HL Deb 27 November 1984 vol 457 cc861-75

9.41 p.m.

Lord Brabazon of Tara

My Lords, I beg to move that the Local Government (Supplementary Grants for Transport Purposes Specified Descriptions) Order 1984, which was laid before your Lordships' House on 22 nd October, be approved.

It is a joint order by the Secretary of State for Transport and the Secretary of State for Wales. There is only one change proposed for Wales—the removal of car-parking from eligibility for TSG. I shall, therefore, mainly concentrate on the effects for England. I should perhaps add that the legislation which we are discussing applies only in England and Wales, and that nothing in what I am about to say has any relevance in Scotland, where my right honourable friend the Secretary of State for Scotland operates different arrangements under Scottish legislation.

This order will make the legislative changes necessary to confine transport supplementary grant in England to capital expenditure on roads. The Secretary of State announced the proposals last month, and copies of the relevant papers were placed in the Library. TSG was introduced under the Local Government Act 1974, and was first paid in 1975–76. Until then, there were specific grants for transport, with all the problems they bring with them. TSG is a block grant.

The overall aim of the TSG system was to encourage county councils and the Greater London Council to follow transport policies suited to their areas, and to support them in meeting costs which were unduly high in relation to their populations. More particularly, TSG was meant to enable central Government to help them finance large local capital transport schemes and to provide support for public transport at a time when there were no adequate means of bringing expenditure on public transport subsidies within the rate support grant system. Thus, to date, TSG has covered support for general transport expenditure, both current and capital, on roads and public transport. The grant has been paid at a percentage rate (55 per cent. in the current year) on all accepted expenditure above a specified per capita threshold.

It has become increasingly clear over recent years, however, that the present system could not cope with the excessive subsidising of public transport in which some authorities indulged. At the same time, the system has not been able to encourage the necessary investment in major roads. Let me give your Lordships some examples. In 1983–84 the six metropolitan county councils spent £91.5 million (54 per cent.) more on public transport revenue support than had been accepted by the department in the TSG settlement. In the same year, outside London, 28 per cent. of the expenditure accepted by the Secretary of State was meant for capital, but less than 10 per cent. of the grant was spent on capital. This tendency has been increasing. In 1980–81 councils devoted some 63 per cent. of transport supplementary grant to the support of revenue expenditure. In 1984–85 they budget to use almost 72 per cent. on revenue, while 25 councils budget to use all their grant to this end.

As for road construction, in 1981–82 the local authorities fell short of the Government's plans by almost £32 million (9 per cent.) and in 1982–83 by £11 million (2.6 per cent.). The effects have been seen more particularly on schemes meeting the main objectives set out in the White Paper Policy for Roads in England: 1983—the primary route network, bypasses and urban roads. These objectives recognise the clear fact that TSG, which represents extra support from the general taxpayer, should be devoted to projects which benefit a wider community and not only those who live in a particular local authority area.

The present TSG system has also been increasingly criticised outside the Government, including criticism from among the recipient authorities. First, this has been because of the unbalanced results it gives. The threshold mechanism was designed to give the system a bias towards authorities with high expenditure, but it has been achieving this only at the expense of others. The degree of bias has become unacceptable over the years. In 1984–85 the GLC's grant was 32 per cent. of their accepted expenditure, the metropolitan county councils 22 per cent, and the shire county councils only 15 per cent. With 38 per cent. of the country's population, London and the metropolitan county councils received 62 per cent. of the grant available. Secondly, the threshold system is far from easy to understand and its effects tend to be highly unpredictable from one year to the next.

Moreover, TSG did not fit in with the developing system of expenditure targets and rate support grant penalties. The setting up of London Regional Transport earlier this year meant that it would not be possible to make a sensible settlement for London under the present system. We decided that changes, indicated for a couple of years, needed to be made for 1985–86.

The Secretary of State signalled his intentions formally to the local authority associations in May this year. In July he consulted them in writing on a capital-only TSG, limited to expenditure on highways and traffic regulation, with grant payable at a flat rate of about 50 per cent. He further proposed that in accepting expenditure for grant he would consider to what extent the roads and routes affected were of more than local significance. He would also take into account the extent to which people living or working in the authority's area would be relieved of the effects of heavy through traffic. He also said that in accepting authorities' capital programmes for grant he would specify the schemes in these programmes. Provided that they were started in the year under review and progress maintained, he would continue to support them with TSG in their future years.

