HC Deb 23 June 1993 vol 227 cc407-18

Motion made, and Question proposed,

That the draft Council Tax Limitation (Wales) (Maximum Amount) Order 1993, which was laid before this House on 21st June, be approved.—[Mr. Redwood.]

10.13 pm
Mr. Paul Murphy (Torfaen)

I am grateful to the Secretary of State for moving the motion formally. I know that he intends to make a longer speech later perhaps to explain why he decided this week not to cap Aberconwy borough council in north Wales. Of course we welcome the decision ostensibly to let that council off the hook. However short the debate might be, it will give the House the opportunity to examine the Welsh Office system of controlling our local authority expenditure in Wales, in particular as it affects Aberconwy borough council. I know that it will be of considerable interest to the Minister of State, Welsh Office, because he represents a great part of that borough.

We are all completely united in the sympathy we express to the people of Aberconwy over the tragic flooding in that area some weeks ago. It is that, above all else, which has caused the Secretary of State to change his mind over the capping decision for Aberconwy. We should not have the impression that, because the capping has been lifted, all is well with Aberconwy. I understand that the burdens on that local authority as a direct result of the flooding tragedy extend to well over 1,000 homes that have been affected in some way or another. At least half those homes are in the ownership of the local authority. That means that an enormous bill, affecting both capital and revenue, will fall on that relatively small council in north Wales. Some estimate that the floods will cost £3.5 million on local authority housing repairs alone. In addition, damage was done to the roads and other infrastructure.

I note that when, in this Chamber, the Secretary of State referred to those floods, and when his Minister of State referred to them outside the House, both praised the work of the local authorities. The Secretary of State also told us that the so-called Bellwin formula would apply to the council. That formula is supposed to top up the finances of the local authority where it meets an unforeseen circumstance or tragedy, such as occurred there.

We have to tell the Secretary of State, however, that there is much wrong with the way in which the Bellwin formula operates. It is over-complex. Only what are termed "relevant costs" are considered. I can only begin to imagine the disputes that could well occur between local authorities, Government Departments and others about what "relevant costs" will be. Under the formula, any works connected with the alleviation of the problems caused by the flooding must be dealt with within two months. Any engineer would tell us that that would be almost impossible to achieve.

The financial basis of the Bellwin formula has yet to be updated from last year. Perhaps most tellingly of all, my hon. Friend the Member for Pontypridd (Dr. Howells) will tell us that the formula did not successfully apply in his borough of Taff Ely, because it did not meet the rather stringent conditions laid down in the Bellwin formula. Obviously, I hope that that is not the case in north Wales, and that the Bellwin formula will give as much financial aid as possible to that stricken area.

This week, in reply to a parliamentary question that I tabled, the Secretary of State said that, although he is not capping Aberconwy as he intended, reserves will have to be used, and that cuts may have to be made in other services that Aberconwy borough council provides to avoid capping above the figure that we are agreeing today.

Mr. Allan Rogers (Rhondda)

Does my hon. Friend agree that the Secretary of State's announcement not to cap Aberconwy is in a sense hypocritical, because the original budget was based on the Government's perception of the needs of the community? All the Secretary of State is saying is, "You can keep that money, but the cost of this disaster is over and above that." If the alleviation of the capping is intended to help with the cost of the flooding, it does not help in any way in relation to other needs. People's primary needs will be neglected to fulfil the needs caused by the flooding.

Mr. Murphy

The amount that we are talking about is £168,000. That is the difference between the capped budget, as it was before the Secretary of State changed his mind, and what the borough council decided was necessary to provide the various services that it is called upon by the House of Commons to provide. My hon. Friend is quite right: this will merely get us back to square one. The council will have to provide out of its own budget much more than the £168,000 of difference between the two figures. That can mean only that its services—housing, environmental health, and so on—will suffer as a result of the tragedy in the borough. It is eminently unfair that such a tragedy must be accompanied by curtailment of basic services.

I fancy that Aberconwy must be way down the list of local authorities that anyone might have thought likely to be capped. Why should it be capped? The town is relatively innocent and has a recently besieged council. With a population of 55,000, it is quite small, even by Welsh standards. As I have said, it is represented in this House by the Minister of State. Its council is probably the nearest thing to a coalition local authority that Wales has. Last year, when the budget was set, three councillors were Liberal, three were Labour, one was Conservative, and the mayor was independent. A Conservative on the Council of Welsh Districts was the representative of Aberconwy borough council.

