HC Deb 18 July 1984 vol 64 cc341-9

5.8 pm

Mr. Speaker

Statement. Mr. Wyn Roberts.

Mr. Donald Coleman (Neath)

On a point of order, Mr. Speaker. [HON. MEMBERS: "No."]

Mr. Speaker

Before the Minister starts?

Mr. Coleman

Yes. We distinctly heard the Secretary of State for the Environment say that we were to have a statement today by the Secretary of State for Wales. We understand now that we are to have a statement from the Parliamentary Under-Secretary. While we have a great deal of respect for him, this is a matter of considerable significance for local authorities in Wales. Would it not therefore be better in the light of that for the statement to be postponed until the Secretary of State for Wales can be present? We know that he has important duties in Wales today, but it would be far better for the Secretary of State to make the statement.

Mr. Speaker

All I can say is that the indication given to me was that the Parliamentary Under-Secretary would be making the statement. [HON. MEMBERS: "On a point of order."] Order. It is not a matter for me, and it cannot be a matter for me. I am not responsible for deciding which Minister makes a statement.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

On a point of order, Mr. Speaker.

Mr. Speaker

Is it a different point of order?

Mr. Rowlands

It relates to it, Mr. Speaker. It refers to an exchange that took place in your presence on Monday 16 July. Question No. 3 from my hon. Friend the Member for Gower (Mr. Wardell) was about this matter. It was answered by the Secretary of State for Wales. He did not just answer it, but, in the view of many Opposition Members, he completely misled the House as to what was going to happen. In view of the fact that he chose to answer that question in the way that he did, and yet within two days he cannot even manage to be present to face the music, we have the right to ask you, Mr. Speaker, whether we have any rights in this respect.

Mr. Speaker

I say again to the House that there is no point in raising the matter with me. I have no responsibility for deciding which Minister will make a statement.

Mr. Ray Powell (Ogmore)

On a point of order, Mr. Speaker.

Mr. Speaker

Order. I am not taking any more points of order. It is not a matter for me.

Mr. Powell

Where is Edwards?

Mr. Speaker

Order. Let us hear no more about the matter. I am not prepared to take any further points of order on the whereabouts of the Secretary of State. I call upon the Parliamentary Under-Secretary to make his statement.

The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts)

With permission, Mr. Speaker, I should like to make a statement on local government capital expenditure in Wales. [Interruption.] The Secretary of State for Wales cannot be here to make this statement, because he is in Wales presenting an honour on behalf of Her Majesty the Queen.

On the basis of the local authorities' forecasts, the 1984–85 capital cash limit is on course to be exceeded by £88 million. Discussions with Welsh local authority associations, in the framework of the Welsh Consultative Council on Local Government Finance, indicate that the excess is likely to be within the range of £40 million to £50 million. We cannot accept the damaging economic impact of overspending on this scale. Accordingly, following the consultations to which I have referred, we are seeking the co-operation of all local authorities in holding expenditure to a more acceptable level, with the aim of preserving the cash limit.

In doing so, my right hon. Friend has not for the present employed any of the statutory measures that are available. As in 1983–84, we prefer to rely on voluntary co-operation, trusting that each authority will play its part. None the less, when considering the allocation of resources available for 1985–86, my right hon. Friend will have regard to the extent to which authorities both collectively and individually have complied with our request for restraint.

Taking action at this relatively early stage of the year enables us to be far more selective in our request for restraint than in 1983–84. Thus, county councils, whose aggregate spending is not currently projected to give rise to pressure on the cash limit, are asked only to contain their spending to the levels forecast in April. It is the district tier which will, therefore, have to trim its spending. District authorities are being asked to restrict their spending in the current year to their capital allocations, plus the prescribed portion of receipts accruing in the year, or the amount actually committed as at midnight tonight, whichever is larger, apart from limited areas which are of particular local and national priority. They are the urban programme, including urban development grants, Welsh Development Agency derelict land clearance, and spending covered by the special allocations made in respect of enterprise zones and priority estate projects.

We are asking local authorities to supply us with more precise information to allow monitoring of the course of their capital spending. That material will enable us to review the impact of our measures, and to see whether there is any scope for allowing authorities to enter into some additional commitments, or whether further restraint is required.

