Rate Support Grant (Wales)

HC Deb 08 February 1984 vol 53 cc905-57 4.52 pm

The Secretary of State for Wales (Mr. Nicholas Edwards)

I beg to move, That the Welsh Rate Support Grant Report for 1984–85, which was laid before this House on 26th January, be approved.

When we debated the rate support grant report last year I said that it must be seen in the broader context of the Government's firm resolve to reduce the burden of public expenditure, approximately one quarter of which is accounted for by local authorities. Since that time the Government's mandate to pursue the policy has been overwhelmingly endorsed and the objective remains as important as ever. Against that background, before I move on to the report itself, I want to tell the House exactly what has happened to Welsh local authority expenditure since 1979. I want to set the facts against the myth; the hard statistics against the wilder allegations of our critics.

Every year since 1979 Opposition Members have alleged that the level of Government support for local authority expenditure has been so inadequate as to lead to unacceptable and slashing reductions in local authority services; to horrendous reductions in local authority staff and to unnecessary and excessive rate rises, which the local authorities could not afford. I have no doubt that those allegations will be repeated again and again in Opposition Members' speeches, following my opening remarks.

Unfortunately, the Opposition face one insuperable difficulty when attempting to make out their case. Factual evidence is overwhelmingly against them. Let us consider expenditure. Between 1979–80 and the present financial year, in cost terms — that is putting figures on to a constant basis using the annual increase in prices in the economy as a whole—local authority total expenditure, current and capital combined, hardly changed at all when allowance is made for both the National Insurance surcharge savings and housing benefit payments. During that same period there has been a relentless growth in current spending which has outstripped the increase in the general price level by about 2 per cent. That meant that, had it not been for the receipts from the sale of council houses, capital expenditure would have had to fall by about 10 per cent., in cost terms, to compensate for the rise in current spending. The figures clearly demonstrate that any talk of a massive reduction in local authority expenditure is nonsensical and in the realms of fantasy: the fact is that expenditure has not been reduced. Current expenditure has actually increased.

The Opposition constantly refer to the draconian reductions in local authority manpower, mass redundancies and services unable to survive for the want of adequate staffing. Here again rhetoric is no substitute for hard evidence. The Opposition are wrong. Between September 1979 and September 1983 the number of full-time and part-time staff employed by local authorities in Wales fell by 3,708, or about 2.4 per cent. during a period when the whole of the productive sector of the economy, public and private, had made massive increases in efficiency and corresponding reductions in staff. Even if one takes full-time equivalents and not total manpower as the statistical measure, the reduction for general services has been only a little more than 4 per cent., or about 1 per cent. a year, on average. That is hardly earth-shattering given the substantial scope for securing manpower savings through increased efficiency that the recent Audit Commission report reveals. That report confirms what every member of the public knows to be true, that efficiency can he enormously improved and that substantial manpower economies are long overdue.

Manpower costs account for 70 per cent. of expenditure, and those costs simply have to be contained and reduced if services are to be maintained and improved. It is a matter for very real concern that between September 1982 and September 1983, the most recent period for which figures are available, the number of full-time and part-time staff in Wales rose by nearly 2,300 or about 1,000 full-time equivalent staff. The salary, wages and overhead costs of that increase alone, setting aside the question of any grant withholding, amount to around £10 million, or about £10 per household in Wales.

The next allegation is about damage to services. I have no doubt that authorities have found adjustment difficult, and I suppose that it is inevitable that they have not always managed it as well as they might, but the picture so vividly painted of slashing cutbacks is a gross distortion of reality. Let us look at education, accounting as it does for over half local authority current expenditure. Between January 1979 and January 1983 pupil numbers fell by nearly 49,000, or about 9 per cent., and a further fall of about 2 per cent. is projected over the next 12 months. Teacher numbers, however, have fallen by only 6 per cent. and as a result the pupil-teacher ratio has improved from 18.2 to 17.7. In addition, the average size of registered ordinary classes in primary schools has continually fallen, while registered classes in secondary schools have remained broadly unchanged. When Labour left government in 1979–80, 19 per cent. of ordinary classes in primary schools had more than 30 children; today, under this Conservative Government, the proportion of such classes has fallen to 16 per cent.

Let us look also at social services. In 1979 there were 11,800 persons, in full-time equivalent terms, engaged directly by the social services department. By September 1983 the number employed had risen by 1,100, or 9 per cent. It is a grotesque distortion to present those figures as evidence of a rundown in the level of provision in that sector. Similarly, the law and order services have never been in better shape, and other services, for example recreation, have been substantially improved. In the face of those facts it really is impossible to take seriously the claim that services are being cut to the bone. The Opposition do not help their case, or credibility, by repeating such unsubstantiated claims.

Mr. Donald Anderson (Swansea, East)

Will the Minister leave the bluster and look at the other side of the balance sheet, at increasing unemployment, the increasing number of elderly people in our community and increasing demands on the social services? Can he stay as self-satisfied as he is now when he looks at those factors?

Mr. Edwards

I was stating that the Opposition claim that there have been slashing reductions in services, when in fact there has been an increase in services and in the number of people dealing with the problems to which the hon. Gentleman refers.

Any unbiased observer considering those figures against the background of economic difficulty and world recession would be bound to say that, far from local authorities in Wales having been badly treated, they have been treated very fairly indeed. I readily acknowledge that local authority expenditure in Wales has kept far closer to the Government's expenditure plans than that of authorities across the border, and I commend Welsh authorities for that. I also acknowledge that many authorities in Wales have made considerable efforts to contain their expenditure. None the less, the fact remains that even the modest expenditure reductions that we have sought have not been achieved: clearly there is quite a way to go before local authority expenditure is at the level we judge the nation can afford.

I announced the main details of the settlement in the House last December. For the local authorities, the main concerns are the total of relevant expenditure accepted for grant, particularly current expenditure, aggregate Exchequer grant, block grant within it, and the expenditure guidance which I have set based on expenditure targets and grant holdback arrangements.

The total of relevant expenditure provision, at £1,440 million, is an increase of about £55 million, or roughly 4 per cent., from this year's level. Within this total, current expenditure provision at £1,253 million is £57 million, or about 4.8 per cent. more than current expenditure provision this year, after making allowance for the 1.5 per cent. reduction in authorities' national insurance surcharge from next April and certain housing benefit administration costs. I do not think that anyone could argue with conviction that these amounts are unreasonable, given the need for local authority expenditure to be constrained.

No doubt Opposition Members will say that any increase in provision less than the likely level of inflation next year—somewhere around 5 per cent.—must mean a cut in services. I do not accept that argument. There is absolutely no reason for local authority costs to rise by 5 per cent. Even if one sets aside the very substantial scope there is for increasing efficiency, low wage settlements in line with the 3 per cent. cash allowance in the public sector would enable local authority costs to increase by about 4 per cent. Even Opposition Members will recognise that there is a trade-off between the level of pay settlements and the number of staff who can be employed.

Dr. John Marek (Wrexham)

That argument will not wash, because local authorities have suffered for a number of years from the Government saying that local authority costs would go up and that allowance would be made for, say, 5 per cent., and it has turned out that costs, and manpower costs in particular, have gone up by 9 or 10 per cent. On this occasion the Government are also suggesting that loan pool costs will be 10 per cent., which is unduly low. Will the right hon. Gentleman take it from me that that is not acceptable to local authorities, and will he make realistic assumptions for increases in costs next year?

Mr. Edwards

If the hon. Gentleman wants to look at what has happened in the last few years, I assure him that the interest charge assumption that we have made in each of the last three or four years has proved too high and that the actual interest rates payable by local authorities have been below the assumption made. Not only does the hon. Gentleman not have a good argument on that, but he must accept the central point that I am making, which is that there is a trade-off between the level of pay settlements and the number of staff who can be employed, as Mr. Len Murray pointed out at a conference over the weekend.

If Opposition Members are as concerned as they say they are about the number of staff "at the sharp end," they should be vigorous in their support of our emphasis on the need for low pay settlements in the local authority sector, value for money, and pruning administration. Aggregate Exchequer grant, at £996 million, is £21 million, or 2.2 per cent., more than this year's provision as set out in the 1983–84 main report, but is nearly £34 million, 3.5 per cent., above supplementary report provision, which, I am sure the House understands, is the figure which counts when it comes to authorities' rating decisions for next year. Block grant is marginally reduced from the amount in the current year, but this has been far outweighed by a substantial increase in specific grants, and it is the totality of grant provision which influences rates.

Mr. Dafydd Wigley (Caernarfon)

rose—

Mr. Edwards

Many hon. Members wish to speak in the debate, which has been curtailed, and I shall be covering a great many points in my speech. However, I shall give way to the hon. Gentleman, after which we can perhaps get on.

Mr. Wigley

Is it not true that the increase in specific grants will go largely towards housing grants, over which we are in such a mess in Wales, and that that will not be available to sustain services, so that the sustenance of services will have to be undertaken on a lower level of grant?

Mr. Edwards

The housing programme — indeed, the urban programme and the urban development grant, which are other aspects of this matter—is part of the overall area where there is widespread acceptance that there should be priorities. Priorities have, of course, been accorded to some services via specific grants. Those priorities are widely accepted and, clearly, within a finite total of grants, priority given to certain services inevitably means reduced priority for others. There is nothing peculiar or unusual about that. It is exactly the problem that I face when looking at priorities within the Welsh Office expenditure programmes.

I come now to expenditure targets and grant holdback. I have again set individual authority expenditure targets, and if councils exceed them grant will be withheld as in the current year. I need hardly say that I hope that grant withholding will not be necessary; that all authorities will spend at target and thus benefit their ratepayers. No doubt some will say that targets are unnecessary; that the very fact that they are set and that grant is withheld, if they are exceeded, increases the burden on ratepayers. I disagree. In an ideal world there would be no need for expenditure targets at all; authorities in aggregate would spend at a level consistent with our expenditure plans. Unfortunately, that has not proved to be the case in the past and experience has shown that targets provide a necessary incentive for authorities. I remind the House that, despite all the claims about the inadequacy of the targets that I set for the current year, three of the eight counties and 29 of the 37 districts have budgeted to meet them and I understand that some which originally planned to spend above their target levels now think that they will meet them. These figures show that targets are achievable if the will is there.

It might be helpful if I cleared up some misunderstandings that seem to exist about targets. First—and this is important—targets are not linked to the previous year's targets; the starting point for their determination is an authority's budgeted expenditure in the current year. Targets comprise, for all authorities, three separate components — current expenditure, loan charges and interest receipts. For the districts there is a further important component—the rate fund contribution to the housing revenue account.

The loan charges and interest receipts components are designed to be neutral, and every authority has exactly the same share of expenditure in these elements as it has in the current year.

The current expenditure component is the most important, and for next year's targets every authority has a cash increase in its current expenditure component; for low spenders, a 5 per cent. increase on this year's current budget, after allowing for the national insurance reduction from next April. In reality, they will get about 6 per cent., if budget drift is about 1 to 2 per cent., as it has been in recent years. Even the highest spenders, on this basis, will get a 1.5 per cent. increase in their current expenditure component.

The districts' rate fund contribution to the housing revenue account component reflects the Government's decision on the increase in public sector rents for the coming year when calculating housing subsidies and is the one which seems to give rise to most misunderstandings.

Not unexpectedly, there have been complaints — which, no doubt, will be repeated later—that the targets are unachievable, that they are too volatile, that some set a cash reduction from this year's actual expenditure and so on. I do not consider these complaints justified. I have never disguised the fact that the targets, particularly for some authorities, are tough. But, as I have told the House, I am using exactly the same methodology for the coming year as that in the present year, and in this respect I am meeting the expressed wishes of the Welsh local authority associations, which pressed me to retain the present method.

As regards the alleged volatility of expenditure targets for district authorities, it is, of course, true that in some instances these have changed substantially from the present year, and in some cases require a cash reduction on this year's expenditure. However, in almost every case where a district authority faces a cash reduction in its target, this results from the change in the rate fund contribution to the housing revenue account. If district authorities decide not to increase their rents in line with the increase in the local contribution assumed by the Government, then of course authorities' actual rate fund contributions to the housing revenue account will be far higher than their target components. They are, of course, free to do so, but they know very well that there are significant financial consequences of such a decision— consequences which of course fall on the generality of ratepayers. I have no sympathy at all for authorities which have decided not to increase council rents at all or to hold them well below the level that most authorities charge and now complain about the consequences.

There has also been criticism from some authorities that the low spenders have to pay too high a price for the current expenditure increase afforded to the higher spenders. I have a great deal of sympathy with that view. It is hard that authorities which have held their costs down in the past should now have to subsidise high spenders, but whatever pressure we apply it is unrealistic to think that the high spenders can be hauled back overnight. I must set realistic targets, but I have made certain that their attainment will require a great deal more effort from the higher spenders than from the low.

As regards the grant holdback for authorities which exceed their expenditure targets next year, I have strengthened the amount of grant to be withheld for levels of expenditure more than 1 per cent. over target. Last year the maximum amount of grant withheld, as a proportion of the expenditure excess, was 75 per cent. for spending 6 per cent. above targets. In the coming year this has been increased to 90 per cent. for spending 5 per cent. or more above target. I make no apologies for that change. I have strengthened holdback for a simple reason—to provide a greater incentive for authorities to meet their targets. There is a positive side to this policy which benefits the majority of Welsh authorities, particularly the low spenders. If they meet their targets they will receive virtually the grant they claim. In other words, they have the significant benefit of grant certainty.

There are only two other points that I need to mention. The first is grant-related expenditure—GRE. Inevitably there will be complaints that the GREs are unsatisfactory in certain cases and do not reflect the circumstances of an authority. Such complaints arise from both rural and urban authorities, which often claim that a GRE is unsatisfactory for totally opposite reasons. That tends to reinforce my view that GREs are broadly right. However, the important point here is that, to date, I have been able to accept in their entirety the GRE recommendations of the two local authority associations which follow the review of particular GRE components undertaken in the year by the associations and my officials. I am always prepared to listen to the associations' views on GREs if they think that they can be refined.

I have also taken account of the latest outturn data when apportioning, on the basis of the long-standing agreement with both the Welsh associations, total resources between counties and districts. This has brought the county and district shares more into line with the division of spending as it actually happened in 1981–82. I am aware that the change for the coming year has led to claims from the districts —I have seen the document which they have circulated to hon. Members — that they have been unreasonably treated. They say that, because their expenditure fell in 1981–82, they have been penalised by a reduction in their share of both aggregate GRE and, therefore, block grant in 1984–85. I do not accept that. It would have been unreasonable for me to increase their share of GRE and block grant above that justified by actual spending in the latest year for which final figures are available. In any event, we should not ignore the significant element of district expenditure met by specific grants which is excluded from GRE. When that expenditure is taken into account, the districts' share of total spending will be virtually unchanged next year. In any event, it is vital to bear in mind that the block grant transferred from districts to counties has not been lost to Wales. Consequently, the overall effect of the change on rates, at the all-Wales level, is nil. Secondly, the safety net provision which I set for the current year is being continued. It protects ratepayers from changes arising in GREs and at the ratepayer level is equivalent to 5p—1p for the districts and 4p for the counties.

Before concluding, I should like to mention rates. Hon. Members will know that I cannot predict the rating or precept decisions made by authorities. It is obvious that they will vary from authority to authority. However, it is worth examining what has happened to rates recently. For the past two years Opposition Members have said that the modest reductions in the grant percentage in the settlements are bound to result in enormous rate increases. Each year they have been proved totally wrong. Between 1981–82 — the first year of the separate Welsh rate support grant settlement — and the current year, the average general rate poundage has increased by about 4 per cent. That is considerably below the rate of inflation for the period and must have been of substantial benefit to industry and commerce in their fight to restore competitiveness and profitability. For the domestic ratepayer the increase during the same period was somewhat higher, but even here the average domestic rate increase last year was less than 1 per cent. Clearly it is to everyone's benefit if the level of rate increases in the coming year can be kept down to that amount. Indeed, there is no reason why that should not be the case.

When I announced the details of the settlement last December there were reports in the media to the effect that an average rate increase of 17 per cent. was likely. I said then, and I repeat now, that I simply do not believe that that will be the case. Such a figure implies an average increase of around 7 per cent. in revenue expenditure— that is 2 per cent. more than the likely rate of inflation. That would be an irresponsible and unjustified amount. Authorities can, on average, increase their net revenue expenditure next year by nearly 4 per cent. and still spend in line with targets. If they do so, even ignoring the use of balances, the average rate increase will be very small, and certainly below the likely level of inflation. If only half the balances which authorities have applied in the current year were to be applied, the average rate increase would be no more than 1 or 2 per cent. As I have told my own county of Dyfed, authorities should ask themselves whether it serves to push up their spending above those levels—and even in the case of Dyfed above what the county planned to spend as recently as last August— thus depriving their ratepayers of substantial grant and imposing burdens especially on local industry and commerce.

In that respect I was amazed to read in today's Liverpool Daily Post that Clwyd's policy and finance committee was recommending the full council to agree a massive 24p increase in next year's precept. The newspaper report went on to say that that was against the advice of the county treasurer, who warned that unless spending was curbed in the future there would be a further massive consequential increase in the 1985–86 precept. A 210p precept for 1985–86 was quoted. That would involve a 40 per cent. increase in the precept in two years. That would severely damage all sectors of the community. As an illustration, it would mean an additional impost of something in excess of £100 per employee in manufacturing and add about £90 to the average domestic rate bill.