Most significantly, the decision to appeal against capping was reached unanimously by parties all of which are represented in the House of Commons. In 1988 the council commissioned a survey. Even then it felt that it was getting rough justice from the Welsh Office. The Chartered Institute of Finance and Accountancy said: Aberconwy borough council is a relatively low-spending, highly rated authority, with expenditure on tourism accounting for up to one fifth of its budget. The block grant has failed adequately to reflect these three factors. The local authority has received only one letter of complaint since it set the budget that was to be capped by the Welsh Office. Even the chairman of Llandudno's hoteliers and restaurateurs—not a very revolutionary body of people, I imagine—has written to the Welsh Office praising the council for what it has done over the past few years to achieve service records.

Let us look at the spending figures. Only 12 Welsh local authorities had a smaller year-on-year increase than Aberconwy borough council. Other councils had bigger increases. South Pembrokeshire. which has an independent council, had a budget increase of 23.5 per cent., and in Dinefwr the increase was 22 per cent. Such figures are replicated throughout Wales. But, because of the standard spending assessment system, Aberconwy has been trapped as an unwilling victim of the capping system. This is ludicrous.

Above all, the inability of standard spending assessments to deal properly with the fact that, in effect, Aberconwy is the tourist capital of Wales means that, in reality, it has been capped.

Mr. Jonathan Evans (Brecon and Radnor)

The tourist capital?

Mr. Murphy

Many hon. Members will realise that tourist areas do not attract from such bodies as the Welsh Development Agency, the local authorities and the European Community the investment that industrialised areas attract.

It is important to remember also that they have to spend money not only on their own residents but also on holidaymakers. They must spend money on promenades, swimming pools, theatres, cinemas, parks and so on. That expenditure is not taken into proper account by the SSA system and the grants available through the Welsh Office.

The hon. Member for Brecon and Radnor (Mr. Evans) may deride my opinion about Aberconwy being one of the tourist centres of Wales, but he should appreciate that, of all serviced hotel beds in the Principality, almost 20 per cent. are within the boundaries of Aberconwy.

What makes the SSA system even dafter is that the reason south Pembroke is not affected by the capping order, unlike Aberconwy, is that that system takes into account the provision of caravans as well as hotels. If there are more caravans in a particular borough, it is counted as having more beds, so it gets more money. If there are more hotels in a borough, it gets less money. That quirk and the ludicrous notion has meant that Aberconwy has been caught in the trap of the insane SSA system.

Hon. Members should also note that the Audit Commission recently published a report on SSAs in which it concluded that they are, effectively, instruments for dealing with capping rather than the distribution of grant. It also drew attention to the fact that they are oversimplified and based on out-of-date information contained in the 1981 census. I hope that our new Secretary of State for Wales will do what his English counterpart has done and review the whole system of SSAs to ensure that, in future, authorities such as Aberconwy, which is not by any stretch of the imagination profligate, are not caught by that ludicrous system.

If there were no SSAs, I am sure that the Government would argue that the power to cap remains an important means of controlling local authority spending. In a recent answer to my hon. Friend the Member for Blackburn (Mr. Straw), however, the Chief Secretary to the Treasury said that the Treasury had not worked out the effects of local government spending on the economy and on macroeconomic indicators such as jobs, services and interest rates.

No one can tell me that, because little Aberconwy council will spend a few hundred thousand pounds more than the Secretary of State believes it should, that will have a detrimental effect upon our economy.

The practice of capping was born out of a distinct hatred of Labour local government. The Secretary of State has gone wrong, however, because he could not find any Labour local authorities to cap. He has had to pick on Aberconwy as a last resort. Under the regime, budgets are not set by locally elected politicians, as they should be. Councils are now effectively capping themselves. What is worse, the system of SSAs is condemned by councils of every political persuasion, and of none, in Wales and beyond.

In July 1991, The Times stated that capping is an offence against local democracy far more outrageous than anything Mr. Delors is proposing for monetary and political union. Most hon. Members and those of all parties serving in local government would agree with that analysis.

