HC Deb 15 December 1987 vol 124 cc1044-65 11.52 pm
The Secretary of State for Wales (Mr. Peter Walker)

I beg to move, That the Welsh Rate Support Grant Report 1988–89 (House of Commons Paper No. 142), a copy of which was laid before this House on 8th December, be approved.

Mr. Speaker

It will be convenient for the House if we also discuss the following motions: That the Welsh Rate Support Grant Supplementary (No. 2) Report 1984–85 (House of Commons Paper No. 158), a copy of which was laid before this House on 8th December, be approved. That the Welsh Rate Support Grant Supplementary (No. 2) Report 1985–86 (House of Commons Paper No. 159), a copy of which was laid before this House on 8th December, be approved.

Mr. Walker

Hon. Members will have had an opportunity to examine the reports and my statement to the House—

Mr. Ray Powell (Ogmore)

On a point of order, Mr. Speaker. The Strangers Gallery has been cleared, but hordes of Welsh people would have been in the Gallery to listen to this debate on this important order. Therefore, I wonder whether the Gallery could be reopened so that the Welsh people can listen to the debate, or whether you would consider it wiser to adjourn until 1 o'clock tomorrow afternoon. We could have a debate for one and a half hours and then start Wednesday's proceedings at half-past 2. Perhaps we would then have a better response. Obviously my peroration must wait for another occasion because all my constituents have been turfed out of the Gallery.

Mr. Speaker

I can give the hon. Gentleman some comfort. I have already asked the Serjeant at Arms to reopen the Strangers Gallery. I am sure that when the hon. Gentleman gets up to make his brief contribution to the debate the Gallery will fill.

Mr. Walker

I am sure that we are all relieved that what will become a Gallery crowded with the constituents of the hon. Member for Ogmore (Mr. Powell) will be able to witness the debate.

Hon. Members have had an opportunity to examine the reports and my statement to the House last week, which summarised my decisions. They will know that for 1988–89 I have provided for fair and realistic increases in all the key components of the settlement—increases which exceed the projected increase in costs for the economy as a whole. In retaining broadly the same block grant mechanism as last year, I have also introduced a high degree of stability to the rate support grant system. Consequently, on the basis of this settlement, councils will have a sound basis for planning and developing their services over the coming year.

It is, I know, inevitable that Opposition Members will say that the settlement is not good enough; they always do. It would be remarkable if they did not. But the record speaks for itself. The level of local government current expenditure since 1979–80 has increased in real terms by £152 million, or 11 per cent. During the years when Opposition Members controlled the purse strings, it fell in real terms by £58 million, or 4 per cent. Grant, too, has been set at the generous level of £1,256 million—about £1,200 per household.

Mr. Michael Foot (Blaenau Gwent)

I am sure that the right hon. Gentleman has his figures at his fingertips. Exactly how much money has been taken from Wales in rate support grant since 1979? Knowing that will enable us to put in proportion all the other figures that he gives. If he gives us the whole figure, without equivocation, that will assist us and the debate.

Mr. Walker

I shall certainly be happy to refer to those exact figures. I shall also give the right hon. Gentleman the figures for the reduction in grant that took place when he was a member of the Cabinet. The two sets of figures will compare well. I hope that the right hon. Gentleman will be proud of what he achieved during that period. I shall be pleased to give him both sets of figures in my final remarks. When the right hon. Gentleman was in the Cabinet, local government expenditure fell in real terms.

Mr. Foot

Would the right hon. Gentleman be good enough to give me the figure I asked for? Any other figures that he likes to bring up are OK with me, but how much has been taken from Wales since 1979?

Mr. Walker

We have not taken anything. Although the percentages have come down in cash terms, I shall be happy to give the right hon. Gentleman the figures, in real terms, that he wants. I hope he is proud of the figures I have just given — local government expenditure fell in real terms when he was a member of the Cabinet, and has risen in real terms during the time that I have been a member of the Cabinet. I hope he will reflect carefully on that.

Mr. Nicholas Bennett (Pembroke)

Has my right hon. Friend seen the figures for total public expenditure in Wales, which show that we receive £108 per head, compared with £94 per head in England?

Mr. Walker

That is true on any figures or comparisons.

This, however, is not just a debate about numbers or the technicalities of the present rate support grant system. It is a debate about local government in Wales, about the provision of services, about the efficiency and effectiveness of those services, about the responsibilities which councils have to safeguard the interests of ratepayers by budgeting responsibly and about the need for local authorities to be sure that the importance of their role is recognised and supported by the Government and this House.

I must say that I have been impressed and encouraged in discussions with the leaders of Welsh local authorities, and in particular with their representatives at meetings of the Welsh Consultative Council on Local Government Finance, by their sense of purpose and determination to ensure that the services they provide reflect the needs of their communities. That does not mean that expenditure on those services must increase before they can develop further. The authorities know that they have a duty to secure efficiency and effectiveness in the delivery of services. They also know that they have a responsibility to exercise sound stewardship over the use of the resources which they spend on behalf of their electorate. There is an overall budget of £1,894 million, which amounts to £1,800 per household in Wales. When we reflect that that is so, we might also bear in mind that the domestic household rate contribution is, on average, £300. We must recognise that this is an important part of their role.

I am confident that in responding to this settlement all councils will recognise that it will give them real and tangible support in providing the services that are essential to their communities and to Wales. In doing so, it is important that councils should plan those services and set their budgets in a way that is sensitive to the needs of their domestic and business ratepayers and complementary to the work that is being done to encourage and foster economic development in Wales.

Local authorities have a unique and important role in the ongoing process of economic regeneration, but expenditure by councils on important infrastructure work will not be as beneficial to their communities if rates are increased by an unreasonable amount.

Sir John Stradling Thomas (Monmouth)

Will my right hon. Friend publish his projections for local authority rate rises for 1988–89 for spending in line with the settlement? That would be helpful to all concerned.

Mr. Walker

I shall make those figures available. I shall see that they are placed in the Library.

Sir Raymond Gower (Vale of Glamorgan)

Will they give details of the effect on each authority?

Mr. Walker

They will reflect on each county and district authority. It is important that central and local government and the people of Wales work together in partnership to foster the interests of the whole Principality. I am especially conscious of the special needs of areas such as the south Wales valleys. I have already said that I shall bring forward in the new year my proposals for tackling the problems of the valleys. The local authorities concerned will have a vital role to play. In moving towards a new local government finance system, it is highly desirable that all concerned should be satisfied that the method for establishing the expenditure needs of local councils is sound.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

About three paragraphs ago, as the Minister struggled through his brief, he said that there would be a valleys initiative,. Do the rate support grant figures include the valleys initiative, or will that initiative be additional?