It is no wonder that the chairman of the county's industrial committee warned that the proposed increase to next year's precept would hinder attempts to attract new industry to the county. He can say that again. The Government have made enormous efforts to help the economic regeneration of the area and the county provides substantial support for industry. Imposing an increase of that size contradicts the county's industrial policies and would be totally irresponsible. It is no good saying that individual ratepayers can get rebates. Industry and commerce cannot and have no option but to pay those swingeing increases. I can think of nothing more damaging to existing industry and commerce in the area and more of a disincentive to attracting new industry. The final decision rests with the full council, and I urge it to think long and hard before accepting such a damaging proposal. I hope that the hon. Gentleman will join me in that request.

Mr. Barry Jones (Alyn and Deeside)

Of course the full council will make the final decision. The right hon. Gentleman has not told the House that the Clwyd county authority's treasurer proposed a 19p rate increase.

Mr. Edwards

I repeat what the county treasurer said and the remarks that I quoted. I also repeat that increases on that level would be seriously damaging to the arrival of new industry.

Mr. Jones

rose—

Mr. Edwards

I shall not give way again. I want to draw to a close. The hon. Gentleman is about to make his own speech.

I want to draw attention to the contrast between what is happening in Clywd and what is happening in South Glamorgan. Hon. Members will have noted the recent decision of South Glamorgan county council to spend in line with its expenditure target for the coming year, although the cash increase on its present budget is limited to about £2 million or 1.5 per cent. What is more revealing, however, are the comments attributed to the council's Labour leader. He says that services need not be cut, that there will be no redundancies, and that the rate for the coming year, while increasing by about 6 per cent., will still be below the level charged in 1982–83. That confirms what I have said all along about the achievability of the targets, the scope for efficiency savings and the need for only modest rate increases. I commend the South Glamorgan council for its efforts. If every authority in Wales—north and south—showed the same resolve to contain spending and protect ratepayers there would be no grant penalties next year, and only modest rate increases.

I conclude by repeating my view that the settlement, while tough, is fair and reasonable. Of course authorities have difficult decisions to take. Of course authorities have to accept that many projects, desirable in their own right, cannot go ahead. That is inevitable when expenditure needs to be reduced. But I am confident that the substantial majority of Welsh authorities will continue to demonstrate, as they have done in the past, their responsibility when grappling with these problems and their determination to see that any increase in the rate or precept is kept to the absolute minimum.

5.22 pm

Mr. Barry Jones (Alyn and Deeside)

The Secretary of State may be unwise in basing part of his case on newspaper cuttings, the ink on which is scarcely dry. I agree with him that, in the case of the Clwyd authority, it will be the full council that will make the final decision. That will probably be the case with all the local authority examples cited today in the immediate weeks or month ahead. Nevertheless, it was the right hon. Gentleman and not I who mentioned Clwyd. I ought to tell him and the House that the controlling group in the Clwyd county authority is by no means Labour. There is no doubt that it will be for his friends on the county authority—the Conservatives and the independents—if they wish, to obliterate the propositions that have come forward.

The real question is how the right hon. Gentleman could so screw up local government finance in Wales that a non-political county treasurer of sober professionalism, rectitude and responsibility was moved to propose a 19p increase. That is a measure of how the policies of the right hon. Gentleman have gone wrong. He raised this example and I tell him that it is the example that damns his policies. We will see in the weeks ahead how his friends on the county authority respond to measures that were designed to save services and jobs in the face of an attack by the right hon. Gentleman on local government in general.

That was in essence the content of the right hon. Gentleman's speech. When in a weak position, he decided to attack. His speech today was an attack on local government. He conceded a considerable loss of jobs in local government throughout Wales over the past five years. He made, in my view, a selective presentation of statistics. He looked at existing local government services through rose-coloured spectacles and he even dragged in at one stage the weary alibi of this Government—the world depression.

As for the report presented to this House, "Welsh Rate Support Grant 1984–85", whilst I do not say that it was the case this time, there is perhaps a tradition across all Governments that such reports are conceived by desiccated calculating machines. With regard to grant-related poundage the right hon. Gentleman has this in his report: for R greater than 1 GRP = PGRE + [PGRE X A X (1.10 X R^{to the Power B} — 1)] That is the sort of report that we have been given by the right hon. Gentleman. Nowhere in his speech did he suggest that he understood the humanity with which this report attempts to deal. It was the tragedy of his speech. He gave no hint that ultimately this support grant affects in a decisive manner the quality of everyday life in the land of which he is the political head.

This grant affects the number of home helps, residential places for the elderly, assistance for the disabled, the requirement for council housing and the availability, for example, of concessionary fares schemes. Nowhere in his speech did the right hon. Gentleman show his deep commitment to, or his concern at the erosion of, vital local government services.

Leaders of local government in Wales are angry and bitter at this settlement. Be they elected or professional members, they know that these terms are injurious to the level and the quality of the many services that local councils provide for our people. Many leading authority members are questioning the value of the right hon. Gentleman's consultative committee. The committee of the Welsh district councils vehemently criticised and objected to their block grant exemplifications. I know that there have been complaints about delays and inadequate time for proper consideration and discussion of matters which are of vital consequence to local government.

The right hon. Gentleman mentioned the district authorities, and particularly their association. They do a good job. It is quite clear to me from what they have told me that severe financial consequences will folow from the loss of block grants. In the area of Aberconwy, the block grant has been cut by £232,000. In my own district authority, Alyn and Deeside, it has been cut by £266,000. This is an area afflicted by some 18 per cent. unemployment. In Colwyn, the block grant has gone down by £238,000, about a 10.6 per cent. cut. This is an area where male unemployment stands at 18.3 per cent. In Monmouth, the constituency, I think, of the Minister of State, the block grant has been cut by £352,000, about 13 per cent., arguably equivalent to a rate poundage of 5.1p. In South Pembrokeshire, a place that the right hon. Gentleman knows, the cut in block grant is £238,000, a matter of just 8.7 per cent. He knows that in Pembroke Dock, the male unemployment rate is 27 per cent. South Pembrokeshire cannot stand the injurious impact of his so-called settlement. In Ynys Mon the cut in block grant is £403,000, about 12 per cent. Male jobless there are 25.9 per cent. of the population.

The House might be interested to know that so severe are the consequences of the right hon. Gentleman's financial policy in Wales that in Wrexham Maelor the spending cuts have forced the council to decide that it can no longer pay the £5 monthly food bill of Nigel, the mouser. The cuts have bitten that deep.

Throughout Wales instances come to mind where the Secretary of State is putting under severe pressure the entire apparatus of local government. Under his regime, cuts in services run by the county authorities will bear most heavily on education and social services. There may also be manpower cuts in areas that are already severely affected by large-scale unemployment.

The best example is Gwynedd. I am informed that, until Gwynedd spends 1.5 per cent. above its target, the grant loss will be much greater than the overspend. The £1.4 million that Gwynedd must remove from its budget will decimate services. The council is considering cutting its nursery, primary and secondary teaching staffs, reducing the provision of transport to secondary schools, and increasing charges for home helps.

Mr. Wigley

Did the hon. Gentleman hear, as I did, the Secretary of State suggest that the penalty would not be more than 100 per cent. for those authorities spending below GRE? That is exactly what is happening in Gwynedd, but Gwynedd has been clobbered because the loss of grant is substantially higher than expenditure.

Mr. Jones

The hon. Member makes an effective point. If Gwynedd spends at its assessment, it will lose £2.6 million. That does not sit well with the assertions made by the Secretary of State at the Dispatch Box only a few minutes ago.

To meet its expenditure target, Dyfed council must consider reducing teaching staff by 75, and the closure of all community centres. It is even considering the closure of 11 part-time fire stations.

In Mid-Glamorgan, expenditure will be reduced by cutting the number of teachers by 170. That authority is considering reducing its social services staff by 100, increasing the charge for concessionary bus fares from £2 to £3, and, remarkably, imposing a £2 charge for disabled people's car badges. In that county about 34,000 people are seeking work, and the right hon. Gentleman's statement will bear hard on them.

West Glamorgan authority faces a difficult choice between two unpalatable options: the imposition of an unwelcome rate increase of 12 per cent. on domestic and industrial ratepayers, or the reduction of expenditure on education, which in its view and mine would inevitably damage the present level of services provided. Those are true statements, and they are the consequence of the Government's policies. West Glamorgan, which is a fine authority, is contemplating major policy changes to achieve even a rate increase of less than 10 per cent.

A horrific line of examples comes to mind. Gwent authority will provide fewer separate remedial classes in schools. There will be no additional telephones for the disabled and no home help services at weekends or during holiday periods. It is almost certain to close one or two homes for delinquent children, and extra cash will not be available to check the decline in public transport.

The reason why some councillors in Clwyd were worried about the level of services was that a long list of new building projects may not go ahead, including proposed schools in Northop Hall, Denbigh, Sychdyn, Flint, Colwyn Heights and Llanrhaeadr. The list is almost endless, and from my inquiries I believe that it is the consequence of the settlement proposed by the right hon. Gentleman today.

The Secretary of State tried to make the best of a bad job when discussing the Welsh district councils. However, those councils had an increase of only 0.1 per cent. in their targets for 1984–85; 14 of them suffered cash reductions of up to 10 per cent. compared with their 1983–84 budgets; and in only seven authorities were the increases in target sufficient to meet inflation. The Welsh district councils are up in arms and are deeply disappointed by the settlement imposed upon them. They say, and I believe them, that the volatility of the Welsh system with its GREs and targets goes against sound financial planning by local authorities, especially district councils, whose expenditure represents only about one sixth of the total.

Although none of the decisions is final, I would quote a letter to the Association of District Councils from Ynys Mon council: If we keep to the same level of expenditure next year as in the current year with 5 per cent. inflation and after adjusting downwards by 1 per cent. for the saving in the national insurance surcharge, our rate in the pound next year will be 41p, an increase of over 50 per cent. The Secretary of State spent some time defending his position on targets, but the evidence from Ynys Mon shoots his theories to pieces.

The letter continues: In 1982–83 we were some £0.4 million over target and suffered penalty. In 1983–84 we will be within target and will not have any penalties imposed. In 1984–85 we again will be above target, because we cannot hope to find £0.5 million and maintain services at a reasonable level and penalties will be attracted.

Alyn and Deeside district authority also wrote to the association, saying: Generally one can see the area beginning to look neglected, which was not the case a few years ago. I refer to vandalism not attended to, graffiti not removed, litter that could be cleared perhaps with more expenditure … and more men on cleansing. There seems to be a general decline and I could indicate many areas where using additional financial resources cost effectively one would readily see an improvement in standards from which the community would benefit.

The chief executive of Newport council said that there will be significant cuts in services, and that expenditure on industrial publicity will be slashed by half. Of the enterprise zone, the jewel in the crown of the Secretary of State's entrepreneurial thinking, Swansea city council says: The scope of the work next year is limited and the knock-on effect is that further industrial sites within the zone will take about 1 to 2 years longer to be completed. New private unit factory building will suffer the knock-on effect. About the Swansea maritime quarter, the city council says that work on the tourist development infrastructure is affected and scaled down … essential items … will take about two years longer to complete. As a result the private sector involvement will have to follow on accordingly.

Sir Raymond Gower (Vale of Glamorgan)

The hon. Member for Alyn and Deeside (Mr. Jones) has been extremely assiduous in examining individual cases. I do not wish to do him an injustice but he seems to have studiously avoided my right hon. Friend's reference to the remarks of the Labour leader of South Glamorgan authority, who said that it was possible in that case to combine the reasonable control of rating with no harsh cutting of services. Can the hon. Gentleman explain that?

Mr. Jones

It would have helped if I had been given beforehand the statement to which the hon. Gentleman refers. It is conceivable that during this year some authorities have raided their balances to enable their rates to be contained. Many decisions have not yet been taken, notwithstanding some of the instances to which I have referred. I may have in part at least an explanation in answer to the query raised by the hon. Gentleman, of which he gave me no notice.

As I was saying before I was interrupted so courteously, the private sector involvement in the Swansea maritime zone will have to follow on and be delayed accordingly. The remaining reclamation in the Swansea urban reclamation scheme will be delayed if the Welsh Development Agency's money is kept back. Perhaps the Secretary of State has a view about WDA moneys. He may give us an assurance that they will not be cut.

Mr. Nicholas Edwards

Surely the hon. Gentleman must accept that the urban development grant, a Government initiative, has led to enormous progress with the maritime zone in Swansea and a commitment approaching £50 million in private sector money. That is something that the Government stimulated and it is not being suddenly cut back.

Mr. Jones

The right hon. Gentleman is clutching at straws but, if it gives him comfort, I shall concede in this instance. I accept that he has propelled the scheme.

Mr. Anderson

Does my hon. Friend find it puzzling that the Secretary of State is so ready to praise Swansea city council and West Glamorgan county council on their enterprise in two key areas—the maritime quarter and the enterprise zone—but considers them irresponsible and unreliable in other areas, which leads him to fine them and unconstitutionally to threaten them?

Mr. Jones

Yes, he does so in a most unconstitutional way. I merely say that if the WDA budgets are slashed, the great scheme at Swansea will be limited. I remind the Secretary of State that there are 17,000 unemployed within the Swansea travel-to-work area. Every time he cuts budgets, the hopes of the unemployed fall back.

In north Wales Glyndwr states: One capital scheme will reluctantly have to be shelved … the provision of infrastructure for a new industrial estate in the town of Ruthin. In normal circumstances a sum of £150,000 would have been spent on the first phase of a small industrial estate. In west Wales, Llanelli has stated that new industrial projects will be postponed. The Islwyn borough council has said that reduced resources will be available only to regenerate industry within the borough.

That is a catalogue of disaster for the district authorities. I do not share the Secretary of State's view on the finances that he has outlined. The level of relevant expenditure makes entirely inadequate allowance for inflation and for increasing demands for local authority services as a result of the recession. It is only 4 per cent. above the level for the current year and very little above the budgets of local authorities for 1983–84.

The right hon. Gentleman has failed to tell authorities of the crucial assumptions that have been made in arriving at a figure which no local authority treasurer can accept as realistic. This is an important factor, although it is technical, but much of the report is extremely technical. Local authority financial advisers believe that loan charges are understated by £8 million due to the use by the Treasury of an artificially low forecast pool rate of interest. If the right hon. Gentleman speaks later, there may be a detailed reply to the question that is raised by that issue. Throughout local government in Wales there is some perplexity at the low rate of interest—10 per cent. —that is being pushed.

Having set an entirely unrealistic expenditure level, the Secretary of State intends to increase the problems of local authorities and ratepayers by reducing the rate of grant. I am advised that it has been calculated that by this one act alone rate bills in Wales will be more than 4 per cent. higher than they would otherwise be.

The right hon. Gentleman referred to specific grants, and I accept that many of the schemes that he funds by that means are extremely good schemes. I concede that they are located very largely in areas of high unemployment and that they are to be welcomed. The problem for the coming year is that, notwithstanding the increases in specific grants, the right hon. Gentleman is not putting extra cash into the kitty. The increased specific grants will reduce the cash that is available in the form of block grant. I am advised that it has been calculated that there will be a 0.4 per cent. reduction in cash terms, which in real terms will amount to 5.5 per cent. I am sure that his advisers will tell him to concede that.

There can be no justification for the much tougher penalties that he has proposed. The proposed scale of penalties for 1984–85 is more severe than that for 1983–84, yet all the local authorities have made genuine efforts to contain their expenditure. I believe that the 1983–84 excess spending over aggregate targets—I know that the right hon. Gentleman knows all about these details—was but 1.7 per cent. The House thrives on details and the right hon. Gentleman has always been able to master them. As a reward for the authorities' efforts, he now intends to impose even more impossible targets and even tougher penalties.

It is estimated that local authorities in Wales will have to reduce their expenditure by more than 3 per cent. in real terms if they are to meet their expenditure targets. This is the nature of the statistical detail and the attack that the right hon. Gentleman is making on local government services. The Welsh rate support grant takes insufficient account of inflation and its effect upon Welsh local authority budgets. It takes no account of expenditure growth as a result of Government policies. It relies on the optimistic Treasury view of interest rates in the coming year and fails to provide extra Exchequer grant for Wales to meet, according to the right hon. Gentleman's own estimate, a 5 per cent. increase in 1984–85 in his contribution to home improvement grants.

Overshadowing the debate is the Rates Bill. The debate is to be seen in the context of the move by central Government to usurp the long-established democratic powers of local government. The authority of the office of the Secretary of State for Wales is being lent to a central Government drive for near-authoritarian power over local government. The Department has already espoused dubious penalties and targets.

The right hon. Gentleman, in the Welsh context, is fighting the wrong war. His two enemies are the Treasury and No. 10, but he has declared war upon his allies. He has taken the big stick to local councils in Wales, whose records are honourable and impressive. We have Big Stick Nick. My right hon. Friend the Leader of the Opposition said in 1973 in the Grand Committee that the right hon. Gentleman could be described as Globtik Nick, and now we have Big Stick Nick. He is bashing local government to such a degree that it is on the point of disintegration. It is unstatesmanlike of the right hon. Gentleman to offend the whole of local government in Wales. The Welsh Office should have attempted to exempt Wales from the Rates Bill and a settlement of the sort that we are discussing.

The Department should have said to the bully boys in No. 10 and in the Treasury that it oversees only eight counties and fewer than 40 district authorities and that it knows every local government leader personally, by name. That should be recognised within the context of the Rates Bill and the settlement. Instead, local government throughout Wales feels betrayed. The right hon. Gentleman must think again, for what he proposes is bad for the people of Wales.

