the housing allocation.
Local authority capital receipts in Wales next year are forecast to be £90 million, of which £85 million is forecast to be housing receipts. As I have said, housing authorities have not been using their capital receipts for new capital spending. With the object of achieving a larger capital spend, I have decided to reduce the proportion of unallocated housing receipts to 25 per cent. The remaining 75 per cent. will be built in to the allocations. I shall be laying before the House accordingly regulations under section 72 of the Local Government, Planning and Land Act 1980.
After consultation with the Welsh local authorities, I have today made rent and maintenance determinations for 1983–84. I have determined the increase in the local contribution for rent at 85p, and the increase in maintenance and management expenditure at 7 per cent. On the basis of those determinations the amount available for spending on housing by local authorities and the Housing Corporation in Wales next year will be £202.3 million. If local authorities underspend by £80 million this year—the figure referred to in a parliamentary answer by my hon. Friend the Under-Secretary of State for Wales yesterday—that will represent an increase of over 75 per cent. On the most optimistic assumption that I have seen for this year's expenditure, which is about £169 million, 708 there will be an increase of 20 per cent. Together with the change in the treatment of capital receipts which I have outlined, this will enable me to allocate £139 million to local authorities in respect of housing. That is an increase of 13 per cent. on the current year's allocation. The allocation to the Housing Corporation will be maintained in real terms.
For other services I have decided to allocate the following amounts—education, £34.325 million; transport, £60.068 million; personal social services, £6.641 million; and for all other services, £42.163 million.
Together with the allocation for housing, that makes a total provision for local authority capital expenditure of just over £282 million, excluding the urban programme to which I shall refer later. In addition, there will be the £41.3 million I intend to allocate to the Housing Corporation.
At the local authority level, an authority receives its allocation as a block and can spend it on whatever capital projects it wishes. I shall circulate in the Official Report a table showing the allocations to individual authorities. Each local authoritiy will receive a formal notification of its allocation.
There is one more thing I wish to say about housing. In the particular circumstances of the Welsh housing stock, I attach the greatest importance to renovation grants. I have already announced the continuation of higher rates of grant until the end of 1983–84 and I am anxious to assist local authorities in meeting the resulting demand. Therefore, I have decided that, if a local authority's expenditure on renovation grants exceeds a specified level in 1983–84, I shall make an additional allocation to cover the excess. The Welsh Office will be writing to housing authorities about this in a few days' time.
I also want to tell the House about my intention as regards the urban programme and urban development grants. My right hon. Friend the Secretary of State for the Environment told the House of the importance we attach to the new urban development grant scheme. The response in Wales has been encouraging and we are considering the imaginative schemes which have been submitted. For the moment I have allocated £21 million to UDGs and the traditional urban programme together. I shall decide how much to devote to UDGs and on the allocation of the remainder to local authority schemes under the traditional programme once our consideration is complete.
The allocations that I have announced will enable local authorities in Wales to undertake a substantial programme of capital work next year. On the most optimisitc assumption about this year's spend, there will be an increase of about £50 million and on pessimistic assumptions a good deal more. That presents them with an opportunity to improve the infrastructure of the community and to tackle some of the problems which we all recognise.
Those authorites with enterprise zones in their areas are presented with particular opportunities—Swansea, where such a good start has been made, and the new zone at Flint which I announced on 15 November. As I said then, I am giving further consideration to the establishment of a third. Throughout Wales, the local communities will benefit, the construction industry will be assisted, and new jobs will be created provided that local authorities take full advantage of the capital allocations I make and use to the full the capital receipts that come in.
§ Mr. Alec Jones (Rhondda)
I welcome the fact that the Secretary of State has made his statement to the House, although I must confess that even with the aid of a calculator I need more than half an hour to understand its contents. I welcome the statement if it means a real increase in capital spending in Wales both from the point of view of local government services and much needed jobs.
The Secretary of State proposes in the current year to try to encourage increased spending on house renovation and a certain hoped-for increase in capital allocations. It is probably far too late in the year to do much about underspend during the current year. Therefore, his statement is right in that it concentrates mostly on the coming year 1983–84.
