HL Deb 16 December 1980 vol 415 cc1005-6

Following is the Statement, referred to earlier, made by the Secretary of State for Wales:


"Mr. Speaker, with permission I wish to make a Statement about the Welsh Rate Support Grant Settlement for next year and about housing finance.

"This is the first time that there has been a separate RSG settlement for Wales. At the same time this year's settlement sees the introduction of the new block grant system. My right honourable friend the Secretary of State for the Environment and I have therefore thought it right exceptionally to announce to the House our decisions by way of oral statements on this occasion before I meet the Welsh Consultative Council later this afternoon.

"The Government's decisions (in accordance with the policies already announced to the House by my right honourable and learned friend the Chancellor of the Exchequer) have to take account of the essential economic requirements to reduce public spending, of which local government spending forms such a large part.

"The most important factor in determining the total amount of Exchequer Grant is the volume of local authority spending we are prepared to accept for grant purposes—which is termed relevant expenditure. Until now there has been no separate determination of the amounts of relevant expenditure and grant for England and Wales and in the preparations leading up to this settlement we have had to establish separate relevant expenditure shares. This has involved a comprehensive review of expenditure programmes with other Government departments and I am satisfied that the results provide a fair basis for the start of the separate Welsh RSG system. In deciding the amount of Aggregate Exchequer Grant for Wales we have taken into account the average level of grant received by Welsh local authorities as a whole in recent years.

"I announce first our decisions about housing rent subsidies and housing capital programmes. For Rate Support Grant purposes I am setting the increase in the local contribution for the purposes of housing subsidy at £2.95. In addition, local authorities have to meet housing costs which fall outside the subsidy system and on average these may require rent income of a further 30p per dwelling. The total resources available within my block for housing next year will be £148.6 million at survey prices, of which £23 million will be available to the Housing Corporation and £87.4 million will be earmarked for local authorities. I am holding back from distribution £14 million to cover any possible overspend and to enable underspenders to have a further allocation when this year's final figures are known provided this year's cash limit is not breached. The reserve also covers pump priming for improvements for sales schemes. I am announcing today the housing capital allocations for individual local authorities at out-turn prices and the figures have been placed in the Library of the House.

"Turning to the RSG settlement, I have decided to accept a total, at 1981–82 out-turn prices, of £1,187 million for relevant expenditure. This figure is consistent with the level of expenditure set out in the last Public Expenditure White Paper as modified by the expenditure reductions announced by my right honourable and learned friend the Chancellor of the Exchequer last month. It therefore provides for a volume of current expenditure which is broadly 3 per cent. below the level local authorities were asked to achieve in 1980–81.

"The second decision I have to make is the grant precentage. As my right honourable friend said earlier, the grant percentage, taking England and Wales together, is being reduced by 1 per cent. from the 61 per cent. level last year. In terms of grant for Wales next year this works out at 73.4 per cent.: the higher percentage of Government grant for Wales reflects the substantially lower rateable values in the Principality.

"The Aggregate Exchequer Grant will therefore be £871 million at 1981–82 out-turn prices. In calculating the cash limit within this figure allowance has been made for a 6 per cent. increase in earnings on due settlement dates from 1st November 1980 and provisionally for the pay round starting in August next year. For non-pay items allowance has been made for an increase of 11 per cent. between the average levels for 1980–81 and 1981–82.

"Within the Aggregate Exchequer Grant, specific grants are estimated at £85.14 million the Transport Supplementary Grant at £40 million and the National Parks Supplementary Grant at £1.36 million. This leaves £744.5 million for the Rate Support Grant itself, including the domestic rate relief grant.

"For 1981–82 I have decided that for the first year of the new block grant system, il would be sensible to maintain the domestic rate relief at its present level—36p in the pound.

"I turn now to the amount of money to be distributed to local authorities in Wales through the block grant—£696.7 million. I do not propose to go into any great detail about the new block grant system itself since honourable Members are familiar with the basic principles involved and can study the details from the Welsh Rate Support Grant Report I am laying today.

"The principles underlying block grant are of course the same in both England and Wales although there are some differences in the detailed arrangements for Wales to take account of our particular circumstances and of views expressed to me by the Welsh local authority associations. The new system will ensure that authorities that increase their expenditure do not just do so at the expense of others, but that the consequences of the decisions are in large part borne locally.

"There will be some substantial changes arising from the move to the new system based on a current assessment of need rather than on a system based on past patterns of expenditure, and I have decided to moderate these by applying safety nets and a ceiling on grant gains to provide protection for individual authorities and ratepayers. I must make it clear however that the safety net will not provide protection against the expenditure decisions of individual authorities.

"Expenditure decisions remain the responsibility of individual local authorities who, in setting their rates, must consider the effect on ratepayers at large including of course industry and commerce.

"I have confidence that local authorities will continue to respond to central Government targets as they have in the past. The efforts already made by local authorities in Wales to reduce their manpower and expenditure are encouraging as the Manpower Watch figures published today, showing an annual reduction for general services of 3.8 per cent. with a 1.5 per cent. reduction in the last quarter, prove. Nevertheless sustained efforts will continue to be required if expenditure is to be brought down to our targets. I urge every local authority, every councillor, to ensure the Government's volume reductions are achieved and that rate increases are kept to the absolute minimum".