5.50 pm

Mr. Tom Hooson (Brecon and Radnor)

The Government have a pressing need to bring local government expenditure under control because taxes and rates impose a burden on productive industry, and that is a great obstacle to the recovery of our prosperity. The Government are entitled to press local authorities for greater efficiency in their expenditure because well over half the total expenditure by Welsh local authorities is funded by central Government.

My right hon. Friend the Secretary of State referred to the Audit Commission. Who can disagree with the commission's description of local authorities as large organisations with the inertia that often comes with size"? It is unthinkable that there is not the opportunity for any large organisation to find the means to economise on its expenditure. The Government are entitled to press local authorities for economy, because this year authorities are, without exception, receiving a cash increase. In each case, the increase is at least 1.5 per cent., and in some cases it is as much as 6 per cent. That is not a small matter. Those increases are being made after allowing for the reduction next year in the national insurance surcharge.

I heard with relief my right hon. Friend's statement on 20 December that this year the Welsh Office will consult Welsh local authorities on a review of the working of the grant-related expenditure formula. It will not surprise my right hon. Friend to hear that I look forward eagerly to the results of that review. I declare an interest as a Member representing part of Powys, the most sparsely populated county not just in Wales but in England. What I say is of relevance also to Gwynedd and Dyfed.

Education costs rise when there are small rural primary schools and there is a need to provide transport from large rural areas to secondary schools. The GRE formula for England assigns a 2 per cent. allowance for sparsity of school population for primary education and 1 per cent. for secondary education. As a comparable document for Wales is not available, I assume that Wales is in line with that provision, but the real costs are not in line with that inadequate theory. Powys county council's estimated cost for school transport in 1983–84 is £1,533,000—5.13 per cent. of its education budget. By comparison, school transport in the whole of Wales takes little more than half that — 2.69 per cent. A clear £700,000 higher cost is borne by Powys county council for the obvious reason of geography.

Mr. Anderson

Surely the solution is in the hands of the county council. According to the earlier spurious analysis, the council can take action if there is scope for increasing efficiency, improvement and cutting down manpower.

Mr. Hooson

I am talking about the allocation of funds throughout Wales. The hon. Gentleman is seeking to lead me in a different direction, and I refuse to go in that direction.

The school meals service is obviously more expensive in rural areas, where children would not be expected to travel 10 or 20 miles home to lunch.

Wales, unlike England, does not single out sparsity factors for fire services. Provision is made for fires per 1,000 population. That does not recognise that a rural area cannot operate with only one central fire station. The standard defence — countervailing costs of dense settlement — needs close examination. However, I recognise the reality of such costs. Some of them undoubtedly occur in urban parts of Powys, such as Ystradgynlais. Is it fair that Wales should make special provision for urban density in the social service category while turning a blind eye, for example, to the greater cost of day centres for the rural population and the smaller number of visits that social workers can achieve when travelling long distances?

The working of the GRE formula has been so absurd in its impact on Powys that only the discretionary use of the safety net concept has saved the system from being undermined by its ridiculous nature. I am grateful to my right hon. Friend for having been good to Powys in regard to the use of the safety net, but I plead that the review should make a more factual examination of the cost of providing services in rural areas.

5.55 pm

Mr. Dafydd Wigley (Caernarfon)

The speech of the hon. Member for Brecon and Radnor (Mr. Hooson) was fascinating. He began by saying that the Secretary of State had every need to press local authorities to cut their expenditure; but the Secretary of State had said that, by and large, Welsh local authorities were abiding by the pressure to keep down expenditure. Having made the general point, the hon. Gentleman pressed for greater expenditure on his county. Some of his points were well made. He appreciates that those aspects are relevant to Gwynedd and Dyfed and, in part, to other areas in Wales.

Equally strong points can be made for some of the urban areas in Wales. When those factors are aggregated, a greater demand is made of total resources. I therefore invite the hon. Gentleman to join the Opposition in the Lobby to press for those resources.

Mr. Hooson

Does the hon. Gentleman, who has a long and a distinguished record in business, accept that there is creative tension between a budget limit and the desire to get maximum efficiency from the spending of that budget? One is not a contradiction of the other. It is the achievement of good management in local government.

Mr. Wigley

Hon. Members on both sides of the House are, I believe, in favour of good management and of local government getting the best possible value for money. None the less, the hon. Gentleman rightly underlines the need for greater resources to be available in areas such as Powys to meet the great burden of maintaining the home help service, and other social services, school meals and the fire service, and the people of Gwynedd certainly agree with that.

Given the concession by the Secretary of State that there has not been gross overspending by local authorities in Wales, the Government would be well advised to accept amendments to remove Wales from the scope of the rate capping Bill which is currently before Parliament. That would give Welsh local authorities some confidence, which they badly need, given the pressures they have been under in recent years.

One aspect of the settlement—I raised this matter by intervention to the Secretary of State earlier today—is the reduction in the block grant to maintain services in Wales. If the increase in specific grant of £21 million, together with the supplementary grants and domestic relief, are considered, the block grant for Wales will be reduced from £802.5 million in 1983–84 to £799 million in 1984–85. That sharp edge will have a serious effect on the level of services maintained in Wales and on counties such as Gwynedd.

The position in Gwynedd is ludicrous, because the target for next year is £89.5 million but grant-related expenditure is £92.2 million. The Government, through the formula on grant-related expenditure, recognise that there is a strong case for a level of expenditure of £92.2 million. If that is not the meaning of GRE, it has no meaning. Next year's target was as low as £89.5 million, because of the way it was put together. It was put together arbitrarily. It includes a proportion of the Government's assessment of the authority's needs — the GRE — a proportion of the authority's past expenditure and a proportion of the authority's latest budget, as I understand it.

In 1975 I remember the Under-Secretary of State, the hon. Member for Conway (Mr. Roberts), saying in the House that Gwynedd was not receiving enough grant to sustain services. He said the same in 1976, 1977 and 1978. By 1979 Gwynedd was about £4 million short of what it needed to maintain services. That case was put time after time by Conservative Members, in opposition, yet when they come into Government they accept that and relate the targets to a historical pattern which was unacceptable to them when they were in opposition. Gwynedd now has a target about £3 million below GRE. If it spends minimally over the target, it starts to be hit very hard, as the hon. Member for Alyn and Deeside (Mr. Jones) said.

The Secretary of State, possibly inadvertently, misled the House when he spoke about the effect of penalties on 20 December. He said: The grant withholding penalty for spending in excess of targets has been strengthened. As in the present year, the amount of grant withheld for excess expenditure up to 1 per cent. above target is 40 per cent. of that excess but above that level the rate of holdback increases progressively with a maximum rate of 90 per cent. for authorities spending 5 per cent. or more above target". — [Official Report, 20 December 1983; Vol. 51, c. 273.] That is true as far as it goes, but the right hon. Gentleman did not refer to the effect of clawback, which, together with those penalties, has a devastating effect on a county such as Gwynedd.

If Gwynedd spends £90.25 million, which is about £680,000, or 0.75 per cent., above target, and it is easy for something like that to happen, it will lose no less than £1.8 million, taking the penalty and the clawback together. The effect on rate-borne expenditure is an increase of £1.8 million for merely overspending by £680,000. In other words, for a 0.75 per cent. overspend the county will have to find 5.5 per cent. more in rate-borne expenditure. The Secretary of State did not tell the House that. As Gwynedd's target is so far below the GRE, it may, despite all its efforts, find itself spending a little over target. The effect of that upon the ratepayer would be disproportionate and devastating.

Where the target is below GRE, there should not be that penalty in respect of the gap between target and the GRE. If there needs to be a penalty, it should not be more than 100 per cent., including both the clawback and the penalty. Will the Secretary of State consider that point? If we are to get out of the imbalance—it is not the fault of this Government or the previous Labour Administration, because there are historical anomalies—the target needs to be moved nearer GRE. That matter needs to be thought about during the coming year. I hope that the means of achieving it will be found. Certain factors which have not been taken into account sufficiently in the past must be taken into account when drawing up targets and GRE.

A county such as Gwynedd has to bear additional costs arising out of the bilingual nature of the community. As the House is aware, my constituency is 84 per cent. Welsh-speaking. However, there is a need, rightly, to maintain services in both languages. We maintain many of our services in English for the benefit of the 16 per cent. of my constituents who are not Welsh-speaking. That is fair, but where there are such additional costs there should be an element in the formula that the Welsh Office uses which recognises the additional costs arising out of the language complexity. The cost of maintaining services in sparse rural areas—the element of super-sparsity which has been referred to—should also be taken into account.

I should like to take up a point made by the hon. Member for Brecon and Radnor about the fire service. He was so right. There is a danger in having just one or two machines scattered around large rural areas. There was a serious fire in Caernarfon recently. The fire service had asked three times in recent years for a new high-rise machine, costing £120,000. It did not get one. The machine it has at Bangor is 20 years old and its gears were not working on the day of the fire. It did not reach the fire until four hours after it started. That is unacceptable. The point made by the hon. Member for Brecon and Radnor is justified.

I want to refer to the effect of the settlement on district councils which is, if anything, more severe than that on county councils. The effect on the Arfon borough council is serious. The aggregate Exchequer grant has shown an increase of £21 million but a reduction overall in the grant available to maintain services. If one applied the grant available to district councils such as Arfon for the coming year, with existing real spending levels maintained, and not increased, then the grant as a percentage of expenditure next year will sustain 62.58p in the pound of total spending compared with 73.24p in the pound this year. It means that there will be an increase in the rate poundage from about 24p in the pound to over 30p in the pound. As a result of the change that the Welsh Office is proposing in this settlement, the Arfon borough council will need a rate increase of 25 per cent. to maintain services at the current level, assuming 5 per cent. inflation.

The rates which will be levied by Welsh district councils have to be increased drastically for 1984–85 to pay for the Government's mishandling of the housing renovation grants. The mishandling has been debated before and we know how serious the position is. There are about 100,000 families waiting for grants. About £300 million is needed to meet those applications.

The Government embarked upon a disgracefully dishonest policy, leading thousands of Welsh householders to believe that they were entitled to repair grants although the Welsh Office had not made adequate financial provision to fund them.

Those applicants are very anxious. They do not know whether they will have to wait months or years before they receive their grants. At the same time, local councils have been squeezed by the Welsh Office to meet the bill. The money previously available for other services will go towards those grants and other local services will be either severely reduced or axed, or the rates will be increased substantially. The danger is that the district element of the rates will have to increase by about 25 per cent. to maintain services. That is the effect of the settlement. The Secretary of State should take it to heart. He should press for extra money for the housing renovation grants to be made available from the Treasury because of our anomalous position. Had he succeeded in doing that, we would not be facing the problems that we are discussing and Welsh councils would not have such appalling prospects next year.

6.8 pm

Sir Anthony Meyer (Clwyd, North-West)

I shall be brief and, as usual, helpful. The system of local government finance and Government support for it is too complicated for any Back Bencher to begin to understand. One recalls Bismark's remark about the Schleswig-Holstein matter—that only three people understood it: the Prince Consort, who was dead, a German professor, who was mad, and he himself, who had forgotten it. Local government finance is in the same category. It is only too clear that the system is deeply unsatisfactory.

The basic and irredeemable flaw in the system is that it has a built-in incentive for irresponsibility. More than half the money for local government comes from central Government. Many, and in some boroughs most, of those who benefit from rate-borne expenditure do not pay rates themselves, including some of the councillors who vote for the rate rises, and many of those who pay the highest burden of rates have no vote in the matter.

All this adds up to a system that is much more profoundly flawed than any of the alternatives that were examined and rejected in the Layfield report. It is precisely on account of that fundamental flaw that the proposed Welsh Assembly, under devolution, would have been such a disaster. It would have conferred power without imposing responsibility. It is because of that basic flaw that the Government's present efforts to mend the system by tinkering with it are doomed to failure.

Even if rate capping proves to be a really effective method of ensuring that the most scandalously extravagant authorities are forced to rein back their expenditure, it will do nothing to oblige those councils to revert to more responsible policies, nor to induce their electors to exercise a stricter control over their extravagance. Still less, as experience shows, will the Government's measures be effective in preventing other councils which escape rate capping from imposing extravagant increases. We have just heard that Clywd county council's general purposes committee has proposed a swingeing increase of no less than 26p in the pound in its precept. Is not Clywd now ripe for rate capping? We shall be interested to hear.

Any elector in Clwyd could list a dozen ways in which Clwyd county council could cut its expenditure without damage to important services. On the one hand, any honest Clwyd elector has to admit that the county faces appalling problems, having, in the space of less than a decade, gone from the area with the lowest unemployment in Wales to the area with the highest—largely because of measures taken by the Government.

Clwyd, and some of the districts in Clwyd, find themselves faced with the cruelest possible dilemma and in the sharpest form. To attract new jobs they have to provide excellent facilities, but those facilities are a burden on the rates, and pushing up the rates frightens away the providers of new jobs. There is only one way out of this vicious circle, and that is to ask for more Government help, but Government help means more taxation, and we all know, although the Opposition do not always admit it, that the burden of taxation, particularly on the poorest members of the community, is now intolerable.

There is no easy way out, but at least we could look for a system that had built-in incentives for responsibility, in which each authority had to strike a genuine balance between what it could achieve by spending money and what it would lose by having to raise that money, instead of being able to slide out each time by demanding more money from the Government and then blaming the Government if it does not get the money.

This Government's greatest achievement has been to restore to people in this country a sense of personal responsibility for their own actions. However, everything that the Government have done in local government finance—all the more so after the false hopes they held out—has had the opposite effect and destroyed what little sense of responsibility was left in this respect. I believe that they will come to regret most bitterly their failure to grasp the nettle of rate reform.

6.13 pm

Mr. Donald Anderson (Swansea, East)

I agree with the hon. Member for Clwyd, North-West (Sir A. Meyer) that the Government are on the defensive when it comes to local government. We know that from recent votes by revolting Conservative Back Benchers— some of them are particularly revolting—from local authorities, and, indeed, from objective journalists who specialise in local government matters.

Local authorities feel that they are under siege—unjustifiably under siege. The hon. Member for Clywd, North-West was right when he said that there is a temptation to irresponsibility in the current system. However, he could not say that our Welsh councils and districts are falling prey to that temptation. Even the most rabid Right-wing journalists cannot find examples in Wales of grants to bodies such as the Clwyd gay babies against the bomb. If there are any, I shall be delighted to know.

The Secretary of State would find it extremely difficult to find examples among Welsh local authorities —certainly in my area of west Glamorgan and Swansea—of profligacy and irresponsibility. Indeed, the Secretary of State justifiably praised both those local authorities for the way in which they responded to Government initiatives — for example, the enterprise zone and the urban development project—the marina. It is hard to reconcile responsible local authorities, responding well to planned Government initiatives, with the picture of authorities like those in parts of England which are likely to spend substantially in excess of their targets. We know that there have been overspends, but, compared with the pattern in England, the Welsh overspend has been very limited. Nevertheless, the Secretary of State does not have the power in Cabinet to say that, as a reward for their relative responsibility, Welsh local authorities should be exempt from the penalties that are available in England.

Sir Raymond Gower

The hon. Gentleman will recall that my right hon. Friend has not had to take action against individual authorities in Wales, as has happened in England.

Mr. Anderson

Unless and until there is clear evidence of irresponsibility on the part of Welsh authorities, those weapons are a useless threat, an insult and an affront to Welsh local authorities and to councillors who seek to behave responsibly and have done so in the past.

The assault on local government should be seen in the context of the promises made about rates by the Conservative party in 1974. The right hon. Member for Finchley (Mrs. Thatcher) said that rates would be abolished. There was a similar but somewhat more muted pledge in 1979. Then we had two committees—the first chaired by Lord Whitelaw and the second by the right hon. Lady — stating that the abolition of rates would be unrealistic. Nevertheless, the Government bring forward this unrealistic rate-capping proposal.

Since 1979 the Government have gone through a bewildering series of different financial regimes for local authorities. It is no wonder that treasurers feel uncertain. I shall not cite again the parallel of the Schleswig-Holstein question. Central Government, with direct control over their own expenditure, have been too ready to criticise — certainly in Wales — extravagance by local government, and, as in other areas, there has been a buck passing operation of denying local authorities resources and then accusing them of not providing what they cannot provide because of the withdrawal of funds by central Government. Many commentators on local government say that the Government are destroying a basic constitutional relationship between central and local government, acting against pluralism and against the checks and the balances which have been a basic feature of our system. I concede, of course, that there would be a case for doing that if there had been a substantial overspend, or if there were clear evidence that a number of local authorities were determined at all costs to defy central Government priorities, but that is a world away from what is happening in local authorities in Wales.

We have heard certain anti-democratic utterances by Members of the Conservative party, claiming that because a substantial part of the local government electorate does not pay rates that in some way reduces the validity of decisions made by local authorities in respect of their own expenditure. The same utterances might be made about central Government. A fair proportion of our electorate obviously do not pay taxes. Is it suggested that they should be denied access to suffrage?

Any threatened overspend in my county and city is due to past cutbacks and the increasing burdens that often arise from objective factors, such as the increase in the elderly in the population and the high unemployment levels, which impose far greater demands not only on the social services but on a whole range of services—for example, through the education structure. West Glamorgan has estimated that it would need to increase the rates by 12 per cent. simply to provide what it considers an acceptable level of education. Swansea city council is now considering plans not to replace or buy any new vehicles and plant in the coming year. There is an interdependence between the public sector and the private sector in terms of their purchasing policies. These local authorities would tend to buy British in any event, so that would tend to work through to employment in other sectors. The city council is considering reducing the opening hours of public buildings, and deleting 20 posts in its parks. It is considering reducing the number of places on MSC schemes by approximately 100. These are key and important areas in which a non-profligate authority is forced to consider reduction against its wishes as a result of Government pressure.

