HC Deb 22 November 1976 vol 919 cc830-1W
Mr. Edge

asked the Secretary of State for the Environment whether he will make a statement about the rate support grant settlement for 1977–78.

Mr. Shore

Yes. The statutory meeting on the rate support grant settlement took place today with the Consultative Council on Local Government Finance. A copy of the statement I made at that meeting has been placed in the Library. Briefly, my proposals are that the rate support grant should be at a rate of 61 per cent. on an accepted estimated relevant expenditure of £11,717 million—at November 1976 prices. This expenditure represents, in terms of current expenditure ranking for rate support grant—excluding General Rate Fund contributions to the Housing Revenue Account—a reduction of 1.6 per cent. on the latest estimate of current expenditure by local authorities in 1976–77.

The total amount of additional grant that may be payable under any increase order relating to 1977–78 will be subject to a cash limit. This limit has been fixed at £570 million.

The formula to be used to distribute needs element will be that developed from a regression analysis of local authorities budgeted expenditure of 1976–77. Excessive changes in the pattern of distribution will be avoided by combining the needs grant formula for 1977–78 with the formulae developed for 1975–76 and 1976–77. The adjustment for London's excess resources will be set at £403 million. London's share of the total needs grant will be increased. The resources element will remain at 32½ per cent. of the aggregate of needs and resources elements. Rate relief for domestic ratepayers will be maintained at 1976–77 levels, namely, 18½p for England and 36p for Wales, except for limited extra relief for domestic ratepayers in three London boroughs as part of the internal London rate equalisation arrangements. The distribution of needs grant within London will also incorporate a number of improvements to the arrangements for the equalisation of rates in London.

I do not propose, for practical and legal reasons, to discriminate between individual authorities in the grant distribution in relation to their expenditure levels.

I propose to make a second increase order for 1975–76 giving local authorities additional grant in respect of pay and price increases since the 1975–76 settlement was made. I also propose to make an increase order for 1976–77 in respect of pay and prices. In making an increase order for 1976–77 I intend to uphold the cash limit on grant announced in November 1975. Taking account of the Government's previously announced intention to set the level of grant £50 million below what it would otherwise have been the amount of additional grant payable under the increase order will be £388 million.

There will be a full opportunity for the House to debate the settlement. I shall be laying the appropriate orders for approval within the next few days.