HC Deb 15 March 1994 vol 239 cc848-54 Queen's Recommendation having been signified— Motion made, and Question proposed, That, for the purposes of any Act resulting from the Local Government (Wales) Bill, it is expedient to authorise—
  1. (a) the payment out of money provided by Parliament of any expenses incurred by any Minister of the Crown under that Act;
  2. (b) any increase attributable to the provisions of that Act in the sums payable out of money so provided under any other enactment; and
  3. (c) the making of payments into the Consolidated Fund.—[Mr. Robert G. Hughes.]
10.27 pm
Mr. Bob Cryer (Bradford, South)

It will be helpful if the Minister accounts to the House for the extraordinary money resolution before us. As a House of Commons we authorise Ministers to make expenditure, and, as usual, the resolution is couched in very general terms.

I shall link the general resolution with the explanation entitled Financial effects of the Bill in the explanatory and financial memorandum. We are giving the Secretary of State unlimited authorisation, but the limitation—[Interruption.]

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. I am having great difficulty in hearing what the hon. Gentleman is saying. Will the House settle down? If hon. Members beyond the Bar want to hold committee meetings, will they please do so outside?

Mr. Cryer

Thank you, Mr. Deputy Speaker.

The money resolution is important because it covers taxation revenue, so we should have a look at it. As I was saying, its terms are unlimited. It simply authorises the Secretary of State to pay money for any expenses incurred by any Minister of the Crown under that Act; … any increase attributable to the provisions of that Act … and … the making of payments"— that is, payments received under the terms of the legislation— into the Consolidated Fund. The explanatory and financial memorandum to the Bill qualifies the costs of putting the legislation into action, saying that they are estimated … to be between £65 million and £150 million over 15 years. That estimate is based on a report prepared by outside consultants, who often have grand titles but, by and large, are guessing. They call them carefully calculated estimates, but they are guessing the amount of expenditure that will be involved. There are examples of previous Conservative Governments doing similar guesswork.

I want the Minister to assure me that the costs mentioned in the Bill and authorised by the money resolution will not be as extravagantly inaccurate as they were for the Local Government Act 1972, which applied to the United Kingdom and not to Wales alone.

I recall that a report, which became known as the Baines report, claimed that, for modest expenditure, local government could make huge savings through efficiency. The report recommended larger, often unitary structures and some two-tier structures in metropolitan areas. High salaries would be paid to chief executives—there would no longer be town clerks—and municipal boroughs, urban district councils and rural district councils would all be swept to one side.

Such arguments are not so far removed from those adduced for the Bill. It is claimed that, because some councils will be swept into oblivion, it will be easier for businesses to deal with the new authorities and they will therefore be cheaper to run. That was the argument contained in the Baines report in 1971. What happened? First, much more compensation had to be paid than was forecast when the 1971 Act was at the same stage as this Bill. Town clerks with years of service were retired with golden handshakes that cost an enormous amount of money. Reorganising local authorities proved much more expensive than had been calculated and the greater efficiencies claimed for the new system did not result. Local government became more expensive and not less.

The paragraph that details the Bill's effect on public sector manpower implies that there will be savings in public expenditure—a cost related to the money resolution—by virtue of a reduction in staffing levels, due to the abolition of local authorities. That was precisely what was claimed in 1971.

The Baines report, with all the weight of Government support, was supposed to create a new era of local government efficiency. Hosts of perfectly decent local authorities, which it had taken more than 100 years to build up, were shovelled to one side by larger units—by what the then Government claimed were the new super-efficient, super-organisations, but it was not true. Pay-offs for senior local government officials were highly expensive and the salaries of the new chief executives were astronomical. The system was based on the style of corporations, which were the private enterprise basis for the Baines report and subsequent local government reorganisation.

The huge, sprawling local authorities, which were often of a unitary pattern, were highly expensive and the claimed savings never materialised. The local government pattern that the Government are changing now is that established by previous Conservative Governments.

The Government's argument for the need to reorganise is that local authorities are not efficient. If they are not efficient, I point out that it was the Government's claims about efficiency which produced the legislation in the first place. If it is the same people with the same philosophy who are putting the ideas forward now, it is reasonable for hon. Members to say that our experience does not show that the claims—in this case, it is expenditure of between £65 million and £150 million on transitional costs over 15 years—are soundly based.