Current expenditure on roads and public transport would continue to be supported through rate support grant block grant. New formulae for grant related expenditure for public transport revenue support and for road maintenance would be devised with the local authority associations. The proposals would not result in changes in the resources available to local authorities, nor in any reduction in the total amount of Exchequer grant available to them.

Investment in facilities for local public transport—such as bus stations, bus depots and rail electrification schemes—would no longer be eligible for transport supplementary grant. But he would pay specific grants under Section 56 of the Transport Act 1968 towards large, worthwhile projects to provide new facilities.

As part of the consultation the Secretary of State and the Minister of State met elected members of local authority associations to discuss the proposals. Meetings were also held at official level on the financial and other details and implications. After considering the written reactions of the associations and the results of these meetings the Secretary of State decided to seek the approval of Parliament to the necessary legislative changes.

Turning now to the order itself, the legislative changes sought in it will enable the Secretaries of State to operate the transport supplementary grant system in England and Wales in the ways I have described. Article 4 confines transport supplementary grant to expenditure in England in connection with highways and the regulation of traffic. Article 5 effectively excludes parking from eligibility in Wales. Article 6 provides for the consequential amendment of Section 6 of the 1974 Act. It describes highways and the regulation of traffic as the transport matters qualifying for grant in England and public transport, highways and the regulation of traffic in Wales. It also changes the method of apportioning the grant in England from the threshold system.

The systems of distributing grant in England and Wales are thus different. This is envisaged in Section 51(1) of the Local Government, Planning and Land Act 1980, where it is provided that the Secretary of State for Transport and the Secretary of State for Wales may exercise the powers to make supplementary grants for transport purposes separately and differently in the two countries. By the Local Government (Supplementary Grants for Transport Purposes Specified Descriptions) (Wales) Order 1981, debated in your Lordships' House on 3rd December 1981, the threshold system for Wales was ended and the eligibility for grant was restricted to capital expenditure only.

For England the criterion of more than local significance and the consideration to be given to such areas as the primary route network, urban roads and by-passes, together with the other aspects I have covered, can be effected within a discretion already available to the Secretary of State. The acceptance of expenditure for transport supplementary grant has always been a matter for his discretion. It is customary for him to indicate in annual circulars how he intends to use it in relation to the transport programmes of local authorities. These aspects do not, however, form part of the order.

This is a very complicated subject and I have tried to take your Lordships through it as clearly and as logically as I could. I have deliberately taken time to give your Lordships the background and rationale of the changes sought; I hope that this has been helpful. I beg to move.

Moved, That the order laid before the House on 22nd October be approved. [38th Report from the Joint Committee (1983–84).]—(Lord Brabazon of Tara.)

9.50 p.m.

Lord Underhill

My Lords, this is a very important order and it will have far-reaching effects on public passenger transport—particularly in the large conurbations. It ought to be clearly understood at the start that, for many years, the marginal rate of grant above the threshold was 70 per cent. But since this Government came into office in 1979, it has fallen steadily and is now only 55 per cent. The Secretary of State has already announced that for 1985–86 it will drop to 50 per cent. For the year 1984–85, the total transport supplementary grant pool fell from £450 million the previous year to £400 million; a drop in that one year of 11 per cent.

The noble Lord has explained from the Government's standpoint the rationale behind accepting in the 1974 Act the transport supplementary grant procedure. But it went beyond what the noble Lord has said. First, it replaced a number of separate, specific grants which were made before TSG. The intention was to allow the planning of highway construction and transport infrastructure to proceed along with a properly-integrated passenger transport network—both bus and rail. We have heard no reference to linking with integrated passenger transport network. That is why I stated in a recent debate that the proposals to abolish the GLC and the metropolitan counties, the Buses White Paper, and now these changes to the transport supplementary grant are all interlinked. They will all tend to destroy an integrated approach to passenger transport.

