§ 4.56 p.m.
My Lords, with the leave of the House, I shall repeat a Statement about local authority capital expenditure in Wales which is now being made in another place by my right honourable friend the Secretary of State for Wales. The Statement is as follows:
"The decisions I am announcing this afternoon have to be seen against the background that since 1979–80 Welsh local authorities have invested, at 1984–85 prices, £2.2 billion in a wide range of projects which have significantly extended and improved the social and economic infrastructure in Wales. The Government's expenditure plans to be published in the forthcoming public expenditure White Paper envisage that over the next three years they should invest a further £1 billion, again at 1984–85 prices. The largest service element within this total of £3.2 billion is some £1.4 billion in respect of housing.
"In the course of the review of the control system which was announced in July, I have considered carefully the views of both the Welsh Counties Committee and the Committee of Welsh District Councils. They have emphasised the need for greater flexibility. They attached particular importance to being given a better view of the future trend in resources, and argued strongly for continued access to their reserve of accumulated receipts. Discussions on the way in which the system could be developed will continue in the new year.
"Having taken full account of the associations' representations the Government have decided to make a significant change to the rules governing the operation of the national cash limit. The present facility for carrying forward to the following year an underspend of up to 2 per cent. against the aggregate planning total will be increased to 5 per cent. In addition, corrective action will not be taken to restrain spending if the cash limit is on course to be exceeded by less than 5 per cent. Any overspending will be taken into account when determining provision for a subsequent year. These changes should greatly reduce the possibility that we have to take corrective action part way through the year, and ensure that resources are not lost if there is only a moderate degree of underspending.
"A principal reason for the capital overspending experienced in Wales in the last two years is that the allocation mechanism has not so far taken account of the inherent spending power provided by accumulated receipts. These are expected to amount to over £300 million next year, all but £10 million being in the district tier.
"Districts argue that they should have complete freedom to spend their accumulated receipts; but not only would this have serious consequences for public expenditure control generally, and the level of PSBR, but it would enable them to spend a major part of their receipts twice. This is because while housing allocations issued since 1981–82 have been calculated so as to include a large proportion of receipts forecast to accrue in each year, at the same 571 time districts have been able to borrow to finance the bulk of their housing spending without needing to use the receipts built in to the allocation: and for this reason they have been able to accumulate large reserves. It is reasonable to place a measure of constraint on their ability to use these receipts for a second time.
"I have, therefore, decided to phase the use of these receipts by reducing, but not eliminating, the proportion which can be used to enhance the spending power of allocations in any one year. In the case of housing the proportion will be reduced by 10 percentage points from 25 per cent. to 15 per cent. For non-housing receipts the prescribed proportion will be 50 per cent. These changes should significantly reduce the pressure on the all-Wales cash limit.
"Last year I gave authorities forward indications of capital allocations based on 80 per cent. and 70 per cent. for the two later years. This year I intend giving forward indications again, but linked to 80 per cent. for each year to provide a firmer basis for planning.
"I turn now to the resources available for 1985–86.
"Gross expenditure provision underlying the cash limit for the coming year will be £349 million, marginally higher than the level of provision for the present year. When the law and order services are added the total is £354 million.
"Within this figure gross provision for local authority housing is £146.5 million. Each authority will receive sufficient to cover the forward indications given them in July 1984. In addition, bids for an allocation to meet expenditure needs on privately and publicly-owned PRC (prefabricated reinforced concrete) dwellings will be met in full. Bids for expenditure on enveloping schemes not covered by previous allocations will also be met in full. I am making provision to enable the two existing Welsh Priority Estates Projects to continue and for a new scheme to commence. The Housing Corporation's net capital provision will be £39 million. I expect receipts and private sector finance to enhance that total by another £3 million to £4 million.
"Total resources for roads and transport, taking into account new receipts, amount to £64 million. Within this sum I have accepted just over £53 million for TSG purposes. This will enable the three new major highway projects announced in the Welsh Grand Committee last Wednesday to start in 1985. Gross capital provision for other service blocks in 1985–86 is over £10 million higher than the projected level of spending in the current year: about £125 million to £135 million.
"The Enterprise Zones have been given additional resources amounting to £2.3 million to further their development. In recognition of its regional status, the Polytechnic for Wales has also been given an individual allocation of £½ million per annum over the next few years to promote its technological development. Other allocations have been made for major coast protection works at 572 Prestatyn, urgent refuse disposal schemes in Swansea, Rhondda and Ynys Mon, flood alleviation works in Denbigh, repairs to the Brecon and Monmouth Canal, and towards the cost of replacing the headquarters of Powys County Council, which has become structurally unsound.
