Public Expenditure (Wales)

HC Deb 14 December 1994 vol 251 cc925-40 3.30 pm

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

With permission, Madam Speaker, I should like to make a statement on public expenditure in Wales.

Copies of my statement, details of provisional standard spending assessments and provisional capping principles for counties and districts will be available in the Vote Office when I sit down.

I am presenting a budget for Wales, full details of which will be published in my departmental report early next year. This is a good settlement for Wales: £6,770 million will be available for 1995–96, an increase of 2.9 per cent. over this year, which is £190 million extra. Because inflation is down, it will buy more than the plans for 1995–96, which I announced last year—£40 million more.

The success of the Welsh economy is well advertised. Industrial output is up by almost 10 per cent. over the past year. The Celtic dragon now rivals the Asian tigers. This budget, with its emphasis on public services and regeneration, will keep Wales roaring ahead. The largely untold success story has been the growth of small and medium-sized businesses, the increase in self-employment and the restoration of entrepreneurship—[Interruption.] I see that the Opposition welcome good news with all the enthusiasm of an undertaker at a baptism.

Self-employment is up from 136,000 in June 1988 to 175,000 in September 1994 and VAT-registered production companies are up from 3,600 at the end of 1979 to nearly 6,000 at the end of 1991. That is great progress. Between them, those firms have created more jobs than the inward investors. That is a well-known success story. The two are mutually reinforcing.

Today's news on unemployment brings the rate in Wales back down to the United Kingdom average. That is welcome news indeed, and I hope that Opposition Members will join in the chorus of support.

Independent forecasts are positive for Wales. They expect growth in 1995 and 1996 to be faster than a strongly performing United Kingdom. From Queen street in Cardiff to the business park in north Wales; from Imperial park to Fishguard harbour, investors are busy building and rebuilding, creating new jobs and prosperity for the 1990s.

Yesterday I launched a drive for £1 billion of private investment for the valleys' 20 prime sites. Good locations for new homes, new shops, new factories and new offices are on offer. This budget provides the money for the new roads and public investments that those schemes require. It provides local authorities with cash under the strategic development scheme and through capital programmes.

Better health and safer streets are the overriding priorities for the public services. There is an additional £114 million for the national health service in Wales—a cash increase of 5.5 per cent., or a 2.2 per cent. real increase. It will increase NHS spending by more than £39 for every man, woman and child in Wales, bringing expenditure up to £754 per person next year or more than £3,000 for an average family. It is more than it costs to run the family car or to go on the family holiday.

With that money, we aim to cut junior doctors' hours, recruit more medical staff, treat many more patients and fulfil patients charter guarantees. There will be fewer forms, fewer administrators in health authorities and many more satisfied patients. A further £6.6 million is available for disabled people. I look to local government to come forward with good schemes to help people in need.

I propose to set total standard spending for local authorities at £2,767 million, an increase of 2.7 per cent. on 1994–95. TSS will be made up of £2,466.3 million for county and district councils and £300.7 million for the four new police authorities. Police TSS represents an increase of about 6 per cent. on 1994–95 police authority budgets. That substantial increase demonstrates the Government's commitment to providing a decent amount of cash for police services.

I am sure that some opponents will complain that those new arrangements take responsibility away from local authorities; but the people of Wales will welcome that additional money for law and order. Local authority members continue to have the majority on the new police authorities. I am sorry that local government in south Wales was unable to find sufficient money when it had control of the decisions, as I and most people in Wales would have liked it to do. I want that money to buy more detective work and more patrols and reduce the number of criminals on the loose.

Final standard spending assessments will be announced in the new year. Aggregate external finance will be £2,450.8 million, comprising revenue support grant of £1,705.5 million, business rates of £520 million and other grants of £225.3 million. I am consulting on my proposals for RSG. Both TSS and AEF include £124.4 million for care in the community—another large increase.

On capping, I propose that any increase of more than 0.5 per cent. on a county or district council's 1994–95 budget requirement will be considered an excessive increase if it gives rise to a budget requirement above the authority's SSA. Any budget requirement that is more than 12.5 per cent. above the SSA will be considered excessive, subject to certain conditions. My capping principles are provisional. I shall make my final decisions in the light of authorities' budget decisions and all appropriate considerations.

There have been suggestions from the Opposition Benches that I would not meet the costs of local government reorganisation and that local authority services would suffer as a result. I am pleased to be able to confound those expectations. The local authority associations asked me to provide £19.5 million to the shadow authorities for their running costs. I propose to meet that bid in full.

The associations asked me to provide £20 million for changes to information technology. I propose to meet that bid in full in the present financial year and next year, by supplementary credit approvals. The associations asked for £10 million for compensation costs. I have concluded that I should provide £3.5 million of supplementary credit approvals in 1995—96.