Mr. Walker

I am preparing a range of measures for the valleys, some of which will involve local government. If the hon. Gentleman looks at the figures that we published about the rating effects of these proposals for the valleys, he will see that the valleys have done fairly well out of this settlement. I repeat that there will be a range of measures, some of which will be unconnected with the rate support grant. I know that the hon. Gentleman will welcome those other aspects with great enthusiasm.

The present arrangements have been developed over the years in conjunction with the local authority associations and generally provide an equitable basis for distributing grant. They take due account of factors which reflect differing needs throughout the Principality, including those of councils in sparsely populated areas and of councils in urban areas, including the valleys. In dealing with any system of this kind, there is always political pressure for changes to be made to secure a better result for a particular council. There is always room for improvement to reflect genuine changes in circumstances and I have asked my officials, in conjunction with the local authority associations, to continue to review the existing arrangements with this in mind. This settlement is both fair and realistic.

Mr. Barry Jones (Alyn and Deeside)

The right hon. Gentleman says that the settlement is fair and realistic and he has used the word "sensitivity". May I refer him to the problems in Wales, and especially those in Clwyd and in my constituency, about the provisions of speech therapy services? I have met many parents who are very worried about the lack of speech therapists. Given the massive budget that he has outlined, would he be prepared to look especially at the worries of parents who say that there are insufficient speech therapists in Clwyd and in my constituency?

Mr. Walker

I understand the anxieties in that respect. In the specific and supplementary grant estimates and in the provisions on education and the like, perhaps additional activity on that can be generated. I am interested in the subject because for some time I have been a trustee of a trust for charitable work for the dyslexic child. I am aware of the real problems connected with speech disadvantage and of the important work done by speech therapists.

As I say, this settlement is both fair and realistic and should enable local authorities to play a crucial and exciting role in conjunction with central Government in Wales. It reflects my firm commitment and support to local government, and it gives local authorities the means to continue to play an important role in Welsh life. I am sure that local authorities in Wales will respond to this opportunity in a responsible way, by setting budgets and rates at a reasonable level. If they spend in line with the settlement, rates should rise on average by no more than 1.3 per cent.

Mr. Dafydd Wigley (Caernarfon)

Does the right hon. Gentleman agree that in order to get the desired rate effect it will be necessary for the wage increases negotiated for both manual and white collar workers to be largely absorbed by efficiency increases? Will that mean that there will have to be redundancies and loss of jobs to balance the figures, to get the rate increases to which he referred?

Mr. Walker

When I have spoken to the local authorities, they have argued that the increases will enable them to obtain greater productivity and improve efficiency. They cannot have it both ways. The hon. Gentleman is right in saying that improved efficiency may cause a change in the nature of employment, but it would be an absurd local authority which said that it would go in for more inefficiency in expenditure in order to employ more people on an inefficient basis. It is important that high standards of efficiency are obtained in local government. I believe that local authorities accept that. If the high wage increases do not bring an improvement in productivity, there is a considerable argument that the adverse effect on jobs of inflationary wage increases without an improvement in productivity could be considerable, particularly in the Principality. I hope that in future negotiations consideration will be given to the impact of those negotiations. The settlement should commend itself to the House.

Mr. Alan Williams (Swansea, West)

It is my wish for as many Back Bench colleagues as possible to take part in the limited debate, and, as I stated most of my objections, which remain unchanged, during the Minister's statement, I will try to be brief so as to facilitate other contributions.

The Secretary of State will appreciate that the debate has come close on the tail of the statement—literally one week later. The local authorities are still assessing the impact, but the Minister will be aware that, on behalf of the counties, Mr. Tettenborn has gone on record as saying that, as we forecast last week, his projection is that the settlement will cause a combination of rate rises and service cuts. The district councils have forecast that about 15 of the 37 districts will have rates increases in excess of 10 per cent. —higher than the Secretary of State's forecast. Only today they suggested that the average rise will be somewhere between 7 and 9 per cent., which is substantially higher than the going rate and, again, substantially higher than the Secretary of State has suggested.

I said in my response to the Secretary of State's statement that local authorities tend to have a better track record of forecasting than the Welsh Office. Only last year my hon. Friend the Member for Alyn and Deeside (Mr. Jones) forecast to the Minister's predecessor that the increases would be between 10 and 20 per cent. He was assured categorically by the then Secretary of State that in no case—not just in a few cases—would the rate bill in districts increase by anything like 10 to 20 per cent., yet 10 districts exceeded 10 per cent. and two districts exceeded 20 per cent.—21 per cent. in Dynevor and 26 per cent. in Colwyn.

The Secretary of State has made the point that successive spokesmen at the Dispatch Box have made. We look to local authorities to achieve savings through efficiency. No one objects to greater efficiency, but one must recognise that it is not an unlimited path which can be followed. It is not possible to go on deducting hypothetical sums year after year and expecting councils to meet those deductions through extra efficiency.

Let me demonstrate that assertion in the simplest way. About 70 per cent. of local authorities' costs are labour costs, and to achieve increased efficiency they would need reorganisation, mechanisation or computerisation. The essence of all three courses, which are managerial decisions, is that capital investment is needed. Only a week before the Secretary of State made a statement whose terms were contingent on increased capital investment to allow increased efficiency, he came forward with a capital programme that actually cut the capital allocation by £10 million.

The Secretary of State cannot have it all ways. If he wills efficiency, he must equally will the means to enable councils to make the investment to make greater efficiency possible. There are limits to how much one can achieve by the simple process of axing manpower without putting in place services of a different kind—computerised and so on—to ensure that the services necessary to our people can be sustained.

We hear about all manner of algebraic formulae when we discuss the rate support grant. However, the critical formula—what matters to our people in Wales —remains the sum that is available to spend in relation to the present quality of services and the quality of services to which they are entitled to aspire. As I said last week, it is no good using the slick Treasury formula of real increases based on simple cost-of-living assessments. According to the Chancellor, the cost of living will increase by 4.5 per cent. in the next year. That is his prophesy, not ours. That means that the average family needs an extra 4.5 per cent. to stand still. There is a tendency to assume that the cost-of-living index is a universally applicable yardstick of cost increases. Let us remember that when we talk of real increases, we are talking about increases in the cost of living geared to the average spending pattern of the average family. But we are talking about nothing of the kind tonight; we are talking about labour-intensive services in county and district councils.

The Secretary of State knows—his officials, in conjunction with council officials agreed this—that to meet higher cost increases £60 million more than he has allowed for would be needed to enable councils simply to sustain the quality of services that they offer at the moment. Most hon. Members will recognise that it is too much to expect local authorities to deliver that £60 million through extra efficiency this year. That would not have been possible even if the capital investment had been made available to local authorities to enable them to install new systems; in fact, that capital investment has been denied them.