The decision to cap in Wales is particularly pernicious because, until now, we have never had to operate under such a system. The Minister of State and the Under-Secretary could tell the House that, year after year, there has been no need for capping in Wales. Under the old system, councils and districts worked with the Welsh Office to avoid that. It is a pity that that did not happen this time, because we would then not have to deal with this daft nonsense.

Worse than that, however, what is now occurring is completely against the grain of local democracy, which is so important to the Welsh culture. That culture is deeply offended by the bypassing of local democracy and the growth of quangos. I fear that it means that the Welsh Office is simply following what is laid down in Whitehall. That is not good for anyone in Wales who is involved with local government, education or any other service.

Unlike some of the English local authorities, of all parties, Welsh local authorities have never been profligate. They are now faced with savage cuts as a result of the worst rate support grant settlement in living memory. Wales is heavily dependent on public services, however, and our local authorities are in the front line of their delivery. It is an affront not simply to local democracy but to people who have to rely on those important services that capping must be considered in the first place.

We must work towards achieving a fairer system of local government finance and grant distribution. We must abandon capping and replace it with proper accountability through the ballot box, as in most other European countries. Who do these Ministers think they are to tell local authorities in Wales what should occur? What if Aberconwy or any other authority in Wales decides that it wants to offer better services than it can provide with the money that it receives from the Welsh Office? Why cannot it do that? It will be held accountable when local elections are held.

More often than not, such authorities know more than Welsh Office Ministers about the realities and priorities in their areas. Instead of bullying small local authorities like Aberconwy, the Conservative party would do better to put its own financial house in order.

10.30 pm
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I have the honour of representing part of the borough of Aberconwy; it is not simply the Minister of State's patch.

Aberconwy commissioned a report on its grant-related expenditure assessment in 1988. It advanced a strong case to the Secretary of State, highlighting many of the points to which the hon. Member for Torfaen (Mr. Murphy) referred. Those special points are relevant perhaps more to Aberconwy than any other borough or district in Wales.

The main industry in Aberconwy is tourism, a by-product of which is the need to provide promenade cleaning, extra street cleansing, public toilets, refuse collection and so on. Aberconwy has 18 per cent. of total Welsh serviced accommodation. That gives some idea of the scale of the tourist operation in the area.

Aberconwy has been making its voice heard in the Welsh Office, apparently to little effect, because it has been less than happy about the way in which SAAs have operated. It proposed a sensible and well-argued case and commissioned an expensive but well-documented report. It has made the case for the borough to be treated differently.

The extra expenditure that I have referred to falls directly on the local taxpayer, bearing in mind that the commercial rate element will be calculated solely by reference to the registered charge payer, which excludes all visitors, who of course generate the need for extra services. As a prime tourist area, Aberconwy is particularly vulnerable to that anomaly, with its high incidence of holiday serviced accommodation and large day visitor population.

The Welsh Office has had five years to consider Aberconwy's case, but it has not given any positive response. One graphic example, perhaps, of the special nature of Aberconwy is the fact that the borough has six fairly extensive promenades to maintain—all at considerable cost.

Uniquely, Aberconwy is underprivileged because it receives no funding from Europe. I plead with the Minister about objective 5b status. I recently went to Brussels to argue the case for the borough. I sincerely hope that the Minister of State and the Secretary of State will consider Aberconwy's case. The A55, welcome though it is, runs across the north Wales coast. To the east, there is some assistance from European funds, and to the west likewise, but the A55 is effectively ensuring that any investment speeds through Aberconwy. I am sure that the point is obvious from the way in which it now qualifies. It qualified five years ago under the criteria that then applied, but it has a strong case now and I urge the Welsh Office to consider it in due course. I am sure that it will.

The recent standard spending assessment changes in social benefit have also had a considerable effect on the finances of Aberconwy. Information on the enhanced population generally and for recreation is derived from two particular statistical sources—the "All Wales Tourism Statistics" and the "Long Distance Travel Survey".

In principle, the council does not query the basis of the source of information, but it takes issue with the weighting factors used in respect of serviced accommodation and caravans—another point which the hon. Member for Torfaen rightly referred to in opening the debate. Serviced accommodation such as hotel bed space has a weighting factor of one, while caravans attract a factor of four multiplied by the number of caravans concerned.