I have consistently made it clear that I expect that virtually all existing local government staff will find jobs in the new authorities, or will go through the normal process of natural wastage. I expect the new authorities to make the fullest possible use of existing staff—if necessary, by redeploying and retraining them—rather than spending large sums of public money on redundancies and recruitment. The provision that I have made for compensation reflects that. However, if some authorities decide that they want to make major administrative savings at the point of reorganisation, I shall make more money available to facilitate that.

In addition to the £43 million that I have made available for local government reorganisation, I have decided to issue £525.6 million of capital grants and credit approvals for 1995–96 for local authority capital investment. That represents a 4.5 per cent. increase on the current year, a real increase, giving local authorities more scope to make their own decisions. That will enable local authorities to play their full part in the regeneration initiatives at the heart of the budget.

I have increased provision for local government investment in environmental and economic development by 15 per cent., to a total of £43.2 million. That includes £4.5 million of additional support to rural areas in place of grant schemes formerly provided by the Welsh Development Agency and the Development Board for Rural Wales. A further £49.4 million goes to capital projects under the strategic development scheme. I shall be announcing the results tomorrow. It is a very generous settlement, taking into account the special needs of Welsh local government.

Planned expenditure on agriculture for 1995–96 will be £267.5 million—more than £33 million above planned expenditure for this year; an increase of 14 per cent. It means that farmers will continue to receive high and fast-growing public support.

Following the change in the assisted areas map announced to the House, there will be reductions in regional assistance. I shall continue to meet demand in full under the rules of the scheme.

The Welsh Development Agency will be able to spend more than £153 million next year. I am reducing the grant substantially in both 1995–96 and 1996–97 as a result of an accelerated property disposal programme. I have indicated a substantial increase in the agency's grant in aid for 1997–98. The WDA this year has received as; much money as it can sensibly spend from grants and asset sales and next year will see a further substantial programme of work. Indeed, this year the WDA has returned £10 million that it was unable to spend. The WDA is not held up by a lack of cash.

I am determined to cut out unnecessary bureaucracy in favour of services. The running costs of my Department for 1995–96 will be below £75.5 million, which is less in cash and real terms than in 1993–94 or 1994–95. They will fall further in cash and real terms in 1996–97 and 1997–98.

I am reducing the total running costs of Welsh executive non-departmental public bodies from £66.7 million this year to £65.3 million next yearv—a cut of 2.2 per cent. or 5.4 per cent. in real terms. [Interruption.] The hon. Member for Cardiff, West (Mr. Morgan) is making fatuous comments from a sedentary position. The figures speak for themselves; they show that we are reducing the overheads and putting the money into services. [Interruption.]

Madam Speaker

Order. We cannot have continual barracking from sedentary positions. Hon. Members will have the opportunity to question the statement in a moment.

Mr. Redwood

I shall also be requiring some NDPBs to make considerable savings on consultancy fees and advertising and shall be slimming down the operations of a few. In some bodies, such as the Countryside Council for Wales, there is scope for that. I am maintaining the provision for arts and leisure in full for next year.

Housing associations have seen substantial increases to their stock in recent years, running well ahead of 10,000 new homes over three years—the target set in 1991 by the Agenda for Action. In 1995–96, more than £100 million should enable Housing for Wales to achieve a target of more than 3,500 additional homes. I have taken into account the 628 empty properties owned by associations and am asking them to bring more of those into use.

I have increased local authority housing provision to £267.6 million, including more than £150 million for mandatory home renovation grants. I am making an additional £3 million available for local authorities to develop low-cost home ownership schemes, which will help 300 more families into home ownership next year. That is in addition to 450 families who will be helped through Housing for Wales. A recent survey shows that many in rented accommodation want to own. I intend to help them do so.

I propose to spend £188 million on central Government roads and transport in 1995–96. The A465 heads of the valleys improvement between Abergavenny and Hirwaun will help development in Merthyr and I remain committed to bringing it forward as quickly as possible. I opened the long-missing link on the M4 motorway over the River Neath on Monday. I plan to start the M4 Magor-Coldra widening, the A550 Deeside Park interchange and the A40 Fishguard western bypass. Work will continue preparing the A55 improvements across Anglesey.

I propose to make £109 million available for capital expenditure on local authority roads. I have discussed with the south Wales valleys councils their priorities for regeneration. This budget meets their main needs.

In Gwent I have decided that work can start next year on the £20 million A472 mid-valleys strategic route improvement. Work continues on the Tredegar bypass, which should open next year, and there is preparation work on the Aberbeeg-Cwm improvement.

In Mid Glamorgan, work can start on the £7 million Merthyr western relief road and on the Bridgend inner relief road. Work is well under way on the Pontypridd inner relief road, which will improve access to the A470 and M4. Preparation work should continue on the Porth and Lower Rhondda Fach relief road.

In West Glamorgan, I am supporting a start to the third phase of the Swansea valley dualling. That will provide access to the important Tawe vale development—

Mr. Rhodri Morgan (Cardiff, West)

Tory vale?

Mr. Redwood

I thank the hon. Gentleman for renaming it.