It is important that the people of Wales do not allow the Government to use the counties and districts as their bodyshield to take the blame for the cuts that they have imposed. Will the Secretary of State confirm to the people of Wales that the councils have been placed over a barrel by the combination of his statement last week with the penalty system that the Government are operating concurrently? Will he make it clear to those who say that, despite the £60 million shortfall, there need be no cuts in services, that under this vindictive penalty system—the so-called negative marginal grant system — if councils tried to spend ratepayers' money to make up the shortfall that he announced last week, they would need to raise not just £60 million but a further £30 million to make up for the fine that would be imposed on them by the Government in the form of cuts in their grants? In fact, to make up the shortfall imposed by the Government, they would need to raise £90 million extra from the ratepayers and that would mean an extra 30p on the rates.

Mr. Gwilym Jones (Cardiff, North)

I am struck by the right hon. Gentleman's conversion to the benefits of efficiency. He then suggested that cuts were being made in services. How can he square those two points with the third fact that is emerging of a significant increase in staffing levels in Welsh local authorities that is predicted to continue? How can he square those three points?

Mr. Williams

I invite the hon. Gentleman to participate in the debate that will take place tomorrow and on Thursday on the Second Reading of the Local Government Finance Bill. He will find that, as a result of the poll tax being introduced by the Conservative party, it will he essential as I hope to show tomorrow—for local authorities to recruit on a substantial scale to meet the requirements that the Government will be imposing on them by changing rating systems.

A week ago I suggested to the Secretary of State that as the extra spend allowed in Wales this year is only 5.3 per cent. compared with 7 per cent. in England, that means that our authorities are losing a possible £27 million of spending power because they will not have the same 7 per cent. formula. The Secretary of State shook his head last week in disapproval and he shakes his head again tonight. He did not give a detailed answer to that point. If that is wrong, it should be exposed and explained. However, I understand that there will be a £27 million shortfall and I should welcome an explanation from the Secretary of State about that. I recognise the problems of making a statement, but last week hon. Members asked about 24 questions during the statement and the Secretary of State addressed only eight of them.

During the statement I stressed that the Government grant as a proportion of expenditure has fallen this year from 66.7 per cent. to 66.3 per cent. That is a cut of only £6 million, but it is another cut. However, the Secretary of State was unable to answer the point raised by my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) about the loss to Wales. When we consider the percentage of grant that was paid in 1978–79, we see that the cumulative loss to Wales has been £750 million. As I said, it is not just that we have lost £750 million. That money has to be raised from the ratepayers to sustain services and is not available for other necessary spending in Wales.

Mrs. Ann Clwyd (Cynon Valley)

Will my right hon. Friend confirm that central Government spending on education in Wales has decreased by 10 per cent. since 1979 while spending by local government has increased by 44 per cent.? Local government has to make up the shortfall that we see in crumbling buildings, the shortage of books and the many services to which parents have to contribute.

Mr. Williams

Exactly. As my hon. Friend has said, it comes back to the families, households, parents and children. The £750 million cut on a household basis means that every household in Wales has lost more than £700 worth of Government grant since the Government came to office and began to cut back their percentage of RSG.

That is happening in an area of Britain with the lowest household income, an area with 42 per cent of its households—households, not individuals —on annual incomes of less than £4,000 a year. The Government have taken the equivalent of £700 from each of those households. Considering the way in which Wales has been deprived in the past, why on earth did the Secretary of State have to deprive us further?

12.20 am
Sir Anthony Meyer (Clwyd, North-West)

I start from a premise that is not so dissimilar from that of the right hon. Member for Swansea, West (Mr. Williams)—it was a pleasant change to hear him in a more measured mood tonight—though I come to very different conclusions from him.

I congratulate my right hon. Friend on the settlement that he has achieved for Wales. It is substantially better than the one that England has had, and I know that much of his success has been due to the way in which he fought his corner in the Cabinet, as did his predecessor, my noble Friend Lord Crickhowell. My right hon. Friend has been the more able to get a good result because of the sensible and co-operative attitude adopted by Welsh local authorities at virtually every level. What is more, they have responded to my right hon. Friend's clear readiness to work in partnership with them.

My right hon. Friend brings to his job an even greater readiness than did his predecessor to recognise the indispensable part that public funding can play in attracting private investment and the part that a lair level of rate support grant can play in enabling local authorities to do their job better, though I recognise that there is a valid argument between the two sides of the House about what constitutes "a fair level". Thanks also to my right hon. Friend, Wales has largely avoided the constant acrimony that has bedevilled relations between central and local government in England.

There is always scope for more efficient management by local authorities. Nowhere is this more evident than in education, but here we come up against a difficulty that is partly of the Government's making. A lot of rather glib talk about parent power and the right to choose is making it far more difficult for local education authorities to carry through schemes which necessarily involve closing down some schools and changing the nature of others. These closures will always be fiercely fought by the parents concerned and by the local councillors on the education committee.

Furthermore, local authorities have a valid argument when they claim that their costs have gone up more than the rate of inflation, because their operations are highly labour-intensive and wage rates, which are nationally bargained and over which they exercise no control, have risen well ahead of inflation. And local authorities do not have the same possibility of streamlining their labour force as manufacturing industry enjoys. Indeed, there are now really serious shortages in several departments. The hon. Member for Alyn and Deeside (Mr. Jones) talked about speech therapists. In Clwyd we have a dramatic shortage of social workers in many areas of the county.

None of this is any reason for relaxing the pressure on local authorities to increase their efficiency, both by cutting costs and by finding ways of generating revenue, but it is important to recognise, as my right hon. Friend manifestly does, that there are instances where a capital allocation now, or a tapering subsidy, may enable a local authority to make worthwhile savings or produce substantial revenues later, and the RSG properly takes account of this possibility, and should go on doing so.

A case in point is the Bodelwyddan castle project, which my hon. Friend the Member for Delyn (Mr. Raffan) criticises so strongly. I make no complaint about that, and it is right that Clwyd county council should be kept under the most relentless scrutiny to ensure that the project is being carefully managed. None the less, this is a project that will do a great deal to enhance the tourist image of north Wales. Although it is within my constituency, the benefits from it, situated as it is alongside the A55 expressway, will fan out along the coast. It will provide the perfect stopping place for families travelling further west along the coast, as well as an ideal excursion for those spending their holidays in north-east Wales and day visitors to the area. In short, it will be of benefit to north Wales, even to the constituency of my hon. Friend the Member for Delyn.

12.25 am
Mr. Richard Livsey (Brecon and Radnor)

The Secretary of State has tried to paint an optimistic picture of his rate support grant settlement for 1988–89. That is his privilege, but he should not expect other hon. Members to agree with his conclusions.

The right hon. Gentleman's spending plans affect many of our constituents in their daily lives. Three sectors are affected: first, there is the effect on services; secondly, there is the impact on capital expenditure; and, thirdly, there is the resulting effect on rates.