I know what the Minister will say. He will say that the Government had consultants. That is the growth area today. The Government do not make any decisions; they get consultants for some astronomical sum—many thousands, if not hundreds of thousands, of pounds—

Mr. Dennis Skinner (Bolsover)

And Tory Members of Parliament on the board.

Mr. Cryer

—with Tory Members of Parliament on the board. There are Tories with their snouts in the trough, and they call themselves public consultants.

I want the Minister to accept that, when decisions are made, even on the basis of outside recommendations and outside consultancies, he takes the can. He makes the decision and he reads the report to decide whether it is valid. The Government may pay the bill for the consultation, but at the end of the day the Minister makes the decision. It is no answer for him to say, in this modest debate, that the Government employed an independent body to make an assessment. He has enough civil servants in his Department to make his own estimate, which is necessary to judge whether the outside consultants have earned their money. That is our first point. We want to know what estimate his Department has made of the costs of the transitional arrangements being between £65 million and £150 million over 15 years. Secondly, in the past there have been so many changes since the Local Government Act 1972, which established the altered system of local government, because of the mistakes that were made then that we cannot be confident that in asking for wide powers in the money resolution the Minister is soundly based in his judgment that we will not go down exactly the same road once again. We have had a change of local government and vast claims about efficiency and savings, and we have got rid of a tier of government, yet at the end of the day we will have more inefficiency because the Government are like some renegade Trotskyist outfit—they cannot leave things alone. They must get their hands on every aspect of life. Even when things are running well, they must get their mad hands on everything in sight.

Mr. Ray Powell (Ogmore)

With my hon. Friend's expertise and knowledge of money resolutions, could he explain whether the Secretary of State—the Secretary of State did not enlighten Welsh Members today as to the financial structure of local government—could impose a poll tax on the people of Wales? The Secretary of State was a great supporter of the poll tax until it was thrown out.

Mr. Cryer

My hon. Friend is right to raise that important point. Of course, my task tonight is to keep within the terms of the money resolution—to go wider would invite criticism. My experience is that Deputy Speakers wish to allow the proper debate of money resolutions, but to go much wider calls on their patience, so I shall confine my remarks to the terms of the money resolution. I am concerned that Labour Members are the guardians of taxpayers' money. That is the bottom of it.

The Government are getting their hands on every aspect of our institutions. It is amazing that we are debating a money resolution which gives the Secretary of State the power to spend money on changing institutions in Wales, yet the Chief Secretary made a speech in which he said that there is an attack on institutions in an age of cynicism which is corroding the fabric of social life in the country. There are many criticisms of our existing institutions. That is exactly what the Secretary of State for Wales, and every other Secretary of State, is doing: every institution is under attack—not from the people at large, but from the Government.

The money resolution in effect gives the Secretary of State authority to spend up to £150 million on changing the local government organisation of Wales, irrespective of the views of the people of Wales as to whether they think it to be of advantage. There will be no local referendums or local polls. I have always taken the view that there should be local consultation on democratic issues. That has always been shrugged off by the Government, just as they shrugged off—this is by way of explanation, Mr. Deputy Speaker—the calls for a referendum on the Maastricht treaty. We ought to have had such a referendum, but I am not going any further down that road. It is not quite within the terms of the money resolution, and I want to stick to those.

The Secretary of State has an explanation to give to the House tonight. We are the guardians of the taxpayers' money, and we do not agree with the sum of £150 million. The House must bear in mind that, on experience, it will not be £150 million. There is no legislation, by the way. That £150 million is not the limiting factor on the money resolution, which is unquantified. The £150 million is merely a figure to convince the House that the money resolution should go through.

The total could be £300 million and, frankly, had the money resolution not been debated, there would have been nothing on the record anyhow. If in 10 years' time the cost was £1 billion and going up, the Secretary of State could not check Hansard to see what claims and assurances he gave to the House.

I debate the money resolution because it gives an opportunity to the Secretary of State, who claims that he is concerned about public expenditure, to give an assurance to the House that the figure of £150 million is absolutely the top figure which will not be exceeded. We could then hold him to task in a couple of years, because that is all the time he has got until the next general election. He will then be out with a lot more Tories, and we will have a Labour Government who are concerned with controlling and holding to account the revenue from the taxpayer.