As stated in the report to which I referred, it is contended that large caravan sites do not face the level of requirement to spend as a result of tourism because many caravan parks are self-contained. The difference in waiting clearly gives great advantage to those areas where large caravan or camp sites exist.

I should also refer to the application of the composite secondary indicator which causes wide variations in the calculation of the SSA. There is little doubt that where high unemployment exists there is greater need to spend, but does the factor of population in unfit properties cause authorities to spend on such matters, or are they content to derive benefit in terms of SSA without placing an increased call on their expenditure? Similarly, in more densely populated areas, it is reasonable to conclude that it is relatively more costly to service population areas that are more diverse.

Unemployment in the borough was 8.6 per cent. in April 1991, 9.7 per cent. in April 1992 and 10.3 per cent. in April 1992—a total of 2,293 people out of work. There is also the added need for attraction-related expenditure such as promenades, swimming pools and leisure centres, all at great cost and highly necessary in the competitive world of leisure.

Tourism is the principal industry; it is vital to the borough. It is reasonable to expect, therefore, that the cost of supporting and investing in that industry should be adequately recognised by the block grant mechanism. Significant tourist areas such as Aberconwy do not extract the same level of outside investment from the development agencies, county councils and the EC as manufacturing industrial areas. That places a heavy demand on the district council to fill the void.

The economic success of areas such as Aberconwy is dependent on the holiday industry which is becoming increasingly competitive. The true costs of tourism to a local authority are difficult to determine. An independent survey commissioned by the council in 1984 concluded that the total direct and indirect revenue costs to the council approximated at a minimum one fifth of the council's annual net rate requirements. While the figures may be open to interpretation, they illustrate that the cost of tourism to the council should not be overlooked and is a significant factor.

It is important to recognise that expenditure on tourism falls into two different categories—population and attraction-related expenditure. I have mentioned attraction-related expenditure, but the population factor is of equal importance. It results from an influx of visitors which creates a demand for extra services.

Population-related services include planning, street cleansing, refuse collection, car and coach parks, all at great cost. However, the central problem in evaluating the effect of increased population as a result of tourism is that there is no comprehensive or accurate source of information on bed nights and day ' visitors. Proxy information is used based on the information which the Welsh tourist board collects. That is based partly on an inventory maintained by the tourist board collected from providers of accommodation which may or may not be accurate, but it is hardly a scientific approach to the problem.

The council estimates that visitor nights and day trips are far in excess of those shown in the GREA for enhanced populations. A recent survey by Gwynedd county council in 1984 estimated that the WTB figures for Aberconwy could be out by as much as 30 per cent. which is a decidedly important figure. The situation is exacerbated by the introduction of the new caravan data, and the abolition of the long-distance travel survey information. Aberconwy is not an area of high caravan occupation; as I have said, it is an area of serviced accommodation. The new data will put more emphasis on caravan occupation. I consider that misplaced, as caravans do not require the same servicing by public authorities as traditional holiday accommodation.

It is a supreme irony that Aberconwy should be saved from capping, albeit for a short while, by the recent flood disaster. However, effectively it will still suffer from rate capping. Under the Bellwin formula, it will have to find 15 per cent. of the qualifying expenditure in dealing with the effects of the storms and floods that hit the area some weeks ago. That will inevitably mean a cut in services; there is no other answer. The cut will be all the more serious because of the large number of elderly retired people who live in the borough.

I hope that the Government will look again at Aberconwy's plight and its reasoned, persuasive arguments, and will ensure that it can set a budget for next year that will enable it to enhance and improve local services rather than cut them—which is likely to be the regrettable, and avoidable, cost to the charge payers of Aberconwy. I ask the Government to reconsider the way in which they have been let off the hook, as the hon. Member for Torfaen put it earlier. They have hardly been let off the hook in real terms; the burden is extremely heavy. I urge the Welsh Office to reconsider.

10.41 pm
Mr. Nigel Jones (Cheltenham)

I send greetings to the House from my hon. and learned Friend the Member for Montgomery (Mr. Carlile), who is on a parliamentary delegation to Romania.