With regard to the effect on services, the education system is under stress, and the hon. Member for Clwyd, North-West (Sir A. Meyer) mentioned some of the effects of that. Social services in many local authorities are near to breaking point. If that is contrasted with the budget for the police force—which we all support—we see that it has received a larger slice of cake than some of the other sectors that need the resources.

In Powys the block grant has fallen as a proportion over the past 12 years by 15 per cent. In the past eight years it has fallen by 10 per cent. Labour costs account for two-thirds of all costs. The grant-related expenditure formula is not a fair measure statistically and it is centrally assessed, yet there is great variability in factors operating in Wales.

Wage settlements have impinged on expenditure. For example, manual workers' wages have increased by 10 per cent., wages for home helps by 18 per cent., and teachers' wages by between 8 and 9 per cent. When one compares the two thirds of local authority costs which are labour costs with the 4.3 per cent. increase in costs in the Secretary of State's statement—only 1 per cent. on top; in other words, a 5.3 per cent. increase—one finds that there is an immense gap between the increases in labour costs and the award made. In this light the award is seen to be not so generous, and it puts councils under pressure.

The block grant will remain at two-thirds of expenditure of local authorities in Wales. Approximately £5 million has been lopped off it this year. In July 1987 Powys was expecting to receive £200,000 more than it will receive under the award.

Mr. Alex Carlile (Montgomery)

Does my hon. Friend agree that these figures show that yet again the Government have failed to have proper regard to the sparseness of the population of rural mid-Wales? As a result, we are facing cuts in education, which we can see in our schools, and cuts in hospital services.

Mr. Livsey

I agree with my hon. Friend. The Secretary of State should have a super-sparsity factor for areas of little population.

The effect of the settlement on capital expenditure programmes must not be ignored. The Secretary of State knows from my remarks in the Welsh Grand Committee my views on the inadequacies of the Welsh Office's roads programme. However, housing is one of the weakest points of Government policy in Wales. There was a drop in the housing capital allocation from £154 million to £145 million, which was a 10 per cent. drop in real terms. We heard about that matter from the Welsh Office of the Association of District Councils today.

Forecasts are based on a continuing buoyant level of council house sales. During the Secretary of State's statement last week, three of us asked why more council house receipts could not be spent at above the 15 per cent. level that is allowed. The Secretary of State did not respond to that question because, I believe, he does not believe in his own Government's policy.

Receipts from council house sales now play an important part in the financing of local government and are an accounting device. There should be a gradual phased allowance of more council receipts being spent on new housing stock. The figures before us depend on more council receipts, when so far in the current year the take of council receipts has fallen short of the Welsh Office's own target. We believe that those council receipt targets cannot be increased. The scope is not there. Much of the stock has already been sold, and when one considers average incomes in Wales, one realises that the possibility of people buying their own council houses is now slight.

Finally, how will the Secretary of State's settlement affect the rates? Without question, they will increase and by more than any of us would like. The Government's penalties for that will not help. We accept that efficiency measures will play a part, but they cannot be expected to play all the part. The block grant percentage is continuously reducing, yet local authorities must still provide and maintain services. It is ratepayers who suffer. In my constituency in Powys the ratepayers' contribution to running the authority has increased by over 50 per cent. during the eight-year period during which the block grant has declined by over 10 per cent. The fact is that Government policy is having a direct bearing on rate increases, which affects the very people whom the Government least wish to penalise. As a former lecturer, one is tempted to write on the bottom of the report, "Must do better."

12.31 am
Mr. Gwilym Jones (Cardiff, North)

I was struck by the contributions of the two opening speakers in the debate. Naturally, my right hon. Friend the Secretary of State started with a measured, positive and realistic approach to the rate support settlement for 1988–89 and local council spending in general. It must have been persuasive, because seemingly in reply we had a measured, positive and realistic contribution from the right hon. Member for Swansea, West (Mr. Williams). Indeed, I was fascinated to note that he appeared to be going against all the previous arguments that we have heard from Opposition Members on the subject of local council spending. Fascinatingly, he turned that on its head and is now a convert to the cause of efficiency, but efficiency achieved by "extra investment". Again, that is the simple answer, "Throw more money at the problem and it will disappear.

I was disappointed that the right hon. Gentleman could not answer my intervention when I asked him to draw together his conversion to efficiency, his allegation about cuts and the fact that currently there is a significant increase in staffing in local government in Wales. I appreciate that I caught the right hon. Gentleman on the hop—

Mr. Alan Williams

Does the hon. Gentleman want the answer now?

Mr. Jones

I give way to the right hon. Gentleman.

Mr. Alan Williams

The hon. Gentleman must at least be aware that to cut 5,000 jobs in the Department of Health and Social Security the Government transferred responsibility for housing benefit and DHSS benefits to the local authorities. Therefore, the local authorities had to take on extra people to do the work. It was quite logical and inevitable.

Mr. Jones

I am afraid that once again the right hon. Gentleman has shot himself in the foot. He previously resorted to spurious claims about extra staffing for the community charge, but that is no justification for this current year, nor is there any need for any local council to employ any extra people or spend any extra money during 1988–89. He is now resorting to talking about history. I am talking about the current year and the extra staffing that is taking place at the moment.

My right hon. Friend made the point that, inevitably, Opposition Members will say that the settlement is not good enough. He could not have said a truer word. The stock approach that is always trotted out is that it is not enough. Even if the Opposition's demands are realised, the ultimate answer is that it is too little and too late.

Surely we have all come to curse the advent of the word processor, which churns out such stock answers one after the other. If we think more deeply about the matter, we note that local council expenditure has increased by 11 per cent. in real terms under this Government. The Opposition say that that is not enough, yet when they were in office it was even less. When that is related to the fact that under the previous Labour Administration local council spending in Wales fell in real terms by 4 per cent., their failure is compounded. Where is the admission from the Opposition? Where is the apology? But that is not a unique approach. There sit the representatives of the only Government ever to cut the Health Service. What answer do they have to that? They scream, "Cut, cut, cut, cut," in the hope that they will be believed, but they certainly will not be.

My right hon. Friend projected that rates should on average rise by no more than 1.3 per cent. if local councils follow through. I am not sure that I share his confidence if such is an authoritative prediction. Such a prediction would assume wise spending on all the important priorities of local councils. It would also assume a universal concern for the burden on the ratepayers.

The Labour group on Cardiff city council is already considering proposals for a double figure rates increase next April. Unfortunately, that will be approximately 10 times more than the projection mentioned by my right hon. Friend. In Cardiff we have an unbalanced council. I fear that the Labour group will be able to have its way on that exorbitant increase because it will be able to rely on its fellow Socialists in the LSD alliance, or whatever it will be called by that time.