We hold that revenue dear because we represent working people, and we know what it takes for them to raise the funds to pay their tax bills. That is why this debate is important; and I know that some of my hon. Friends wish to speak in this debate. We are holding the Secretary of State to account. Many people in Parliament and outside say that the Executive gets away with too much, and this money resolution is an example of that. There are no figures or limitations—just an indication on the financial effects of the Bill. The figures have no legal binding effect on the Secretary of State, so he can, if he wants, go beyond £150 million without any recourse to the House. I hope that the right hon. Gentleman is prepared to give the House a comprehensive explanation of the money resolution.

10.43 pm
Mr. David Hanson (Delyn)

I did not intend to speak to the money resolution, but having sat through the debate today let me say that there are several questions which need to be raised with regard to the financial effects of the Bill. As an hon. Member representing a Welsh constituency, I remember vividly only a few months ago voting on the rate support grant settlement for Wales. Throughout my constituency and Clwyd, massive cuts had been made in spending by local authorities in Wales. Yet tonight we are debating a money resolution which promises expenditure of between £65 million and £150 million in 15 years.

That will be offset from April 1996 by continued savings in public spending, presumably from local councils which have already had cuts imposed on them through the rate support grant settlement which came before the House earlier this year. If my county of Clwyd had its share—one eighth of that £65 million to £150 million—it would find itself in a different situation. Last year, Clwyd's rate support grant was cut by some £12 million, and this year the cut is £11 million.

It is not possible to continue to reduce rate support grant to councils such as Clwyd without its having a serious effect on services. How can we find £65 million to £150 million for the cost of reorganisation when we cannot find money to provide a decent level of services elsewhere? I could list a thousand and one examples of how the money for reorganisation could be spent more effectively in Clwyd and elsewhere in Wales on promoting services rather than changing the organisation.

Several examples will suffice; I shall not detain the House by listing many. Only today further news came through from my constituency and county of the potential loss of some 200 teachers from the education system. Only yesterday in my constituency at Ysgol Maes Garmon the pupils staged a demonstration about the loss of six teachers at the school as a result of a loss of rate support grant.

Can the Minister justify to the House the £65 million to £150 million expenditure in the next 15 years when we face reductions in the level of public spending through rate support grant to local councils such as mine in Clwyd? How does the Minister envisage—this is a serious point—that the savings from April 1996 will be offset by continued savings in public spending? How will the savings be made? Will it be simply a question of losing staff? Will services be lost? How does he anticipate that local government will balance out in Wales in view of the potential in the Bill for further cuts in public spending?

The precise level of the savings will depend on decisions taken by the new councils on matters such as staffing levels and management structures. I can accept that with the decency with which I am sure it has been put into the Bill, but what strictures will the Secretary of State impose on councils when considering such matters? It is one thing to put in the Bill the bland statement The eventual figure will depend on decisions to be taken by the new councils", but we do not know as yet what rate capping regimes will be in place for the new councils, what directions the Secretary of State may give them, or what rate support grant they will have. The £65 million to £150 million transitional cost will have to come from somewhere. Will it come out of next year's rate support grant settlement, or the settlement the year after? Those questions need to be answered this evening.

There has been a lot of discussion this evening about the establishment of a Welsh assembly or a Welsh parliament. Let us bear it in mind that 32 of the 38 Members of Parliament who represent seats in Wales have argued for a Welsh assembly and signed the amendment that was defeated this evening in the House. One argument that the Secretary of State and Conservative Members have made concerns the cost of implementing the proposal for a Welsh assembly. According to figures which Opposition Members dispute but which the Secretary of State and Conservative Members have suggested this evening, it would cost some £50 million.

If it is possible to spend £65 million to £150 million on transitional costs, is not it possible to find the resources, if needed, to establish democratic control over the many quangos in Wales which spend millions of pounds of taxpayers' money? Already we have said this evening that millions upon millions of pounds are spent on quangos. There are additional costs in the form of salaries for many members, including some in my constituency who bring home £60,000 a year plus from serving on quangos. If the money can be found for that activity, cannot the money that is being earmarked today be made available to implement the policy on which the majority of Welsh Members of Parliament were elected—a Welsh assembly and a Welsh parliament?