The revised cash limit for 1983–84 was overspent by some £7 million. Normally, an excess over the cash limit would be deducted from the resources available in the following year. Given the circumstances, such a procedure would clearly be inappropriate in this case. The overspend will be taken into account when setting the limit in 1985–86.

A copy of the text of the letter that is being sent to councils has been placed in the Library.

Mr. Barry Jones (Alyn and Deeside)

Overall, this statement will receive a resentful welcome from district authorities because it will create uncertainty and confusion. Does not the Minister yet understand that Wales needs more, not less, capital spending? Does he not know that we have suffered major cuts in rate support grant allocations? We have the worst housing in Britain, with some 40 per cent. of the stock being pre-1919 housing. We have lost 12,000 jobs in the construction industry since 1979 and, therefore, we expect more unemployment as a consequence of the measure announced today.

Regarding capital receipts, what will be the consequence of the Under-Secretary's advice on new council house building, for the improvement of aging council homes, for recreational and tourist schemes, and for our sea defence schemes? Does he not agree that the statement will throw the improvement grant scheme into chaos and cause more disruption to undertakings that have already been made by authorities throughout Wales? Is not the Minister employing the tactic of threatening penalties on local authorities which do not oblige him by agreeing that their 1985–86 allocations can be tampered with?

Is not this statement just one more instance of the Government's blatant disrespect for local government democracy? Is it not bully-boy tactics writ large? The Government are giving district authorities very little freedom to manoeuvre. They will have only the freedom to do as they are told. They are being invited to choose only the form of pain that they will have to suffer.

Mr. Roberts

I believe that the hon. Gentleman has taken a very short-sighted view of the situation. He has made it out to be far bleaker and darker that it really is. With regard to confusion, apart from the confusion that exists in the hon. Gentleman's own mind, the letter that we shall send to local authorities will make the position abundantly-clear to them.

The hon. Gentleman has pleaded for more capital spending in Wales. We would, of course, all like to spend more, but the Government are pledged to restrict spending to what the nation can afford. What we are doing in this statement, and the follow-up today, is holding down expenditure to the planned levels.

I have explained the position with regard to district councils. They are, of course, allowed to spend their allocations, plus the prescribed portion of receipts. The majority of improvement grants will have been committed already, and some 24,000 improvement grants have already been approved. The work to implement those improvements will carry on.

As for threatening the local authorities, I stress that we are seeking their voluntary co-operation and that we are not using statutory powers.

Sir Anthony Meyer (Clwyd, North-West)

Will my hon. Friend accept that, within the context of an intolerable system of local government finance, he has made the best of a very bad job? None the less, it is unsatisfactory that when cuts are called for they have to fall in the first place on capital projects and that far less hardship is inflicted upon current expenditure. The Minister should use that as a further reason for pressing on with a thorough overhaul of the system of local government finance.

Mr. Roberts

May I reassure my hon. Friend, as my right hon. Friend the Secretary of State for the Environment has just reassured other hon. Members, that there is no question of cuts in this case. [HON. MEMBERS: "Trimming."] We must restore spending to its planned level.

With regard to the capital control system, as my right hon. Friend also said, we are seeking ways to improve it.

Mr. Michael Foot (Blaenau Gwent)

Will the Minister convey to the Secretary of State our protest against his absence from the House? Does he not realise that it would have been open to the Secretary of State, when he knew that the statement was to be made, to ask for it to be made on another day? He must have known how important the matter was. I do not say this in disrespect to the Under-Secretary, but for us in Wales the absence of the Secretary of State is just another proof of the right hon. Gentleman's total unfitness for the office that he holds.

I should like to ask the Minister a question about the application of the announcement to my constituents, who are fighting against mass unemployment on a huge scale. How many more will be added to the dole queue because of the announcement?

Mr. Roberts

I regret the right hon. Gentleman's remarks about my right hon. Friend the Secretary of State. He will be here later in the day. He is due to participate in a debate on the rate support grant reports. I dare say that the subject that we are discussing now can also be brought up during that debate.

With regard to unemployment, I reassure the right hon. Gentleman that the works to which district councils are already committed, and which they are legally bound and contracted to perform, will not be affected, so there is no immediate impact on employment.