TSG compensates for the needs for transportation which are not met by the per capita distribution of the block grant. It also reflects the wide variety of the nature and scale of transport problems in different local areas. But it allows for decisions to be taken locally on the basis of priorities. As the Minister has said, the Government's justification is that local authorities have been underspending on roads. Here I must quote the figures mentioned in respect of the 1982–83 allowance for capital road projects.

It was stated that £469 million was allocated but that the authorities spent only £301 million. But the House of Commons Select Committee on Transport published only in May this year a report which blew that claim sky high. The figures showed that actual expenditure was much higher than that quoted. In fact, local authorities have spent £442 million—not much short of the figure allowed of £469 million. That is only a 6 per cent. underspend and we are delighted that the Government have agreed that underspending on trunk roads would be allowed to be carried over—up to 5 per cent. That means a difference of only 1 per cent. Yet on that basis the Government have introduced this order.

One should examine what the Select Committee in another place had to say in paragraph 21 of their report: Whilst we are pleased to note that underspending in 1982–83 was in fact far less than had been feared, we are surprised by the inaccuracy of the Department's estimates and the apparently long delay before a complete picture of the pattern of local authorities' capital expenditure could be obtained. It goes on to suggest that we might find similar discrepancies in the later figures for 1983–84.

The Government argue that the change is to concentrate TSG on highways capital expenditure. It is very difficult to reconcile that with actions taken in recent years on the levels of expenditure accepted for TSG. If the Government had wished to encourage the level of capital expenditure on transport, this could have been done by increasing the proportion of capital expenditure accepted by the Secretary of State for TSG and, what is more important, increasing the amount of TSG assumed notionally to be capital.

But what did the Government do? In 1982–83, of the £519 million capital expenditure accepted for grant, only 30 per cent. of the actual grant was assumed notionally to be capital. In 1983–84 this fell to 25.5 per cent. of£619 million, and in 1984–1985 it further declined to 21.5 per cent. of £647 million. What this means is that while capital accepted for TSG increased, the actual level of grant assumed to be paid on capital fell. I shall be pleased if the Government can explain the reasoning behind that.

There had been, as the noble Lord said, murmurings about possible changes in TSG during 1983. As noble Lords appreciate, I am the president of the Association of Metropolitan Authorities. I have been at meetings when these matters have been discussed and I can assure your Lordships that the consultations have not been on the basis that one would imagine to have been the case listening to the Minister. The chairman of the AMA Transportation and Planning Committee wrote to the Secretary of State on 21st December, 1983, expressing very grave concern at the reduction in TSG settlement for 1984–85 and seeking a reassurance that the transport policies and programme system with TSG would be continued. The Secretary of State replied—and I will now quote in full the detailed reply: Thank you for your letter of 21st December about TSG. I have noted the points you make". That is the reply to the important authority of the AMA Transportation and Planning Committee chairman. So that was that.

It is appropriate to refer to another extract from the Commons Select Committee's report. I quote from paragraph 40: The Department has stated that it is currently reviewing the future of the TSG and that it will consult the local authority associations on the issue. We believe that very careful consideration needs to be given to possible reforms to the TSG system and that all interested parties should be consulted before any changes are introduced". But what happened? During our debate on the relationship between central Government and local government on 14th November, I referred to the statutory requirement that the Secretary of State and the Minister of Transport should consult the local authority associations on the question of rate support grant, which, of course, involves transport supplementary grant. In a letter from the department to the associations dated 22nd December, the lack of selective consultation on the previous year's rate support grant was recognised. I complained during that debate that there had not been any proper consultation with the associations about these intended changes. Despite what the Ministers have said subsequently in the other place and what the Minister said tonight, I stand by that complaint.

On 9th July the Secretary of State stated in reply to a Question in the other place that he was consulting the local authority associations regarding the future of the transport supplementary grant. What he did was to arrange for the department to send to the Association of County Councils, the Association of Metropolitan Authorities and the GLC a draft circular setting out the proposals. In fact, that was sent three days before he made his reply in the other place. It was sent out on 6th July, but comments were requested by 8th August on purely a draft circular.

