§ The Secretary of State for Wales (Mr. John Redwood)
With your permission, Madam Speaker. I should like to make a statement on my proposals for local government finance in Wales for 1994–95. I have asked for the figures to be available in the Vote Office now for Members, and copies of this statement will be placed there at the end of my remarks.
I propose to set total standard spending at £2,704.8 million, an increase of 4.2 per cent. over 1993–94. Aggregate external finance will be at £2,419.2 million, an increase of 3.3 per cent. Both figures include care in the community.
Councils will receive revenue support grant of £1,740.1 million, business rates of £464 million and other revenue grants of £215.1 million. I am consulting local authorities on my proposals, and will advise the House of my final decision in the new year.
This settlement should be considered in the light of the low level of inflation—the latest retail prices increase is 1.4 per cent. and pay is rising by 1.5 per cent. in the public sector—and the Government's view that future pay increases should be met from savings arising from increased efficiency and improved performance.
My Department has today written to each local authority in Wales telling in its provisional standard spending assessment and provisional capping principles for 1994–95.
I hope that Welsh local authorities will budget wisely. It is important to ensure that local taxpayers are not faced with unreasonable bills. I therefore propose the following capping principles for 1994–95.
The first is that any increase of more than 1.75 per cent. over the 1993–94 budget requirement will be considered an excessive increase if it gives rise to a budget requirements over the authority's SSA.
Secondly, any increase of more than 1.25 per cent. over the 1993–94 budget requirement will be considered an excessive increase if it gives rise to a budget requirement over 5 per cent. above the authority's SSA.
Thirdly, any increase of more than 0.75 per cent. over the 1993–94 budget requirement will be considered an excessive increase if it gives rise to a budget requirement over 10 per cent. above the authority's SSA.
Fourthly, any budget requirement more than 12.5 per cent. above the SSA will be considered excessive subject to certain conditions.
An authority that sets a budget at or below its SSA will not, of course, be capped. Of necessity, my capping principles are provisional. I will take account of all appropriate considerations in making my decisions. Final SSAs will be announced in the new year.
I have decided to issue £503 million of capital grants and credit approvals for 1994–95. That represents a 4 per cent. increase on the current year. Given the low level of inflation, it will permit a good level of local authority capital investment.
Basic credit approvals for 1994–95 will amount to nearly £189 million, a 9.6 per cent. increase on 1993–94. That will give authorities more scope to set their own priorities for capital spending to meet local needs.
I have increased provision for educational capital by nearly 12 per cent. to a total of £42.5 million. I have 832 increased provision for environmental and economic development by more than 39 per cent., to a total of £37.6 million. That, among other things, should help local authorities in finding their portion of the costs of European regional development fund-backed projects.
I have allocated £49.8 million for capital projects in the strategic development scheme. I will be announcing next week the local strategies and projects that I will approve under that figure.
I have increased housing provision modestly to £265.7 million. Mandatory home renovation grants go up from £145.6 million to £149.1 million and discretionary disabled facilities grants from £26.3 million to £27.9 million.
Total provision for transport amounts to £94 million. The transport grant settlement of £63 million will provide assistance for 30 schemes in total. It will enable county councils to start four major schemes: the third Dee Crossing, the Rhuddlan bypass, the second phase of the A4067 Swansea valley dualling, and the Bridgend cross valley link. I hope that hon. Members on both sides of the House will welcome those proposals.
I shall also provide support towards the preparation costs of four new schemes that have been conditionally accepted for transport grant: the Newport southern distributor road, the Porth and Lower Rhondda Fach relief road, the initial phase of the A485 Ceredigion link road, and the East Moors dualling of the peripheral distributor road in South Glamorgan.
I have placed full details of my proposed capping principles, provisional standard spending assessments, and credit approvals for capital spending in the Vote Office and the Library.
