Local Government Reform (Hansard, 1 March 1993)

§ 2. Mr. Ieuan Wyn Jones
To ask the Secretary of State for Wales what representations he has received on the cost of local government reform in Wales.

§ The Secretary of State for Wales (Mr. David Hunt)
The Welsh Consultative Council on Local Government had a full discussion about the Touche Ross report on the costs of local government reorganisation at its meeting on 17 February. Since the report was published I have received three written representations.

§ Mr. Jones
The Secretary of State will be aware of the view of the Association of Welsh Counties that a balanced interpretation of the Touche Ross report suggests that the cost of local government reorganisation in Wales could be anything between £100 million and £150 million. So how can the Secretary of State justify his claim that the cost will be recovered in seven years, bearing in mind from previous experience the fact that local government reform is an absolute disaster in financial terms? Is it true that this year's county budgets have been cut to find money for the reforms?

§ Mr. Hunt
On the last point, no, that is not true. As the hon. Gentleman will see if he looks at the figures, the total standard spending for local authorities in the coming financial year is up by 3.1 per cent., even before one takes into account the amount set aside for community care, which puts the increase up to 3.5 per cent.
On the point about the costs of local government reorganisation, I hope that the hon. Gentleman is not arguing against reorganisation. First, the costs are spread 3 over 15 years. Secondly, they do not take account of the annual savings, which earlier reports have suggested will be substantial. That is why I say that the reorganisation of local government could pay for itself within about seven years.

§ Mr. Roger Evans
Does my right hon. Friend accept that the expense of the previous local government reorganisation was largely due to the creation of multi-tier arrangements, which have so disastrously failed? Will he give some reassurance and some figures about, for example, what savings will be occasioned by his present proposals, particularly in the cases of Monmouth and Gwent? Gwent county council is seen by the public as an unnecessary and extravagant layer of local government.

§ Mr. Hunt
I agree with my hon. Friend. Substantial annual savings will flow from the reorganisation into unitary authorities. For the mid-range of about 20 to 23 authorities, one is looking at annual savings of between £12 million and £17 million. Of course, the previous example cannot be followed for the reasons that my hon. Friend gave. We shall make absolutely sure that the reorganisation presents value for money as well as establishing good, strong local government.

§ Mr. Murphy
Will the Secretary of State acknowledge that not only the county councils but many district councils believe that he has seriously underestimated the cost of local government reform? Does he accept that many of the figures are pure guesswork, especially when it comes to the amount that local authorities will have to pay out in redundancy payments? How can he justify the fact that local government might cost as much as £150 million when Wales is recoiling at the savagery of the cuts to education and other local government services?

§ Mr. Hunt
The hon. Gentleman made a number of points. First, local government reorganisation into unitary authorities is widely welcomed in Wales. The hon. Gentleman should recall that, right at the start of the consultation process, no strong lobby argued that we should continue the existing system, because, as my hon. Friend the Member for Monmouth (Mr. Evans) said, there are savings to be achieved by having one unitary local authority administering services.
To put the matter into context, local authority budgets for this financial year total £2,472 million. If one sets that against the figures that we have mentioned, one sees that the transitional cost would total perhaps between 2 and 6 per cent. I believe that the reorganisation will represent great value for money and that we shall have better local government as a result.