The next step was a meeting on 30th July between the Secretary of State, the Minister of State and department officials and representatives of the various local authority associations concerned. That was not consultation on the principles of the changes proposed for TSG. It was consultation on how to see that the working of the changes proceeded as the Government wished. It was not consultation on the principle. In fact, complaints were voiced about the changes, but the Minister of State emphasised emphatically that there could be no delay and that there was urgent need for action.

One important point arises from the change to capital only TSG. It is that there must be some adjustment in the rate support grant; otherwise local authorities will lose heavily on the change. Representatives of the various associations stressed that exemplifications of GRE formula to deal with this were most important and must be agreed before any decisions on the change could be taken. The Conservative controlled London Boroughs Association—I emphasise that—said at this meeting that it was difficult to proceed without exemplifications and that there must be agreement on the GRE formula before the proposals for the changes to TSG went forward. We have the order today when there has been no satisfactory acceptable formula for the change to enable GRE to cope with the position that arises now that some of these matters have to go into the rate support grant.

The day following the meeting on 30th July the chairman of the AMA Public Passenger Transport Committee wrote to the Minister of State, criticising the inadequate consideration that had been given and strongly seeking an undertaking that a further meeting with representatives of the associations would be held so that they could look at the possibility of satisfactory GREs to deal with the position of revenue support and maintenance. A month after that we had a reply from the Minister of State rejecting this request but stating, as the noble Lord has said, that there would be discussions with officials. But the Minister of State, Mrs. Chalker, included in a letter some very important words, which I shall quote: But there is a limit to the usefulness of exemplifications which are necessarily based on hypothetical input". I hope that this will be considered when local government is studying generally the whole question of GRE procedure for all other services. The AMA sub-committee, chairman wrote again on 26th September, repeating that he thought it was understood at the meeting on 30th July that there would be another meeting at member level before decisions were reached. That letter was sent on 26th September. The Minister of State replied on 7th November, pointing out that the Secretary of State had already announced on 16th October his decision to seek parliamentary approval for the introduction of the roads capital-only TSG.

I have gone into this at some length because it is a sorry story of what is claimed by Government to be consultation with the local authority associations. It is no surprise that relationships between central and local government are as bad as they are. The facts that I have given can be backed up by correspondence, letters and documents which I possess. Yet ministers state repeatedly that the local authority associations were consulted and that their comments were carefully considered. The very first words of the circular that went out to the bodies concerned on 22nd October are: Following recent consultations with the appropriate local authority associations". I must claim, and I must be emphatic in saying, that that is a complete travesty of what took place on this very important order.

Another important matter is expenditure on road maintenance. When the Commons Select Committee looked at this they had in mind the point that the previous Commons Transport Committee had made very unfavourable comments arising from the national roads maintenance condition survey. In fact, they had suggested that expenditure on road maintenance had been consistently above the level provided in the Government's expenditure plans over the last few years. On road maintenance for 1983–84, the expenditure is estimated at £902 million, compared with the White Paper provision of £831 million. In other words, the local authorities were spending more on road maintenance than the Government thought they should.

The Select Committee, in paragraph 27, state: The fact that this has occurred at a time when local expenditure generally has been severely constrained is an indication of the strength of feeling of the local authorities about the need for more resources for road maintenance. But road maintenance will no longer be covered by TSG. Road maintenance will have to be covered under the rate support block grant.

What else did the Select Committee say on that? I am sorry to be so long, but these issues are very important. The Select Committee, in paragraph 38 says: However, we would not wish to endorse such a change until we are satisfied that adequate provision could be made through the Rate Support Grant for the support of current transport expenditures, particularly road maintenance and public transport revenue support… We believe it is essential that any changes to the TSG should be dependent upon satisfactory solutions in the areas of both road maintenance and public transport revenue support". There have not been any satisfactory agreed formulae for GREA, for road maintenance or for revenue support; yet the Government are bringing forward this order tonight as a matter of urgency.