No mention has been made in the debate of the effect on the voluntary sector, which Conservative Members in general purport to support so much. A local authority faced with central Government pressure on expenditure will first carry out its statutory duties. Any money left over will be left for the voluntary sector, intermeshing social and welfare projects between local authorities and the voluntary sector. All hon. Members must now have experience of key and important community organisations which are suffering as a result of withdrawal or threatened withdrawal of local authority grants. The Swansea Accommodation for the Single Homeless, in a city which has the largest homeless element anywhere in Wales, is now in difficulties. The citizens advice bureau in Swansea recently threatened that it might have to close as a result of local government cutbacks, although happily an accommodation has now been reached. The effect can be seen working through the general local authority services beyond the principal statutory duties to bus grants, for example, where our constituents are finding themselves increasingly more isolated than their fathers and grandfathers were because of the withdrawal of bus services.

This is part of the failure of central Government to think long and to consider the problems that will face our communities when there will be fewer jobs to go round. Some key sectors are education and leisure and co-ordination between the public and voluntary sectors which are being put at risk as a result of the cutbacks. It is a depressing picture of increasing hardship and deprivation. The monetarists in the Cabinet may indeed gloat, but local people, particularly councillors who on any estimate have acted thoroughly responsibly in Wales, will not gloat. They will despair when they see the effects of the cutbacks that are being forced upon them.

6.24 pm

Mr. Peter Hubbard-Miles (Bridgend)

I should like to comment first on some of the points made in the tale of agony and woe recited by the hon. Member for Alyn and Deeside (Mr. Jones). I speak with a background of some 17 years' experience in local government in the mid-Glamorgan area, experience which is continuing, much to the annoyance, I am told, of some hon. Members representing constituencies in mid-Glamorgan. In those 17 years I have experienced a great deal of extravagance in local government. The hon. Member for Rhondda (Mr. Rogers) will be well aware of the many occasions on which I have challenged the extravagance of the local authority on which he served at one time.

Mr. Allan Rogers (Rhondda)

rose

Mr. Hubbard-Miles

The hon. Gentleman is well aware that I have made certain recommendations. One of the recommendations that I have made over the years is to reduce the district administration, the bureaucracy that exists in mid-Glamorgan, and has existed for many years. In the forthcoming estimates budget it has been decided to reduce that administration and to remove two district education officers and the back-up bureaucracy.

Today I received a letter from one of my constituents bewailing the fact that mid-Glamorgan has reduced the number of night sitting units from two to one. The constituent is a 65-year-old pensioner looking after a 93-year-old mother. She asks me to investigate why mid-Glamorgan is taking one night sitter a week away from her. I deplore that, of course.

I could tell my constituent that the cost of the night sitting facility in mid-Glamorgan, together with the cost of the meals-on-wheels facility which has recently been taken away, could easily be covered, indeed, more than covered, by one decision. That one decision would be to accept the recommendations of mid-Glamorgan's chief office to reschedule the county council's meetings so that members would be required to attend the county council on fewer days in the year than at present. That one decision would save £50,000 a year. If the county council were to discontinue the meetings that it holds on Saturday mornings in Cardiff—Cardiff Arms Park beckons—that alone would equal the cost of the night sitting facilities which it is intended to cut back.

The hon. Member for Alyn and Deeside spoke of the 170 school teachers who are to lose their jobs. That number includes the 46 school teachers whom mid-Glamorgan added last year, despite the plea of the Secretary of State for economies. The hon. Member for Rhondda knows well that he was one of those who insisted on refusing to accept the advice of the Secretary of State for Wales. He, and other members of the county council, talked last year about not accepting orders from a Tory Minister in the Welsh Office.

Mr. Allan Rogers

rose—

Mr. Hubbard-Miles

I shall not give way, as there is very little time. The hon. Gentleman may have a chance to speak later.

Mr. Rogers

I was never in mid-Glamorgan under a Tory Government.

Mr. Hubbard-Miles

I am sorry to hear the hon. Member say that, but he knows that he was there in 1974 when the Conservative Government were in power.

Mr. Donald Coleman (Neath)

rose—

Mr. Hubbard-Miles

The hon. Gentleman will have an opportunity to speak later.

The hon. Member for Alyn and Deeside spoke about the disintegration of the local government of which I have been a member for 17 years. My local borough council is far from disintegrating. In 1984–85 it plans to build new council offices costing £3½ million. The council has not taken that money from the block grant. It has gone to those horrible capitalist money lenders, the merchant bankers, to borrow the £3½ million, not to provide people with houses or leisure facilities, but to give councillors new council offices. That is being done by a local council which we are told is disintegrating.

The hon. Member for Alyn and Deeside talked about how the loss of jobs in local government destroyed hope for the unemployed. The hopes of employers also fall back when they see the inexorable rate increases under Labour-controlled councils. They see no hope of achieving increased staff. I speak personally as a small business man. We look to 1 April each year to see what further rate increase will be imposed. As a result, we consider carefully how many people we employ. If we employ too many, we are bankrupt and can employ no one.

No one wants needed services to be cut. Local government should examine carefully the economies that can be made without cutting services. If it did that, it would be in the happy position of being able to look after both the people who use local government services and those who pay for them.

6.31 pm

Mr. Geraint Howells (Ceredigion and Pembroke, North)

After listening to many Government Members and to the Secretary of State, we could be forgiven for believing that everything in the local government garden in Wales is rosy. Alas, it is not in 1984.

The most striking characteristic of the Welsh rate support grant settlement for 1984–85 is the deep sense of injustice that it has inspired throughout the Principality. It has generally been acknowledged that, despite tremendous difficulties in the past few years, the Welsh districts and counties have attempted to live within their means and have done their utmost to continue to provide necessary services. Instead of praise, they have been rewarded with the unpleasant task of finding further ways of cutting already depleted services.

It has long been agreed that the rating system is absurdly out of date and that it is high time it was reformed. Be that as it may, the Government's way of dealing with local government finance is turning a disgrace into a scandal. We were told by the Secretary of State for the Environment at Question Time today that the Government and his Department have no plans to reform the rating system. Try as they might, councils in Wales are unable to please central Government. The people of Wales will suffer in the long run.

In drawing up the settlement the Government have obviously disregarded all the obligations laid on the authorities and the difficulties that they face. For example, Ceredigion district council has told me about the tremendous cost of administering the housing benefit scheme. It has also voiced concern about the impact on the revenue budget of the increased level of home renovation grants. Indeed, during the current year many authorities have been obliged to stop giving grants, thus disappointing thousands of applicants and causing many of them financial loss. I emphasise that the renovation grants are financed at the expense of the rate support grant, which, of course, has been reduced. That can mean only further difficulties.

What word of comfort can the Minister give to applicants who have been cut short now? What word of comfort can he give this evening in the Chamber to those in various parts of Wales who are worried about their financial future?

My sympathy goes to the local authorities which have to make impossible decisions. In my part of the world, where there is high unemployment and an aging population, the needs are as great as anywhere in the country. Already a great strain has been placed on the social services. The education budget has been cut to the bone. No more cuts can be made without serious harm to the school population. The Secretary of State tried to present a rosy picture, but he did not tell us that fewer children are about today than many years ago.

Our roads needs far more attention, and all services at county and district level are operating at minimum level. It is time for the Secretary of State to think seriously about giving extra financial aid to county councils so that they can improve second and third class roads in rural Wales. Unemployment in parts of my constituency is 26 per cent. Why can we not repair the roads now and look forward to the 1990s? That is how we should plan ahead.

My constituency is within one county, and two district councils operate there. The decrease in the block grant is felt keenly. Although the figures are not as harsh as in some other parts of Wales, they are harsh enough in terms of the community's needs and the services that authorities are expected to provide. The expenditure targets, although increased, far from cover the results of inflation.

According to the Welsh office of the Association of District Councils, this year's block grant settlement will result in a cash reduction of £9.9 million. What effect will the cuts have on the elderly in Wales? What effect will they have on unemployment and on the economy of the area? I am sure that many hon. Members on both sides of the House will agree that it is about time that the people of Wales had their own Welsh Assembly to look after their own interests.

Mr. Speaker

Sir Raymond Gower.

Mr. Roy Hughes (Newport, East)

On a point of order, Mr. Speaker. So far in the debate only one Back-Bench Member representing the principal Opposition party has been called. I am sure that you are aware that throughout this century in Wales, in Parliament and in local government, the Labour party has been predominant. In view of the concern expressed about the cuts in local government, some arrangement should be made through the usual channels for the debate to be extended.

Mr. Speaker

The hon. Member is on a bad point. The debate is on a report in pursuance of an Act and can, therefore, be continued until 11.30 pm. There is plenty of time for all who wish to be called.

Mr. Hughes

Further to the point of order, Mr. Speaker. Will you bear in mind that hon. Members have been prevailed upon to cut their speeches to the bone?

Mr. Speaker

I know nothing about that.

6.40 pm

Sir Raymond Gower (Vale of Glamorgan)

I assure my right hon. Friend the Secretary of State that we recognise the great difficulty of the task with which he is faced and that he is doing his best to carry it out fairly as between central Government and local authorities.

The hon. Member for Alyn and Deeside (Mr. Jones) made light of what he described as an alibi for the Government — namely, the world crisis and the effect that it has had on so many countries. The hon. Gentleman regards that as of little importance. In that context I should have thought it would be remarkable, where countries, not only in the West but even in the Third world, have suffered so savagely in recent years, if merely one section of national life — local government — should be exempt from the effect. The hon. Gentleman gave the game away when he accepted that there has been increases in expenditure and in money received from central Government, but felt that full account should be taken of inflation. In other words, whatever happened to other expenditure, local government expenditure should be indexed so that it would be unaffected by what happened to industry, receipts from national taxation and so on. That impossible thesis cannot be sustained. In that respect the report has my support and, I hope, that of my hon. Friends.

I share the view of some of my hon. Friends that the present system is unsatisfactory for the whole United Kingdom. The system of grants is so complex and difficutlt to understand that we must come to terms with it sooner rather than later. However, we are working within the existing set-up, and it is in that context that my right hon. Friend has presented the motion.

Much of the concern expressed by local authorities has arisen because they do not understand the formulae upon which the grant settlements are based. The formulae are far too involved, even though authorities have expert advice from their officers. There is a tremendous need for simplification of the formulae.

Some local authorities, like the Vale of Glamorgan, feel that they have done a responsible job for several years. They have controlled their expenditure and carried out good housekeeping. In spite of that, they are not satisfied that they have derived any benefit. I hope my right hon. Friend can put forward valid arguments that will convince them. They have the impression that their efforts in the past have not apparently placed them in any better positon than irresponsible authorities.

Like Opposition Members, we wish to maintain essential services. We want the most needy to be looked after and the roads to be improved, but we do not believe that that can be achieved by inefficient or wasteful administration, as illustrated so graphically by my hon. Friend the Member for Bridgend (Mr. Hubbard-Miles). We want the utmost efficiency in both local and national administration.

We hope this will be one of the last reports to impose on my right hon. Friend such an unpleasant task and that there will be a resuscitation of the economy to enable him to do better in future.

6.44 pm

Mr. Ron Davies (Caerphilly)

When I was reading the report that the Secretary of State presented to the House I was interested to see on page 6, under expenditure guidance: The Secretary of State considers that the present general economic conditions continue to require restraint by local authorities in the level of their revenue expenditure.

There is a fundamental difference between his view of what he believes he is doing by restraining expenditure and the view of the people in local authorities facing the consequences of his policies. His view of what he is doing is not shared by informed opinion in Wales.

For the record, I wish to read representations that have been received by the Welsh Office from the Association of District Councils in regard to the report: Welsh District Councils' targets for 1984–85 are in total only £335,000 (or 0.15 per cent.) above their 1983–84 targets. If they budget at last year's level in real terms (i.e. 1983–84 budgets + 4 per cent.) they will incur grant penalties of some £7.9 million (£6 million more than in the current year) in addition to the basic grant loss of £9.9 million—a total grant loss, year on year, of £15.9 million or 21 per cent. of Welsh District Councils' budgeted rate-borne expenditure in 1983–84. In fact, if District Councils in Wales budgeted for a no real term change in 1984–85 (i.e. 1983–84 budgets + 4 per cent.) these grant losses would result in the District Council part of the Rate Bill increasing by 30 per cent. over their own 1983–84 rate levies with individual Councils' increases of up to 50 per cent. The fact that they will not, of course, increase by these staggering percentages is immaterial. Instead Welsh District Councils will be forced into making swingeing reductions in service costs, increasing rents and charges well above the rate of inflation which will immediately feed into the cost of living index. This will, no doubt, result in draconian measures being taken to reduce service levels and standards in areas of high social economic and environmental needs. To the extent that rate increases this year are moderated by the use of balances this will only postpone the day of heavier rate increases.

In those two paragraphs of informed objective opinion Welsh local authorities have destroyed the case put by the Secretary of State to the House. If the Secretary of State wishes the people of Wales to accept his proposal on rate support for 1984–85, he should be prepared to offer substantive justification for his arguments. The justification should be more substantive than some of the frivolous points made by Conservative Members who chose examples of local government expenditure which were in dispute within their local authorities.

I have listened with interest to the arguments put forward by the Secretary of State today and on other occasions in the House; I have also read what he has said in the press. The right hon. Gentleman seems to be offering three reasons in support of his claim that we must, in his words, restrain expenditure. He says that there is an overall need to restrain Government expenditure. That is the central policy of the Government. In the context of that statement, I read with interest in the Financial Times on Monday that Ministries, presumably including his Department, are being warned about overspending. The Financial Times said: The reasons for the overshoot are not at all clear, but it is genuinely expected that the Public Sector Borrowing Requirement will be £2 billion above its £8 billion target in spite of the fact that Government revenues appear considerably more buoyant than was expected in March.

If the Secretary of State and his Cabinet colleagues are saying to local authorities in Wales that they must account for every £1, £100 or £1,000 of their expenditure at the risk of paying substantial penalties, they in turn expect him and his colleagues in the Cabinet to conduct their affairs in a better way than is reported in the Financial Times.

If my local authority, Rhymney Valley, were to miss its target, as the Government have missed their PSBR target, by 20 per cent., it would this year suffer a penalty of £1.515 million. Rhymney Valley would suffer that penalty if it were as conscientious in its accounts as the Government have been in theirs.

Mr. Mark Robinson (Newport, West)

Will the hon. Gentleman give way?

Mr. Davies

Perhaps the hon. Gentleman will allow me to develop my argument before I give way. However, had he been present for the beginning, let alone the whole, of the debate, I should have expected a more informed interruption and, indeed, been more inclined to accept his intervention.

I do not accept the Secretary of State's argument that there is an overriding need to constrain expenditure, nor do I accept what was said by the hon. Members for Brecon and Radnor (Mr. Hooson) and Bridgend (Mr. Hubbard-Miles) about the crushing burden imposed on business and commerce by successive rate increases. I notice that they have now been joined in their lack of wisdom by the hon. Member for Cardiff, West (Mr. Terlezki). It would pay those hon. Members to have a word with the Secretary of State about the policy that he is following.

I was interested to read in a recent report from the CBI that, according to its figures, the cost to business and commerce was less than 2 per cent. of the value of industrial production. That is hardly likely to affect a thriving industrial and commercial sector.

I tabled questions to the Secretary of State to discover whether the volume of local authority rates paid by business and commerce had changed in recent years. I wanted to know whether there was an imbalance between domestic and non-domestic ratepayers. The figures that I received in a written reply will be of some interest to those Conservative Members who are concerned about the level of rate charges.

In 1979–80, in Wales as a whole, the total contribution made by non-domestic ratepayers was 60.9 per cent. In 1980–81, that declined to 59.6 per cent. In 1981–82, it went down to 59 per cent., and in 1982–83 it was 55.6 per cent. The latest estimates show that it will remain at or about that figure in the current year. Therefore, there has been a reduction of about 6 per cent. in the burden on business and commerce over the last few years.

As chairman of the finance committee of Rhymney Valley district council, I have on occasions received representations from industrialists about the situation they now face. We told them that we were prepared to waive the rate payments, at least until the end of the financial year. Time after time those industrialists were unable to cope, not because of the rate burden which has been put to one side, but because of the lack of demand in the economy. They were unable to sell their products or meet the high interest charges as a result of Government policy. Therefore, if such arguments are to be used in support of the business and industrial community, they should be advanced with more regard to the facts.

In Rhymney Valley in 1979–80, the total contribution made by the non-domestic sector was 57.7 per cent. In 1980.81, that declined to 53.4 per cent. There has been a continual and gradual decline, and in the 1983–84 financial year the contribution is 49.2 per cent.

The Secretary of State may argue that certain factors must be taken into consideration. I accept that. But Conservative Members must also accept that, because of the Government's decision not to increase domestic relief to ratepayers in line with inflation, the relative burden between domestic and industrial ratepayers has swung heavily against the domestic ratepayer in favour of the industrial and commercial ratepayer.

It took some time before I comprehended that argument. When I initially contacted my colleagues on Rhymney Valley district council, I asked, "Can you explain why the contribution paid by industry has declined from 58 per cent. to 48 per cent?" They told me, "That is quite simple. It is not that the Secretary of State has changed the formula or that he has taken any positive or negative action to change the balance, but that he has been closing factories so that fewer in the area now make that contribution."

The third argument — the Secretary of State has advanced it in the House and elsewhere — is that somehow a higher value should be placed on private expenditure: that somehow the pound from the pocket of the individual going into the private sector has a more beneficial effect on the economy, is more productive and will make a greater contribution to the overall community good.