I continue to support preparation work on the Port Talbot peripheral distributor road and I have confirmed that work can start soon on the Rhuddlan bypass. I should like to make progress with more schemes, but I am disturbed by significant cost increases on some important local road schemes. I have asked South Glamorgan to look again at the design and costs of the final links in the Cardiff peripheral distributor road. The costs have increased by £35 million—or 50 per cent. —in the past year. I have agreed to provide money to prepare an improved link to Cardiff-Wales airport. That, too, needs to be realistically designed and costed.

There is a large amount of freight on Welsh roads that could be taken by rail. I have asked the WDA to include a rail option on its industrial parks wherever possible, and to see how freight facilities can be improved.

Further and higher education will receive grants totalling £411 million in 1995–96. That will enable the higher education institutions to provide full-time places for more than 30 per cent. of young people each year. It also provides for the number of part-time students in higher education to increase. Student enrolments on those plans increase by more than 30 per cent. between 1992–93 and 1996–97. Some £40 million for capital expenditure in that area in 1995–96 will help in renovation and development. In addition, I am giving the colleges greater flexibility in the way in which they can use their capital. From next year, they will be free to use it to service loans from the private sector if suitable schemes are designed.

I have increased the money for the Curriculum Council for Wales next year by 18 per cent. The aim is to oversee the tests in schools and allow external marking.

I shall introduce a major new initiative for popular schools. I am committed to promoting parental choice and diversity and to raising standards in our schools. [HON. MEMBERS: "What is a popular school?"] Opposition Members ask what a popular school is. It is one to which parents wish to send their children. I should have thought that that was elementary. If Opposition Members do not understand that, they really do have problems with education policy.

Popular and successful schools are having to deny places to large numbers of children—some of them are constituents of Opposition Members—seeking to enjoy the first-rate education that they offer. My popular schools initiative will provide the money for additional facilities at those schools and will be a major investment in the future education of children in Wales. It will be very welcome to parents, even if Opposition Members do not speak for them.

Results in Welsh schools are still too varied. The best are good, the worst are bad. The bad schools are not starved of money and cannot always shelter behind the notion that their pupils are bound to fail because of their backgrounds. It is not the income of one's parents that matters to do well at school—the daughter of an out-of-work plumber can do better than the son of a stockbroker if she is encouraged to do so.

This budget for Wales means a stronger health service, more resources for the police to improve the safety of our streets and homes, more investment in urban and rural regeneration, better education in our schools and opportunities for more students in our colleges. It pays the costs of local government reorganisation, gives local authorities more capital for their communities and tackles the high overheads of government.

This is a budget for a Wales recovering from recession, a budget to reinforce the growth of new jobs, a budget for a more modern and prosperous Wales. I commend it to the House.

Mr. Ron Davies (Caerphilly)

I thank the Secretary of State for his statement, which has taken nearly 20 minutes. I should like to draw your attention, Madam Speaker, to what I regard as a flagrant abuse of the proceedings of the House. Over the past 11 years, certainly for as long as I have been a Member, at this time of year we have had a statement on local government finance. I was not notified that the Secretary of State intended to make a 20-minute speech on what is, in effect, a budget for Wales. I do not think that any hon. Member was aware of that and no notification was given of the fact that we were to have an extended debate. If it is the Secretary of State's intention to adopt that procedure in the future, I ask you to reflect, Madam Speaker, on whether you should discuss it with the appropriate authorities to ensure that hon. Members' rights are protected.

I want to make it absolutely clear that I and my colleagues have been pressing for some time for a debate on all these matters in the Welsh Grand Committee in Cardiff. It is of great concern to me that the Secretary of State has apparently been conspiring through the usual channels to frustrate our requests for a meeting of the Welsh Grand Committee, where we would have an opportunity to question the Secretary of State about the very matters that he has put before us now. It appears that the new style adopted by the Secretary of State is to deny us the opportunity for a full debate in Cardiff on all these matters and to come here at the shortest possible notice, without the courtesy of notification to any hon. Member, with the intention of smuggling through the House without debate or question what he refers to as a budget for Wales. It is a flagrant abuse of our proceedings and I hope that the House will register the strongest possible dissatisfaction with what the Secretary of State has done.

During the earlier part of his comments, the Secretary of State referred to the fact that he was producing a budget for Wales. I want to refer to the Budget produced a fortnight ago by the Chancellor of the Exchequer, who I understand carries more authority in the Cabinet than the Secretary of State for Wales, certainly when financial matters are discussed. The Chancellor's Red Book records the fact that total expenditure for Wales in the current financial year is £6.5 billion and that the forecast for next year is £6.4 billion. By any standard, that is a cut in real terms of £100 million. It ill becomes the Secretary of State to try to confuse matters by arguing that there has been a real-terms increase in expenditure for Wales. It is a completely unsatisfactory way of dealing with those matters and I hope that we shall not see any repetition of that disgraceful behaviour by the Secretary of State.