I shall provide over £144 million of revenue and more than £15.5 million of capital to the Further Education Funding Council. That is an increase of 11.2 per cent. over the current year. I shall also provide nearly £200 million of revenue funding and almost £23 million of capital funding for the Higher Education Funding Council.
That, in conjunction with the substantial increase in local authority educational capital, shows the Government's commitment to a higher quality educational system, and to teaching and training more students and working from better buildings. In addition, I shall provide an extra £6.6 million for people with disabilities to pay for a range of new projects next year, of which £6.3 million will be spent by local authorities.
Local government in Wales will also wish to welcome gross Housing for Wales expenditure of £121.3 million next year, ensuring that the Housing for Wales's core programme will provide 3,800 extra homes next year, compared with 3,650 this year. That is a welcome increase in the number of new and improved homes.
I intend to use the extra money for Wales in the general settlement to reinforce our priorities of better education and health care, to complete the crucial investments in the future of Wales and to assist its economic recovery. I commend the proposals to the House.
§ Mr. Ron Davies (Caerphilly)
I thank the Secretary of State for his statement, although there is nothing in it that will give any comfort to local government or to Wales.
Why is the Secretary of State so obsessed with maintaining secrecy about the details of the settlement? My hon. Friends may know—they may not be too disappointed when they do know—that the Secretary of 833 State has leaders of Welsh local government, who were told a couple of hours ago of the details of the statement, incarcerated in the Welsh Office in Cardiff. Why does the Secretary of State want to prevent hon. Members having before them the views and analyses of local government in their constituencies while he gives his report?
Why is the Secretary of State making such a mockery of the process of consultation that he is bound, by statute, to conduct? Nothing illustrates that better than his meeting dwith the county councils on 2 December to discuss the tier split. At 5 pm on that day, his Parliamentary Private Secretary undertook to give serious and detailed consideration to the case, and letters were delivered at 8.30 am the following morning, announcing that he had dismissed their representations. Why are such decisions taken before proper consultation is held?
Will the Secretary of State confirm that there is widespread dismay in local government at the further cuts in jobs and services that he is announcing today? Does he understand that that, coming on top of the wasteful and expensive reorganisation of local government that he is imposing—which no one in Wales wants—this will impose further burdens on council tax payers?
The Secretary of State is claiming an increase in spending. Why is he engaging in that sleight of hand when he is supposed to believe that cuts in public spending are good for Britain and the economy? Excluding care in the community, the SSA increase is nearly 1 per cent. below this year's actual budget and will inevitably mean further job losses. Does he realise that last year's settlement, which his predecessor hailed as "generous", resulted in 2,500 job losses in Wales, more than 2,000 of which were among teachers, lecturers and others involved in education?
If the Government's message is "back to basics", how will education be improved when school transport is cut, education welfare officers sacked and teachers made redundant? How will "back to basics" be achieved when the South Wales police authority cannot manage to police royal visits, and when chief constables are queuing up to tell the Secretary of State that they cannot do their job properly within the resources allowed?
The new capping criteria are arbitrary and complex, and designed to choke off local initiatives and flexibility. Was it the Secretary of State's wish that Wales should be brought into line with England, or did he succumb to Treasury pressure? Because the increase in external finance is less than the increase in spending, will that not mean a minimum increase of 15 per cent. for council tax payers in Wales?
Has the Secretary of State heard from local authorities in Wales that provision of care in the community is in a state of crisis due to a chronic lack of underfunding? [Interruption.] The £86 million quoted by the Secretary of State includes £37 million already promised. The new money for next year, £48 million, is only half of the amount estimated by local authorities to be the minimum requirement. That is on top of this year's underfunding of £20 million.
Is the Secretary of State aware that, since his predecessor's statement a year ago, Shelter Cymru estimates that homelessness in Wales has gone up by 10 per cent.? The Parliamentary Secretary may share a joke with the Secretary of State for Wales about this matter, but 834 I do not think that the increasing numbers of people who wander aimlessly on the streets of Wales because they are suffering from mental illness is anything to joke about.
