HC Deb 15 February 1990 vol 167 cc402-7W
Mr. Rooker

To ask the Secretary of State for the Environment when he expects to reply to the letter from the hon. Member for Birmingham, Perry Barr dated 23 November 1989, which asked for a response to the statement by the leader of Birmingham city council on the revenue support grant settlement and its implications for poll tax in Birmingham.

Mr. Chope

My hon. Friend the Minister for Local Government and Inner Cities, wrote to the hon. Member on 12 February.

Mr. Austin Mitchell

To ask the Secretary of State for the Environment whether his November estimate of the amount of poll tax payable in 1990–91 per adult compared to rates took account of any transitional reliefs.

Mr. Chope

The provisional assumed charges published on 6 November, and the assumed charges published on 11 January, include safety net contributions or receipts and any transitional special grant but take no account of community charge benefit or transitional relief, which are paid to individuals, not to areas. The effect of community charge benefit and transitional relief is that charge payers in receipt of either or both will pay less than the personal community charge for the area.

Mr. Fraser

To ask the Secretary of State for the Environment what criteria he will adopt when giving consideration to the capping of the poll tax.

Mr. Chope

I refer the hon. Member to the answer I gave to the hon. Member for Bradford, North (Mr. Wall) on 24 January at column739.

Mr. Austin Mitchell

To ask the Secretary of State for the Environment if he will list the number and weighting of all indices of need in the grant-related expenditure and standard spending assessment and the effect of the changes made in both on the financial allocations.

Mr. Chope

The formula used to calculate grant-related expenditure assessments for 1989–90 was set out in the Rate Support Grant Report (England) 1989–90, approved by the House on 19 December 1988. The formulae for assessing standard spending assessments are set out in the Revenue Support Grant Distribution Report (England), debated in the House on 18 January 1990. The new

1990–91 SSAs—Cash changes from adjusted 1989–90 GREs
1989–90 GRE Adjusted 1989–90 GRE 1990–91 SSA Cash change (column 3 minus column 2)
£ million £ million £ million Per cent.
(1) (2) (3) (4)
Beverley 5,161 5,063 5,624 11.1
Boothferry 3,633 3,487 4,743 36.0
Cleethorpes 4,760 4,653 4,617 -0.8
Glanford 4,117 4,036 4,932 22.2
Great Grimsby 7,622 7,347 7,019 -4.5
Holderness 2,483 2,425 2,994 23.5
Kingston upon Hull 27,416 26,223 25,149 -4.1
East Yorkshire 4,448 4,307 5,071 17.7
Scunthorpe 4,750 4,468 4,365 -2.3

Mr. Austin Mitchell

To ask the Secretary of State for the Environment if he will give the scaling factors used to calculate stages 2 and 3 of the standard spending assessment, specifying how they were arrived at; and if he will show how they were used in arriving at the standard spending assessment for Grimsby borough council.

Mr. Chope

The method used to calculate the scaling factors for standard spending assessments is set out in paragraph 3.3 of section 3 of the Revenue Support Grant Distribution Report (England), approved by the House on 18 January. The factors used in deriving the SSA for Great Grimsby are:

Other Services

  • Other Services—District level: 0.9999
  • Other Services—County level: 1.1047
  • Flood Defence: 1.0124
  • Coast Protection: 1.0193
  • Interest Receipts: -0.0287

Capital Financing

  • Debt Charges: 0.9569
  • Capital Expenditure Charged to Revenue Account: 0.3014
  • Interest on Capital Receipts to shire districts: -0.3926

Mr. Austin Mitchell

To ask the Secretary of State for the Environment if he will list the factors and indicators taken into account in assessing(a) grant-related expenditure allocations and (b) standard spending assessments and his reasons for the differences between the two.

standard spending assessments are the result of extensive research and discussion with local authority representatives. They are composed of fewer elements than grant-related expenditure assessments and each element is based on understandable factors of direct relevance to the services provided by local authorities.

Mr. Austin Mitchell

To ask the Secretary of State for the Environment if he will give the grant-related expenditure allocations 1989–90 and the standard spending assessments allocations for 1990–91 for each district in Humberside and the percentage increase or decrease; and if he will explain the reasons for the divergence.

Mr. Chope

The table provides the information requested. Standard spending assessments follow from extensive research and discussion with local authority representatives. They are composed of fewer individual service elements than grant-related expenditure assessments, with each element based on simple understandable factors of direct relevance to the services provided by local authorities.

Mr. Chope

I refer the hon. Member to the answer I gave him today.

Mr. Austin Mitchell

To ask the Secretary of State for the Environment what were the grant-related expenditure allocations for Grimsby for 1986–87 to 1989–90, together with his proposed standard spending assessment figures of November 1989 and his final standard spending assessment figures in January; and if he will outline the reasons for the differences between the last two.

