Spending Review (Local Government) (Hansard, 26 July 2000)

§ 1. Mr. Win Griffiths (Bridgend)
When he last met the First Secretary to discuss the impact of the 2000 spending review on local government. [130876]

§ 10. Sir Raymond Powell (Ogmore)
What discussions he has had with the First Secretary about the effect of the 2000 spending review on local government in Wales. [130886].

§ The Secretary of State for Wales (Mr. Paul Murphy)
Madam Speaker, as this is the last occasion on which you will preside over Welsh questions, may I, on behalf of all Welsh Members of Parliament, wish you well in your retirement?
I have met the First Secretary on a regular basis in the run-up to the 2000 spending review. I welcome the excellent settlement that we have secured for Wales, which includes amounts consequential on allocations to the Department of the Environment, Transport and the 1094 Regions for local government. It will, of course, be for the National Assembly to decide how the consequential amounts will be allocated in Wales.

§ Mr. Griffiths
Given that the National Assembly has that flexibility in allocating spending in Wales, will my right hon. Friend confirm that my right hon. Friend the Chancellor's recent statement on spending has the direct consequence that an extra £338 million could be available for local government in Wales over three years, and that additional sums could also be available for education, housing and social services? Will he also confirm that those welcome additional resources will be badly needed by local government as it takes up new duties and challenges in the provision of services, especially for children and elderly people?

§ Mr. Murphy
I can confirm that, if the National Assembly were to spend the consequential amounts on the services to which my hon. Friend referred, the figure that he gave would be correct. As I said earlier, it is entirely for the National Assembly to decide how to spend its money. However, I am sure that the Assembly and the House will agree that the settlement that Wales received last week from my right hon. Friend the Chancellor of the Exchequer, which amounts to £2,000 million over and above the normal increases over the past three years, is the best settlement that Wales has received for many years.

§ Sir Raymond Powell
Will my right hon. Friend get the message across to all the people in Wales that this is the best settlement that local government has ever had? Should not local government be satisfied with what it has got and begin to ensure the proper provision of housing, education and other services? Should not the £101 million that has been given for housing in Wales be used to tackle the backlog of repairs and shortages that the Tories left in Wales when they left government?

§ Mr. Murphy
My ministerial colleagues and I will do everything that we can to get that message across. My hon. Friend is right to say that, after nearly two decades of neglect, there is much to be done in Wales, especially in the valley communities that he and I represent. That is why objective 1 status was given to west Wales and the valleys, and why we are extremely pleased at today's news that the European Commission has finally given its approval to the plan for objective 1 status.

§ Mr. Dafydd Wigley (Caernarfon)
The hon. Member for Bridgend (Mr. Griffiths) quoted figures for local government and education, and the hon. Member for Ogmore (Sir R. Powell) quoted a figure for housing. However, would not the total be £80 million a year higher if that same amount did not have to be taken out of the Welsh block to provide match funding for the European projects? We welcome the Secretary of State's announcement of the decision in Brussels, but local government in Wales is very worried at the news from the Department of the Environment, Transport and the Regions that it expects an increase in council tax of as much as 10 per cent. Will the right hon. Gentleman give a categoric assurance that enough money will be provided to prevent that?

§ Mr. Murphy
The right hon. Gentleman will be aware that last week's settlement with regard to structural funds means that £421 million extra is going to Wales, over and above the Barnett formula. We have never had that money—nearly £0.5 billion extra—in the past. It releases money in the block for match funding, and is therefore excellent news for Wales. I believe that local government will be very glad to receive the settlement, and I only wish that Plaid Cymru was glad too.

§ Mr. Nigel Evans (Ribble Valley)
The question asks when the Secretary of State last met the First Secretary. We have the honour of having the First Secretary with us today. May I take the opportunity of congratulating him on his recent appointment as a Privy Councillor?
The question relates to local government. Is it not a fact that the people of Wales have had enough spin from the Government and that it simply will not wash with them any more? The recent local council tax rises of five times the rate of inflation are quite incredible. In all but two counties, the council tax increase has more than eaten away the 75p increase in pensioner incomes in Wales. Is it not the case that the Government give with one hand but grab back with two hands? What reassurances can the Secretary of State give to the people of Wales that, given the settlement, next year's council tax rises will be within the rate of inflation?

§ Mr. Murphy
First, the National Assembly is looking very carefully at the way in which it distributes its grant. There is, as the hon. Gentleman knows, a consultation process taking place which will be completed in September, to which he and others can make representations.
After two decades of neglect of local government in Wales, to tell us what should happen with public spending is very rich coming from the hon. Gentleman and his party. I repeat what I said to the right hon. Member for Caernarfon (Mr. Wigley)—local government in Wales is extremely happy with the overall settlement given by my right hon. Friend the Chancellor of the Exchequer in the spending review last week. Local government and all the people of Wales will benefit from what has occurred during the past seven days in this House of Commons.

§ Mr. Llew Smith (Blaenau Gwent)
Although I think that most people would accept that this settlement is the best that Wales has had, at any time and from any Government, my local authority is concerned that the formula for the distribution of local authority moneys by the National Assembly still does not take deprivation into account. As the poorest authority in Wales, we expect that formula to reflect poverty and to begin to rectify some of the injustices of many a long year.

§ Mr. Murphy
I understand my hon. Friend's concern. He has raised the matter with me on a number of occasions. Again, I repeat what I said to the hon. Member for Ribble Valley (Mr. Evans). The National Assembly is reviewing the way in which the grant is distributed in Wales, and there is a consultation period that ends in September. I hope that both my hon. Friend and his local authority of Blaenau Gwent will be making representations to the Assembly. I hope that that review will take into account the deprivation to which he quite rightly refers.