The fact that the right hon. Gentleman's Department is today releasing 12 separate press releases shows that he is embarking on what he expects to be a major series of announcements. If there has been any increase at all during the past 12 months, it has been an increase not in the expenditure available to Wales, but in the number of press releases, which is apparently the result of frenetic outpourings from the Secretary of State's private office as he hopes to restore his battered reputation.

The Secretary of State does not represent one person in Wales and his decision not to consult any of the 32 Opposition Members out of 38 Welsh Members about this new system is a deliberate insult to the House of Commons, a deliberate discourtesy to 32 out of 38 Members and a clear sign of the contempt that the Secretary of State has for the people of Wales.

Now that the right hon. Gentleman has embarked on that new process, will he give two specific guarantees? First, will he ensure that there is a full day's debate on the Floor of the House on the local government settlement, so that we can have a full and proper discussion? Secondly, will he give a clear undertaking that there will be no further obstruction in the operation of the usual channels, so that Labour's long-standing request for a meeting of the Welsh Grand Committee in Cardiff to debate the whole of the Government's programme in Wales can now be met?

On the matter of local government, which should have been the subject of the statement, does the Secretary of State acknowledge that his analysis of the settlement is different from the analysis provided by those in local government? Will he confirm, particularly, that his claimed increase of 2.7 per cent. on total standard spending represents a cut of 5 per cent. in real terms if the basis of comparison is what local authorities budgeted for in the current financial year? In addition, the proportion of the settlement that the Secretary of State has funded this year is 1 per cent. less than last year. Does he accept, therefore, that the budget's net result is that the average council tax payer in Wales faces a 10 per cent. increase in household bills in the next financial year?

We all know that the Secretary of State has a secret agenda to cut public expenditure in Wales—it is a matter of common knowledge. Why, therefore, must he resort to the sort of subterfuge that he showed this afternoon? If he wants to cut public expenditure and if he is proud of his public expenditure cuts, why does not he have the courage of his convictions and stand up and say that that is what he wants to do?

In his statement, the Secretary of State referred to the costs of local government reorganisation. Now that the changes have collapsed in chaos in England, why should we in Wales have to suffer injury added to insult, with the average Welsh income tax payer paying an extra £1 per week for changes that we did not approve? As with the Severn bridge tolls, is not that yet another Tory tax on Wales?

The Secretary of State referred to £19.5 million being made available to shadow authorities in the current financial year. Will he tell us whether that money is a grant to shadow authorities, or whether it will be made available on the basis of supplementary credit approvals? If the latter is the case, he is not paying for the changes; Welsh council tax payers will pay for them.

The Secretary of State has made available a small sum for staff compensation arrangements arising from the reorganisation. Will he now make it clear whether all staff who do not agree to redundancy should transfer to the new authorities and whether it will be the responsibility of the new authorities to bear the cost of subsequent redundancies? That is a direct question. I hope that we shall have a direct answer from the Secretary of State.

Without exception, Welsh local government is doing a good job efficiently and it is providing vital public services under democratic control. Does not the Secretary of State appreciate the irony of his undermining those local councils when his own regime at the Welsh Office represents one of the most centralised, least efficient and least accountable of all Departments? Does he understand the serious reservations across Wales about his decision to take control of the police?

Having effectively nationalised the police, why is the Secretary of State still underfunding police authorities to the extent that police authorities such as Dyfed-Powys and North Wales are openly critical of his budget? That decision alone will divert resources from services, such as education and social services, which are playing a vital crime prevention role. As a result of this budget, the social services' budget in Wales is £38 million short of the amount that they require to meet their statutory obligations under care in the community. Will the Secretary of State, therefore, concede that his Government clearly have no coherent partnership strategy for dealing with crime?

What value does the Secretary of State place on local government now that he has reorganised it, stripped it of its functions, undermined its resources and placed the tightest-ever regime of rate capping on it? On the other programmes that he has announced today, does he understand the widespread dismay that will arise in Wales because of the impact of the cuts? Is he surprised at the lack of confidence in him as Secretary of State when it emerges that even the Cabinet had to restrain him from his zeal for further cuts in public expenditure?

The cuts in the grant to the Welsh Development Agency will be especially deplored. Given the way in which the Secretary of State's predecessors have played politics with the agency, does not he recognise that he has a responsibility to restore some long-term stability to it and to restore credibility and security to its operations?

Will the Secretary of State confirm that, if he cuts the Tai Cymru budget by the 20 per cent. that the budget suggests, the number of homes built in Wales will be reduced next year by between 700 and 800? Given that last year he referred to the increase of 150 new homes as a "welcome increase", what words does he now use to describe the reduction, particularly given the fact that Shelter Cymru has reported a record figure of 60,000 homeless people registered in Wales this year?

The Secretary of State's treatment of quangos demonstrates that he wishes to interfere with their executive functions, but he will do nothing to restore or extend democracy at board level.