I can understand the natural desire of the Secretary of State to improve his housing achievements in Wales, since the present Government have probably the worst record on house building in Wales of any Government since the war. Anything that can be done to improve that is to be welcomed.
The Secretary of State, in an effort to use more receipts from the sale of council houses for new building, is reducing the proportion of unallocated housing receipts to 25 per cent. and building the remaining 75 per cent. into local authority allocations. Is this not a further intrusion into the freedom which he previously boasted he was anxious to give to local authorities? Will he consider using the rate support grant settlement to compensate local authorities for the interest on capital receipts that he is now asking them to forgo by using the receipts from sales of council houses for new building? Of the total increased level of expenditure announced, how much is from the sale of council houses and the sale of other assets, and how much, if any, new money are the Government putting into local government?
The Secretary of State announced rent increases next year of 85p and a 7 per cent. increase in maintenance and management. Is it necessary for all local authorities to raise rents by that amount? How many local authorities in Wales, for instance, are now in surplus on their housing revenue accounts, and, if they are in surplus, what is the justification for this further increase?
The Secretary of State has allocated £6.641 million for personal social services. Does that item include any transfer of funds from the National Health Service to cover any increase in jointly funded schemes?
I note that the Housing Corporation allocation is only to be maintained in real terms. Does that mean that the Secretary of State does not realise that housing associations can play an increased role in dealing with housing needs in Wales? The Secretary of State has given us some details of the increases in expenditure on housing. What are the percentage increases in real terms on education, transport and personal social services?
If local authorities incur current expenditure and loan charges as a consequence of the capital expenditure on which the right hon. Gentleman is encouraging them to embark today, will he give an assurance that if such increased current expenditure takes them over their expenditure targets for next year they will not have their rate support grant reduced?
Finally, I should like to say to the right hon. Gentleman that I certainly prefer him in his new role as a spendthrift from Pembrokeshire.
§ Mr. Edwards
I recognise the complexity of the statement and the right hon. Member for Rhondda (Mr. Jones) has raised many points on it.
In response to the right hon. Gentleman's final point, I emphasise that all we are seeking to do is to encourage local government to spend up to the cash limits previously announced. No change in the Government's economic strategy is implied in that.
The right hon. Gentleman asked about the overall increase in allocations. Including the urban programme, the increase amounts to 8 per cent. and is regardless of the actual spend on capital receipts.
The right hon. Gentleman referred to housing renovations and suggested that it was perhaps too late to achieve much increased expenditure in the current year. In 1981–82 the local authorities spent only a little more than £16 million on renovation grants. It is estimated that this year they will spend about £45 million, and next year we expect them to spend at least £70 million. The total expenditure on renovation grants during the period of office of the previous Labour Government was not more than about £57 million, so that is a very sharp upturn indeed.
I do not agree that it is too late to do much about underspend during the current year. I had an example drawn to my attention only in the past 24 hours. In Rhymney, the local authority is currently refusing to give improvement grants, despite the fact that we have given assurances to the local authority about the matter. It is holding off until it has the full allocation for next year, although it seems clear that it will have an underspend—indeed, its current level of spending is much less that some of its neighbours which are still allocating grants. There are plenty of other local authorities in the same position.
The right hon. Gentleman asked about our record on housing. Local authorities—most of them are dominated by the Labour Party—are estimated to be underspending in the current year up to £80 million of the money available for housing. If the right hon. Gentleman really feels that there is a housing need—I agree with him—I hope that he will encourage local authorities throughout Wales to spend the money that the Government have made available.
The right hon. Gentleman asked about the proportions of unallocated receipts and about the formal amounts allocated. In the current year, we originally estimated that receipts for local authorities sales would amount to £58 million. Our latest estimate is £97 million, and for next year we are currently estimating £85 million.
The right hon. Gentleman asked about the scale of the housing work and the effect that it might have on current expenditure and on interest charges. I make no apology for saying that, in the light of the known housing need in Wales, local authorities should spend the money on this priority, and I do not believe that there is any justification in their present expenditure to exceed targets as a result.