No Labour Member would agree with that assumption, because it reduces the concept of public service to its lowest conceivable level. Such philosophy raises the standard of an individual who chooses to spend his money on video nasties above that of an individual who is prepared to pay his rates so that he can have theatres, libraries or museums.

If Conservative Members wish to argue for the virility of private expenditure, they should consider the value of such expenditure to the community and compare it with the value that derives to the community from public expenditure. Only public expenditure will give our communities the freedom to enjoy schools, playing fields, sports halls, libraries, museums, decent housing and care for the elderly and infirm. The 50p or £1 paid in rates has an intrinsic, economic and social value that is immeasurably greater than the grubby pound note paid over the counter of a video nasty shop. Therefore, let there be no more of the "beer and fags" argument that Conservative Members have adduced when discussing private expenditure.

I must inform the Secretary of State of the impact that these proposals will have on Mid Glamorgan and Rhymney Valley. In the current financial year—when the Secretary of State has said that there has been no cut or adverse impact on Mid Glamorgan—the county lost £3.491 million in grant holdback. The right hon. Gentleman cannot sit back and say, "Too bad, their target exceeded their GREA", or, "Their GREA exceeded their target", or, "They knew what the penalty would be."

If we look at the figures, we see that there is no relationship at all from year to year. Let us consider the way in which the relationship between GREA and target has changed. In the financial year 1981–82, my local authority's target fell short of the GREA figure by almost £1 million. The relative figures were GREA at £7.052 million and target at £6.004 million. The consequence of that was a penalty of £21,000. The figures were reversed in the following year by a method known only to the Secretary of State and his advisers. The Under-Secretary is looking puzzled. In 1982–83, the target figure was about £500,000 above GREA. The relevant figures were GREA at £7.435 million, and target at £7.992 million. As a consequence, grant holdback was £97,000.

How can the Secretary of State expect local authorities to budget on a year-to-year basis, or to have a rolling programme for two to five years, when they do not know what the figures will be from one year to the next, and do not know the impact of an imbalance between target and GREA figures?

This year Mid Glamorgan has lost £3.491 million, and Rhymney Valley has lost £362,000 as a consequence of Government policy. For the past three years neither Rhymney Valley nor Mid Glamorgan has been able to meet the targets that have been set. That has not been the result of profligacy by either authority. They do not wish to deny compliance with the Secretary of State, to be rebellious, or deliberately to inflate expenditure, but it is impossible for them to meet their targets without massively increasing rates and rents or making large cuts in services to the most disadvantaged and deprived people in our communities.

Those authorities, in trying to discharge their social responsibilities, are being pilloried by the Secretary of State. The ratepayers of both authorities are being subjected to crippling financial penalties. That is the measure of the report before us this evening. The most vulnerable members of the community will suffer severely. The services provided by local authorities are for the benefit of the vulnerable members of the community. Further cuts will deny services to the handicapped — [HON. MEMBERS: "Here he goes."]—Indeed. I could recite a litany of suffering for which the Government are responsible. Pensioners in Mid Glamorgan are being denied free concessionary passes.

Dr. Marek

Will my hon. Friend give way?

Mr. Davies

Perhaps I may finish my remarks. I am sure, Mr. Deputy Speaker, that my hon. Friend will make his own contribution to the debate.

The disadvantaged in my community are suffering. Decent housing and proper care are being denied to the elderly. Children are being denied the opportunity to go to good schools. Standards are being reduced as a result of cuts in education expenditure. Swimming pools are shut at weekends. Public transport is inadequate and local roads are deteriorating. The whole level of provision is affected by cuts in local authority services.

The Secretary of State's report gives a further twist to a spiral of deprivation in Mid Glamorgan and Rhymney Valley. The report is indefensible in terms of democracy, because it removes from local communities the right to self-determination. It is unjustifiable in economic terms and is in conflict with the Government's programme. Its application to the economics of those communities does not make sense. It is arbitrary in its application. Each and every local authority will have to pay the penalty for the report.

The effect of the rate support grant is punitive on the people of Wales. I hope that Conservative Members who have experience of local government, who know what the report means or who claim to care for the communities that they represent will join us in voting against the motion.

7.5 pm

Mr. Keith Raffan (Delyn)

The hon. Member for Caerphilly (Mr. Davies) did his case no good by the exaggerated language that he has just used. I thought that he would have learned from the experience of the Opposition last year when they fell headlong into the trap of totally exaggerating the average rate increase in Wales. They said that it would be 7 per cent., but it turned out to be just 1 per cent. No further answer is needed to the points that he raised.

I am not surprised by the hon. Gentleman's attitude or by the way in which he put his case. It followed the over-the-top performance by the Alyn and Deeside school of dramatic art. It had more to do with "The Two Ronnies" than with rates in Wales. We know that the rate support grant is totally realistic.

Mr. Rogers

What a lovely Welsh accent.

Mr. Raffan

Scottish, actually. I know that you are not used to bluntness, but you will get it. The local authorities can maintain—

Mr. Donald Coleman (Neath)

On a point of order, Mr. Deputy Spaker. Are you accustomed to bluntness in the House?

Mr. Deputy Speaker (Mr. Harold Walker)

Order. The hon. Gentleman is right to remind the hon. Member for Delyn (Mr. Raffan) that he must address the House, not me. I am not responsible for the matter that he attributed to me.

Mr. Raffan

I apologise for my lack of courtesy. I did not mean to attribute that matter to you, Mr. Deputy Speaker, only to Opposition Members. I do not retract what I said in that respect.

Local authorities in Wales can maintain the standard of their services under the rate support grant—there is no doubt about that—provided that pay settlements are kept down, that the totally unacceptable growth in manpower in the past year is reversed and that the local authorities rigorously pursue efficiency, economy and better value for money, as the Audit Commission recommended in its initial report.

It was interesting that the hon. Member for Alyn and Deeside (Mr. Jones) suffered from selective amnesia in conveniently overlooking one borough and its record—the one in which he happens to reside. I refer, of course, to Delyn borough council. It has managed to keep spending below the target for the coming year and to maintain the rate level at 28p in the pound. That will be done with no cuts in services and without raiding the balances. It will be done, in the words of the chief executive, by getting the best possible mileage out of every pound.

That is in sharp contrast to Clwyd county council. Delyn runs its council extremely well on a rate that is the size of Clwyd's proposed rate rise. That is the extent of the staggering news that we heard yesterday from shire hall, Mold. A 16 per cent. increase in the rates is proposed. I am not surprised that the hon. Member for Alyn and Deeside seemed embarrassed when my right hon. Friend the Secretary of State made that point towards the end of his speech. So he should be. It is the Labour members in Clwyd who are pushing for that rate rise. The Clwyd Labour party is like a banana plantation, providing almost one banana skin a week for the shadow Secretary of State. The hon. Gentleman is not in the Chamber, but he is already embarrassed by the behaviour of his local election agent, who proposed the closure of a local hospital. Now the local Labour party is suggesting an enormous increase of 24p in the 148p rate, which will therefore rise to 172p.

What will that lead to? A deputation came from Clwyd county council to the Welsh Office in London. Those people forget that a great part of the buck stops with them. They should look at their own costings, their budget and their expenditure if they are genuinely to attract jobs to Clwyd. It is no use them coming to the Welsh Office and whining to the Secretary of State about unemployment.

Dr. Marek

rose—

Mr. Raffan

I will give way to the hon. Gentleman shortly. I repeat, there is no point in a deputation from Clwyd county council coming here, no doubt at the ratepayers' expense, to tell the Secretary of State what he already knows, totally overlooking the fact that they have a responsibility to keep control of their budgets and their own expenditure. The best service that they can perform is to ensure that the tragically high level of unemployment in Clwyd is reduced.

Dr. Marek

Is it not a fact that, for every pound that Clwyd raises in rates, 90p at the margin will be stolen by the Government, and that, because of that, the finance committee is having to put the rate up so much?

Mr. Raffan

If Clwyd persists with its absolutely insane recommendation of yesterday, and if that is passed by the full council—I am not surprised that the hon. Member for Alyn and Deeside is hoping that the Conservative and independent members of that council will get him out of the mess that he is about to be dropped into—Clwyd will have to pay a penalty of £4.2 million; for every £1 spent, £2 will have to be raised from the ratepayers. In the current climate, that is not just nonsense but totally insane.

One council in Clwyd, Delyn borough council, has a superb record in terms of budgeting, effective management and services to the people of its locality. Clwyd could learn much from the way in which Delyn has managed its manpower situation. For 1982–83, Delyn had a drop of 2.2 per cent. in full-ime staff and a drop of 6.7 per cent. in part-time staff. Clwyd, on the other hand, had a rise in full-time staff of 32 and a rise in part-time staff of 330, or 5.5 per cent. That continued the long-term unacceptable trend in Clwyd of increasing part-time staff, bringing the total increase to more than 700 in the last five years.

If one goes to Mold in my constituency—the hon. Member for Wrexham (Dr. Marek) will be aware of this — and looks at the shire hall, one sees the sheer bureaucracy of the place. It is a jungle-like complex which is slowly encroaching on the town. When one examines the staffing of that complex, one sees that it is a local government empire which has little to do with the provision of efficient and effective services to the community.

We on the Conservative side are desperately concerned to see that the rates are not just kept under control but are reduced in Clwyd because we are in urgent need of new industry and jobs. I wish that the hon. Member for Alyn and Deeside were in his place because he formerly represented part of my constituency. A plant in that constituency, Courtaulds at Greenfield, employing more than 800 people, has struggled to survive. It has captured foreign markets and it cannot afford the scale of rate rise that has been suggested. If Opposition Members and Clwyd county council are serious about keeping jobs in Clwyd, let alone increasing them, I hope that the hon. Member for Alyn and Deeside will speak more robustly than he has today against the insanity that we heard from Clwyd yesterday.

7.14 pm

Mr. Donald Coleman (Neath)

I will not follow the hon. Member for Delyn (Mr. Raffan) into the highways and byways of north Wales, although I probably know them rather better than he does.

It is interesting to note that the algebraic calculation to which my hon. Friend the Member for Alyn and Deeside (Mr. Jones) referred, and which occurs in the rate support grant for 1984–85, gives further evidence of the cynical attitude of this Tory Government towards democracy in Britain. I refer to the present Tory Government because many people in the Conservative party perceive the damaging effects of the Government's antagonism towards local government and are extremely worried by the trend that it is taking.

Grave concern is being expressed among Welsh authorities as they contemplate this year's so-called settlement, which will result in a cash reduction of block grant to Welsh district councils in 1984–85, even if they spend only to the Government's target. The reduction is a substantial loss of grant, equivalent to a 10.5 per cent. reduction in real terms. It is unreasonable and unjust and is felt to be so by the local authorities.

My hon. Friend the Member for Alyn and Deeside pointed out that the Welsh district councils' targets for 1984–85 were in total only £335,000 above their 1983–84 targets. If they budget at last year's level in real terms, they will incur grant penalties of 7.9 per cent., in addition to the grant loss which the rate support grant settlement will impose on them. It is time that the domestic ratepayers woke up to what the Government are doing to our cities, towns and rural areas in the guise of cutting public expenditure.

The experience of my county of West Glamorgan must be considered against the background of the introduction of block grant in 1981–82, which immediately put West Glamorgan at a disadvantage. The assessment of grant-related expenditure initially produced for West Glamorgan an amount more than 6 per cent. below the average for Wales per head of population. Representations were made, and that has been improved to 4.5 per cent. for 1983–84 and to 3.6 per cent. below average for 1984–85. Nevertheless, this has an effect on West Glamorgan and perhaps it is no coincidence that other counties in the southern industrial belt of Wales, including Mid-Glamorgan, are also below average per head.

The position on the council's budget for 1984–85 is that a decision will be taken this month after a further review of budgeted expenditure and the impact of grant penalties. The education committee has been asked to look again at its draft estimates and at the measures that would be necessary to reduce them by about £2 million to accord with guidelines adopted by the country council last autumn. This request has been made because the county council's expenditure next year would require a rate increase of 20p in the pound, half of which would be required to meet the grant penalty for expenditure above the Secretary of State's target.

My hon. Friend the Member for Alyn and Deeside said that the county council would have to face a difficult choice between two unpalatable options, either to impose an unwelcome rate increase of 12 per cent. on ratepayers, domestic and industrial—a course which would enable the right hon. Gentleman to impose further penalties on West Glamorgan, which, as this year, would have to be borne by the ratepayers — or to reduce education spending in ways which would inevitably damage the present level of service.

Perhaps that is what the right hon. Gentleman wants for our children and young people. It is only now being realised by people in Gowerton in the constituency of my hon. Friend the Member for Gower (Mr. Wardell) that the right hon. Gentleman's intervention during the general election campaign for political purposes has deprived children there of something beneficial.

Final decisions have not yet been made in West Glamorgan but all of the council's committees have adopted a rigorous approach to budgeting for next year. They have set out to achieve a 5 per cent. reduction in administrative costs. As West Glamorgan is perceived by the Secretary of State as an overspending authority, its budget for next year will inevitably lead to a grant penalty. Every additional £1 of expenditure loses the council another £1 in grant. The rate increase will inevitably be higher than the increase in spending and about one half of the county's increase will have to go towards paying the grant penalty. The same is likely to apply to no fewer than six other Welsh counties in 1984–85 to a greater or lesser extent. That is why there are fears that the Government's rate-capping legislation might be used to select most of the counties, in pursuance of the Secretary of State's objectives on expenditure levels. There is no sanity in that.

Ratepayers are having to find money not to improve, increase or maintain services but to pay for the Government's antagonism towards local government. That is why the Opposition and those outside the House who understand these matters regard the Secretary of State's proposals as unreasonable and unjust. That is why the Opposition will vote against the Government tonight.

7.21 pm

Mr. Stefan Terlezki (Cardiff, West)

The longer one listens to the Opposition, the more one becomes aware of the fact that they have power but do not want to face the responsibility of it. They cry crocodile tears and want to spend, spend and spend again, but they are not interested in where the pennies and pounds come from. They maintain that everyone should be taxed as much as possible and that rates should be increased as much as possible. They are envious of small businesses and say that they create only video shops.

Mr. Ray Powell (Ogmore)

Is the hon. Gentleman a wetzki?

Mr. Terlezki

I am appalled that Labour Members who represent the Principality are not interested in attracting businesses to Wales. Nor are they interested in how to create businesses and jobs. We recently heard excellent news about the designation of a freeport in Cardiff. We also heard excellent news yesterday about a Severn crossing. That is wonderful news for Wales, for its capital city and for those who represent Welsh constituencies. However, the Opposition want only—

Mr. Roy Hughes

On a point of order, Mr. Deputy Speaker. May I respectfully ask you to rule on whether the Severn bridge will be financed out of the rate support grant for Wales?

Mr. Deputy Speaker (Mr. Harold Walker)

I was listening carefully to the hon. Gentleman's speech. I hope that he will now address himself to the motion.

Mr. Terlezki

I apologise to you, Mr. Deputy Speaker, but not to Opposition Members, if I have in any way misled the House.

I have spent about 27 years in local authorities. I do not pretend to know all the answers, but I have much more experience than most Opposition Members put together. South Glamorgan county council is spending thousands of pounds of ratepayers' money on political propaganda. Why should that money not be spent on schools, housing and old people's homes? The council knows that it can blame the Welsh Office for everything. Indeed, it blames everyone but itself and wants merely to spend. That is not the way in which to maintain services and to control local authority finances. We must be rational, reasonable and realistic. We should not continue to spend other people's —ratepayers' and taxpayers'—money.

7.25 pm

Mr. Roy Hughes (Newport, East)

Every day I seem to receive letters from local authorities complaining about cuts or threats of some sort from the Government. They also complain about Government interference.

I should like to draw the attention of the House of representations which I have received from Gwent county council. In August 1983 it was advised by the Welsh Office that its provisional target for 1984–85 was £168.242 million. The final target, which was announced on 20 December, was £165.821 million — a reduction of £2.421 million on the original notification. The council asks: How can anybody budget sensibly against switches of this size at such short notice?

That is a reasonable point of view. The council has tried merely to maintain existing services — perhaps a standstill budget. There has been a series of swings and roundabouts. The number of teachers has fallen in line with the fall in pupil numbers, but I should have thought that this was a good opportunity to make an onslaught on the pupil-teacher ratio. At the other end of the spectrum is the provision of home helps. The increasing number of old people puts greater demands on that service. However, merely by trying to maintain the status quo, Gwent finds that the standards of its services are declining.

The Government are laying down so-called targets and penalising local authorities if they do not comply with them. I recently received a protest from the National Bus Company officer of the Transport and General Workers Union. He complained that subsidies provided by Gwent council were inadequate, but what is the county council to do when it is hard pressed? The council is disgusted, as well it might be. It says: What is most frustrating is that effectively choice is taken away from the local community. The County Council has resources. We could ask local people for modest increases in rates to cover urgent but modest improvements in services. But the penalty system, which takes away £1.7 million for the first 50p spent over target, and then takes away grant for every further £1 spent, makes it prohibitive to spend above the Government's arbitrary limit. One can see the predicament in which Gwent county council finds itself as a result of the Government's action. The Government jackboot has been put into local government. The Government are kicking hard and causing suffering to people who already have only slender resources and who are least able to bear this sort of blow.