"The cash limit provision for 1985–86, which is gross spending less forecast receipts, is £249 million excluding law and order services. To calculate the total available for allocation the cash limit has added to it a proportion of housing receipts, and deducted from it estimates of expenditure not counting against allocations, such as leased vehicles and derelict land clearance. The total calculated in this way is £263 million. Of this sum about £14 million is being withheld from those district authorities which resolved to spend in excess of the voluntary restraint level for the present year. If the authorities concerned are able to realise sufficient additional receipts, all or part of the allocations withheld will be restored to them as soon as possible after the end of the present financial year. Details of allocations have been placed in the Library of the House, together with an explanatory note on the new arrangements.
"I believe the new framework for managing local authority capital spending in Wales represents a fair and reasonable compromise between the objectives of local and central government. Coupled with the level of resources I have announced, it is clear proof of the Government's desire to provide a firm foundation for a wide and effective programme of worthwhile capital schemes."
§ My Lords, that concludes the Statement.
§ 5.5 p.m.
§ Lord Prys-Davies
My Lords, I thank the noble Viscount the Minister for repeating the Statement made in the other place. There is an indication in the Statement that the Government may be responding to the pleas made by the Welsh Counties Committee and the Committee of Welsh District Councils, and this we very much welcome. We are also gratified that the three new major highway projects, which were announced earlier in the year, will start in 1985. However, in the Principality the total need for new major highways is still unmet, and if we are to bring pulsing life back to our communities, many of them regrettably half-derelict, there is therefore a need to get a move on.
There will be disappointment that the proportion of the receipts which can be used to enhance the local authorities' spending will be reduced from 25 per cent. to 15 per cent. in the housing sector and, in the case of non-housing receipts, to 50 per cent. This will be particularly significant for housing but not exclusively so.
I should like to concentrate my few remarks on the significance of this Statement to the Welsh housing scheme, because we on these Benches believe that the Statement looks upon the Welsh housing scheme with a menacing eye. I am sure it will be seen as registering a low tide of fortune for the Welsh housing authorities. Coming on top of the so-called voluntary restraint measures announced in July, it is expected because the 573 housing stock in the Principality is dreadful—40 per cent. of the stock having been built before 1919, and of that 40 per cent., one-third being substandard. Very many buildings are without basic amenities. This Statement will convince many councillors and families that the Government have no real understanding of the problem facing the housing authorities in Wales; that they may be out of sympathy with the need to rebuild the housing stock, or, very simply, that they do not mean business. Whatever may be the explanation, we assert that this document and its implications poses its own threat to human dignity, human personality and identity.
I should like to put three or four questions to the Minister. Will the Statement mean that new council construction programmes can come to a halt in the case of some district authorities? Secondly, do the Government, through the Welsh Office, intend to protect some of the housing programmes, such as homes for the disadvantaged? Thirdly, what is the significance of the Statement for the 40 or so Welsh housing associations? These have been active in the Principality; they have tapped a rich seam of energy; and they have the capacity to renovate or build 6,000 homes annually, but that capacity has been crippled over the last few years. In 1982–83 they built or renovated 2,100 homes; in 1983–84 the figure was 1,600; and in 1984–85 it was 1,100. Will the provision made in the Statement for the Housing Corporation mean that that decline will be halted and reversed?
Fourthly, will the interim grant be protected from further cuts? We attach the highest importance to the interim grant. I know of two or three families who within the last month have made an application for an interim grant to repair their homes which are without a bathroom, without an inside toilet and without a water supply, and which require new window frames and a new roof, and are crippled with dry rot if not wet rot. Can the Minister assure the House that the interim grant will be safe? I have concentrated on this aspect of the Statement because Welsh homes have nurtured communities; the time is long overdue when those communities should be rebuilt, and the first stage is to build the new homes.
§ Lord Tordoff
My Lords, I find myself here as a stand-in Welshman today, and I apologise to your Lordships that some of my Welsh colleagues are not here to speak on behalf of the Principality, but they are doing other important things. Although I am grateful to the Minister for repeating the Statement in this House, parts of it would have meant no less to me if they had been read in Welsh. However, it is clear that the response to the Welsh counties and the Welsh districts on flexibility will be welcomed in Wales. One is glad to see that the Government have been prepared to give them that degree of elbow room.