The right hon. Gentleman referred to the rent increase next year of 85p. He will be aware that the Labour Government took the view that rent levels should rise in line with increases in inflation but never did anything about it. This increase is broadly in line with inflation and, as the right hon. Gentleman knows, we are increasing the local contribution which effects, of course, the local authority grant position, but local authorities are free to make individual decisions on rents in their own areas. 711 The right hon. Gentleman referred to personal social services and to other matters. I said in my statement that there is a block allocation to each local authority and that the local authority, within that total, and subject to the limitation that I have introduced about housing receipts, is free to spend the money in the ways that it thinks best. I have no immediate control over the way it does it.
The right hon. Gentleman asked about jointly funded schemes. I shall elaborate on that subject in the Welsh Grand Committee tomorrow.
I hope that I have dealt with most of the right hon. Gentleman's detailed points.
§ Sir Anthony Meyer (Flint, West)
Is my right hon. Friend aware that there will be a warm welcome in Wales for what he has announced and that hope will be rekindled in many quarters? Does he recognise that the capital works schemes on which he has placed so much emphasis are certainly the best way of creating employment without producing too many inflationary pressures? Will he ensure that his fairly complex arrangements are fully and clearly explained to local authorities so that there is no misunderstanding on their part about exactly how much they have available to spend and on what? In the past, there has undoubtedly been misunderstanding about the moneys available from the sale of council housing. This misunderstanding has had adverse effects on some authorities, especially Rhuddlan borough council.
§ Mr. Edwards
I thank my hon. Friend for his remarks. The simplest form of clarification is that on the first half-yearly figures we could be faced with a capital underspend in Wales of £93 million, including the £80 million in respect of housing to which I have referred. On the most optimistic estimate, we could be faced with a total underspend of about £69 million. These figures show that there is a great deal of capital available within existing cash limits and within the Government's overall strategy to provide for the need that everyone acknowledges and to give a real boost to the construction industry. It is now up to local government to do its job.
§ Mr. James Callaghan (Cardiff, South-East)
Is the right hon. Gentleman aware of the large increase in the number of people on the Cardiff housing waiting list? Is there any prospect that the increases that he has announced today will reduce waiting lists to the levels at which they stood when he began his stewardship?
§ Mr. Edwards
If the Cardiff authority was as energetic in its disposal of housing stock as other authorities, it would be able to provide a great deal of new housing for the right hon. Gentleman's constituents.
§ Mr. John Morris (Aberavon)
Does the right hon. Gentleman not feel occasionally like the Grand Old Duke of York in that, having marched his bewildered local authority troops up the hill, he is now marching them down again? Will he make a statement comparable with that made by the Secretary of State for the Environment at the Tory Party conference, when he responded to the great anger about the proposals on the size of lorries by promising 55 new bypasses in England? Will there be comparable provision or a comparable promise for Wales?
§ Mr. Edwards
We are dealing with a statement on housing and local authority capital expenditure. I shall be 712 announcing a substantial road programme on another occasion. The right hon. and learned Gentleman has talked about the Grand Old Duke of York, but I recall that when he was the Secretary of State for Wales he, too, was faced with an underspend. I am merely repeating the actions that he took when he had the same experience. He, too, had difficulty in getting local authorities to spend the money that the Government had made available to them.
§ Mr. Ian Grist (Cardiff, North)
Is my right hon. Friend aware that last Saturday a married couple visited my surgery to tell me that they had applied 18 months ago to buy their flat in Cardiff from the council and that they had not received any offer, visit or notification? This waste of potential money for the Cardiff council is delaying the necessary programme of renovation of the housing stock, most of which was erected 70, 80 or 90 years ago and is in bad need of renovation. The programme that my right hon. Friend has announced will be extremely welcome to the people of Cardiff and by most of those living in the valleys of South Wales.
§ Mr. Edwards
The situation that my hon. Friend described is indefensible. It is penalising those who wish to buy their flats or houses and those who could have new authority housing built for them, or their existing housing improved, if the local authority got on with its job and spent the money that could be available to them.
§ Mr. Geraint Howells (Cardigan)
I am grateful to the right hon. Gentleman for making a statement so early in the new Session. Will he give an assurance that the £3.58 million that he has allocated for urban programme schemes will not be clawed back from rural programme schemes? Will he give a further breakdown of the £42.163 million that is to be provided for all other services?
