Local Authorities (Spending) (Hansard, 14 November 1990)

§ 1. Mr. Sheerman
To ask the Secretary of State for the Environment what level of inflation he assumed in fixing his total standard spending for local authorities for 1991–92; and if he will make a statement.

§ The Secretary of State for the Environment (Mr. Chris Patten)
Our proposals for the local authority finance settlement take account of what the country as a whole can afford. They do not assume any particular level of inflation. Our proposal for total standard spending is the level needed in cash terms in 1991–92 to provide the standard level of service taking into account all relevant factors.

§ Mr. Sheerman
Is the Secretary of State aware that most of us know that the level at which the assessment has been pitched is 7.8 per cent? With the current rate of inflation at about 10.9 per cent., even my poor school mathematics suggests that there will be a 3.7 per cent. gap between the assessment and what local authorities will be forced realistically to plan for in their budgets. Is the Secretary of State aware that good local authorities, such as mine, Kirklees in West Yorkshire, will be forced to make drastic cuts in expenditure on essential services, to lay off staff and to push up the poll tax to a rate at which they will be capped? Does he realise what he is doing to good local authorities with his plans?

§ Mr. Patten
As I recall, the standard standing assessment of the hon. Gentleman's constituency will increase by 18.4 per cent. next year. The level of local authority spending this year represents a 25 per cent. increase in two years. We are proposing an increase of nearly 13 per cent. in the external financing going into local authorities for next year. If the hon. Gentleman thinks that we should give more taxpayers' money to local government, I should be interested to hear how much more, who will pay for it and whether the shadow Chancellor of the Exchequer has accepted his figure.

§ Mr. Thurnham
When my right hon. Friend talks to local authorities, will he remind them of the enormous savings that they can make by cutting waste and inefficiency? The Audit Commission has identified savings of £1.3 billion, of which only half have been achieved, with no help from the Labour party.

§ Mr. Patten
My hon. Friend is entirely correct. Recently, the Audit Commission suggested that there was scope for savings of about £100 million in energy efficiency. In a study of sickness absence in some London local authorities it pointed out that the six worst could save £27 a year per community charge by reducing sickness absence to Confederation of British Industry average levels. There are substantial savings for local authorities if they listen to the Audit Commission and implement its proposals.

§ Mr. Gould
Nevertheless, is not it ridiculous for the same Secretary of State in the Department on the 561 same subject, that is, local government finance, to use two widely differing inflation rates—an artificially low rate for local government spending commitments and the full, true rate of 10.9 per cent. for setting the business rate? Is not it one of the nonsenses that we understand the right hon. Member for Henley (Mr. Heseltine) will sweep away? Will the Secretary of State support him in that or would he rather resign than do so? Or, will he be back here next week under new leadership to say that the poll tax was, after all, a terrible mistake?

§ Mr. Patten
I am delighted to discover that, despite a recent outbreak of democracy in the Labour party, the hon. Gentleman is still in his present slot—I think more or less. Let me say something about the comparisons that he made. Thanks to the uniform business rate, businesses will not be clobbered by high-spending Labour authorities, as they used to be. Over the past decade, businesses have regularly been fleeced by Labour local authorities, which is why their rates bills have gone up by more than the rate of inflation year after year. The hon. Gentleman is still remarkably coy about telling the House by how much he thinks the external financing of local authorities should have been increased next year and he should tell us where that money would come from.