Is the Secretary of State planning—as his statement seemed to suggest—a savage cut in funds for the Countryside Council for Wales? Does he recognise that such action would be regarded as a particularly sinister development, given the council's role as environmental watchdog for Wales? Is it now being victimised because it will not bend the knee to Government diktat—although it is headed by Michael Griffith, who has described himself as "a crusty old Tory"?

During our debates on the Budget, the Secretary of State announced cuts of £180 million in Welsh Office expenditure. We are now seeing what that actually means, Department by Department. Does the Secretary of State understand why Wales has turned against him and his party?

Mr. Redwood

I am surprised at the hon. Gentleman's objections to the statement. It was clearly flagged on the monitors as a statement on public expenditure for Wales, and that is exactly what I spoke about. I should have expected Opposition Members to welcome an opportunity to cross-examine me on all matters concerning spending in Wales, not just on the local authority settlement. I shall, of course, do my best to answer the questions that are asked.

I believe that my offer of a Welsh Grand Committee in London this side of Christmas, to debate the budget and spending arrangements for Wales, was passed on through the usual channels—as was my offer of another Welsh Grand Committee in Cardiff, probably to debate a subject of the Opposition's choosing. I believe that it was the Opposition who turned down the offer of a sitting in London before Christmas, which I should have welcomed as an opportunity to debate those matters at greater length.

I have no worries about democracy and proper argument; I believe that I presented a good budget, and I shall be happy to debate it at length as well as answering questions about it.

As for the objection that I am issuing press releases today, I plead guilty. I believe that issuing press releases is a well-known ministerial practice, and I do not think that I am issuing more press releases about spending in Wales this year than has been traditional in past years. This time, however, I am providing an opportunity for cross-examination in the House. [HoN. MEMBERS: "Get on with it."] I am going on about that point, because the hon. Member for Caerphilly (Mr. Davies) made it the main feature of his objections to my statement.

I hope that agreement will be reached through the usual channels in regard to the debate on local government spending; I am sure that it is a worthy subject for further discussion.

The hon. Gentleman suggested that the local authority settlement was a 5 per cent. cut in real terms. It clearly is not, as the figures that I gave illustrate only too well. The hon. Gentleman should bear it in mind that I am recommending a higher proportion of grant through aggregate external finance than is being provided for either England or Scotland. He will know that the level of council tax is in the hands of local authorities, many of them under Labour control, which will determine spending levels.

The hon. Gentleman spoke of cuts in public expenditure. He had clearly prepared the wrong speech ahead of my statement. As the statement made clear, there is to be a cash increase of £190 million—a very large increase. I have identified ways in which that will mean a real gain for Wales in the main areas of spending.

As for coming clean on cuts, I have come clean. I confess that cuts are being made in one or two areas, but I spelt them out in detail. That is how I have managed to secure real growth in the budgets that matter. I have cut the grant to the Welsh Development Agency, but it does not need the money; as I said, it can raise it from asset sales.

The hon. Gentleman asked whether the £19.5 million would be grant or supplementary credit approval. I am currently considering representations on that, and I shall make an announcement later. I am also consulting on the standard spending assessments for the police and other bodies, and will inform the House as soon as I have completed my calculations.

Sir Wyn Roberts (Conwy)

I welcome my right hon. Friend's extensive and novel budget for Wales. It sounded to me rather like a very fulsome Christmas stocking: there was a great deal in it for many people in Wales. There was some excellent economic news, followed by the announcement of an increase of 2.2 per cent. in real terms in money for the health service. Will my right hon. Friend confirm that that will mean more patients being treated better in NHS hospitals in Wales?

I also welcome the increased spending on further and higher education, and the fact that there will be more students. Will my right hon. Friend confirm that support for those students will be maintained in real terms, as either loan or grant?

Mr. Redwood

I am delighted that my right hon. Friend has understood the message; my statement is indeed a Christmas stocking packed with goodies. More patients will be treated, and there will be more students.

Mr. Alex Carlile (Montgomery)

Will the Secretary of State assure the House that he will never again abuse parliamentary procedure as he has done today by delivering a budget virtually without notice, under the guise of a statement? He cut out of that statement a joke from the published version, comparing the Welsh Grand Committee with a cartoon character. Does he recognise that if he wants to present a budget, it will be a Mickey Mouse budget unless it is given to the Welsh Grand Committee and is debated and amendable?

Does the Secretary of State further accept that his "budget" will be a great disappointment to everyone in Dyfed and Powys because the settlement for the Dyfed-Powys police is equivalent to a cut of no fewer than 100 police constables? Does he also accept that there will be a great sense of disappointment at his failure to quash the rumour that passenger railways in Wales are under severe threat, in that not one extra penny will be available to sustain them?

Will the right hon. Gentleman assure the House that his reference to "popular schools" does not mean that money over and above the norm will be given to grant-maintained schools in an effort to bribe governors and parents into going for grant-maintained status? Finally, will he confirm that, although it has been claimed that extra money is being given for community care, the real effect of the settlement is that there will not be a single new penny piece to ensure that people who cannot obtain community care now will be able to do so in the coming year?