I welcome the Secretary of State to his new role. I know that he will have a wonderful time meeting the people and visiting the places in a beautiful nation which is also very near Gloucestershire. I also welcome the Government's change of mind over the capping of Aberconwy. It seemed bizarre when it was first announced that the Government intended to cap it to reduce average council tax hills by the magnificent sum of 2p a day.

The position was summed up by the distinguished journalist Iorwerth Roberts in the Daily Post on Wednesday April 28. He said: Aberconwy has no record of irresponsible spending, and its council tax is no higher than many of its neighbours. Making an example of it for the sake of a mere £8 a house seems to be using a sledgehammer to crack a tiny nut. It is good that the new Secretary has seen sense, and is allowing elected local councillors to set a budget at the level that they judge is needed to provide high-quality, properly managed services at a price that local people are prepared and able to pay.

It does not surprise me that the right hon. Gentleman has made that decision. He is a fair-minded man; I have some experience of that. Last year, he was the Minister who heard the capping appeal from my own county council, Gloucestershire, and I am sure that he was instrumental in raising the cap on that occasion. I feel a tinge of regret that, having shown a talent for listening then, and again in the case of Aberconwy—a talent rare in the present Government—the right hon. Gentleman has moved into his new job too soon, leaving this year's English capping decisions to a new and disappointing team at the Department of the Environment.

It would have been perverse of the Government to continue with their plan to cap Aberconwy, which is not a loony, high-spending council. The hon. Member for Torfaen (Mr. Murphy) reminded the House of the severe damage and disruption caused to the area on 10 and 11 June, when serious flooding took place. Along with other hon. Members, I seek an assurance that the Government's lifting of the cap is not the end of the story for the people of Aberconwy. As the Secretary of State will know, 4,000 people are registered as having been affected by the floods, in which 5 in of rain fell in three hours. The House will know of the widespread discontent among local authorities about the formula that the Government use to determine standard spending assessments. SSAs are to accuracy what Evel Knievel is to road safety.

Only today, at the Association of District Councils' conference in Bournemouth, a motion was passed, with support from all parties, expressing no confidence in the formula. I understand that a Conservative councillor from Buckinghamshire was tempted to table an amendment saying that he had little confidence in the formula, but he was persuaded to withdraw it at the last moment.

Following the disaster in north Wales, the Government should consider an additional parameter. When calculating SSAs, they should take into account an area's propensity to flood. I cite as an example the Meadows estate and the surrounding area at Llandudno junction, which have flooded four times in 16 years. It seems that natural disasters are becoming more frequent as a result of ecological change.

As the hon. Member for Torfaen said, the Bellwin formula is insufficient to deal with the problem. Only 85 per cent. of the money can be recovered. If a local authority needs to spend £5 million, £750,000 has to be met from its budget. In Aberconwy, between 600 and 700 council houses are currently uninhabitable because of the floods, yet social fund loans are available only to those on income support and are currently taking six weeks nationwide to process.

In addition to the welcome lifting of the abhorrent cap, we need a system of crisis fund payments. The Prime Minister will have received a letter from Roger Roberts, whom the Minister of State will know as his Liberal Democrat opponent at the election. Roger Roberts is asking for £2 million as a starter for the crisis fund payments. Many elderly people's bungalows have been flooded for the second time in two years, but there seems to be little hardship help. Will the Secretary of State give an assurance that help will he forthcoming? Will he use his new-found influence in Cabinet to persuade the Government to abandon capping once and for all because it is a democratic abomination?

10.47 pm
The Secretary of State for Wales (Mr. John Redwood)

The hon. Member for Torfaen (Mr. Murphy) asked me to explain the basis of my decision and I am happy to do so.

In coming to my decision on a final cap for Aberconwy, I took very careful account of all the relevant information available to me, including the representations made to me by Aberconwy and the severe flooding that occurred between 10 and 11 June. I saw the extensive damage for myself when I visited the borough on 11 June and, as the House knows, I announced on 14 June that financial assistance through the Bellwin scheme would be available to local authorities to meet 85 per cent. of their revenue costs for emergency arrangements and repairs.