I must also ask: what is to be the position regarding Section 20 grants to British Rail? These are payable by the passenger transport executives in the metropolitan counties to subsidise non-profitable services of British Rail. Without TSG these services are at risk. These grants are at risk, and that means, therefore, that the services are at risk. These are local rail services. It must be emphasised that, combined with the proposals for abolition, this throws into the melting pot the whole question of strategic planning in those particular areas. Section 20 grants will have to be in the queue with other priorities. This was made absolutely clear by the Minister of State in her speech in the other place when she introduced a transport supplementary grant there. Passenger transport executives have expressed their considerable concern about the future. British Rail have said that the loss of the Section 20 grants will present a serious problem to them because some £78 million would be involved if they were lost.

The noble Lord the Minister referred to the position nationally. I should like to quote what the Minister of State actually said in Hansard, columns 637–8 in the debate on the TSG order in the other place: The extra support from the taxpayer nationally represented by TSG should be used to benefit the population at large who produce the money and not only those who live in a single local authority's area". Then she referred to what the noble Lord the Minister has said tonight: the intention of the Government to see that transport revenue grants are cut drastically.

In my opinion, these statements show a misguided view. The first argument could be used against every single item covered by the rate support grant, because they deal with services in a locality. The second argument ignores the fact that most transport undertakings run by local authorities go beyond the particular local authority area: they provide services for neighbouring areas which do not have transport undertakings of their own. The same can be said of the National Bus Company networks. If the level of support is not maintained, all these services will be in jeopardy—and we had this out in our discussions on the White Paper Buses.

The change in the order ignores the fact that the TSG system, allied to the structure for transport policies and programmes reports, ignores the whole development that was intended towards an integrated transport policy, and the Government fail to recognise that transport needs are part of a national economic policy and are not purely local considerations, as the Government regard them. Local transport, if we accept the Government's view, is now to be considered as being outside the concern of central Government. We cannot possibly accept that, and that is what I believe is behind the three-pronged attack by abolition of the GLC and the metropolitan counties, the Buses White Paper, and this order changing the basis of TSG.

It will tend to take away from the local authorities their decisions on priorities. It will be a major attack on public transport planning, and the impact on local transport investment will become very severe. It is a retrograde step. I am sorry that, because of our convention, we do not vote against orders, but I felt it necessary to express the Opposition's complete feeling that this is a wrong order, that it should not be introduced, and that it will have a bad effect upon public transport throughout the country.

10.11 p.m.

Lord TordofT

My Lords, it is interesting (is it not?) that, having had a full House for most of the day, when we come to a matter which is going to affect the lives of most people in this country the Chamber is reduced to the usual collection of people, either those who are waiting for the next debate or the three or four people who normally take part in debates on transport. It is not my intention to delay your Lordships' House very long tonight because the noble Lord, Lord Underhill, has spelt out in considerable detail the objections that there are to what the Government are trying to do under this order. I merely want to emphasise what he has said on the Section 20 provisions.

I agree with virtually everything he said on the whole spectrum of the effects of this order, but I think that the Section 20 provisions are really very worrying indeed. He mentioned that the British Rail Board receives a figure of some £78 million per annum in support under Section 20. If I may say so, I think that that includes Scotland as well, and therefore the figure is slightly inflated. In regard to England and Wales it should probably be nearer £50 million rather than £78 million; I say that with respect to him. Strathclyde takes in quite a large slice of that £78 million.

The country is faced with a situation where, as he rightly says, with the various prongs of the attack the Government are making on local government and on transport there is a possibility that the British Rail Board in particular is going to find itself totally unable to support services which are seen as a social necessity by commuters, by people living in the major conurbations of this country; that is because the priorities which are placed on local government simply do not allow them to take from their rate support grant, unless some clear indication is given by the Government—there has been no indication in another place that this is likely to happen—that they in fact intend to make available to local government sufficient money to pay for the Section 20 provisions. That is what we are waiting to hear tonight from the Government.

There was nothing from Mrs. Chalker in another place that indicated that she was prepared to give any guarantee from the Department of the Environment that they would insist on the block grants being sufficient to support these Section 20 provisions. I have a terrible feeling that, because of the needs which are placed on local government by Bills which are passed through into Acts by Parliament, and which call upon local government to provide services in all sorts of directions, frankly, with the best will in the world, local government is not going to be able to support the British Rail Board in many of these genuinely socially needful rail services.