Mr. Redwood

The hon. and learned Gentleman is wrong on those points. An extra £38.5 million will be provided for community care; of course we wish the elderly and the disabled to be taken care of. I notice that the hon. and learned Gentleman did at least listen to what I said as well as reading my speech, and I am glad that he tried to adjust his question when I disappointed him by not reading out the bit on which he wished to play.

Mr. Carlile

It was published—here it is.

Mr. Redwood

I have published the speech that I delivered, and it is up to people to check the text against my delivery in the House.

I shall receive representations on the police, and I take what the hon. and learned Gentleman said as an early representation. Passenger railway grants are in the main financed through Department of Transport programmes, and I shall pass his comments on to my right hon. Friend the Secretary of State. I can reassure the hon. and learned Gentleman on popular schools; the plans that I have in mind relate to local education authority schools, not only grant-maintained schools.

Mr. Walter Sweeney (Vale of Glamorgan)

I thank my right hon. Friend for his positive statement. It is especially welcome that, against a background of falling unemployment and of growth in the Welsh economy, nothing done today will jeopardise that growth or the continued recovery. I especially welcome what my right hon. Friend said about the funding of the police. In south Wales, we have suffered as a result of the police authority's choosing to leave the police force short of resources, so I warmly welcome the fact that the money will go directly to where it matters. If one message has come across loud and clear from my constituents, it is resentment that the South Wales police authority and the three county councils from which its membership is largely drawn have chosen to stifle and limit the resources of the police in south Wales in general and in the Vale of Glamorgan in particular. I welcome my right hon. Friend's statement and wish his plans every success.

Mr. Redwood

I am grateful to my hon. Friend for his support.

Mr. Allan Rogers (Rhondda)

Within the generalised claptrap that the Secretary of State has given us, he has forgotten that there are many areas in Wales, such as the Cynon valley, Merthyr and the Rhondda, which by any socio-economic indicator are among the most deprived in the United Kingdom. Yet no special treatment is being given to those valley communities. It is incredible that the Secretary of State should allow the Cardiff bay barrage road scheme to overrun by £35 million, and simply announce it in the Chamber today, and that he should tell us that the WDA is to hand back £10 million to the Welsh Office, when schemes submitted for the valleys have been turned down, seemingly because of lack of resources. This is not a fair budget for Wales. I decry the fact that we do not have the opportunity to discuss its vital elements, which are so important for our deprived communities.

Mr. Redwood

The hon. Gentleman is wrong. The deprived communities of Wales, as he calls them, get favourable treatment in the proposals. I have listened carefully to what valleys local authorities want. I have met their demands for a big road-building programme. I am putting a lot of money into regeneration through the strategic development scheme, the Welsh Development Agency budget and directly through Welsh Office budgets. The hon. Gentleman misunderstood the point about the Cardiff peripheral road. I am querying the cost overrun and saying that I do not accept that cost overrun. I have, indeed, said today that my priorities go to the valleys where I have approved the schemes.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

If the Secretary of State is so generous, why in the name of heaven did the WDA manage to hand back £10 million, when in all our communities we could use that money in the productive regeneration of infrastructure and other developments? What is going on in the WDA that leads us to that? Given that the right hon. Gentleman is to make such a huge cut in the WDA's budget, what assumptions is he making about rent increases for businesses and companies run by the WDA? Will it, in fact, mean a significant increase in rents this year to cover the cuts in grants and budgets that he is proposing?

Mr. Redwood

No, rents will be determined by the marketplace and I do not think that the marketplace will permit very big, if any, increases in rents. The problem for the WDA was that schemes were not ready. That often involves the local authorities, which are also strongly involved in those developments. I have not cut the WDA's spending budget. I have cut its grant substantially because I intend to finance that budget from sales of assets.

Mr. Dafydd Wigley (Caernarfon)

The Secretary of State said that he was not afraid of democracy. Are not today's totally unsatisfactory proceedings a classic example of why we need a Parliament in Wales where we can discuss and debate those issues and take our own decisions on a budget for Wales? How can he call it a budget for Wales when there is nothing in it on the income side? It is all very well pretending to play Santa Claus to the electorate of Wales, yet he plays Scrooge to his friends on the Tory right wing.

The reality is that the money that the Secretary of State is giving back to the people of Wales is money paid by the taxpayers in Wales—some £13 billion to £14 billion in the year in question, compared with the £6.7 billion that he announced for the Welsh Office. Is not it the case that if we had proper scrutiny of public expenditure in Wales, quangos such as the WDA would have to answer for what they were doing or not doing to the people in Wales, rather than this totally unsatisfactory arrangement? Surely we need a Treasury for Wales, answerable to an elected all-Wales body, so that we may have proper control and scrutiny over what is happening.

If the economy of Wales is as strong as the Secretary of State says, why is the income per head in Wales 17 per cent. below the UK average and a further 2 per cent. below the average for Europe? That shows the failure of Government policies.