Like the right hon. Member for Swansea, West I fear that that will be the case with many other councils in Wales. I advance just one reason for that. Next year will not be local election year. The local councils in Wales will not have to face the electorate and there will not be the same regard as in an election year.

I am afraid that I know the system all too well in Cardiff, because in the off years we have had peak increases of 26, 54, and 94.5 per cent. It is only because of the Government's success in reducing inflation that the last peak was as low as 26 per cent. However, sadly, that was about six times more than the going rate of inflation, when the previous peak of 94.5 per cent. was only about four times the growing rate of inflation.

I welcome my right hon. Friend's settlement. I congratulate him on what he has achieved in fighting his corner in Cabinet. We should all join him in imploring the local councils of Wales to follow through in achieving rate increases of no more than 1.3 per cent.

12.37 am
Mr. Paul Murphy (Torfaen)

In the media release last week and his speech tonight, the Secretary of State said that the rate support grant settlement is fair, reasonable and realistic. Indeed, he goes further than that. He refers to the Welsh local authorities as being better than their English or Scottish counterparts.

I only wish that the hon. Member for Cardiff, North (Mr. Jones) felt the same way about the local authorities in Wales. I suspect that he does not, because the majority of those local authorities are Labour controlled and they are still reasonable authorities, much better than any Conservative examples, because they do not exist in the Principality of Wales.

What is certain is that the local authorities in Wales, and district councils in particular, have for the past few years kept their rates and expenditure at a reasonable level and have effectively achieved the unachievable— maintaining services at a good level while having to comply with the sort of restrictions that we have seen over the past few years from the various rate support grant settlements. Much good it has done them. Their reward, year by year—and again this year—in the rate support grant settlements has been a decrease in the amount of grant that they have received.

The aggregate rate support grant settlement for the whole of Wales has been reduced by about £5 million, but the effect on individual Welsh local authorities has been even more severe. Five years ago, when Lord Crickhowell was Secretary of State for Wales, 60 per cent. of Torfaen's expenditure was met by the rate support grant settlement. In 1988–89 it is below 50 per cent.

The rate support grant settlement is unrealistic because it does not take into account the impact of inflation on local authorities. Moreover, it does not take into account the fact that 54 per cent. of the budget of many local authorities in Wales is swallowed up by items over which they have no control. Last year there was a 10.7 per cent. pay increase for manual workers and an increase of nearly 9 per cent. for craftsmen, but this year's rate support grant settlement provided for an inflation rate of only 5 per cent.

The Secretary of State says that local authorities in Wales should be reasonable and that they should impose rate increases of less than 2 per cent., yet the committee for the Welsh district councils has said within the last few days that if services are to be maintained at their present standard many Welsh local authorities will have to impose rate increases of over 10 per cent. Most of those local authorities are valley authorities that suffer the greatest amount of deprivation in Wales. Their rates will have to be increased by that amount just to ensure that the services that are so vital to the people who live in those areas are maintained—not even improved, as they should be.

The Secretary of State says that rents will have to be increased by over 1.60 a week and that the rate fund contribution to the housing revenue accounts of district councils must be reduced. Many of the pensioners' schemes in the valley communities and elsewhere rely on that income. If the Secretary of State so desired, he could, at a stroke, change the face of Welsh housing, which needs to be changed a great deal. He could release the money that is lying in the coffers of local authorities. The Secretary of State could build new houses with those capital receipts and provide homes for the homeless. I asked a question a few weeks ago about the number of people in Wales who are waiting for houses, and I was told by the Under-Secretary of State that those figures are not kept. How can the Secretary of State know how many houses are needed in Wales if he does not know how many people are waiting for houses? If the Secretary of State released that money for improvements and repairs, he would ease the burden on the housing revenue accounts, and rent increases would be unnecessary.

I was the chairman of my local authority's finance committee for eight years. The Conservative party was in office for seven of them. Throughout those seven years there was continuous underfunding of the services that are provided by Welsh local authorities. The rate support grant settlements are bedevilled by unfathomable figures and meaningless jargon. The poll tax will make no difference to what has happened in recent years. This rate support grant settlement is no credit to the Secretary of State for Wales. It sells Wales short.

12.45 am
Mr. Keith Raffan (Delyn)

The hon. Member for Torfaen (Mr. Murphy) made the point, although he may not have meant to, of the importance for local authorities to secure moderate wage increases. I am surprised that the hon. Gentleman should have strayed onto the subject of home improvement grants, considering the last Labour Government's appalling to disgraceful record on that issue. In just one year of this Government we spent more on home improvements than the previous Labour Government did in the whole of their term of office.

As my right hon. Friend is aware, two of the local authorities covered in whole or in part by my constituency, Delyn borough council and Clwyd county council, lose out in the settlement as a result of changes in grant-related expenditure. On the other hand, Rhuddlan borough council, part of which is in my constituency, gains significantly. Clwyd county council loses out primarily because of a reduction in the number of further education students. I spoke this afternoon to the county treasurer, Mr. Dalby, and I shall be raising in writing on his behalf several detailed, complex points with my right hon. Friend. Delyn borough council also loses out because of data changes to do with lower capital allocations and a large European regional development fund grant, but the council's chief executive is aware of and appreciates the reasons why.

As my right hon. Friend said in his opening remarks, the debate is not just about this particular rate support grant settlement; it is also about local government in Wales and the efficiency and effectiveness of local government services. I am fortunate to represent in whole or in part two reasonably good to outstanding local authorities, Rhuddlan borough council and Delyn borough council. I only wish that Clwyd county council would emulate them.

I know that a certain hon. Gentleman—perhaps two as they are sitting together, the hon. Members for Wrexham (Dr. Marek) and for Clwyd, South-West (Mr. Jones), who represent parts of Clwyd — would agree strongly with that remark.

Mr. Martyn Jones (Clwyd, South-West)

rose—

Mr. Raffan

I shall give way to the hon. Gentleman in a moment. Certainly the hon. Member for Wrexham in a previous rate support grant debate, went as far as to describe Clwyd county council as "rotten".

Mr. Martyn Jones

I remind the hon. Member for Delyn (Mr. Raffan) that Clwyd county council is run by a coalition of independents and Tories.

Mr. Raffan

We are well aware that the council is, sadly, run by its officers, it being a hung council. The hon. Member for Wrexham is nodding in agreement with me. Perhaps he can sort out the differences on the Opposition Benches; I hesitate to intrude in a family Labour party quarrel between the hon. Members for Wrexham and for Clwyd, South-West, but as they are sitting next to each other perhaps they can sort it out between themselves.

I wish to make three specific points on how the efficiency and cost-effectiveness of local government in Wales can he improved, using Clwyd as an example. First, in relation to manpower, all local authorities need to bear in mind the words of my hon. Friend the Minister for Employment who said in the debate yesterday that unemployment can only be tackled through the creation of new jobs in the wealth-creating sector of the economy. Local government is part not of the wealth-creating sector of the economy, but of the wealth-consuming sector.