Aberconwy's preliminary assessment is that the revenue costs for remedial work and for the accommodation of the temporarily homeless will be about £3 million. The authority considers that its share of that under the Bellwin rules, coupled with the loss of revenue from tourism and conference facilities which have been damaged, could amount to more than £500,000, although I hope that that will prove to be an overestimate.

The authority will have to meet the costs by drawing on its reserves and curbing the budget for other services. I am told that it currently has reserves of £448,000, which would enable the council to meet its obligations. It is not legally permissible to put a higher figure in the order than the original budget and I have decided that, in these exceptional circumstances, the confirmation of the provisional cap of £8,566,950 could prejudice Aberconwy borough council's ability to maintain an acceptable level of services for its residents while meeting the costs of the floods. For that reason I ask the House to approve a final cap of £8,734,695, the sum of the authority's original budget—the maximum permissible.

Mr. Murphy

The Secretary of State said that the local authority has about £400,000 worth of reserves. He will, of course, be aware' that district auditors and the Audit Commission are anxious that all local authorities should have a reasonable balance in their accounts. Would not it be wrong to take away such a large sum and leave the council with no balances at all, as a result of having had to tackle the flooding, which is totally beyond its power?

Mr. Redwood

The hon. Gentleman is right that some reserves must be left and it is up to the council, its advisers and its auditor to decide what would be a prudent reserve. I am sure that the hon. Gentleman would agree that £448,000 for a council of that size leaves it considerable scope to pay the bills that will, unfortunately, fall to it as a result of the tragedy.

I stress that the flooding is the sole reason for my decision to relax the cap. If the events of the weekend of 10 June had not taken place I should be asking the House to approve the proposed cap of £8,566,950 notified to the authority on 26 April. Aberconwy has been generously treated under recent local authority revenue settlements. Hon. Gentlemen have asked questions tonight about the adequacy of its standard spending assessment, but I must tell the House that its SSA of £8,487,933 for 1993–94 represents an increase of 14.5 per cent. over that for 1992–93, and that for the three years 1991–92, 1992–93 and 1993–94 taken together its SSA has increased by 58.39 per cent., a level of increase more than 14 percentage points higher than the average increase in district SSAs over the same period. I hope that the House will agree that that is a large increase, at a time of recent restraint on general public expenditure.

The hon. Member for Torfaen was a little more cautious in his remarks than the hon. Member for Caerphilly (Mr. Davies), who went to Llandudno shortly after I did, and tried to terrify local people into believing that there would be no Government support whatever for the council at this time of great stress. That is most regrettable, as I promptly announced the Bellwin formula, which provides substantial aid in such difficult situations, and I have now announced that there will be no restrictive cap on the authority, so it will be allowed to spend at its previous budget level.

Of course, the hon. Member for Torfaen is right to say that I expect the council to make some use of its reserves and to manage its resources well.

Mr. Ron Davies (Caerphilly)

The Secretary of State referred to the increase in the expenditure that the local authority is allowed during the current financial year. When he has been in the job a little longer he will have had the chance to read the records and then he will realise that that apparent increase is a direct result of this year's financial settlement for Welsh local authorities, in which the bulk of support was transferred from the county authorities to district authorities. It creates a false impression to suggest that the districts are doing well.

Secondly, the right hon. Gentleman is totally misinformed if he believes that when I visited Llandudno I suggested that no Government aid would be forthcoming. However, I certainly pointed out to many people who were closely interested that under the Bellwin formula a substantial initial cost would have to be borne directly by the local authority, which would mean cuts in services to meet the expenditure incurred as a result of the flooding.

In addition, 15 per cent.—

Madam Deputy Speaker (Dame Janet Fookes)

Order. I believe that this is an intervention, but it very long, and I must ask the hon. Gentleman to resume his seat.

Mr. Davies

May I finish my sentence, Madam Deputy Speaker?

Madam Deputy Speaker

No, because this is far too long for an intervention. The hon. Gentleman may seek leave to intervene again, but not just at the moment.

Mr. Redwood

The hon. Gentleman got into a muddle about whether the money was going to the county or to the districts. I am under no delusion; the money was switched to the districts, and that was exactly my point. I was saying that Aberconwy, which is a district council, had a generous settlement this year and the previous two years, compared with other districts, with counties and with local government across the United Kingdom. I think that the hon. Gentleman has become muddled on that subject and I am sorry that he is so confused.