Like the noble Lord, Lord Prys-Davies, I welcome the other capital spending which has been referred to, particularly on the new highway projects. Wales is extremely badly off for communications. Anybody who has travelled from north to south in Wales will realise that it is almost impossible to get from the north coast to the south coast without going via London, or certainly via Shrewsbury. Anything which improves communications in Wales must be to the 574 greater good of the community there; but, as the noble Lord said, there is a long way yet to go.
I wonder at the priority that the Government have given to some of these things, although it is clearly a matter for the local council to decide for itself. I should have thought that money put into housing rather than replacing the headquarters of county councils is something that would have been of greater benefit to the people of Wales. I really have only one basic question to ask because, like the noble Lord, Lord Prys-Davies, we on these Benches are worried about the housing aspects of the Statement.
Do the Government expect any more houses to be built in Wales next year than have been built in the last 12 months? If so, how many? I suspect that the effect of this will be that less houses will he built. In a part of the United Kingdom which is already in a serious position so far as houses are concerned, the Government are surely going down the wrong road there. From these Benches we frequently talk about building up the infrastructure, and housing is one of the most important parts of the infrastructure. In some ways it is more important in Wales than in many parts of England.
My Lords, I am grateful to the noble Lords, Lord Prys-Davies and Lord Tordoff, for their kind compliments in regard to the Statement and for the way they have accepted certain things like the roads, and so on, that the Government have acknowledged are important. I should like to start by saying to the noble Lord, Lord Tordoff, that the Powys County Council is housed at the moment in small sheds around the council district, and the building itself, which is an old hotel, is falling down and is highly dangerous. It has moved an inch into the ground. As mentioned in the Statement, there is money there and it must be paid into building new council offices as they are spaced all over the town.
§ Lord Tordoff
My Lords, does not the noble Viscount also accept that there are many houses in Wales which are in an even worse state than the county council offices to which he has referred?
My Lords, I cannot answer that one just at this moment. I have not had a big enough or long enough inspection of what is going on there, but the council people must have decent offices to work in. The noble Lord, Lord Prys-Davies, was kind enough to let me know about certain things he wanted. He centred his arguments around the investment in housing and the elderly and how the grants were going to work there. Perhaps I may say to the noble Lord, Lord Prys-Davies, and also to the noble Lord, Lord Tordoff, who referred to investment in housing, that the £147 million, the provision for gross expenditure on housing by local authorities—that is all local authorities—is only about 3 per cent. lower than for the present year. In addition a further £39 million will be spent by the Housing Corporation. This is an expenditure which can be enhanced by private sector receipts amounting to possibly another £3 million to £4 million. This is also largely due to the fall in the sale of council houses.
In answer to the arguments of the noble Lord, Lord 575 Pry's-Davies, I have to say to him also that the Secretary of State has increased net expenditure provision for housing by 27 per cent. in the year 1985–86 to compensate for this. Therefore, there is some money there and the local authorities know that they can move in on any new projects.
The noble Lord also asked about highways. Overall, if I may say so, the aggregate resources for Wales are already very generous, and, in total, per capita spending in Wales is double that in England. I think they are not doing too badly on roads in Wales and as the noble Lord said, of course there are more new roads to be built, or needed.
The noble Lord went on to housing renovation, and he took the figures from 1982–83, 1983–84 and 1984–85. There is adequate provision within its spending provision for housing in 1985–86 to accommodate a continuing high level of renovation grant activity. How much is spent depends on the priority which authorities themselves attach to this work. It is up to them to decide how urgent it is. I hope they will attach the highest urgency to whatever renovations are needed. I hope that that will help the noble Lord.
I think that the noble Lord was talking about receipts and the quality of housing stock. The Government recognise these problems. That is why resources for housing are as high as they are, including the Housing Corporation, and nearly £180 million will be spent on housing next year. The noble Lord, Lord Tordoff, wanted to know how the housing programme was going. Well, the money is there. The net provision for housing had been increased by 27 per cent. compared with 1984–85.
The noble Lord, Lord Tordoff, asked what the housing programme is for next year. The number of houses to be built depends on the authorities. I think I have already referred to that. Greater priority needs to be attached to renovating houses rather than building new ones, and many councils recognise this. I hope that that has answered the questions of the noble Lord, Lord Prys-Davies, and the noble Lord, Lord Tordoff.