The Government try to justify their interference in the affairs of some of our local authorities by saying that they are the majority shareholder in local government undertakings. The Government's contribution as a percentage of rate aid for Welsh local authorities is given as 69.2 per cent., but this figure can be very misleading. In Newport, rate aid of approximately £5 million is 49 per cent. of target expenditure for 1984–85, but this target expenditure is the net requirement to be found jointly by ratepayers, who contribute 51 per cent., and the Government, who contribute 49 per cent.

The whole picture is false, because the total expenditure of the borough of Newport on current account is no less than £40 million. Most of this will come from rents and borough services, such as swimming baths, buses, leisure centres, car parks, factories and the golf course. If, therefore, the Government's contribution is related to total expenditure, it forms only approximately 12.5 per cent. —an entirely different picture from that which the Government are trying to portray.

In Newport there has to be all manner of cuts, as Mr. Cook, the chief executive of the borough, has pointed out in a recent letter. He cites street and civic amenity cleansing, with cuts in seasonal cover, and so on. I know from firsthand experience that there is tremendous concern in Newport about litter. This is the heart of the matter —inadequate services which the borough are having to cut. The borough has had to omit intended improvements in land drainage. When I went down to the Liswerry area of Newport I saw quite a number of gardens that were flooded. The local authority has had no resources to deal with the problem.

We had a spectacular event in Newport a week or so ago, when a group of parents and children almost caused a riot. They raided the mayor's residence because of a decision by the borough council to close an adventure playground. This is what is happening as a result of the Government's cuts in local authority expenditure.

There is much more to it than that. Housing—the new build as we call it—is being cut back, as are renovation grants. This is affecting central heating in council houses. A man came to see me at my last surgery. He had a houseful of children, the central heating had been out of order for several weeks and he could not have it repaired because the council allegedly had no resources to deal with it.

The Welsh office of the Association of District Councils asks why Welsh district councils should lose grant in 1984–85. That is a very good question. There will be a cash reduction of £9.9 million, or 6.9 per cent., in the block grant, and it is felt that this is both unreasonable and unjust because expenditure has already been reduced in 1983–84 at the Government's behest.

It seems that local government, along with the trade unions, has now become a favourite target of the Government's offensive. Local government in this country has a great tradition and it should not be turned into a mere Treasury poodle. We may be living in 1984, but our message should be that Big Brother is not always right. One day, perhaps in the not-too-distant future, we shall again have a Government who appreciate the value of local government to the society in which we live.

7.35 pm

Mr. Ian Grist (Cardiff, Central)

What a litany of gloom from the Opposition Benches—the only thing which, ironically, is clear, because what is not clear is how Opposition Members wish to pay for the various services for which they have been calling in the past five years.

I remind the hon. Member for Caerphilly (Mr. Davies) that his predecessors on the Opposition Benches predicted, year in, year out, the downfall of local government. It has not occurred. He quite clearly did not listen to the excellent speech of my hon. Friend the Member for Bridgend (Mr. Hubbard-Miles), who cited the types of savings that could be made and actions that could be taken by a caring authority which thought more of the people in its care than of its own comforts and emoluments.

What is also evident from this debate is that most of this report is incomprehensible to most hon. Members. There was a brief time, when I was Parliamentary Private Secretary to my right hon. Friend the Secretary of State, when I thought that I had achieved a grasp of rates and of the rate support formula, but I think that it has been changed since then and, in any case, I have become a little rusty, like the three gentlemen in Schleswig-Holstein, and I cannot make head or tail of a great deal of it. I wonder how many hon. Members could tell the House what a guidance-related multiplier is, at the drop of a hat. Not many, I will bet.

Something which emerges very clearly from a discussion of the problems of local government is the need to continue the pressure for efficiency and control of manpower. I have been looking at the recently published "Local Government Statistics" and those of my own county of South Glamorgan. Incidentally, my right hon. Friend might like to note that the bookkeeping of South Glamorgan has been aided by raiding the balances built up by the supplementary rate which it levied in 1981–82 and which, thanks to legislation by this Government, is no longer legal. That is why it has been able to keep down its increase this year.

Between March 1979 and March 1983 the numbers of full-time staff were cut by 2.75 per cent., part-time staff were cut by 2.9 per cent., and this at a time when labour was being shed in considerable numbers by state and private industry and by central Government. Local government managed to hold on, at high rates of pay, to the overwhelming majority of its employees. In the same period Cardiff city council cut its full-time staff by 3.85 per cent. and its part-time staff rose by 45 per cent. That was what it contributed to the welfare of its ratepayers.

What have we heard about the savings to be made in Wales by privatising certain local authority functions? It is worth while looking at what certain other authorities have managed to achieve in this respect. Bath city council has saved £300,000 in a year on refuse collection. Cambridgeshire county council has saved £700,000 on school cleaning. Ealing borough council has saved £600,000 on street cleaning. Wirral borough council has saved £1,400,000 on refuse collection. Wandsworth has saved £670,000 on street cleaning, £200,000 on garden maintenance, and £1,130,000 on refuse collection.

Those are the sorts of savings that could be made, will be made and should be made by local authorities in Wales. The money that they save can then be spent on those about whom we are all concerned—the old, the disabled and the young. However, if local authorities continue to spend money for their own purposes, we shall be having every year such debates and the prediction of the breakdown of local authorities.

7.40 pm

Mr. Gareth Wardell (Gower)

The Society of Metropolitan Treasurers, a highly regarded body that has no political axe to grind, has said that the 1984–85 rate support grant settlement involves the lowest level of grant aid to local authorities since the rate support grant system was introduced in 1967–68.

Since the Government came to power in 1979, they have consistently withdrawn support for local services and reduced their share of local budgets. The Government's share of local services in Wales has been reduced from 75.4 per cent. to 69.2 per cent. The Welsh office of the Association of District Councils says that for its councils the measures proposed for next year are totally inadequate and unrealistic. They will result in a loss of almost £10 million of block grant, which for them is a 7 per cent. reduction even before allowing for inflation at 4 per cent. The Welsh district councils expect a substantial cut in support.

Swansea city council, which covers part of my constituency, tells me that its support has been reduced by almost £1 million. The question is: from where will those councils make up such a shortfall? Yesterday another district council in my constituency, Lliw Valley, was forced to cut its planned capital expenditure programme for the next financial year from £6 million to £3.5 million. Therefore, sheltered accommodation expenditure for the elderly will be reduced from £610,000 to £250,000 and, for the first time, that council will not start any new council house building next year.

The Welsh district councils are in a difficult position. At the same time, local social services and the probation service, now partly run by the county councils, must be expanded and reorganised to comply with the requirements of the Criminal Justice Act 1982. Compliance with the Health and Social Services and Social Security Adjudications Act 1983, also passed by this Government, and the Mental Health (Amendment) Act 1982 will require additional expenditure by local authorities.

The idea of community care is appealing, and somehow makes us believe that the community cares. Unfortunately, caring, whether at home or in hospital, is not a cheap option. The Government, far from supporting county councils as they take on those expanded roles, have the audacity, first, to withdraw from bearing their share of the cost and, secondly, to try to tell ratepayers that local authorities are to blame for rate increases.

That is typical of the Government's doublespeak. They have failed to keep their election promises, and they are trying to foist responsibility and blame, as always, on to someone or something else. In 1979 the blame lay at the door of inflation; in 1980 it was the trade unions; and in 1981 it was the world recession. By 1982, the promised land was at hand, and in 1983 it was on the way. The 1984 gremlin is to be local government, which the Government say is spending too much.

My hon. Friend the Member for Caerphilly (Mr. Davies) quoted from the article in the Financial Times showing the Government's spending record. He was right to say that the control of public expenditure was crucial to the Government's monetary policy. But we are now told that central Government cannot control their expenditure because local councils' spending is out of control. However, local council expenditure represents only about 25 per cent. of Government's expenditure. Since 1979, central Government spending as a proportion of gross domestic product has increased from 27.4 per cent. to 29.1 per cent. Yet, for the same period, on the Government's own figures, local authorities have reduced their spending as a proportion of GDP. Local councils' spending, in cash terms, and despite rate increases, has increased by 3 per cent. less than central Government spending.

How are local authorities thwarting central Government's spending targets? Who has failed to control spending? The Government promised to reduce taxes. Yet, thanks to their policies, Britain is one of the most highly taxed nations in the developed world. In addition to successive cuts in the rate support grant, it is estimated that an accumulated loss to local authorities of about £9 billion has occurred. If local councils had not borne those losses, and given the decline in the economy, central Government would have had to increase taxes by at least 3p in the pound. Local councils have had to bear the brunt of the Government's unwillingness to keep election promises.

The Govenment promised to reform the rating system. They will do so via the Rates Bill, but not in the fair way that everyone envisaged. Instead, they will ignore the real issue of reform and concentrate on castrating local democracy and accountability.

Welsh councils have been so careful in their spending that, of the 37 district councils, 34 will not be affected immediately by rate capping. Since they have made their contribution to economies, why should they be further penalised by cuts in the rate support grant? Perhaps the Government believe that, by taking those powers in the Rates Bill, they will be seen as a strong Government. They will not; they will have shown themselves to be incapable of dealing with the real problem. Starving local authorities of funds, as in this rate support grant settlement, and ensuring that they stay starved by rate capping, will mean cuts in services which will affect people directly.

When my constituents complain about inadequate street lighting, the state of their roads, which are now pounded by 38-tonne juggernauts, the repairs that are needed to their homes, the need to refurbish schools and the failure to replace and update school-learning materials, they want action to be taken. My response to the complaints is not to write to the Secretary of State. I go to the local council and councillors. They are the people who provide the services. When the services are not provided, the consequences are felt immediately by local people. That will be the result of the Government's policy towards support for local services.

So much for the Government's promises to protect the nation's welfare, quality of life and standard of living. Let us not forget their promises to cut unemployment, to care for the sick, elderly and disabled, to subsidise local services, such as rural transport, to supervise and organise job creation schemes and to ensure that local authorities have the opportunity to provide services over and above the minimum required by statute — for example, free school meals and free school transport. Such services keep people in employment, but the cuts that will inevitably follow the reduced rate support grant will mean the loss of employment opportunities. People will also lose jobs or be thrown on to the scrap heap. The contribution that those people could make to the benefit of the community will be wasted. That is where the rate support grant cuts will lead us.

The Government are adrift. The Saatchi and Saatchi myths of purposeful, strong and single-minded determination are all being exposed as part of a propaganda exercise. The Government's policy is in a shambles. They are looking for a scapegoat, and this year's demon is to be the local authorities. When the Secretary of State replies, I hope that he will explain why the Government feel that they must transfer their own failure to come to grips with the problems of the nation on to the backs of local authorities. Why does the right hon. Gentleman feel that he can no longer support Welsh local councils, which have the best record in the United Kingdom for controlling public expenditure? What is his justification for cutting the support for services which are closest to the well-being of the people of Wales?

7.53 pm

Dr. John Marek (Wrexham)

Conservative Members have told us that we predicted that local Government would not be able to continue to function and that there would be large increases in rates. They have reminded us of those predictions and claimed that they have not come to pass. That may be so, but that is because of the quality of our councillors in Wales and the quality of the majority of Labour-controlled councils. However, they have continued to function at the price of cuts in services.

The cuts are not readily apparent, but they have been made. For example, we have not been able to build as many sheltered homes for old-age pensioners as we would wish. That means that old people have been dying earlier. That is not a cut to which one can easily point, but it is one of the consequences of local government having suffered restrictions in the money made available to it over the past four or five years.

When my hon. Friend the Member for Caerphilly (Mr. Davies) talked about cuts in social services, I was sorry to hear Conservative Members laughing and talking. Their response was, "Here we go again." That is not the right attitude, for we are dealing with an extremely serious issue upon which we can deliberate properly only if we talk about it seriously.

It has recently been reported in the newspapers that a hospital which serves north Wales and treats cancer patients has a waiting list that is too long and that many cancer patients die before they can be admitted. That is a sad reflection on the quality of life that we are now receiving at the hands of the Government, especially after the past four or five years.

During the most recent Question Time for Wales I asked the Secretary of State whether the authorities were reaching their targets. He chose to direct his reply to Wrexham and said that its expenditure target was lowered because the borough council would not increase its rents. The council will not respect its target because it is aware of the difficulties faced by the neediest, the poorest and by those who generally need the most help. These people are mainly unemployed and living in council properties. If they are not in receipt of social security benefit, they have just enough money on which to exist by reason of housing benefit. The rent that they pay matters very much to each and every one of them.

The Wrexham rate for 1983–84 was 26p in the pound. The same rate was levied during 1982–83. It was 27.52p in the pound in 1981–82 and in 1980–81 it was 26.5p in the pound. In 1979–80 it was 21.5p and in 1978–79, when the Government took office, it was 23p. Over the past six years the rate has increased—this is what is perceived by the ratepayer—by 3p in the pound. That is a 13 per cent. increase overall during a period when the retail price index has increased by over 70 per cent. That is a good record of efficient management. Against that background, why do we need a support grant which cuts the expenditure target by such a savage amount for many authorities? It will cut the target for Wrexham Maelor by £300,000.

The rate support grant is about people and not formulae, although it might contain formulae. It is about whether we can build enough houses, whether we have to have young couples living in a front room with a television while their parents live upstairs. For how long will that situation have to exist in Wales? The support grant is about whether we can have an adequate supply of teachers and enough meals on wheels and not about formulae. The Government have it wrong this time because of their obsession with figures and statistics.

Rates have not increased significantly over the past six years, so why have the Government chosen to clobber the councils? Has the Chancellor of the Exchequer dictated that the economy will go to pieces unless we can cut local authority public spending? Does the right hon. Gentleman want to control the public sector borrowing requirement? As that requirement is not included in the calculations, that is not the reason. If there are no restrictions on local authority growth, will the monetary supply increase? That is not so, because we know that the monetary supply is not increased by local authority growth. There is a quid pro quo, because when rates increase extra money is taken from ratepayers.

Are the Government clobbering councils because they do not wish to discourage industrial development? Of course, no one on either side of the House wishes to discourage that. Nevertheless, it is true that rates amount to less than 1 per cent. of the costs incurred by industry. Therefore, that cannot be the reason behind the Government's policy. What is the reason? I do not believe that the Government have a valid reason. Their actions are based on political dogma. They wish the rich to get richer, and at the expense of the poorest in society.

The Secretary of State talked about Clywd county council. In 1983–84, Clywd county council received grant-related expenditure of £141,019,000. Its expenditure target was £141,409,000. According to the Government, it was overspending. I do not accept that. We should not talk about overspending. Its expenditure target was a little over GRE. In 1984–85, the position will be reversed. GRE will be £146,795,910, but the expenditure target will be £145,983,000.

Last year Clywd's target was above the uniform assessment of what a local authority can spend, but this year, because of the Government's formulae, the expenditure target has been cut to below GRE. There is no honesty, fairness or justice in that action. I ask the Government to look at the formulae which provide those expenditure targets, because they do not work, as the example of Clywd shows.

Where does that leave Clwyd? The answer is clear: it must either cut services or increase rates. That is why a report in this morning's Liverpool Daily Post said that the finance committee has decided to increase rates by that large amount. One alternative for Clwyd would be to make cuts in home help provision, meals-on-wheels and staffing in schools. The hon. Member for Clwyd, South-West (Mr. Harvey) knows as well as I do that Clwyd county council has postponed plans to introduce nursery units in Minera in his constituency. Is he opposed to Clwyd county council not introducing plans for nursery units, although the package is in? If he does want those units, I look forward to him joining me in the No Lobby.

The hon. Member for Delyn (Mr. Raffan) is in the Chamber also. An article in the Liverpool Daily Post of Tuesday 7 February states: Delyn MP Keith Raffan, has pledged total support in the fight to keep open Trelawnyd village school. The article reported the hon. Gentleman's words: It would be quite tragic to close the school. The article states that he is writing to the Church in Wales and to Clwyd county council.

Mr. Raffan

I do not want to cause the hon. Gentleman too many problems, but he should realise that Trelawnyd village school is a Church in Wales school and not an education authority school.

Dr. Marek

Better still. Public funds are still provided for it. I am surprised that the hon. Gentleman is saying one thing to his electors in Delyn — that he does not want services cut—and something different to hon. Members. Which is the truth? If the hon. Gentleman were honest and supported the views in the newspaper article, I would hope to welcome him in the No Lobby.

Mr. Raffan

The hon. Gentleman seems to be confused. I have given total support to keeping the school open, and in fact I am campaigning for that with the Church in Wales. The question of education authority aid to the Church for the building has not yet arisen. A meeting is being held tomorrow night. The hon. Gentleman is premature in his remarks and probably inaccurate.

Mr. Coleman

As a Member of the Church in Wales, I must say that those schools in Wales are the concern of the local authority. Local authority money is paid from the education grants for that purpose.

Dr. Marek

I am grateful for my hon. Friend's assistance. I thought that was the case, and I am glad to have it confirmed. The hon. Member for Delyn must be clear about this point. Which way will he have it? He has been fighting to keep Chatsworth hospital open. It would be kept open if there were not Government cuts and restrictions which will make the old die earlier. I ask him earnestly to join us in the No Lobby to vote against the report.

Clwyd has been unfairly treated. I hope that the cuts will be defeated. I regret to say that I doubt that Government Members know what I am talking about. We are short of time and there are many Conservative Members who, no doubt, are missing their dinners and their drinking parties. If that is the case, I am sorry, but matters affecting Welsh local authorities are important. We have had an English debate, a Scottish debate and now we have a Welsh debate, and I believe that we should debate Welsh affairs properly. I shall try to be brief.