After the massive cuts of last year, capital spending has been savaged yet again. Despite the Secretary of State's sleight of hand, capital expenditure by local authorities is down from £620 million last year to £503 million, a cut of 15 per cent. That will mean a loss of jobs, services and opportunities. The Government's policies are worlds away from their rhetoric.
We were promised quality in public services; the reality is savage cuts. We were promised a commitment to stability and economic growth; the statement will cost jobs. We were promised an open and democratic system of government; this system continues the process whereby more than £1 billion of public money will be transferred from democratic local government to undemocratic quangos.
The Secretary of State is widening the gulf between the people of Wales and the Government, and he and his colleagues will ultimately pay a heavy price for their failures.
§ Mr. Redwood
The hon. Member for Caerphilly (Mr. Davies) would have been the first to complain if I had given the statement to others outside before extending the courtesy of telling the House. That is why, as is traditional, leaders of local government were invited to the Welsh Office to read the statement, but not to broadcast it before hon. Members had heard it from my own lips in the House. The hon. Gentleman should withdraw that point. He and his hon. Friends always want to hear the news first, which is reasonable in a parliamentary democracy.
Of course I am now engaged in consultation on the proposals, as I have explained. There will be time aplenty for local authorities to consider them, and to give me the benefit of their views in writing over the next few weeks following my statement.
The hon. Gentleman sides with the counties on the tier split. Is he aware that the districts are very much in favour of the system that was hammered out between county and district over many years, and want it to continue this year? Perhaps he would like to explain to all the Labour leaders of districts in Wales why he is campaigning against them for the partial county view of the tier split.
As the split works out this year, it does not switch much money from country to district. I think it a fair settlement. I have chaired two meetings in which I have tried to establish a common view between counties and districts, but they were unable to reach such a view. We have therefore decided to continue with the original system that was agreed between them in previous years.
The hon. Gentleman says, wrongly, that no one wants our reorganisation. I suggest that he tell that to his friends in the Labour party in the big towns and cities, and in the historic Welsh shires, which are very keen for self-government and unitary status to be granted to them.
The hon. Gentleman juggles with figures that he little understands, and says misleading things. The truth is that the Welsh Office budget is up £320 million next year compared with this year; the truth is that total standard spending for local authorities—a big figure—is up by £100 million. Against a background of very low inflation and better control of public-sector pay than for many a long year, I consider that a good settlement. Well-run local 835 authorities will be able to deliver the goods and improve their services, and will not need to sack people, because they will have the money to do the job.
The hon. Gentleman criticises education authorities, and says that they will deliberately savage the services they offer, because he thinks that they will be unable to manage. I have more confidence in those authorities than does the hon. Gentleman; I believe that they can manage with the money that I am proposing to Parliament, and that, if they get their priorities right, they can raise standards in the way we want, and balance the books.
The hon. Gentleman suggests that the minimum increase in council tax will be 15 per cent. as a result of the settlement. That is simply untrue; I am sure that some local authorities in Wales will manage to deliver a good range of services without terrifying the taxpayers to that extent. Just in case there are any problems, however, I have the provisional capping in mind, lest authorities overspend and do their budgeting badly.
The hon. Gentleman went on to criticise what he described as a "chronic lack of underfunding" in care in the community. I think that that was why my hon. Friend the Under-Secretary of State was amused. I assume that the hon. Gentleman miscued his phrase.
If he meant that he was worried about a chronic lack of funding, I rebut his allegation very strongly. A large sum—£86 million—has been allowed for care in the community. I am very pleased with the way in which most local authorities are tackling the issue of care in the community in Wales: I see much good work as I go around the country. They will have extra money next year with which to get on with the job, and I wish them every success.