§ Mr. Edwards
I cannot give the breakdown that the hon. Gentleman requests. I allocate a total block to the local authorities. The Government merely indicate the way in which the block has been made up. It is for individual authorities to decide how much they spend on certain items.
The hon. Gentleman may have misunderstood the urban programme. This year I allocated originally £15.3 million to the programme. Additional amounts were made available during the year and the total was increased to £16..8 million. I have now allocated slightly more than £21 million to the urban programme and the UDG schemes combined. I have not yet decided the make-up of that sum. I have to consider the 50 or more UDG schemes that have been submitted by local authorities. The hon. Gentleman will be aware that if we get investment in UDG schemes we multiply the scale of the capital investment. We may get a multiplier effect of four by getting private sector investment in addition to the public sector contribution.
§ Mr. Dafydd Wigley (Caernarvon)
Will it be possible in future, bearing in mind the complex nature of the statement, to publish a statement and to follow it up shortly afterwards with a debate in the Welsh Grand Committee so that we can go into some aspects in greater depth?
The right hon. Gentleman has talked about proven housing need. Was there not that need three years ago when the Government chopped the housing allocation in Wales by 48 per cent? Surely it is extremely difficult for local authorities to deal with changing programmes. Their staffing is geared up to meet a programme, there is a strong 713 surge forward in an election year and then there is a programme of cuts immediately afterwards. Can we not achieve some stability in the housing programme in Wales?
§ Mr. Edwards
If I had presented the House with a written statement and announced a subsequent debate, the hon. Gentleman would have been one of the first to criticise me for not making an oral statement.
We are not dealing with a new development. We announced our intentions in respect of the availability of capital receipts when we started disposing of local authority housing under new legislation. Much earlier in the year we gave assurances and guarantees to local government which should have enabled them to go ahead and plan into next year on the basis of stability. We are now giving them a further assurance that they are not dealing with a one-year programme. There is no excuse for the current massive underspend of local government when it is the first to say that there is considerable housing need.
§ Mr. Roy Hughes (Newport)
When the right hon. Gentleman replied to the questions of my right hon. Friend the Member for Rhondda (Mr. Jones) he said that the recently announced rent increases for council tenants were reasonable. Has he considered the tremendous unemployment in Wales, let alone short-time working, and the effect that it is having on rent arrears? What is he doing to help Welsh authorities? The Newport authority is facing much trouble because of these difficulties.
§ Mr. Edwards
Bearing in mind the emphasis on capital need and the state of the housing stock in Wales, it is not unreasonable to ask local authorities to increase rents broadly in line with the increase in costs. We shall be increasing maintenance and management expenditure by 7 per cent., which on the current inflation forecast means that there will be an additional margin for local authorities that will allow them to catch up with an admitted backlog of maintenance work.
§ Mr. Tom Ellis (Wrexham)
To what extent would the insistence of a local authority, such as that of the Wrexham Maelor borough council, on having complete management control of an enterprise zone in its area influence the right hon. Gentleman in deciding whether to allocate a zone to such an authority?
§ Mr. Edwards
I have to bear in mind a number of factors in determining the siting of an enterprise zone, not least its potential success and the effect on other developments in the area. The hon. Gentleman will recognise that to place an enterprise zone immediately adjacent to a large industrially developed site, for example, could have an impact on that site. That is one consideration that has to be taken into account. We are having further discussions with local authorities that have applied for enterprise zones before ascertaining which we should select as the third site in Wales.
§ Mr. Ioan Evans (Aberdare)
Does the Secretary of State realise that his announcement will be considered cynically by Welsh local authorities? Since he became Secretary of State he has told local authorities to cut, cut, cut. Now, in the run-up to an election, he is telling them to spend, spend, spend. What effect will that have on Wales, if there is current expenditure as well as capital expenditure, and how will it benefit total public expenditure? He mentioned the local authority part. Will 714 the Secretary of State now divert resources from the Health Service or from other sectors or will there be an all-round increase in Wales?
§ Mr. Edwards
The hon. Gentleman will get in part an answer to the latter point in the Welsh Grand Committee tomorrow when we shall debate health matters.