Nothing has a more dramatic impact on current spending, and so on rate rises, than increases in local government manpower. I am sure that the hon. Member for Clwyd, South-West will listen closely to my next point. Clwyd is to be commended for reducing the number of full-time employees by 734, or 8.2 per cent., between September 1979 and September this year, but the beneficial effect of that has been undermined by the parallel increase in part-time employees during the same period—up by 953 or 16.5 per cent. That has had the effect in full-time equivalent terms of diminishing the reduction in manpower to 327, or 2.9 per cent.

More can be done to reduce manpower. There is particular need for the Audit Commission to study more closely the duplication by, and overlap between, the activities of different tiers of local government. I believe that the Opposition are "unitarians" in local government terms, and presumably one of the reasons for that is their belief that there is overlap between the different tiers.

In Wales as a whole there has been an increase, however slight, in the number of full-time equivalent local authority staff, as my hon. Friend the Member for Cardiff, North (Mr. Jones) has said, in the second quarter of this year compared to the second quarter of last year. That continues the increase of recent years and is a cause for concern. To ensure maximum efficiency, there is a need for all local authorities closely to monitor and to control their staffing levels.

My second point relates to surplus school places. As at October this year, there were 11,235 surplus places in primary schools in Clwyd. The current number at secondary level is not available, but, as of last year, it was 4,075, and, because of falling rolls, the county council expects it to rise to 9,200 by 1990.

The cost of keeping 15,000 school places empty is £2.3 million, or nearly 5p on the rates. Removing even a fraction of them would produce substantial revenue savings that could be redeployed with great advantage elsewhere in the education budget. What is true of Clwyd is true of Wales as a whole. There are more than 125,000 surplus school places in the Principality.

Dr. John Marek (Wrexham)

I am a little perplexed about the hon. Gentleman's comment about surplus school places. In my constituency, there are many classes with more than 30 children in them. Clearly there are reasons for that in rural and urban areas. Instead of talking about surplus places, why does not the hon. Gentleman talk about cutting class sizes? I asked the same question of the Secretary of State. Why could he not, as a matter of policy, set a class size of no more than 26 pupils? Does the hon. Gentleman agree with that?

Mr. Raffan

The hon. Gentleman answered his own question. There are urban primary schools in my constituency in which class sizes are even higher than 30. But if we remove some of the surplus places, particularly in rural areas, the money saved can be redeployed to reduce the size of cramped and overcrowded classes in certain primary schools. Redeploying money saved by removing surplus places is an excellent way in which that could be done.

As I said, what is true of Clwyd is true of Wales as a whole. There are over 125,000 surplus school places, costing nearly £20 million to keep empty.

My third and final point relates to the revenue implications of capital expenditure. Loan charges in Clwyd have risen from £324,000 in 1982–83 to £780,000 in 1987–88. Total loan charges over that five-year period have amounted to £3,683,000. Local authorities must restrict major capital projects to statutory obligations, otherwise statutory services will suffer severely.

I had hoped to get through my speech without mentioning Bodelwyddan castle. It was a challenge that I had set for myself. But as the matter was raised by my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer), the House will not be surprised to hear that I express my disagreement with him. It is a wrong priority to spend £4.5 million on that project by 1991, with resultant loan charges, debt repayments and running and maintenance costs of over £500,000 a year. That could well be at the cost of 34 additional primary school teachers.

My right hon. Friend the Secretary of State has been unduly modest in describing this as a fair and reasonable settlement. Wales's share of the total grant for England and the Principality has steadily increased from 7.25 per cent. under Labour to 8.4 per cent. under the Conservative Government. Wales has done well again this year. My right hon. Friend has continued his predecessor's line record. The figures that he gave for local government expenditure in Wales, which has increased in real terms by £152 million, or 11 per cent. under this Government, is in stark contrast to the Opposition's record. The £56 million drop in local government expenditure in Wales under the last Labour Government — that 4 per cent. Drop —torpedoes the speech of the right hon. Member for Swansea, West (Mr. Williams) and all the sanctimonious utterances from the Opposition on local government expenditure.

12.53 am
Mr. Allan Rogers (Rhondda)

I shall briefly address the issues and, in particular, the Secretary of State's remarks about the reasonable and fair settlement. Those of us who live in Wales know that it is not a reasonable and fair settlement.

We hear Conservative Members juggling the figures, but those of us who live in the valleys know the reality of local government and local government expenditure. We have schools that have not been painted for years. We have roads in a deplorable state. We have houses that desperately need improvement grants. I pay tribute to the Government for giving substantial amounts to improve houses in the valley communities. But why have they cut that money? The number of houses in the Rhondda that need improvement grants is 18,000. So 18,000 pre-1919 houses in one constituency are waiting for improvement. The Secretary of State says that the figures are reasonable and fair but we look on that statement with scepticism.

Mr. Martyn Jones

The same position appertains in north Wales and in Clywd, which has already been discussed tonight. Clywd county council, through the Tory chairman of the social services committee, has asked for more money. He and a colleague voted with the Labour group because they felt that the social services were so badly stretched that danger point had been reached.

Mr. Rogers

I am sure that the position is the same in north and mid Wales as it is in the valley communities.

Perhaps the Secretary of State can answer some points when he replies. Are we to assume that all moneys for the valleys initiative are to be new and separate moneys and are not included in the grant? Will the Secretary of State make more money available for the reclamation of derelict land by local authorities apart from other money available elsewhere?

The hon. Member for Pembroke (Mr. Bennett) intervened earlier to draw out from the Secretary of State that Welsh local authorities received £104 per head in grant as opposed to £98 in England. I wish that the hon. Member would start scrapping for Wales and that he would be a little partial. Although he is a translated Londoner he should remember that he represents a Welsh constituency. He should start fighting for his Welsh constituents instead of intervening with such fatuous remarks.

12.56 am
Mr. Nicholas Bennett (Pembroke)

It is typical of the hon. Member for Rhondda (Mr. Rogers) that he not only gets wrong what I said, but sees it as an insult to Wales. I was merely pointing out that, far from being hard done by, we are doing better in terms of public expenditure per head than local authorities in England. That is something of which we can be proud, because it means that the Secretary of State for Wales and his predecessors have fought hard to ensure that Wales gets a larger percentage of expenditure than England.