As for housing, the hon. Gentleman should read the statement again. As a result of today's announcement, 3,800 extra and improved houses are to be provided next year, on top of what the local authorities will be doing. I believe that that is a manful way of tackling the task, and I commend the proposals to the House.
§ Madam Speaker
Order. I must keep in mind the business before the House, and strike a balance. I hope that hon. Members will co-operate by asking brisk questions, which produce brisk answers, so that I can do my best to call all who wish to be called.
§ Mr. Rod Richards (Clwyd, North-West)
Is my right hon. Friend aware that my constituents in Rhuddlan will be dancing in the streets following his announcement that the town is to have a bypass? That bypass will not only relieve traffic congestion in the town itself and ease access to Glan Clwyd hospital, but facilitate the excellent work being done to develop Rhyl further as a tourist resort.
§ Mr. Donald Anderson (Swansea, East)
The Secretary of State will be aware that those with mortgages have benefited substantially in the recent past as a result of interest rate reductions. Is it fair for those who must pay council rents to expect a rent increase of some 7.5 per cent. as a result of the reduction in Government subsidy?
§ Mr. Redwood
Those who are in need and on low incomes will be taken care of through the benefits system. We believe that others should pay a realistic rent for their housing.
§ Mr. Roger Evans (Monmouth)
My right hon. Friend referred to £86 million being provided for community care in Wales next year. How much of an increase is that?
§ Mr. Redwood
From memory, it is £38 million this year, and it will be £86 million next year as the range of services increases.
§ Mr. Roy Hughes (Newport, East)
Will the Secretary of State appreciate that, after listening to him, I was left with the thought that the old concept of local government had become almost meaningless? Is it not all about the diktat of central Government allied to quangos? Is it not time that we got back to the old principle of local power, local autonomy and local decision-making?
§ Mr. Redwood
Today's announcement grants permission for £2,700 million to be spent by local authorities, which gives them enormous choice and control over cash and people and other resources. I would have hoped that the hon. Gentleman would welcome that. It dwarfs the resources going through most of the non-departmental bodies under the Welsh Office, and rightly so, because it means that local people have a direct interest in making decisions and spending money on behalf of their local communities. Ninety per cent. of the money comes from central Government sources, but is given, in the main, in a block grant to maximise that local choice.
§ Mr. Jonathan Evans (Brecon and Radnor)
Will my right hon. Friend confirm that the formula that is used for the division of the increased resources that he has announced for local government will be according to the formula that was set by the local authorities in co-operation, as has traditionally been the case?
Has my right hon. Friend reached a conclusion regarding Housing for Wales's expenditure in relation to the grant rate? He will be aware of the concern that has been expressed on both sides of the House about a potential reduction in the amount of public finance and an increase in the amount of private finance that housing associations will have to find. Has my right hon. Friend reached a conclusion on that issue?
§ Mr. Redwood
My hon. Friend is quite right. It is an agreed formula—something that I welcome and that England would be well advised to follow, judging from the Welsh experience. We are proposing a grant rate of 62 per cent. I believe that we can build more from the public moneys available because, now that the market is improving and the private finances are a little more confident, we can expect them to make a proportionately larger contribution.
§ Mr. Paul Flynn (Newport, West)
Does the Secretary of State recall the bizarre incident in the past year on the day of the local government elections, when the previous Secretary of State threatened to take Gwent county council to court because of its Budget? As a result, enormous expense was incurred by the county council, a great deal of energy was expended and, afterwards, the Welsh Office withdrew its threat.
Will the right hon. Gentleman give an undertaking that Gwent county council will be compensated for any cost 837 that it suffered because of that, and also that Newport borough council will be compensated for the decision to impose costs on it because of its Browning Ferris decision? Will he give an undertaking that the Welsh Office will not engage in more crude, futile, political stunts?
§ Mr. Redwood
It was not a political stunt. The case was well judged by the Welsh Office. Unfortunately, the courts were not able to resolve it in a sensible time for the current budgetary year, which was the only reason why I agreed to its withdrawal. Were the county council to budget next year in a way in which we thought was wrong, of course we would wish to take action.