Mr. Peter Hubbard-Miles (Bridgend)

I am sure that my hon. Friend will realise that the exclusion of enterprise zones and urban grants from the restrictions that he has announced will be welcomed, but is he aware that the local authority that covers my constituency, which is one of the largest district authorities in Wales, had capital expenditure last year of £12 million and this year of £17 million and that its projected expenditure for next year is £21 million? In the light of those figures, my hon. Friend's modest proposal can hardly be described as cuts or a moratorium, but is merely a gentle containment of an explosive capital situation.

Mr. Roberts

My hon. Friend is absolutely right in that we are acting prudently in bringing local authority expenditure back to planned levels. I am glad that my hon. Friend welcomes the exemption that we have given to the enterprise zones in particular. Together with the other exemptions, that amounts to a capital spend of about £34 million. The reason we have been able to exempt the areas that I mentioned in my statement is that firm control was exercised over the planned spend in those areas.

Mr. Alex Carlile (Montgomery)

Will the Minister tell those of us who do not have his command of language how one trims without cutting? Does he agree that the use of the word "voluntary" is absolute humbug because any local authority that does not act voluntarily will get its knuckles rapped? Does he agree that the housing stock in Wales, which the Secretary of State described as dreadful in the Welsh Grand Committee recently, will suffer further as a result of the cuts? Does the hon. Gentleman further agree that local authorities are indefensibly being forbidden to spend their own money—their own capital receipts, which have absolutely nothing to do with the Government? Does he agree that it is high time that there was a rolling programme for local authorities in Wales so that they could plan for the future and for the people of Wales without constant obstruction from the Welsh Office?

Mr. Roberts

There appears to be some confusion. Local authorities are allowed to spend their current capital receipts. It is their accumulated capital receipts that we are restricting, for very good reasons. If those accumulated receipts are used, the cash limit will be exceeded and that in turn will lead to damaging effects on the economy, and employment, with all the other consequences that we do not wish.

With regard to the hon. and learned Gentleman's point about trimming and cutting, I have said that what we are doing is bringing the local authorities back to the planned level of expenditure. That is clearly shown in the case of the counties—we are simply saying that they must stand by their April forecasts. That is how they are affected. The scheme is voluntary. My right hon. Friend the Secretary of State met the Welsh Consultative Council on Local Government Finance yesterday, and I was present. We discussed the situation. It is fully aware of the fact that an overspend was threatened.

With regard to housing, I can give the hon. and learned Gentleman the same assurance that I gave previously to him, as well as the House, which is that we expect expenditure of about £200 million this year on housing in Wales.

Mr. Keith Raffan (Delyn)

The fact that enterprise zones will be exempt from voluntary restraint will be particularly welcome in Delyn, where we are doing our utmost to get the new enterprise zone off the ground as quickly as possible. Is my hon. Friend aware that Delyn borough council is extremely grateful for the helpful way in which the Government have made up what was held back under last December's voluntary restraint, and for the very generous £1,006,000 urban programme grant for the zone, which is £250,000 more than its wildest expectations?

Mr. Roberts

I am sure that Delwyn appreciates the fact that enterprise zones have been exempted. I am glad that my hon. Friend appreciates it, too. There is no hon. Member who does not wish success to the enterprise zone in my hon. Friend's constituency.

Mr. Donald Anderson (Swansea, East)

I shall say nothing about the humbug of calling this a "voluntary" arrangement, but is it naive of us to imagine that the Government have calculated the consequences of their own announcement? What estimate have they made of the effects on employment, direct and indirect, of the announcement? Will a similar restraint, voluntary or otherwise, be applied to housing associations?

Mr. Roberts

I certainly cannot add to the statement that I have already made, except to say, as my right hon. Friend the Secretary of State for the Environment did, that we are not talking about the same sort of cuts in expenditure as the Labour Government imposed in 1976, when all the horrors that are in the minds of Opposition Members were perpetrated. I must stress that what we are doing is bringing local authority expenditure back on track.

Mr. Rowlands

Will the Under-Secretary tell us which authorities might be caught by the midnight moratorium? In his statement he referred to the authorities that might have contracted expenditure by midnight tonight. Will the hon. Gentleman tell us, from his estimates, which those authorities are?

Mr. Roberts

I can tell the hon. Gentleman that there are positive aspects to the statement that I have just made—[HON. MEMBERS: "Answer the question."] Not only will there be encouragement for certain authorities to maximise their capital receipts in the course of this year so that they can increase their spending, but some authorities, possibly amounting to as many as half the district authorities in Wales, have not yet reached the limits that I outlined in my statement.