I am not changing Government policy suddenly and asking for expenditure of money not previously available. I am merely emphasising the point that local authorities are not spending the money that has always been available to them. That does not represent a similar "spend, spend, spend" policy before a general election to that initiated by the hon. Member for Merthyr Tydfil (Mr. Rowlands) before he had to change direction when the International Monetary Fund moved in. We are asking local authorities to spend the money that has always been available and that they have not spent up to now.
§ Mr. Donald Anderson (Swansea, East)
Although I welcome the new priority given to housing, will the Secretary of State confirm that the total sums available to Welsh housing authorities in the financial year 1983–84 are no higher than those available in 1979–80, the last year of the Labour Government, and that he has presided over the greatest slump in house building in Wales since the Second World War, with only 1,000 starts in the public sector in 1981–82?
On a technical point, local authorities are allowed to top up their allocations by the totality of capital receipts available to them—with the exception of housing which is only 50 per cent.—but the Secretary of State announced recently that the top-up will be reduced to 50 per cent. in other sectors. Is not that change inconsistent with today's statement, and will the Secretary of State withdraw the reduction from 100 per cent. to 50 per cent?
§ Mr. Edwards
A shortfall in the housing programme must be entirely the responsibility of the local authorities, mostly Labour-controlled, which have not spent the money made available to them by the Government. If the hon. Gentleman re-reads my admittedly complicated statement, he will see that the allocation of capital receipts has been made perfectly clear.
Following is the table:
Capital Expenditure Allocation 1983–84 L.A. Code £000's Counties: Clwyd 38 11,785 Dyfed 39 10,905 Gwent 40 24,234 Gwynedd 41 7,015 Mid-Glamorgan 42 16,919 Powys 43 4,626 South Glamorgan 44 18,821 West Glamorgan 45 11,949 Total Counties 47 106,254 Districts: Alyn and Deeside 01 3,254 Colwyn 02 3,077 Delyn 03 3,211 Glyndwr 04 1,987 Rhudllan 05 2,597 Wrexham Maelor 06 4,620 Carmarthen 07 4,293 Ceredigion 08 3,730 Dinefwr 09 1,619 Llanelli 10 4,318 Preseli 11 2,706 South Pembroke 12 2,668
L.A. Code £000's Blaenau Gwent 13 7,930 Islwyn 14 5,254 Monmouth 15 3,493 Newport 16 8,791 Torfaen 17 4,991 Aberconwy 18 2,390 Arfon 19 3,530 Dwyfor 20 1,360 Meirionnydd 21 3,170 Ynys Mon 22 3,799 Cynon Valley 23 3,989 Merthyr Tydfil 24 4,314 Ogwr 25 7,151 Rhondda 26 6,949 Rhymney Valley 27 6,118 Taff-Ely 28 7,103 Brecknock 29 1,796 Montgomery 30 1,907 Radnor 31 1,385 Cardiff 32 20,376 Vale of Glamorgan 33 5,569 Afan 34 2,409 Lliw Valley 35 4,402 Neath 36 2,999 Swansea 37 16,658 Total Districts 46 175,943 Total Wales 48 282,197
§ Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)
On a point of order, Mr. Speaker. I apologise for not giving you notice of this point of order, but as I was involved with the steel lobby I could not do so. I resisted the temptation to raise a point of order following the statement last week by the Secretary of State for the Environment, because I was not sure what the Welsh Office intended to do. We had a statement from the Secretary of State for the Environment on his local authority spending programmes and we have today had a statement from the Secretary of State for Wales on his local authority spending programmes. However, the matter was dealt with by the most junior Minister at the Scottish Office at a press conference some days ago.
The Secretary of State for Scotland is deliberately avoiding his responsibilities to the House and in the process, and most importantly, he is denying Scottish Members of Parliament the opportunity, as was given to Welsh and English hon. Members, to ask questions on a statement. I hope, Mr. Speaker, that you will see that as a serious restriction on the ability of Members of Parliament from Scottish constituencies to carry out their parliamentary duties. If you see it in that way, Mr. Speaker, I hope that in your capacity as Speaker you will make representations to the appropriate quarter in the Government to ensure that the Secretary of State for Scotland has the courage to make a statement on the Floor of the House.
§ Mr. Speaker
I allowed the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) to make his point of order at length, but he will realise that the matter is one for the usual channels and not for me.