To be fair to the Secretary of State, he has been in the Chamber throughout the debate. He said that the Government mandate was overwhelmingly endorsed at the last election, but that is not true in Wales. There are still 20 Labour Members representing Welsh constituencies, which means a majority of Labour Members. The rate support grant report will be regarded as yet another disaster for Wales. It is centralist and contemptuous of local democracy. It will make the poor poorer. It shows no appreciation of the immense problems in relation to employment, social aspects, education and housing.

It is a Stalinist policy. Stalin would be proud of such lackies and their outdated and irrelevant dogma. The Government must know that those policies do not represent Socialism, but, more than that, I am convinced that they do not represent traditional Conservatism either. If the Government recognised that, they would withdraw the report and prepare something which would have general agreement and be to the benefit of all the people in Wales.

8.7 pm

Mr. Ioan Evans (Cynon Valley)

This wide-ranging debate has taken longer than we expected. Seventeen hon. Members from Wales have taken part. It is interesting to contrast this debate with that on the English rate support grant order, when there was a major rebellion against the Government's proposals by Members representing English constituencies. The Welsh grant is as bad as the English grant. Conservative Members have been critical of certain aspects of the grant, but they will no doubt vote in the Lobby with the Secretary of State.

The contribution of my hon. Friend the Member for Alyn and Deeside (Mr. Jones) was made not only for the Opposition, but for local government in Wales and the overwhelming wishes of the Welsh people who wish democracy in local government to be maintained.

The most telling point in the speech of the Secretary of State was the reference to Clwyd county council. As was pointed out, Clwyd has an Independent and Tory majority. There is a difference not just between the Labour party and the Tory party in the House and throughout the country, but between Conservative Members of Parliament and Conservative councillors who disagree with the Government's actions. The Secretary of State talked about what the nation can afford. Why can we not afford £10 million more in Wales for the extra people whom local authorities want to employ, when the Government are prepared to spend £2,500 million in the next three years on defence of the Falklands? The people of Wales are beginning to question the Government's sincerity.

The Secretary of State criticised the Welsh authorities for seeking to keep down council rents. Surely we should try to maintain people's living standards and keep down council rents. Presumably the Government will penalise local authorities which do not increase their rates. That is the encouragement that the Government give.

The Secretary of State said that he accepted the comments of the two Welsh local authority associations about GRE. Does he accept and support their outright opposition to the Rates Bill which seeks to undermine Welsh local democracy?

I wish to deal with the Rates Bill, because I believe that it is related to the report. Despite opposition from both sides of the House, the Bill has received a Second Reading and is now in Committee. The Bill deals with local government in Wales, but I was astonished to find that there is not one Welsh Office Minister serving on the Committee. There are Scottish Ministers serving on the Committee to deal with the part of the Bill relating to Scotland, but for the part relating to England and Wales we have only Ministers from the Department of the Environment. When I raised this point in Committee, the Under-Secretary of State for the Environment said that the circumstances were difficult because there were eight Committees sitting but only three Welsh Ministers.

When one studies the Committees, one finds that one is about housing, one about Scotland, two come from the Home Office and one relates to defence. I went to see on which Committees the Welsh Ministers are serving. They are not serving on one. They were available and could have served on the Rates Bill Committee. There is worse to come. There are more Welsh Conservative Members than Welsh Opposition Members, but not one Welsh Conservative Member is serving on the Committee. The Conservative party is ducking out of this unpopular constitutional measure, which will fundamentally affect the relationship between Her Majesty's Government and the Welsh county and district councils.

The Association of District Councils, the Association of Metropolitan Authorities, and the Association of County Councils are opposed to the Bill. The Association of County Councils, which represents 37 of the 39 non-metropolitan counties in England and the eight Welsh county councils, passed a resolution by 95 votes to two calling upon the House to reject the Bill. The Conservative-dominated association overwhelmingly called upon the House to reject the Bill.

On 13 January, the Welsh office of the Association of District Councils, in a letter sent to all Welsh Members so that we would all be aware of its views, said: In Wales, a new committee of Welsh District Councils was set up in the summer of 1983 under the umbrella of the ADC and the 37 District Councils in the Principality are represented thereon. Considerable concern has been expressed by our new Welsh Committee to the new proposed rate limitation scheme. As you know the Government has attacked local authorities' spending records in recent years; in fact, the Welsh Districts have increased their estimated expenditure between 1979–80 and 1983–84 by 9 per cent. less than the rise in RPI during the same period". That is the record of the Welsh authorities. They have sought to meet the Government's target, but they are to be covered by the Rates Bill.

The letter continues: furthermore, the reduced level of spending has been achieved despite considerable increases in the statutory responsibilities of Welsh local authorities … On 6th January the policy Committee of our new Welsh organisation decided to support wholeheartedly the measures being taken by the ADC in opposing the rate limitation schemes and to draw your attention to the excellent record of Welsh District Councils in containing expenditure over recent years. Members are of the opinion that the schemes are unlikely to be effective in terms of national public expenditure policy and would be extremely difficult to put into practice and require a massive effort in bureaucracy to apply. It can be seen, therefore, that the eight Welsh county councils and the 37 district councils are opposed to the rate-capping powers that the Government are seeking in the Rates Bill.

It would be interesting to learn what the views of the Secretary of State and his colleagues were about the Bill when the matter was considered in Cabinet—if it was— because we read in The Times that there are so many leaks from the Cabinet these days that many issues are not taken there.

The Opposition are in complete agreement with the Welsh county and district councils in their opposition to the deplorable Rates Bill. It is important to discuss the Rates Bill with this report, because, if the Bill goes through all its stages in the House of Commons and the House of Lords, it will be the determining factor as to how much money will be given to local authorities in the years ahead.

What is the view of the Welsh local authorities about the rate support grant? The Association of County Councils, which represents England and Wales, and, as I said, is Tory-dominated in England, although Wales is well represented by Labour members, said: the ratepayers face abnormally high increases, serious cuts in services or both. In a letter to all Welsh Members on 31 January the Welsh office of the Association of District Councils said: They have instructed me"— that is the secretary writing on behalf of the association— to express their grave concern regarding this year's settlement which will result in a cash reduction of £9.9 million or 6.9 per cent. of Block grant to Welsh District Councils in 1984/85 even if they spend at target. This is a very substantial loss of grant equivalent to a 10.5 per cent. reduction in real terms—which in the committee's view is entirely unreasonable and unjust. Those are the views of the district councils in Wales, some of which are represented by members of the Conservative party. The letter goes on: When linked with Welsh District Councils' expenditure targets for 1984/85 the position is quite untenable and completely unfair to the Committee's constituent members. Welsh District Councils targets for 1984/85 are in total only £335,000, or 0.15 per cent., above the 1983/84 targets. If they budget at last year's level in real terms (that is the 1983/84 budget +4 per cent.)"— that is inflation, but it is now 5 per cent.— they will incur grant penalties of some £7.9m (£6 million more than in the current year) in addition to the basic grant loss of £9.9m—a total grant loss year on year of £15.9m or 21 per cent. of the Welsh District Council budgeted rate-borne expenditure for 1983–84. If Conservative Members support this motion, they will be voting against the best interests of the county and district councils in Wales.

We have experienced the attack that Ministers are making on local authorities. However, there are some notable exceptions. One must refer to the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) who had reservations, and the former Foreign Secretary, the right hon. Member for Cambridgeshire, South-East (Mr. Pym), who spoke against the rate support grant order for England and who, at least if he did not vote against it, was prepared to abstain. The former Secretary of State for the Environment, the right hon. and learned Member for Hexham (Mr. Rippon), also abstained. Many Conservative Members voted against the order.

It will be interesting to see whether English Conservative Members have more regard for their authorities then Welsh Conservative Members. We shall see that when we go into the Division Lobbies.

The role of the Thatcherite totalitarian tendency in the Tory party is to attack local authorities. Its members attack local authorities for raising rates, although the record of Welsh local authorities is far better than that of the Tory Government. Can anyone challenge that? Total Government expenditure has increased by 111 per cent. How does the expenditure of central and local government compare? The Tory Government argue that the increase in public expenditure is caused by the activities of local councils. Let us examine the figures. Total Government expenditure has increased by 130 per cent. in six years, whereas local government expenditure has increased by only 77 per cent. The Association of District Councils states: Bearing in mind the extremely good record of Welsh local authorities and Welsh district councils in particular in reducing their expenditure by 6 per cent. in real terms since 1979–80 whatever the position may be in England the position in Wales is that county and district councils of all political persuasions have done all they can and gone a long way to meet the Government's behest. The reward for Welsh district councils has been the same—if not more so—as that claimed on behalf of English shire counties … that is lower spending and budgeting has brought a reduction in grant-related expenditure figures and reduced spending targets. What are the comparative figures in cost terms for local authority expenditure? Let us compare the present situation with what happened when my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) was Prime Minister. On roads and transport, the figure was £167 million in 1978–79, compared with £160 million in 1983–84. On housing, the figure was £150 million in 1978–79; and it is £53 million in 1983–84. On other environmental services, the figure was £241 million in 1978–79, compared with £240 million now. On education and libraries, the figure was £653 million in 1978–79; now it is £633 million. Of all the services, only the social services have increased under this Government, from £101 million to £102 million. However, we all know that expenditure has increased because we have an aging population, with increased statutory duties imposed by the Government, together with the fact that unemployment in Wales has increased, not by the 100 per cent. in some areas, but by 200 per cent. and 300 per cent., including the Secretary of State's constituency. With a massive increase in unemployment there is bound to be an increase in expenditure on social services. Overall, however, £124 million less is spent now than was spent under the Labour Government.

The new White Paper on 16 February will include the revised figures, but those are the best calculations that can be made at present. At a time of recession and increasing unemployment, instead of the massive increase in local government expenditure in Wales that one might expect, there has been a reduction. On top of that, the draconian powers in the Rates Bill will make the situation far worse in the coming years.

Local authorities should not be punished for the Government's economic failures. Welsh county councils and district councils are criticised unfairly, but they do their best to operate within the guidelines that are laid down by the Government.

The Association of District Councils, in its letter, concludes: In the Committee's opinion this year's proposed settlement throws in doubt the Government's ability to distribute rate support grant on a fair and sensible basis. Relations between local authorities and Parliament have been poisoned by this Government's actions. The Government, since they came to power, have changed eight times the method of financing local authorities. That is not the way to make for good local government.

Ministers never tire of saying that local authorities can pick and choose their priorities. That is not true. They have legal duties. For example, local authorities are finding it increasingly difficult to meet their legal commitments under the Chronically Sick and Disabled Persons Act. Some are accused of breaching the law. But who are the law breakers — local authorities that are denied the resources even to meet their legal duties, or the Ministers who starve them of those resources, especially when they are determined to force through a Bill containing draconian powers that will penalise authorities if they raise finance locally to cope with problems, such as those described by the hon. Member for Bridgend (Mr. Hubbard-Miles), relating to meals-on-wheels and other services that have been stopped?

I conclude by saying, first, that, by reducing the proportion of the rate support grant, most authorities, including many of those that have done exactly what the Secretary of State said, will be forced to increase rates, and cuts in services will follow.

Secondly, the Secretary of State has imposed on Welsh local authorities demands for cuts in services and general improvements in efficiency which central Government have manifestly failed to achieve. They are now getting local authorities to reduce spending, although they have utterly failed to do that.

Thirdly, the Secretary of State has today again attacked local authorities in Wales, although those authorities have made real cuts in their expenditure over the past four years.

Fourthly, the Secretary of State has fixed the system of grant assessment to penalise the most hard pressed areas in Wales.

Fifthly, the Government are responsible, to the greatest extent, for the rate increases that have taken place. Now they want to keep rates down, and they are putting a straitjacket on authorities. As a result, authorities have to cut back their services. It is no good Conservative Members saying that there is no need for those cuts. The evidence is there in all the reports, whether from Tory and Independent authorities, such as Clwyd, or Labour-controlled authorities, such as Mid Glamorgan. They are all compelled to cut back services.

We should remember that the future of the welfare state is at stake. After all, it is the local authorities, in co-operation with the Department of Health and Social Security, which cater for the welfare state. We are disappointed in the Welsh rate support grant report. We urge all Opposition Members and those who are interested in the future of local government in Wales to join us in the Lobby tonight and to vote against the motion.

8.26 pm

Mr. Nicholas Edwards

Fortunately for the House, in my opening speech I anticipated a great many of the arguments that have been advanced tonight and I do not propose to repeat the comments that I made then.

Dr. Marek

On a point of order, Mr. Deputy Speaker. Can you help me as a new Member? This is the first time that I have seen a member of the Government open a debate and then finish it. Is that normal practice, or do the Government not have enough people to have two different spokesmen?

Mr. Deputy Speaker (Mr. Paul Dean)

It is quite in order. In this case the Secretary of State does not need the leave of the House to reply to the debate. I have called him to speak and he is wholly in order.

Mr. Ray Powell

Further to that point of order, Mr. Deputy Speaker. I hope that the Secretary of State for Wales will not repeat what we had to endure in his first speech.

Mr. Deputy Speaker

That is not a point of order. I have dealt with the point of order. The Secretary of State moved a motion and he is entitled to reply to the debate. I have called him and he now has the Floor.

Mr. Powell

On a different point of order, Mr. Deputy Speaker. The Whips circulated a document to all Members saying that this debate would conclude at 7 o'clock. There is a lot of pressure, particularly from the right hon. Gentleman's colleagues, who have their dinner jackets on, and who have been waiting around here since 7.30 pm. The Secretary of State should bear that in mind.

Mr. Deputy Speaker

Order. At the risk of prolonging the debate, I must inform the House that this debate could go on until 11.30 pm, but it looks to me as though it is about to reach its conclusion.

Mr. Edwards

As I observed before I was interrupted, fortunately I anticipated many of the arguments that were advanced in the debate, and I do not intend to repeat the comments that I made in my opening speech.

As the hon. Member for Cynon Valley (Mr. Evans) has referred to the performance of Welsh local government in expenditure terms in the last few years, I should repeat what I said at the outset. There has been an increase in current spending by Welsh local authorities which has outstripped the increase in the general price level by about 2 per cent. This has led to an offsetting reduction in capital expenditure which has been made up only by the sale of council houses, which has supplemented what would otherwise have been a reduction of capital spending.

The hon. Member for Gower (Mr. Wardell) spoke about election promises. I remind him that it was a central promise for which the electors voted that we would control excessive expenditure by local government. I warned in my opening remarks that we would have a long catalogue of horror stories about what local authorities faced in reducing services. My hon. Friends the Members for Bridgend (Mr. Hubbard-Miles), for Delyn (Mr. Raffan), for Cardiff, North (Mr. Jones), and for Cardiff, West (Mr. Terlezki) all pointed correctly to the performance of some local authorities which have shown the nonsense of this argument, and to the enormous scope for improved efficiency.

We were asked, for example, by the hon. Member for Alyn and Deeside (Mr. Jones), who opened the debate for the Opposition, to weep over Wrexham and its cat. He made no reference to the point acknowledged by the hon. Member for Wrexham (Dr. Marek) that the present position of the Wrexham council is accounted for entirely by its persistent refusal to raise council rents. Had Wrexham increased its average council house rent for 1983–84 by the recommended 85p per week to about £10.50, which would still have been about 30 per cent. below the Wales average, instead of refusing to increase it at all, its 1984–85 target would have been within £100,000 or so of its budget for the coming year.

The hon. Member for Alyn and Deeside asked us to weep for Gwynedd, as did the hon. Member for Caernarfon (Mr. Wigley), but they did not say that the target per head that I have set for Gwynedd is the third highest of the shire counties in England and Wales, and that all the Welsh counties have about the highest GRE per head in England and Wales.

The hon. Member for Alyn and Deeside and the hon. Member for Caerphilly (Mr. Davies) referred to the general position of the district share in relation to that of the counties. That point came out repeatedly during the debate, but the districts are now in the same position for GRE shares as they were in terms of current expenditure in 1981–82, as I pointed out in my opening speech.

The hon. Member for Alyn and Deeside said that I was declaring war on my Welsh allies and submitting to the bully boys at the Treasury. At the risk of provoking some of my English colleagues—and I am bound to point out that the figures that I am about to quote arise from the fact that Welsh local authorities have come so much closer to the target set by the Government than have English and Scottish authorities—I think I am entitled to point out that all the Welsh counties are in the top eleven of the shire counties in England and Wales in terms of target per head. Powys and Gwynedd are ranked one and three, and the average county target per head in Wales is 13.8 per cent. above the England and Wales average. That hardly looks as if I am declaring war on my Welsh allies.

In the case of districts, the average target per head is 43 per cent. above the England and Wales average, and is even 26 per cent. above the average for the broadly comparable area comprising the north, north-west and Yorkshire and Humberside regions of England. The Welsh district with the lowest target per head of the districts in England and Wales is Dinefwr. There are 20 Welsh districts among the top 50 districts in England and Wales in terms of target per head. Because of their past performance, the truth is that we have been able to give benefits to the Welsh local authorities.

My hon. Friend the Member for Bridgend spoke from his long experience in local government of the economies that can be made, and made absolute nonsense of the stories of the disintegration of local government. The hon. Member for Ceredigion and Pembroke, North (Mr. Howells) referred to the cutback in improvement grants, but what we have had is an enormous increase in expenditure on local authority improvement grants over the last two or three years, a total outturn in 1983–84 of £118 million, compared with £31 million and £54 million in the two previous years. After that enormous increase in expenditure, and the tremendous drive that we have had to improve the condition of our housing stock, it is not at all surprising that we are not able to maintain expenditure at that very high level, but there are still substantial sums available next year. There is nothing to stop local authorities from authorising new expenditure now if payments are held over until after 1 April.