It is, of course, a terrible temptation to local government to use the extra block grant money to boost services that they would like to see in the social services and which they have a statutory obligation to provide. I dare say that the next debate will in fact go into that area.

However, this really is a very serious matter when taken in conjunction with the abolition of the metropolitan counties and the GLC. These types of services—as we have said so often in the past in debates this year and last year—are necessary to provide some type of integrated transport service. Your Lordships will be bored with hearing me say that the Government are trying to disintegrate our transport services in the metropolitan counties and in the Greater London Council. But every indication that we have proves me right. Every indication proves that they are failing to support, for instance, the Tyne and Wear integrated transport system and the integrated transport systems that many other major conurbations should like to include in the infrastructure of their areas. Frankly, I do not believe that, once this TSG is removed, local authorities will be able to provide the type of money to enable integrated rail/bus services to exist in our major conurbations in the future. That is the only major point that I want to make tonight. However, it is important and it is symptomatic of the Government's attitude to the whole of public transport.

There is no doubt in my view that the Government are totally obsessed by the road lobby and that they are not very interested in public transport in general. I fear that tonight's minor skirmish is as good an indicator as any of the Government's attitude to the provision of public transport. At the end of the day we shall find ourselves with our great conurbations clogged with motor cars and with public transport being run down. As the noble Lord, Lord Underhill, has said over a much broader scale, the Government's attitude is revealed in the resolution before your Lordships tonight.

Lord Mountevans

My Lords, as the noble Lord, Lord TordofT, has remarked, not only have the captains and kings departed, but the lights seems to be getting dimmer as well! The order before us this evening specifies the Government's intentions to see funds earmarked for capital expenditure on roads, thus seeking to prevent local authorities from bidding for funds under the heading, "Capital expenditure on roads"; having their bids granted, and then using these funds for revenue account subsidy of what was described by the Minister in another place as extravagant public transport subsidies.

This superficially seems like another example of central government interference in local affairs. But things are not always what they seem. We are discussing central funds and I accept that these central funds should be subject to central control. The Government have argued before that subsidy should not equal over supply of transport services, and I accept that premise. But I am concerned that the Government's first priority—and I refer to the Minister of State speaking to this order in another place—is to focus grants more closely on roads capital expenditure.

Earlier in the same context the honourable lady expressed the Government's intention that TSG should be used to smooth out uneven expenditure on road building. My concern is that by seeking to achieve this aim in terms of road building, the Government are discriminating against capital intensive and long lead-time rail-based projects.

Your Lordships will be aware of my commitment to public transport based on rail, but integrating the other modes. I am worried—and I have in mind the local government Bill which will come before your Lordships' House later in the Session—that the successor bodies to PTEs will go for the road capital expenditure bird in the hand as opposed to the longer term rail-related options to be found in the bush. Strategically they will look for very localised road-related options which are covered by this order, rather than the longer-term options with slower pay-backs that integrate public transport—a topic which has been raised by both the other noble Lords who have spoken in the debate. They will thus be penalising the non-car owning public, the transport user, while favouring the motorist. In a manner of speaking, they will be giving to those who have and taking away from those who have not. It can be argued—indeed, it has been argued—that Section 56 of the Transport Act 1968 will plug the gap, which worries me. I believe that the local authorities will put Section 56 projects at the bottom of their list of priorities. On capital and on revenue account there will be less expenditure, poorer service and discrimination against those for whom I unofficially speak—the non-vehicular Peers or the non-motorists. We shall suffer, but I think it has been made clear from this side of the House this evening that we shall not suffer in silence.

There are two points of detail on which I would welcome the Minister's illumination. The order encourages expenditure on roads in Wales. For the motorist it makes getting to his destination that much easier. But it specifically excludes investment in parking. This seems to me to be a typical example of the Government riddling around in terms of transport policy, and I should appreciate an explanation of the apparent contradiction.