Mr. Redwood

The statement includes items on the income side through the asset sale lines about which I have been talking and it implies matters on council tax, which will, of course, be determined by local government, but which are a matter for discussion today. The hon. Gentleman and his party scored an own goal with their attempt to prove that more money was sent from Wales to London than was sent from London to Wales, because their own figures showed that there was a £2 billion gap in favour of Wales, which they made up through some notional transfer. Their own figures made that very clear.

Mr. Wigley

The Government borrow from Wales.

Mr. Redwood

The hon. Gentleman says that the Government borrow from Wales, but he has to prove how much they borrow from Wales. The point remains that the income collected is less than the money spent, and rightly so. It is misleading of him to imply otherwise.

In some parts of Wales, income per head is still too low. That is the purpose of the regeneration and industrial schemes that I identified today.

Mr. Barry Jones (Alyn and Deeside)

Will the right hon. Gentleman acknowledge the constant underfunding of the schools budget? It is reduction after reduction. Does he know that my local education authority is desperately anxious to avoid sacking teachers and cutting special needs provision? Is not it the case that the Secretary of State has now cut into the bone and there is no more flesh to cut away? He has left the teachers in the lurch and parents in despair. This is not a Christmas-stocking budget; it is a very miserly budget.

Mr. Redwood

The schools budget is an item for decision by local councils, and I welcome that. I hope that they use their discretion wisely. Like the hon. Gentleman, I think that spending good amounts of money on schools is important for the future of our children.

Mr. Roy Hughes (Newport, East)

The Secretary of State's statement was carefully camouflaged, but is not his essential message, "Cut, cut, cut"? Is not that a deplorable policy, bearing in mind the fact that we are about to inaugurate our local authorities in Wales? Is it any wonder that the Government have become widely known as the enemy of local government?

Mr. Redwood

The hon. Gentleman has been listening to a different statement from the one that I delivered. Does he not see the large increase in capital approvals that I am offering local government, which give it real discretion? Does he not see that the total Welsh budget is up £190 million? That is no cut.

Mr. Paul Flynn (Newport, West)

May we say that there is a welcome for the announcement that the Government have decided not to privatise the Patent Office or to contractorise jobs there? Is that a sign that the Government's privatisation madness has run its course? Although there is a welcome for the announcement that the work of the Patent Office will be extended within its statutory role, does the Secretary of State see a future for the Patent Office, the Passport Office, Companies House in Cardiff, and the statistical office? Should not they be modernised for the next century, within the public sector, by extending their statutory roles?

Mr. Redwood

I am glad that the hon. Gentleman welcomes an announcement by the Government. I shall pass on the question to my right hon. Friend the Secretary of State who is responsible for such matters. This is not the end of privatisation, however. The hon. Gentleman should remember the very successful privatisation of coal, which was most welcome to the miners of Tower who bought their own pit.

Mrs. Ann Clwyd (Cynon Valley)

May I say that I found the Secretary of State's comments on care in the community remarkably complacent? As everybody in the Cynon Valley and throughout Wales knows, care in the community simply does not work. People who cannot cope are walking the streets. People are relying on their neighbours because there are no acute or secure beds available to cope with the crisis. Can the Secretary of State guarantee that the settlement will deal with the crisis in community care?

Mr. Redwood

The big increases in the budget go into just those sensitive areas: £114 million extra for health and £38.5 million extra for care in the community. Of course I want high-quality services for the people whom the hon. Lady mentions. I trust that a good job will be done in her area as elsewhere in delivering that care.

Mr. Nick Ainger (Pembroke)

The Secretary of State told us that his settlement is a good deal for law and order in Wales, and in particular that more policemen will be on the beat and more criminals locked up. Will he therefore explain why the chief constables of North Wales and of Dyfed-Powys police are saying that it will mean a cut in the number of police officers available? Who is telling the truth: the Secretary of State or the two chief constables?

Mr. Redwood

I referred to the overall position in Wales. The hon. Gentleman is quite right that the big increases go to the South Wales police force, where the majority of people live and where the underfunding has been very pronounced in recent years. Of course, I shall listen to representations from north and west Wales about the settlement, but I am right about the average experience; it will mean a big increase in the resources to fight crime.

Mr. Alan W. Williams (Carmarthen)

Will the Secretary of State look again at the funding of Dyfed-Powys police? Based on a standstill budget for the work that they did last year, they needed an extra £2 million. Instead, they have a cut of £200,000, and they might have to sack or get rid of up to 100 constables. Will the Secretary of State look again at the underfunding of Britain's most successful police force?

Mr. Redwood

My hon. Friend the Under-Secretary of State, the Member for Cardiff, North (Mr. Jones), who is responsible for local government in Wales, will be meeting a delegation tomorrow to discuss the matter, and of course I shall receive a full report on the points that are made at that meeting. There is a common formula for England and Wales, and we shall look very carefully at the points that are made.