That is borne out by the figures that my hon. Friend the Member for Delyn (Mr. Raffan) has given. Since 1981 the Welsh share of the total grant for England and Wales has risen from 7.4 per cent. to 8.3 per cent. and it will rise again in 1988–89 to 8.4 per cent. The reasons are clear. Local authorities in Wales have a better record on expenditure than England and Scotland, and that has been rewarded. Spending in Wales has risen by 11 per cent. more than inflation since 1979 compared with 17 per cent. in England. Rates in Wales have risen by about 15 per cent. more than the rise in the RPI in Wales, compared with over 48 per cent. in England since 1979. So we have a good record in Wales on local government expenditure. We can be proud of that. In addition, we get 66 per cent. in grant compared to 46 per cent. in England. That ought to be remembered.

Given the figures for the coming year, it should be possible for Dyfed county council to reduce its rates bill by 2.1 per cent., Preseli to reduce its rates by 2.6 per cent., and South Pembroke to cut its bill by 2.7 per cent. if they follow the guidelines in the Government statement. I shall be looking, as I am sure all my constituents in those local authority areas will, to see that that happens.

There are some ominous signs in regard to Dyfed county council. In recent years it has constantly ignored Government guidelines; it put its rates up by 7 per cent. last year and by 19 per cent. the year before. I noticed in the local newspapers recently that the chief officers in Dyfed have been awarded quite substantial increases in pay. That has caused concern among local electors and throughout Pembrokeshire.

Out of the three old counties of Dyfed, South Pembroke provides the most rate income, yet we do not get a fair share of the services that are provided by Dyfed. I am sure that the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) shares the concern in Pembrokeshire about the number of county council services that are being drawn towards the centre, in Carmarthen, to the detriment of his constituents and mine. If the county council is anxious that support is given to everyone in the county it does not do much good to start centralising services in the area represented by the hon. Member for Carmarthen (Mr. Williams) where unemployment is only 6 per cent. compared to levels of 24 per cent. in Fishguard and 17 per cent. in my constituency. If the county council is contemplating any further centralising moves, I hope that it will consider the effect of such moves on local unemployment.

I believe that the present settlement is good for education. The RSG provision for education in 1988–89 will be £830 million, which is 8.7 per cent. higher than the revised provision for the current year, which in turn, was 17 per cent. higher than the final settlement for 1986–87. Therefore, since 1979–80 educational expenditure in real terms, has increased by 22 per cent. in the primary sector and by 31 per cent. in the secondary sector. That illustrates the Government's commitment to ensuring that we get the best education for the children whom we represent.

The current expenditure of local authorities on the maintenance of school buildings has risen from the 1978–79 level of £53.85 per pupil at constant prices, to £60.5 per pupil in the current financial year. That demonstrates the Government concern to do something about the old primary schools and some of the older secondary schools in Wales that need repair.

We should also consider the provision of money for the local education authorities training grant schemes. In the current year the provision is £11.86 million and it will increase to £12.28 million. However, I am sure that all hon. Members are worried that Her Majesty's inspectors recent report on in-service training in Wales, showed that there were serious deficiencies in the way in which some of the money had been spent. I hope that the Secretary of State and the Minister will consider carefully how that money is spent in the coming year so that the recommendations of the HMI report are adhered to and we get the best value for the £12 million that will be spent.

1.2 am

Mr. Paul Flynn (Newport, West)

The reward that has been handed out to the Welsh local authorities will not be welcomed in Newport. If this settlement is judged a reward by the Government, I am sure that the Newport authority would prefer to be punished.

When the Government figures were first introduced I asked what the settlement would be for Newport. I gave precise figures and asked for them to be confirmed, but I received no answer. Let us consider what the settlement will mean for that authority. As a result of essential increases following the wage negotiations relating to the teachers' strike and capital expenditure—most of it in Newport—on job creation and encouraging new work, it has been estimated that, to stand still and cope with inflation Newport expenditure must increase by 7.5 per cent. That is the figure that has been given by the authority's treasurer.

We have heard about various figures—4.3 per cent. and 5.63 per cent.—but Newport has fared badly. Over a long period this council has been acknowledged by all parties to be efficient and to be providing good value and cost-effective services. However, Newport has not done well and its reward is a princely increase of 1.9 per cent. compared to last year's settlement. As a result, there must be a rates increase of 9.3 per cent. if the council is to keep up with inflation, but if it seeks to continue its valuable work on job creation and capital schemes the district rate must increase by 10 per cent. The Secretary of State must acknowledge that. We have heard many fine words, but what is this? Is it a confidence trick? We have heard the fine promises, but now we see the reality.

I should, perhaps, have started with a word of croeso to the Government Front Bench. We have had some eight hours of debate in this black December for local authorities in Wales, and tonight the awful, destructive Local Government Bill was finalised. To its eternal shame, the Welsh Office Front Bench put in not a single appearance during the past two days. Even more remarkable has been the characteristic caricature of tabloid press-type local government from the hon. Member for Cardiff, North (Mr. Jones). It is a myth and a fiction. Throughout the 100 hours in Committee, we asked time and again for examples of free-spending authorities in Wales—all those authorities for which the Government had to bring in the weapon of the Local Government Bill. That extra bureaucracy and expense, that wholly alien and malicious irrelevance to Wales, will be used to punish the authorities. Again and again I have asked questions, and the Minister has not uttered a single word during all those hundred hours. It must be a record for a Minister to have stayed mute for a hundred hours without earning his salary.

The Bill and the poll tax legislation that is coming this week are wholly irrelevant to Wales. This is a bad day for local government and for Wales. We are witnessing the schizophrenia of the Welsh Office. We have heard fine words and double talk from the Secretary of State. We have seen the double think and tonight we have the double cross.

1.6 am

Mr. Ieuan Wyn Jones (Ynys Môn)

The Secretary of State talked about the valley initiatives. I am pleased to hear of any initiatives, provided that they represent additional resources given to Wales to deal with the many problems facing those valley communities. However, I ask the Secretary of State to bear in mind that there are special problems in the rural parts of Wales. Following his initiative for the valleys, we would like to welcome the Secretary of State to the rural areas of Gwynedd and Powys, to see the real deprivation in those parts and the hidden problem of rural depopulation. We are losing so many young people because of the lack of proper facilities, services and job opportunities.

Has the Secretary of State allocated resources for implementing the Disabled Persons (Services, Consultation and Representation) Act 1986 in Wales, which will cost between £7 million and £10 million? Has that been included in the formula for this year? The people of Wales will be extremely disappointed and angry if, yet again, provision has not been made for the implementation of that important Act.

Has provision been made in this year's grant for the considerable extra expenditure that many local authorities will incur as a result of this year's severe flooding in Wales —both for the immediate and long-term problems that the flooding highlighted? Much structural work will have to be done to provide proper facilities to ensure that such flooding does not happen again.