§ Mr. Dafydd Wigley (Caernarfon)
Will the Secretary of State assure us that, in no part of Wales, anyone who is entitled to a house renovation grant—disabled people especially—will be refused because of lack of resources? Will he say which roads scheme will help Trawsfynydd area in the wake of the rundown of the nuclear power station?
§ Mr. Redwood
Local authority roads are a matter for the priorities of local authority, and the hon. Gentleman should talk to them about that matter. I have made an increase in the money available for house renovation, especially for those who are disabled. That will represent a welcome extension in the number receiving the benefit, which he and I would like to see them get. I cannot make an absolute promise, because I do not know yet entirely how the pattern of demand will work out. My intention is that we should meet that demand as best we can, and I have therefore increased the amount of money to do so.
§ Mr. Allan Rogers (Rhondda)
The Secretary of State twice regurgitated the figure for housing starts, saying that it was increasing from 3,600 to 3,800 for the whole of Wales. Why does he not put it in context and accept that there are more people on the housing lists in the Rhondda than the number of starts that he is approving today?
§ Mr. Redwood
I am pleased, as is the hon. Gentleman, that many people on the housing list are currently housed and are seeking better accommodation, which will mean changing accommodation. It does not mean that we need to build the number of houses to equal the number of people on all the housing waiting lists in Wales. I believe that this programme, coupled with private sector programmes and other initiatives, will be a sizeable improvement in the position, and I hope that the hon. Gentleman will welcome it.
§ Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)
In the name of care in the community, Mid Glamorgan area health authority is closing down wards and is proposing to shut down Mardy hospital in Merthyr Tydfil. At the same time, everybody in the community knows that the care is not there, particularly for the elderly.
Since it is mostly the elderly in our communities who tend to take care of the elderly, will the Secretary of State take a good look at this again and discover what is going on? The majority of people do not feel that there is a care in the community system that is capable of meeting the needs, especially given the loss of vital hospital beds, particularly respite beds for the elderly.
§ Mr. Redwood
I share with the hon. Gentleman the wish that Merthyr hospital should be better run, and we have changed the management comparatively recently to 838 try to achieve that aim. Care in the community is a local Government policy, and I hope that the hon. Gentleman will work with his local authority to obtain the best value for the substantial increases in money that I have announced today and which I will be making available. I hope that the hon. Gentleman will also welcome the important road scheme for his area.
§ Dr. Kim Howells (Pontypridd)
Will the Secretary of State admit that an increase in standing spending assessment in Taff Ely of a mere £342,000 in the coming year will pay for, at the most, 20 house improvement grants when there are thousands of people in that borough seeking more suitable and better accommodation, including many disabled people who cannot even have the money to allow them to take wheelchairs into the toilet? Why will the Secretary of State continue to condemn such people to that sort of life when he has an opportunity to make their lives much better?
§ Mr. Redwood
That is a bit rich when I announced a special £6.6 million package for the disabled on top of the general support grant that has been announed. The hon. Gentleman's local authority will receive a 2.4 per cent. increase in its SSA under these proposals, which is well ahead of inflation and pay increases.
§ Mr. David Evans (Welwyn and Hatfield)
Will the Secretary of State confirm that record amounts of money have been spent in Wales? Does not that prove that we are the party of hot money and that lot over there are the party of hot air?
§ Mr. Redwood
I am delighted to welcome my hon. Friend to Welsh questions. I can assure the House that he and I had not colluded on that question, but I agree with its sentiments entirely.
§ Mr. Peter Hain (Neath)
Will the Secretary of State admit that he has delivered his usual diet of slippery statistics and smooth talk? The fact is that, yet again, there will be a reduction in the budget of West Glamorgan county, which will hit, for example, students seeking discretionary awards. Why does he not have any compassion for the skilled young people who want to do better with their lives by obtaining student places, but who are unable to do so because of the cuts that he has confirmed today?