Mr. David Hanson (Delyn)

Does the Secretary of State accept that my constituents in Clwyd awaited the settlement with great trepidation and nothing that the Secretary said today will allay their fears? Will he meet Clwyd county council to hear at first hand the cuts that will have to be made following the settlement announcement?

Will the Secretary of State also define what he means by "good schools", as many of my constituents attend perfectly good schools which are not grant-maintained and which face dramatic funding cuts in the forthcoming year? Will he inform the House what he plans to do with the WDA once he has finally sold all the family silver?

Mr. Redwood

The budget proposals make it clear: the grant in aid will increase again in order to maintain the work that we think still needs to be done. We shall make a final judgment nearer the time, in light of the requirements of Wales and the amount of money available.

"Good schools" are schools in the grant-maintained or local education authority sectors which achieve good results and which are liked by parents and pupils. I wish to reinforce all schools that are achieving good results, whether they are under local authority control or whether they run themselves through grant-maintained status.

There will be the usual consultation arrangements during the period of consultation on my proposals.

Mr. Peter Hain (Neath)

Taking into account next year's 2.3 per cent. pay increase for local authority workers and the additional cost pressures imposed on local authorities by Government legislative requirements, why does not the Secretary of State come clean and admit that the settlement will mean real expenditure cuts for all local authorities in Wales?

For example, West Glamorgan county estimates funding cuts totalling £9 million. Coming on top of expenditure cuts of £5 million in each of the past two years, that will mean savagely reducing front-line services, such as care for the frail elderly and school budgets, or adopting a scorched earth policy and raiding the reserves and crippling the new unitary authorities. Why does not the Secretary of State admit that cuts have been made instead of surrounding his statement with warm words?

Mr. Redwood

I will not admit anything because I do not agree with the hon. Gentleman's points. Large amounts of money are offered to Wales through the statement—particularly for care in the community, which looks after the frail elderly whom the hon. Gentleman mentioned in his question.

I believe that there is considerable scope for efficiency improvements in local and national government. I am not asking local government to do anything that I will not do myself in the Welsh Office.

Mr. Win Griffiths (Bridgend)

What we have heard this afternoon confirms that the Maples memorandum has not been very effective in guiding the Secretary of State for Wales. Plainly, Walter Mitty is alive and well and running around the Welsh Office. This afternoon's statement on expenditure in Wales gives the impression that Welsh local authorities—the police and everyone involved in the provision of public services—will be wondering how on earth they will spend the money, there is so much available.

The truth is that there will be expenditure cuts in education, which come on top of the cuts detailed in last year's settlement. It is calculated that expenditure increases of between 5 per cent. and 6 per cent. Will be needed next year to maintain the service at the same level as this year. The Secretary of State has not taken into account the increased demands of the introduction of the code of practice for special educational needs. Class sizes in Wales are rising and an increasing number of teachers are taking early retirement because of illness. Yet all the Secretary talks about is a popular schools initiative.

Has the Secretary of State asked any of the heads of oversubscribed schools whether they want money to attract more pupils, or to provide better facilities for their existing pupils? If the Secretary of State wants to spend more money on schools in Wales, he ought to concentrate on the schools that provide education in the most difficult circumstances in our inner cities and deprived valleys. That is where he needs to spend money.

In any case, where is the money? The Secretary of State did not tell us this afternoon where it will come from. What does he intend to do about his grant-maintained school initiative? Will he now dump that initiative, given the second ballot at West Mon school and given today's announcement that Bishopston school has voted 2:1 against becoming grant-maintained? Is it true that the 18.8 per cent. that has been given as extra money to the Curriculum Council for Wales for external marking will come out of the budget that schools would normally have had?

On further education, can the Secretary of State confirm that while current spending will go up by less than 4 per cent., he expects student numbers to go up by over 11 per cent.? Why does not he fund the further education sector so that it can take full account of the increased number of students?

On housing, the right hon. Gentleman mentioned that he wanted to encourage home ownership, but no money was attached to that. Finally, on local government reorganisation, he said that he did not expect there to be any staff cuts, but that he expected savings to be made. Where does he expect savings to be made in the immediate future?

Mr. Redwood

The hon. Gentleman with the elephant tie went on a stampede of a question, and ran out of control as a result. He cannot stand the good news. South Wales police is very pleased with .my announcement today, and the health service will be pleased with the substantial sums of extra money.

The popular schools initiative will of course apply in the valleys and in communities such as the hon. Gentleman's own, as well as elsewhere in Wales. I am now consulting schools before I finalise the details of the scheme. I thought it best to tell the House first, although I see that the hon. Gentleman wishes that I had not. I wonder whether he cleared his remarks on grant-maintained schools with the Leader of the Opposition, who takes a rather different view from him on the subject.

The money for the further and higher education sectors will take account of the growth in student numbers, and the hon. Gentleman should remember that there are some economies of scale as one increases the number of pupils or students going to an organisation.

The hon. Gentleman is simply wrong to say that there is no money for home ownership, as I announced money for that subject in my statement.