Secondly, I ask the noble Lord whether similar legislation is proposed in terms of Scotland and in particular in terms of Strathclyde Regional Council, which has already been mentioned. After all, it is the local authority making most use, in financial terms, of Section 20. In his opening remarks the noble Lord the Minister pointed out that the TSG is not applicable to Scotland; but I wonder whether Scottish Office policy will be as road-related as the England-Wales order under discussion.

10.22 p.m.

Lord Brabazon of Tara

My Lords, I shall try to answer as many points as I can which have been raised during the debate. The noble Lord, Lord Underhill, queried the reduction in the percentages of TSG from 70 per cent. in 1983–84 to 55 percent, in 1984–85, and now to 50 per cent. In fact, the present TSG system was on all accepted expenditure above a per capita threshold. Although 55 per cent. may have seemed generous and 70 per cent. even more so, the overall rate of grant was only 21 per cent., varying, according to the operation of the threshold, from 33 per cent. for the GLC, to 2.4 per cent. for Oxfordshire. The threshold system was unpredictable and hard to understand. On the contrary, the proposed 50 per cent. flat rate is straightforward and certain. It is also a much higher overall rate of grant.

Both the noble Lords, Lord Underhill and Lord Tordoff, mentioned the end of comprehensive transport planning. We believe that local transport planning is for local authorities. The changes will not prevent them taking a comprehensive look at local transport, and the councils do not need Government grants to encourage them to plan sensibly. Sensible transport planning does not have to be bought at the expense of the ratepayer and taxpayer. It is about finding cost-effective ways of meeting demand, avoiding duplication and getting value for money. The TSG changes will help because they will remove the distortion in the old system.

Lord Tordoff

My Lords, before the noble Lord continues, may I ask this question? Does he not understand that we are saying that the long-term planning aspect of integration will go out of the window with this change? Perhaps this is a point that we did not make clearly enough. Can he accept that, under the new scheme, under the block grant scheme, local authorities cannot see far enough ahead without some guarantee of support to put in the sort of integrated transport system which exists at the moment in Tyne and Wear?

Lord Brabazon of Tara

My Lords, I appreciate what the noble Lord says; but we believe that they should be able to do so under the block grant. All they are doing is getting the money from a different source.

Lord Underhill

My Lords, I am sorry to interrupt the noble Lord, but may I ask whether he is saying that, allowing for inflation, without any doubt there will be no less money under the rate support grant and TSG than there is now for TSG only? Is he saying that as a definite promise?

Lord Brabazon of Tara

My Lords, I cannot make a definite promise. All I can say is that under the present plans overall the amount of money will remain the same. Obviously I cannot at the moment give any assurance for the future. I do not think the noble Lord would expect me to be able to do so at this stage.

The noble Lord, Lord Underhill, accused us of rushing these changes through. He explained to us the consultation process that had taken place, and I cannot disagree with the timetable he gave. We accept that the need to make the change for 1985–86 resulted in a tight timetable. Consultation in earnest began on 6th July, but local authority associations have been aware of likely changes for some time. Capital only TSG, as was mentioned, has been in the air for some two years, and my right honourable friend outlined the proposals, as we said, on 17th May this year.

We believe that there is an urgent need to ensure that sufficient grant is used to support local roads construction, to remove the anomalies, and to meet the criticisms. Furthermore, with the setting up of the LRT, the GLC would have got only about £20 million of grant to support nearly £200 million of highway expenditure. Therefore it was essential that we moved forward and made the changes as quickly as possible, particularly under the criticism of the threshold mechanism which I have already mentioned.

On the question of local authority capital spending, we have figures which we believe to be true, and on the transport side the provisional 1983–84 figures indicate an underspend, but we believe that the final figures due soon may show even a small overspend. On the question of road maintenance suffering, we do not believe that this will happen; far from it. Provision continues to be steadily increased in real terms, and rate support grant will reflect this in full.

On the question of revenue support for rail services, which both the noble Lord, Lord Underhill, and the noble Lord, Lord Tordoff, mentioned, the responsibility for deciding the level of provision of local rail services rests with the British Railways Board and county councils. Transport supplementary grant will not in future be paid and authorities will receive block grant instead. There is already a separate GRE indicator for revenue subsidies for local rail services in passenger transport executive areas. Councils will be able to decide whether to maintain support for local rail services within all the resources available to them. I hope they will be looking for better value for money from the services they support, just as we are from the railways nationally.