§ Mr. Redwood
The hon. Gentleman has not studied the figures. The total SSA for West Glamorgan will be up 5.2 per cent. on the basis that I have outlined. I have announced today major increases in higher and further education budgets and in capital for education through local authorities, because I am serious about improving educational standards, and it will not be for lack of money that we do not succeed.
§ Mr. Barry Jones (Alyn and Deeside)
The River Dee crossing announcement will be welcomed. It is a £60 million scheme, which will provide hundreds of jobs for local unemployed construction workers. Will it be complete by 1997, bearing in mind the distress and traffic jams that have been created because of the 10-year delay in its construction? Now that the Secretary of State has done the decent and honourable thing for Deeside, will he bear in mind the fact that we do not need the massive improvement in the road section at Aston Hill?
§ Mr. Redwood
I am grateful for the advice on the hon. Gentleman's third point. On his first question, I am advised that it is a £55 million scheme. The answer to his second question will in part depend on the local authority's decisions on phasing.
§ Mr. Nick Ainger (Pembroke)
Does the Secretary of State accept that, although he has announced an apparent increase in capital expenditure for all county councils, compared with two years ago it still represents a significant cut? For instance, two years ago Dyfed county council received a basic credit approval of more than £13 million, and the Secretary of State has just announced that it is £11.2 million. Does he recognise that that is a massive cut in two years, which prevents county councils throughout Wales from improving and building the new schools and other properties that are required, particularly for community care?
§ Mr. Redwood
It is an increase on the current year, and it is given in a way that increases local discretion to choose schemes.
§ Mr. Llew Smith (Blaenau Gwent)
How many people in Wales are homeless, and how many additional houses will be built as a result of the statement?
§ Mr. Redwood
I do not know how many people are homeless. That is not the same statistic as the one that hon. Members often trot out. It is important not to confuse homelessness, when people have no roof over their heads, with unsatisfactory housing, when people would like to change the house or flat in which they live. There is often confusion on that point.
§ Mr. Win Griffiths (Bridgend)
I thank the Secretary of State for the additional £6 million-plus for the disabled and the almost 6 per cent. increase in the disabled facilities grant under the housing budget. But despite that increase, 840 on the evidence of my borough of Ogwr, those increases will not be sufficient. Once he has given that money to the local authorities, will he carry out a survey to find out how many people are waiting for disabled facilities to be provided in their homes? That r[...]mains a scandal.
§ Mr. Redwood
I took advice before choosing the amount of money, and the amount I chose was based on advice about what could be spent on decent schemes. If evidence comes to light in the next few months that more could be spent on good schemes for the disabled, I shall look again at that figure. In the meantime, however, I am grateful for the hon. Gentleman's welcome. I intend to do well by the disabled; that is the purpose of the £6.6 million.
§ Mr. Paul Murphy (Torfaen)
Does the Secretary of State admit that it is shameful that he is unaware that there are 10,000 homeless people and at least 80,000 people waiting for council houses in Wales? The settlement will do absolutely nothing to improve their position. Will he admit that the people of Wales see no sense in cutting services that are essential to the quality of their lives while he is preparing to spend millions of pounds on a so-called reform of local government that no one in Wales wants?
§ Mr. Redwood
The reform of local government will not incur heavy expenditure in the ensuing year that we are discussing. The aim will be to produce savings if there are transitional costs. The main cost would be shedding people, which would lead to revenue savings if councils chose to do that when we reach that stage.
On the homeless, the hon. Gentleman falls into exactly the same trap as I outlined in an earlier reply. The 10,000 people will not be without a roof over their heads tonight. They would like, and many of them need, better housing. The number of people without a roof is tiny, and my hon. Friends and I are attempting to tackle that problem, because it is unacceptable.