Mr. Nigel Evans (Ribble Valley)


Mr. Hanson

If the hon. Member for Ribble Valley (Mr. Evans) had spent the day in the Chamber, as many of my hon. Friends have done, perhaps he would be convinced of the arguments.

My key argument to the Secretary of State is that, if rate support grant cuts which hit local councils and services are being made in Wales now, how can we afford to spend money on reorganisation when that money can be far better spent on providing teachers and books for schools, and on support for local services that are much needed in my constituency and those of my hon. Friends? Until the Secretary of State gives reasonable examples of why those costs could be incurred, and until we can be sure that those costs are not at the expense of direct money provided for local government services, the House will not support the motion.

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

The hon. Member for Delyn (Mr. Hanson) should take note of the fact that revenue support grant has been going up, not down, in recent years. There have not been cuts; there have been increases. He asks where offsetting savings would come from. Perhaps he should ask some of the Labour councils in Wales. The Council of Welsh Districts, with many Labour councils, has estimated that there would be annual savings of £17 million a year, because one council in each area should be cheaper than two as a result of cutting unnecessary administration and duplication.

The hon. Member for Delyn asks what other controls I would wish to impose on councils. I wish to impose no new controls, but when the year of transition arrives I, with the approval of the House, will have to judge the levels of capital investment and revenue support grant. I will take full account of the transition when approaching those items, and I am sure that the House will debate them vigorously then.

The hon. Members for Delyn and for Bradford, South (Mr. Cryer) should remember that we are speaking about transitional costs being mainly in the form of one-off capital items, which will be controlled through the capital budgets. They cannot be compared with the annual revenue costs of an assembly, which the hon. Member for Delyn says that he wants, which would be an annual cost on top of the costs of governing Wales already, and well in excess of anything that we are discussing for improved local government.

Mr. Ieuan Wyn Jones (Ynys Môn)

Will the Secretary of State tell us how he arrived at the estimate of the annual cost of running a Welsh assembly?

Mr. Redwood

There are several ways of calculating the estimates. We have taken estimates based on our estimate of the number of members, the number of staff and the likely modest costs. On top of that, I think that the assembly would have huge spending programmes, which we have grossly underemphasised in the debate.

It is a pity that the hon. Member for Bradford, South did not do some preparation or thinking before he intervened in this Welsh debate. Indeed, it was a great pity that he did not attend the debate, because he would have heard many of the answers to his arguments. He should realise that the estimate provisions have been made for 1994–95 and subsequent years and laid before the House in the normal way with the public expenditure review, so that there will be plenty of opportunity to debate them in the years when the spending is incurred.

The purpose of the money resolution is to authorise modest expenditure in 1994–95, under those estimates, on the Staff Commission for Wales, which was welcomed earlier by the hon. Member for Caerphilly (Mr. Davies). It was not to authorise the expenditure of large sums of money at which he has been guessing, which will take place in future years, which will require estimates and debates in the House and the revenue support grant and the capital settlement for the authorities. Those items will be settled by local councils elected in Wales. At the moment, much of Welsh local government is Labour controlled, which is why we would look to the Opposition to give us their thoughts about costs. It is interesting that they have presented us with a much wider range of estimates of costs than the range that consultants have come up with—and some of those consultants believe that the introduction of our proposals could result in substantial savings.

The hon. Member for Bradford, South muddled up the costs of potential job losses, new headquarters and the like for the new councils.

We have debated extensively today and in previous debates and I do not wish to detain the House at length by discussing the details again. Suffice it to say that I believe that the reorganisation can produce good value for the taxpayer. I think that the hon. Gentleman and other Opposition Members are trying to exaggerate the costs. They do not understand the difference between the different types of budget and the difference between a one-off cost to save money and annual costs incurred to bloat and increase the costs of government in Wales in a way that we would find thoroughly reprehensible. I recommend the money resolution to the House.

Question put and agreed to.

Resolved, That, for the purposes of any Act resulting from the Local Government (Wales) Bill, it is expedient to authorise—

  1. (a) the payment out of money provided by Parliament of any expenses incurred by any Minister of the Crown under that Act;
  2. (b) any increase attributable to the provisions of that Act in the sums payable out of money so provided under any other enactment; and
  3. (c) the making of payments into the Consolidated Fund.