I want to make a special plea on behalf of the social services budgets of local authorities—especially for the concept of care in the community. The pressure on health authorities as a result of cuts in their budgets has a knock-on effect on social services departments. In Gwynedd, for example, cuts in the health authority budget will mean that there will be fewer beds for the elderly, in the acute, rehabilitation and long-stay sectors. That will inevitably mean that more people will have to be cared for in their homes. It must be remembered that 18.5 per cent. of Gwynedd's population are aged 65 or over and that 8.2 per cent. are over the age of 75. That is higher than the national average. This will increase demands on the social services and mean that we will need more social workers and more home carers. This year Gwynedd has seen a real cut in provision for social services and home carers. The Secretary of State should bear that in mind. Perhaps when he is winding up the debate he will tell us whether that has been taken into account.

My final point is about local authority smallholdings. I should like to see local authorities being given allocations to ensure that they have more starter farms. The important first step for many young people entering agriculture is the small farm, the smallholding, and I ask the Secretary of State whether that sort of allocation could be made available to local authorities.

1.10 am
Mr. Roy Hughes (Newport, East)

The Secretary of State has again proclaimed that the settlement is fair and realistic. That argument has been rebutted by the Opposition on numerous occasions. Our county councils think that the settlement is neither fair nor realistic, and they are at the sharp end of affairs in local government.

It has been said many times that charity begins at home. I know that because of various pay awards Gwent county council has been under considerable financial strain. The teachers were awarded 16 per cent. overall, but the first full year of that settlement is next year. The money has to be found because teachers, who perform such a worthwhile task in our society, have fallen well behind in the pay league. We can add to that settlement the pay award for manual workers. It was 12 per cent. and took effect from July. Administrative staff and the police and fire brigade received 7 per cent. That took Gwent's inflation rate to 11 per cent. However, the rate support grant settlement to our counties is only 6.3 per cent. and that includes what is known as the special allocation. Yet again, the Welsh counties are being unfairly penalised, not because they have been extravagantly spending taxpayers' money, but because of national pay awards and the Government's mean and shortsighted approach to local government affairs.

The public expenditure levels of the Welsh Office do not keep up with the inflation rate faced by our county councils. What is more, this rate support grant settlement does not make adequate provision for the services that the councils have to provide, including roads, schools and social services. The picture is equally dismal when we consider the district authorities in Wales. I can best illustrate that by citing the case of Newport which has already been lucidly brought out by hon. Friend the Member for Newport, West (Mr. Flynn).

Newport's grant-related expenditure assessment—the Government's own assessment of what authorities should spend to provide a standard level of service— has increased by only 1.9 per cent. compared with last year. That was the figure mentioned by my hon. Friend the Member for Newport, West and is well below the general level of pay and price inflation. If the Newport authority were to maintain services at their existing level for next year and meet the costs from the capital expenditure programme, it would face an increase in expenditure of between 9 and 10 per cent.—much higher than the 4.8 per cent. allowed in the statement and much higher than the increase in Newport's grant-related expenditure assessment.

I turn to the tragedy of Welsh housing. I read this week that 200 families per week are becoming homeless in Wales. My hon. Friend the Member for Torfaen (Mr. Murphy) pointed out that it is time for the Government to release the assets from the sale of council houses, because we badly need a massive housing drive in Wales. My right hon. Friend the Member for Swansea, West (Mr. Williams) pointed out that no less than £750 million in rate support grants has been withheld from local authorities over the past eight years. This is a deflationary packet if ever there were one. Is it any wonder that the Government, in their submission to the EEC 12 months ago, pointed out that Wales had the lowest economic activity rate in the whole of Britain?

The Government continue to rob Wales. Following the appointment of a new Secretary of State, we thought that there might be some improvement, but we have found that the leopard has not changed its spots. Is it any wonder that the number of Conservative Members in Wales has been reduced to a rump and that they could not even produce a Secretary of State out of their own ranks?

Mr. Peter Walker

The hon. Member for Newport, East (Mr. Hughes) will be delighted that Mr. Speaker made the decision to open the Galleries, so that the people of Wales could flock in such considerable numbers to hear the various contributions of Opposition Members.

I start by answering the right hon. Member for Swansea, West (Mr. Williams), who compared what he said was the 5.3 per cent. increase in Wales with the 7.4 per cent. increase in England. I am afraid that he is not comparing two similar figures. One figure applies to the increase in budgets, while the other provides for the increase in provision. If he wishes me to give the comparison with the 5–3 per cent., I am glad to say that the English figure is 3.9 per cent., not the 7.4 per cent. that he suggested. He asked me to correct him, and I am delighted to do so. I am sure he will be satisfied that his figures have been corrected in that way.

I have also been asked to compare the figures of what has happened in various years under various Governments, and I am willing to do that. The whole tone of the debate from Opposition Members has been, "We think the rate support grant is not big enough; that local government expenditure should be bigger," and they are condemning the Government for not achieving those objectives. The simple comparison is that in the lifetime of this Government we have increased local government expenditure in Wales in real terms by 11 per cent., whereas the Labour Government decreased local government expenditure in real terms by 4 per cent.

Mr. Rhodri Morgan (Cardiff, West)

When the right hon. Gentleman says an increase "in real terms", will he tell the House whether he means an increase above the retail prices index, because we know that local government does not buy the same basket of goods as the retail customer.

Mr. Walker

If the hon. Gentleman wishes to say that the position is worse than the retail prices index, he must be ashamed that, under a Labour Government, it went down by 4 per cent. If he is suggesting that the grant should be increased by more than the rate of inflation, he must remember that the figure went down under a Labour Government. Perhaps he would like to have the figures for the rate support grant for the last years of the Labour Government of which he is such a keen supporter. In 1976–77 it was £585 million, in 1977–78 it was £535 million, and in 1978–79 it went down to £512 million. That was the result of action by a Government supported by Opposition Members who now complain about poverty, bad housing and terrible conditions in Wales and say that more should be done for Wales. Opposition Members sat there supporting a Government who reduced local government expenditure and the rate support grant. They now have the audacity to condemn us for not increasing it enough.

The hon. Member for Newport, East (Mr. Hughes) referred to housing. Has he no feeling of shame about the last Labour Government's unbelievably bad record on house improvement? Is he not delighted that we are increasing grants for housing improvements by a further £7.5 million? Anyone who knows the problems of housing in the valleys and in Wales generally knows the desperate need for a substantial house improvement campaign. The comparative figures are remarkable. This Government have been spending £92 million a year on house improvement. The Labour Government spent not £92 million, but £29 million, on house improvements. These are the people who describe their passion for good housing and who have the audacity to complain that more is not being done on housing. In every respect, the figures in this rate support grant are better than those granted to England. Out of £1,800 per household expenditure, only £300 will come out of the domestic rating system. It is a generous settlement. It is one—

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question pursuant to Standing Order No. 14 (Exempted Business).

Question agreed to.

Resolved, That the Welsh Rate Support Grant Report 1988–89 (House of Commons Paper No. 142), a copy of which was laid before this House on 8th December, be approved.