Dr. John Marek (Wrexham)

I urge the Minister to worry less about preserving cash limits and more about the prevention of misery, deprivation and poverty in the Principality. Does he care in any way that the infrastructure of the Principality is crumbling about our very ears and does he realise that he is leading the nation fast to the status of a developing country? Is he aware that local authorities, unless they are legally obliged, will have to get together and put the interests of the people of Wales first and not co-operate in any way with the Minister because he does not represent those people in any way?

Mr. Roberts

The hon. Gentleman is encouraging the Government to allow capital spending to rocket. There is no doubt that that would have a very damaging effect. I know of no Government, Conservative or Labour, who have allowed that to happen. In order to prevent damage to the economy, we must stick to planned levels of spending.

Mr. Dafydd Wigley (Caernarfon)

Is the Under-Secretary aware that it is unacceptable that the Secretary of State should be prancing around Wales presenting honours, playing Santa Claus with royal palliatives, while the Government bring disaster to Wales?

The guidelines are vague and cannot be quantified, but the local authorities will be measured and punished against them. Will the hon. Gentleman admit that when he says "trim" he means "cut back"? What is the position of authorities that cannot undertake their statutory responsibilities because of the cuts?

Finally, will the hon. Gentleman tell the House whether there is any level to which he will not stoop or demean himself before he considers his position in office?

Mr. Roberts

The House is well aware of what, in this situation, the Government are about. I know that I am repeating myself, but I must say again that we are bringing the local authorities back to the planned level of spending, and seeking to avoid the adverse consequences that would surely follow if expenditure was allowed to rocket.

We will, of course, expect all local authorities to meet their statutory obligations.

Mr. Brynmor John (Pontypridd)

How can we take the Under-Secretary seriously when he said a week ago, in the Welsh Grand Committee, that it was far too early in the year for definite conclusions? If the midnight moratorium is not a definite conclusion, what is? Have the Government calculated the consequences of these measures on jobs and on the economy? Has the hon. Gentleman calculated by how much the number of housing starts will be reduced in south Wales, where 32,000 people are awaiting for a home in the coming year? How many authorities will be added to the six which will not build a single council house next year?

Mr. Roberts

Yes, of course I accept that we discussed the situation last week in the Welsh Grand Committee. I do not want to quote myself——

Mr. John

The hon. Gentleman misled the Committee.

Mr. Roberts

No, I did not mislead the Committee. I made it clear that we are concerned about the figures that the local authorities are giving us. As I said in my statement, this is fairly early in the year. The fact that we have taken action at this stage means that that action is less stringent than it might have been if it had been taken later on. But, as I have said, we shall monitor and review the situation. We have not made any calculations about the effect on housing starts, but there will be a very substantial spend on housing in Wales this year.

Mr. Coleman

The hon. Gentleman will recall that his voluntary persuasion of county councils—especially in Glamorgan — has had a devastating effect upon our education and especially on the conveyance of children to school. Will he accept that, after midnight tonight, those who had the expectation of being housed decently and those who are undertaking improvements to their homes can forget it?

Mr. Roberts

No, I will confirm nothing of the kind. By the end of March this year, some 24,000 improvement grants had been approved but not yet paid. They will not be affected by what I have said today. We can look forward to the payment of some 24,000 improvement grants.

The hon. Gentleman referred to schools. He well understands that the running of schools is a matter for revenue expenditure—current expenditure—rather than capital.

Mr. Ray Powell

I share the sentiment expressed by my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) about the absence of the Secretary of State. I understand that, if the right hon. Gentleman had to travel from Cardiff to London, he might be delayed by the presence of 110 lorries transporting iron ore and coal from Port Talbot to Llanwern, but he should be here to answer the questions. However, I notice that another of the three stooges has arrived on the Government Front Bench to support the hon. Gentleman.

The hon. Member for Bridgend (Mr. Hubbard-Miles) is a member of the local authority which represents my area as well as his. He failed to ask how much unemployment would be created in Ogmore by the measures to be introduced. He should have emphasised the fact that in Ogmore 8,000 people are out of work and only 100 jobs are on offer in the jobcentre, and that this measure will create unemployment and allow it to escalate out of all proportion. Is not it time that the Government took action?