I am grateful for the hon. Gentleman's clarification of his true position on the generous aid and support that the Government have offered for the floods. However, that was not the impression given in the newspapers in the region after his visit. I am glad that the fact that the hon. Gentleman's remarks were misconstrued in the press has been read into the record of the House.

Mr. Ron Davies

I am grateful to the Secretary of State as I can now complete the point that I was making. I am not responsible for the way in which the newspapers interpret the Government's parsimony. I was saying that the local authority will have to meet the initial cost of many of the works and, under the Bellwin formula, will have to find 15 per cent. of the cost. That is not, in any circumstances, a generous settlement, especially when the cost of the works will have to be met at the direct expense of services being provided by the local authority.

Mr. Redwood

The hon. Gentleman is responsible for the remarks that appear as quotations from him in the newspapers, but I am sure that the House is grateful for clarification of what he really meant on that visit. I am sure that the constituents of my right hon. Friend the Minister of State will be interested to see the record corrected in that way.

The general issue of standard spending assessments was raised by various hon. Members in our short debate. Tourism, visitors and recreation is taken into account in the SSA formula. I have the calculations used to work out the SSAs in the guide that we issued to the House. It is made clear that those calculations include enhanced population—caused by visitor nights and day trips of people coming from 25 miles away or more for business and non-business purposes. The formula contains a genuine attempt to reflect the extra costs to authorities caused by visitors and tourism such as that incurred by Aberconwy. It is partly because of that element of the formula that Aberconwy enjoys an above-average SSA per head compared with other Welsh districts.

I promise that there is an opportunity each year for the formula to be reviewed. It is done in a consultative way in Wales, which I widely welcome. It is up to Aberconwy and its supporters to put their views on the formula to the Welsh consultative council.

Mr. Llwyd

Earlier I referred to the fact that a detailed report was commissioned from experts on the subject. It was made known that the attempt to reflect the current position was not succeeding. That point was made with clarity, but it did not achieve anything.

Mr. Redwood

That is for the consultative council, which includes all the important interests in local government in Wales. Just as Aberconwy can commission a study that proves one thing, so other districts and counties can commission studies that might purport to prove something else. The consultative council and Ministers have to make a different judgment on the balance of the factors in the SSA in order to be fair to the various pressures on different councils around Wales. I am pleased to inherit a system based on agreement with and through the local council organisations as that greatly helps in ensuring a just settlement.

Mr. Murphy

Earlier, I said that we in Wales sometimes received bad things from England. One of the good factors that we could have been granted was what has taken place in the Department of the Environment—a commitment to a proper review of the general SSA system, which is overdue. The SSA system does not take into account long-term unemployment, chronic ill health and other factors. If a review of the system can take place in England, why cannot it happen in Wales?

Mr. Redwood

I have already said that there are opportunities for change and reform in the SSA system in the Welsh way. I am proud to inherit the Welsh model. The review in England is ministerial because that is how things are done in the English system. The review will take account of all the representations made by local government in England. In Wales we can do something similar; we can, through the consultative process, review how satisfactory we find the existing calculation. I invite councils to write to the consultative council in the usual way if they wish to see changes. However, the issue will have to be debated with other colleagues from local government to try to sort out the best way forward.

I believe that we have a good system. I hope that the House will welcome the fact that I have done the decent thing tonight by proposing a capped limit at the original budget and have not attempted to make life more difficult for Aberconwy. I do not think Aberconwy should have been put through a rebilling exercise in the middle of cleaning up after the floods. However, I make it clear to the rest of local government in Wales that it was only the flooding that led me to that conclusion because I know that many other districts and councils worked hard to live within the capping limits. I am pleased that they did that and that was the right thing to do. Without the floods, Aberconwy would have been proposed for a tighter capped limit tonight.

I acknowledge the spirit of co-operation and partnership between my predecessors and local government associations in Wales. That is typified by the arrangements for discussion and agreement on the distribution of resources through the SSAs. I intend to sustain and foster that system because I think that it is right for Wales and right for local government.

Question put and agreed to.

Resolved,

That the draft Council Tax Limitation (Wales) (Maximum Amount) Order 1993, which was laid before this House on 21st June, be approved.