On the question of support for public transport, the Government see no justification for continued taxpayer support for excessive fare subsidies. They may provide social benefits, but they merely underwrite inefficiencies. Decisions on revenue support properly belong with local authorities and they are best placed to judge what should be their share of the available resources. By ending TSG for public transport we are simply putting revenue support on the same basis as other services in the competition for scarce local resources.

Like other local expenditure, resources for public transport revenue support will have a grant-related expenditure total. This will be allocated to authorities by a new formula. Some promising formulae have been discussed with the local authority associations and we shall select the most suitable. We cannot expect the metropolitan county councils to like them, as they may show up their overspending, but the formulae will be revealed in the December RSG announcement.

To the extent that TSG is less, RSG will be increased. The difference will be that the extra block grant will be subject to the reduced grant rates and hold-back penalties where authorities spend well over their grant-related expenditure assessments or targets.

Lord Tordoff

My Lords, will the Minister give way? This is the point I was trying to make. The effect of what is happening now is that because of the penalties which are being imposed on local authorities from other directions the Section 20 support will be nonexistent from local authorities. What steps do the Minister's department intend to take when British Rail have to pull out from important commuter services, from local regional services, which they provide at the moment? At that stage will they be prepared to come back to support those services, or will they simply say, "It is none of our problem"? In other words, are we not playing pass the parcel from one Ministry to another?

Lord Brabazon of Tara

My Lords, as I have said, we believe that they should have to find the money from their block grant. I cannot give any assurance about what we might or might not do if the case which the noble Lord mentioned arose. We hope that they will find the money from their block grant.

The question of abolition was raised. I should like to make it quite clear that the proposals for changes to TSG are neither the consequence of abolition, nor are they intended to anticipate abolition. They would have been necessary in any case. They do not affect the structure or organisation of local government.

In seeking to reduce extravagant public transport subsidies the proposed changes are, it is true, against the practice which is prevalent in the metropolitan areas. Over the four years 1981–82 to 1983–84 the six English metropolitan county councils between them spent £290 million, that is 66 per cent. more on subsidies than that accepted for TSG.

We stand accused of trying merely to make another move to curb local authority spending. This is not so. We are trying to remove the distortions in the current system using grant to provide the taxpayers' share of the lumpy costs of roads with more than local benefits. The overall level is a matter for my right honourable friend the Secretary of State for the Environment, who has his own mechanisms for controlling expenditure. The total amount of TSG—£ 160 million is proposed for 1985–86—will be less than before, but the RSG block grant will be larger than it otherwise would have been. Overall local authorities will be as well off in future years under the new system as under the present one. I am probably repeating myself when I make that point.

The noble Lord, Lord Mountevans, asked why parking should be different in England and Wales. We can see no justification for special taxpayers grants towards the provision of parking places. Charges can be made for parking and these should surely be sufficient to cover the capital costs of the car parks. I remind the noble Lord that financing costs will be covered by the normal GRE for financing capital expenditure. If parking is to be subsidised this must be a local decision and locally financed. I would also point out that in the proposals for Wales my right honourable friend the Secretary of State for Wales proposes to pay TSG only on expenditure on projects costing over £5 million. I wonder whether many parking arrangements would cost as much as that.

The noble Lord, Lord Mountevans, also mentioned the difference between Scotland and England and Wales. As I made quite clear at the beginning, Scotland is not covered by this measure. Legislation under discussion does not apply there.The arrangements are similar in many respects to those now proposed for England. Local road maintenance and public transport revenue support are taken into account in rate support grant paid under powers in the Local Government (Scotland) Acts 1966 and 1975, as amended by the Local Government Planning (Scotland) Act 1982. I hope that that reply covers the point that the noble Lord made.

I have listened carefully to the points raised by all noble Lords. I hope that I have answered them all. I doubt very much whether my answers have satisfied everybody. In essence this is a straightforward, almost technical, measure which is needed to give some point to what has become an increasingly anomalous grant system.

On Question, Motion agreed to.