Mr. Roberts

I must reiterate what I have already said, for the benefit of the hon. Gentleman, who is aping certain other statements made about my right hon. Friend. I said that local authorities would, of course, be allowed to spend their allocations, plus the appropriate proportion of their capital receipts. In the case of housing, that is 25 per cent. In the case of non-housing receipts it is 100 per cent. or the level of their legally binding commitments. All the work that has been planned and contracted over the past few months of the current year will go ahead, but the district authorities cannot take on further commitments.

Mr. Gareth Wardell (Gower)

In view of the directive which the Government have issued today to local authorities in Wales, will the Parliamentary Under-Secretary spell out how, at a time of high interest rates, income and employment are to be generated in Wales without an expansion in capital investment? Will he further explain a reply to me last Monday during Welsh Question Time, when the Secretary of State said: We are discussing with local authorities the best way of dealing with this situation."—[Official Report, 16 July 1984; Vol. 63, c. 5.] Will the hon. Gentleman say whether the discussions which were continuing on Monday stopped suddenly today? Is this situation not indicative of the lack of consultation and openness which characterises the Government's behaviour at the moment?

Mr. Roberts

There is every indication that the Government have been most open. We have, of course, consulted the local authorities. Yesterday, there was a meeting of the Welsh Consultative Council on Local Government Finance. That meeting had been preceded by other consultations with local authorities at an official level. The local authorities are well aware of the threatened overspend of the cash limit. Indeed, the sub-committee set up by that consultative council — comprising Welsh Office and local authority officials—has been discussing the capital situation, as we did yesterday. The cash-limited total of public expenditure—that is, capital expenditure—this year in Wales is £280 million and of that the local authority element is about £237 million. It is a substantial spend by any standards.

Mr. Ron Davies (Caerphilly)

Is it not a fact that the Department of the Environment and the Welsh Office have made a complete hash of their relations with local government? Does the Under-Secretary accept that, if there had not been three months of fine weather this year, they would not have been panicked into these measures? Is he aware that the moratorium which he has announced this afternoon will mean that some local authorities in Wales will be able to enter into new contracts for capital works, which will lead to nothing other than higher unemployment, a lower level of environmental services and a worsening of the relationship between local government and central Government? That is all that the Minister has achieved.

Mr. Roberts

The consequences for local authorities are spelt out in the letter to which I referred in my statement, which explains the position clearly. There is no hash, and I can assure the hon. Gentleman that there is no panic. I must tell Opposition Members once again that we are not indulging in the savage cuts that were introduced in 1976.

Mr. Barry Jones

May I take up the question of my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) about the midnight moratorium? Will the Minister take this further opportunity to tell the House what additional information is available to us about the local authorities that have reached the limit?

Mr. Roberts

I cannot give precise information to the hon. Gentleman, who will be aware that we are only just coming to the end of the first quarter of the financial year. All that we have now are strong signs. As I said, the local authorities' estimate was about £88 million. We have agreed after consultation that the overspend threatens to be about £50 million. That is why we have taken this appropriate and timely action.

Mr. Speaker

Standing Order No. 10 application——

Dr. Roger Thomas (Carmarthen)

On a point of order, Mr. Speaker. In raising this point of order I am seeking your guidance. I accept that the Secretary of State for Wales is in Wales doing his duty for Her Majesty the Queen, but was it necessary for the right hon. Gentleman to take with him two thirds of the Conservative Back Bench Members who represent Welsh constituencies?

Mr. Speaker

The hon. Gentleman might have had the opportunity to put that question to the Minister if he had risen in his place during questions on the statement.

Standing Order No. 10 application——

Mr. Tony Baldry (Banbury)

On a point of order, Mr. Speaker.

Mr. Speaker

Order. I have written to the hon. Gentleman about his point of order and I think that he should read my letter before he seeks to raise the matter on the Floor of the House.

Mr. Laurie Pavitt (Brent, South)

On a point of order, Mr. Speaker. I sat through the interesting statement on Wales and the questions that followed it. I was naturally interested in the proceedings, but I do not represent a Welsh constituency. Is it the custom of the House that Members who represent English constituencies do not intervene in Welsh or Scottish questions, or is it permissible for them to do so if that is their wish?

Mr. Speaker

It is permissible, but whether the hon. Gentleman's Welsh colleagues would appreciate such intervention is another matter.