My hon. Friend the Member for Vale of Glamorgan (Sir R. Gower) said that we should reward good housekeeping. It is for precisely that reason that we are applying severe targets to the very high spenders and protecting those that spend within targets. As he has in the past, my hon. Friend the Member for Brecon and Radnor (Mr. Hooson) spoke about sparsity. I must tell him, as I told him before, that we are using the formulae agreed with the associations. We have looked at the matter several times. We are now awaiting a major study by the Association of County Councils on this issue, and when we have the outcome of that study we shall be prepared to look at the matter again.

The hon. Member for Caernarfon — I have already referred to the position of Gwynedd in terms of its relative situation — referred to grant withholding and the consequences of clawback, or close ending. Close ending is the process of ensuring that the total amount of grant claimed does not exceed the total available before clawback. It is self-evident that if all authorities spend at target the amount of grant claimed equals the amount available, and that if certain authorities exceed their targets they are directly responsible for the excess claim on resources. For that reason, since 1982–83 I have ensured that only those exceeding their targets are subject to close ending. This arrangement has been of immense value to target achievers, because it means that they do not suffer as a result of the actions of the high spenders, and their rates are lower as a consequence.

The hon. Gentleman also spoke about the Arfon borough council. I agree that its target is tough, but by any objective standards it is a generous target. In terms of target per head it is 4.5 per cent. above the Welsh average. More revealingly it is 50 per cent. above the shire district average for England and Wales. If that is not enough to convince people of the reasonableness of the resources allocated, its target is some 8 per cent. higher even than its GRE.

The hon. Member for Caerphilly and others referred to the situation in Mid-Glamorgan. The problem in Mid-Glamorgan stems from the fact that, having overspent its 1983–84 target by £7 million, increasing its revenue spending by even a modest amount results in a significant overspend in 1984–85. Had the county decided to spend at target in 1984–85, we estimate that it need not have increased its precept at all in the coming year. The saving to the ratepayer would amount to about £9 million and that is equivalent to about £22 per household, or about £30 per employee in manufacturing.

A further point which I think I am entitled to draw to the attention of the House is that South Glamorgan, to which I referred in opening, is resolved to spend at target which enables it to spend £361 per head. Mid-Glamorgan's target would enable it to spend £383 per head — 6 per cent. more than South Glamorgan. It is on course to exceed even that figure by about 3 per cent., making its spend £32 per head, or 9 per cent., higher than South Glamorgan's spend. It is hard to see how that can be justified.

The hon. Member for Caerphilly referred to the non-domestic and domestic share. There are major limitations on authorities' accountability to their ratepayers. In 1983–84, about 70 per cent. of Welsh local authorities' net revenue expenditure was met by the national taxpayer, not the ratepayer. In Wales, only 14 per cent. of net rate revenue expenditure is financed by domestic rates before rebates. It is not surprising, therefore, that industry believes that there is no effective democratic control over local authority expenditure.

I was asked about the possibility of rate capping in Clwyd. If the Clwyd authority persists in the policies described today, there is a serious danger that it will be subjected to rate capping.

The hon. Member for Swansea, East (Mr. Anderson) spoke about the problems in his area. Swansea's target per head at £91 exceeds the Wales average by 18 per cent. and the English shire district average by a massive 70 per cent. That is hardly evidence of grossly inadequate resources.

I spoke earlier about the reward that we are giving to Welsh local authorities for their restraint and cuts in expenditure relative to cuts in England and Scotland. Welsh local authorities are benefiting from high GREs, from high targets and from substantial additional capital expenditure as a direct result of their performance in meeting our earlier objectives. Notwithstanding the fall in capital activity next year, capital provision per head will still be about 50 per cent. higher in Wales than it is in England.

The hon. Member for Cynon Valley referred at length to the possibility of rate capping. I would rather offer a carrot than a stick. I hope that the performance by Welsh authorities will enable us to continue giving them relatively more than authorities in England and Scotland which have not met Government objectives. Above all, I hope that Welsh local authorities will recognise the services that they can render to industry and to their ratepayers by holding down the cost of local government and therefore the rate demands on their ratepayers.

Question put:—

The House divided: Ayes 275, Noes 170.

Division No. 157]	[8.44 pm
AYES
Adley, Robert	Atkinson, David (B'm'th E)
Aitken, Jonathan	Baker, Nicholas (N Dorset)
Alexander, Richard	Baldry, Anthony
Alison, Rt Hon Michael	Banks, Robert (Harrogate)
Amery, Rt Hon Julian	Batiste, Spencer
Amess, David	Beaumont-Dark, Anthony
Ancram, Michael	Bellingham, Henry
Arnold, Tom	Bendall, Vivian
Ashby, David	Bennett, Sir Frederic (T'bay)
Aspinwall, Jack	Benyon, William
Atkins, Rt Hon Sir H.	Berry, Sir Anthony

Bevan, David Gilroy	Grist, Ian
Biffen, Rt Hon John	Ground, Patrick
Blaker, Rt Hon Sir Peter	Hamilton, Neil (Tatton)
Bonsor, Sir Nicholas	Hampson, Dr Keith
Boscawen, Hon Robert	Hanley, Jeremy
Bottomley, Peter	Hannam, John
Bowden, A. (Brighton K'to'n)	Hargreaves, Kenneth
Bowden, Gerald (Dulwich)	Harris, David
Boyson, Dr Rhodes	Harvey, Robert
Braine, Sir Bernard	Haselhurst, Alan
Brandon-Bravo, Martin	Havers, Rt Hon Sir Michael
Bright, Graham	Hawkins, C. (High Peak)
Brinton, Tim	Hawkins, Sir Paul (SW N'folk)
Brown, M. (Brigg & Cl'thpes)	Hayes, J.
Browne, John	Hayward, Robert
Bruinvels, Peter	Heathcoat-Amory, David
Buchanan-Smith, Rt Hon A.	Heddle, John
Bulmer, Esmond	Henderson, Barry
Burt, Alistair	Heseltine, Rt Hon Michael
Butler, Hon Adam	Hickmet, Richard
Butterfill, John	Hicks, Robert
Carlisle, John (N Luton)	Higgins, Rt Hon Terence L.
Carlisle, Kenneth (Lincoln)	Hind, Kenneth
Carttiss, Michael	Hirst, Michael
Chalker, Mrs Lynda	Hogg, Hon Douglas (Gr'th'm)
Channon, Rt Hon Paul	Holland, Sir Philip (Gedling)
Chapman, Sydney	Holt, Richard
Chope, Christopher	Hooson, Tom
Churchill, W. S.	Hordern, Peter
Clark, Dr Michael (Rochford)	Howard, Michael
Clarke, Kenneth (Rushcliffe)	Howarth, Alan (Stratf'd-on-A)
Clegg, Sir Walter	Howarth, Gerald (Cannock)
Cockeram, Eric	Howell, Rt Hon D. (G'Idford)
Colvin, Michael	Howell, Ralph (N Norfolk)
Coombs, Simon	Hubbard-Miles, Peter
Cope, John	Hunt, David (Wirral)
Cormack, Patrick	Hunt, John (Ravensbourne)
Corrie, John	Hunter, Andrew
Couchman, James	Hurd, Rt Hon Douglas
Crouch, David	Irving, Charles
Currie, Mrs Edwina	Jackson, Robert
Dickens, Geoffrey	Jenkin, Rt Hon Patrick
Dicks, T.	Jessel, Toby
Dorrell, Stephen	Johnson-Smith, Sir Geoffrey
Douglas-Hamilton, Lord J.	Jones, Gwilym (Cardiff N)
du Cann, Rt Hon Edward	Jopling, Rt Hon Michael
Dunn, Robert	Joseph, Rt Hon Sir Keith
Durant, Tony	Kershaw, Sir Anthony
Edwards, Rt Hon N. (P'broke)	King, Roger (B'ham N'field)
Eggar, Tim	Knight, Gregory (Derby N)
Evennett, David	Knight, Mrs Jill (Edgbaston)
Eyre, Sir Reginald	Knowles, Michael
Fairbairn, Nicholas	Knox, David
Fallon, Michael	Lamont, Norman
Farr, John	Lang, Ian
Fenner, Mrs Peggy	Latham, Michael
Finsberg, Sir Geoffrey	Lawler, Geoffrey
Fookes, Miss Janet	Lawrence, Ivan
Forman, Nigel	Leigh, Edward (Gainsbor'gh)
Forsyth, Michael (Stirling)	Lennox-Boyd, Hon Mark
Forth, Eric	Lilley, Peter
Fowler, Rt Hon Norman	Lloyd, Peter, (Fareham)
Fox, Marcus	Lord, Michael
Fraser, Peter (Angus East)	McCrindle, Robert
Freeman, Roger	MacGregor, John
Fry, Peter	MacKay, Andrew (Berkshire)
Gale, Roger	MacKay, John (Argyll & Bute)
Galley, Roy	Maclean, David John.
Gardiner, George (Reigate)	McQuarrie, Albert
Gardner, Sir Edward (Fylde)	Madel, David
Glyn, Dr Alan	Major, John
Goodhart, Sir Philip	Malone, Gerald
Goodlad, Alastair	Marland, Paul
Gorst, John	Mather, Carol
Gow, Ian	Maude, Francis
Gower, Sir Raymond	Maxwell-Hyslop, Robin
Grant, Sir Anthony	Mellor, David
Gregory, Conal	Miller, Hal (B'grove)
Griffiths, E. (B'y St Edm'ds)	Mills, Sir Peter (West Devon)
Griffiths, Peter (Portsm'th N)	Miscampbell, Norman

Moore, John	Stevens, Lewis (Nuneaton)
Morris, M. (N'hampton, S)	Stevens, Martin (Fulham)
Needham, Richard	Stewart. Allan (Eastwood)
Neubert, Michael	Stewart, Andrew (Sherwood)
Newton, Tony	Stewart, Ian (N Hertf'dshire)
Normanton, Tom	Stokes, John
Norris, Steven	Stradling Thomas, J.
Page, John (Harrow W)	Sumberg, David
Parris, Matthew	Taylor, Rt Hon John David
Patten, John (Oxford)	Temple-Morris, Peter
Pawsey, James	Terlezki, Stefan
Pink, R. Bonner	Thatcher, Rt Hon Mrs M.
Pollock, Alexander	Thompson, Donald (Calder V)
Porter, Barry	Thompson, Patrick (N'ich N)
Powell, William (Corby)	Thorne, Neil (Ilford S)
Powley, John	Thornton, Malcolm
Raffan, Keith	Thurnham, Peter
Raison, Rt Hon Timothy	Townend, John (Bridlington)
Rees, Rt Hon Peter (Dover)	Townsend, Cyril D. (B'heath)
Rhodes James, Robert	Tracey, Richard
Roberts, Wyn (Conwy)	Trippier, David
Robinson, Mark (N'port W)	Trotter, Neville
Roe, Mrs Marion	van Straubenzee, Sir W.
Rossi, Sir Hugh	Vaughan, Sir Gerard
Rost, Peter	Waddington, David
Rumbold, Mrs Angela	Wakeham, Rt Hon John
Ryder, Richard	Walker, Bill (T'side N)
Sackville, Hon Thomas	Wall, Sir Patrick
Sainsbury, Hon Timothy	Waller, Gary
Sayeed, Jonathan	Walters, Dennis
Shaw, Giles (Pudsey)	Ward, John
Shaw, Sir Michael (Scarb')	Wardle, C. (Bexhill)
Shelton, William (Streatham)	Warren, Kenneth
Shepherd, Colin (Hereford)	Watson, John
Shersby, Michael	Watts, John
Silvester, Fred	Wells, Bowen (Hertford)
Sims, Roger	Wells, John (Maidstone)
Skeet, T. H. H.	Wheeler, John
Smith, Sir Dudley (Warwick)	Whitfield, John
Smith, Tim (Beaconsfield)	Wilkinson, John
Soames, Hon Nicholas	Winterton, Mrs Ann
Speller, Tony	Winterton, Nicholas
Spence, John	Yeo, Tim
Spencer, D.	Younger, Rt Hon George
Spicer, Jim (W Dorset)
Spicer, Michael (S Worcs)	Tellers for the Ayes:
Squire, Robin	Mr. Tristan Garel-Jones and
Stanbrook, Ivor	Mr. Archy Hamilton.
Steen, Anthony
NOES
Abse, Leo	Clay, Robert
Adams, Allen (Paisley N)	Cocks, Rt Hon M. (Bristol S.)
Alton, David	Coleman, Donald
Anderson, Donald	Concannon, Rt Hon J. D.
Archer, Rt Hon Peter	Cook, Frank (Stockton North)
Ashley, Rt Hon Jack	Cook, Robin F. (Livingston)
Ashton, Joe	Corbett, Robin
Atkinson, N. (Tottenham)	Corbyn, Jeremy
Banks, Tony (Newham NW)	Cowans, Harry
Barron, Kevin	Craigen, J. M.
Beckett, Mrs Margaret	Crowther, Stan
Beith, A. J.	Cunningham, Dr John
Bell, Stuart	Davies, Ronald (Caerphilly)
Bermingham, Gerald	Davis, Terry (B'ham, H'ge H'I)
Bidwell, Sydney	Dewar, Donald
Blair, Anthony	Dixon, Donald
Boyes, Roland	Dormand, Jack
Bray, Dr Jeremy	Douglas, Dick
Brown, Gordon (D'f'mline E)	Dubs, Alfred
Brown, Hugh D. (Provan)	Duffy, A. E. P.
Brown, R. (N'c'tle-u-Tyne N)	Dunwoody, Hon Mrs G.
Brown, Ron (E'burgh, Leith)	Eastham, Ken
Buchan, Norman	Edwards, Bob (W'h'mpt'n SE)
Callaghan, Rt Hon J.	Evans, Ioan (Cynon Valley)
Callaghan, Jim (Heyw'd & M)	Evans, John (St. Helens N)
Campbell-Savours, Dale	Fatchett, Derek
Cartwright, John	Faulds, Andrew
Clark, Dr David (S Shields)	Fields, T. (L'pool Broad Gn)
Clarke, Thomas	Fisher, Mark

Flannery, Martin	Mikardo, Ian
Foot, Rt Hon Michael	Millen, Rt Hon Bruce
Forrester, John	Miller, Dr M. S. (E Kilbride)
Foster, Derek	Mitchell, Austin (G't Grimsby)
Fraser, J. (Norwood)	Morris, Rt Hon A. (W'shawe)
Freeson, Rt Hon Reginald	Morris, Rt Hon J. (Aberavon)
Garrett, W. E.	Nellist, David
George, Bruce	O'Brien, William
Gilbert, Rt Hon Dr John	O'Neill, Martin
Godman, Dr Norman	Park, George
Golding, John	Patchett, Terry
Gourlay, Harry	Pendry, Tom
Hamilton, James (M'well N)	Penhaligon, David
Hamilton, W. W. (Central Fife)	Pike, Peter
Harman, Ms Harriet	Powell, Raymond (Ogmore)
Harrison, Rt Hon Walter	Prescott, John
Hart, Rt Hon Dame Judith	Radice, Giles
Haynes, Frank	Randall, Stuart
Healey, Rt Hon Denis	Redmond, M.
Heffer, Eric S.	Rees, Rt Hon M. (Leeds S)
Hogg, N. (C'nauld & Kilsyth)	Richardson, Ms Jo
Holland, Stuart (Vauxhall)	Roberts, Ernest (Hackney N)
Home Robertson, John	Robertson, George
Howell, Rt Hon D. (S'heath)	Rogers, Allan
Howells, Geraint	Rooker, J. W.
Hoyle, Douglas	Ross, Ernest (Dundee W)
Hughes, Dr. Mark (Durham)	Ross, Stephen (Isle of Wight)
Hughes, Robert (Aberdeen N)	Ryman, John
Hughes, Roy (Newport East)	Sedgemore, Brian
Hughes, Sean (Knowsley S)	Sheerman, Barry
John, Brynmor	Sheldon, Rt Hon R.
Jones, Barry (Alyn & Deeside)	Shore, Rt Hon Peter
Kaufman, Rt Hon Gerald	Short, Ms Clare (Ladywood)
Kennedy, Charles	Skinner, Dennis
Kilroy-Silk, Robert	Smith, C.(Isl'ton S & F'bury)
Kirkwood, Archibald	Snape, Peter
Lamond, James	Soley, Clive
Leadbitter, Ted	Steel, Rt Hon David
Leighton, Ronald	Stewart, Rt Hon D. (W Isles)
Lewis, Ron (Carlisle)	Thomas, Dafydd (Merioneth)
Lewis, Terence (Worsley)	Thomas, Dr R. (Carmarthen)
Litherland, Robert	Tinn, James
Lloyd, Tony (Stretford)	Torney, Tom
Lofthouse, Geoffrey	Wainwright, R.
Loyden, Edward	Wallace, James
McCusker, Harold	Wardell, Gareth (Gower)
McDonald, Dr Oonagh	Wareing, Robert
McKelvey, William	Weetch, Ken
Mackenzie, Rt Hon Gregor	Welsh, Michael
Maclennan, Robert	White, James
McTaggart, Robert	Wigley, Dafydd
Maginnis, Ken	Williams, Rt Hon A.
Marek, Dr John	Wilson, Gordon
Marshall, David (Shettleston)	Woodall, Alec
Martin, Michael
Maxton, John	Tellers for the Noes:
Maynard, Miss Joan	Mr. John McWilliam and
Meadowcroft, Michael	Mr. John MacKay.

Question accordingly agreed to.

Resolved, That the Welsh Rate Support Grant Report 1984–85, which was laid before this House on 26th January, be approved.