Mr. Chope

The figures requested for Great Grimsby are as follows:

Grant Related Expenditure Assessment
£000's
1986–87 7,288
1987–88 6,855
1988–89 6,969
1989–90 7,622

The figures for 1986–87 to 1988–89 are those determined in the latest supplementary report for the relevant year. The 1989–90 GRE is a settlement figure.

The standard spending assessment (SSA) for Great Grimsby issued as part of the November consultation was £7.053 million. The final SSA is £7.019 million. The main reason for the difference is the replacement of an estimated credit approval used in calculating the capital financing element with a figure based on actual credit approvals.

Mr. Hayes

To ask the Secretary of State for the Environment whether the Government's spending assumption for the area safety net and the community charge transitional relief scheme and the figures for assumed spending by local authorities in England in 1990–91, issued by his Department on 11 January, represent the amount he considers it appropriate for each authority to spend in 1991.

Mr. David Hunt

No. It is an authority's standard spending assessment (SSA) for the year which is intended to represent the amount of revenue expenditure which it would be appropriate for the authority to incur in that year to provide a standard level of service consistent with my right hon. Friend the Secretary of State's view of the amount of revenue expenditure which it would be appropriate for all authorities to incur. This latter amount is net total standard spending, as defined in the Revenue Support Grant Distribution Report (England), which the House approved on 18 January 1990.

The Government's spending assumption—and the assured charge based on it—does not represent the Government's view of what an authority could or should spend or charge. Nor does it represent a Government target or guideline for, or a prediction of, spending and charges by individual local authorities next year. The spending assumption, based on 1989–90 rate income and grant, adjusted for changes in function and increased to be consistent with total standard spending of £32.8 billion for 1990–91, is a reference point for the calculation of the area safety net and of the assumed charge for the purposes of the transitional relief scheme. Both of these measures are designed to give an appropriate degree of protection from changes arising from the move from the old system to the new. They are not designed to protect people from changes arising from individual authorities' spending decisions for which they are accountable to their electorate.

Mr. Patrick Thompson

To ask the Secretary of State for the Environment if he will estimate the distribution of changes in the percentage of net income paid in(a) domestic rates in 1989–90 and (b) community charge in 1990–91, if community charges are set at the level assumed for the calculation of 1990–91 revenue support grant entitlements.

Mr. David Hunt

I have today placed in the Library a note updating figures on the impact on household finances of the community charge system. The figures are based on the assumed community charges published in January. They show that three out of five households would pay less with the community charge than they would have paid had rates continued. The actual gains for households will depend on spending decisions by their local authorities. Higher spending than we have assumed will result in higher community charges, just as it would also have resulted in higher rate bills.

The analysis compares 1989–90 rate levels with 1990–91 community charges. Since these are at different price levels, the results are presented in terms of changes in percentage of net income paid in rates and community charge. The figures show that 60 per cent. of households (11.4 million) gain from the new system—88 per cent. of single pensioner households and 82 per cent. of other single adult households gain from the new system; community charge is particularly good news for households in the lowest income band. On average, they will see a 26 per cent. reduction in the percentage of their income paid to local government as a result of the new system. This is because community charge benefits will be more generous than rate rebates and because many of the single adult households benefiting from the change are on low incomes.

The message is clear. The community charge with its benefit system is fair. Contrary to claims made by opponents of the community charge, many of the lowest income households should gain from the changes being made. But for the full benefits of the community charge to be felt, local authorities must control their expenditure. High spending will lead to high community charges just as it would lead to high rate bills. Those high bills would be the responsibility of local authorities, not the Government.

Mr. Lord

To ask the Secretary of State for the Environment when he expects to make a report under the Personal Community Charge (Relief) (England) Regulations 1990 (S.I., 1990, No. 2).

Mr. Chris Patten

Over the next three years the community charge transitional relief scheme will reduce personal community charges for about 6 million people by £710 million during the changeover from domestic rates to the new system. Most charge payers would pay no more than £3 per week more than they did in rates, where councils spend in line with the Government's assumptions.

I have today laid the Community Charge Transitional Relief Report (England), as required by these regulations, which sets out the assumed community charges for the purposes of the scheme: these are as announced on 11 January in connection with the revenue support grant settlement for 1990–91. Copies of the report are being sent to local authorities and to the local authority associations.

Local authorities will be reimbursed in full for the income forgone as a result of the abatement of community charges. In addition they will receive grant in respect of administrative costs.

When the community charge transitional relief scheme was announced I met the local authority associations and made it clear that authorities' reasonable costs incurred in preparing for and administering the scheme would be reimbursed in full. KPMG Peat Marwick McLintock, management consultants, were commissioned to undertake an independent study of these costs. They have had discussions with 31 local authorities, software suppliers, and have met the local authority associations to discuss their views on the operation of the scheme and on methods for cost reimbursement. They have now submitted their report and copies of the recommendations and cost summary have been placed in the Libraries of the Houses of Commons and Lords: copies of the complete report will be available shortly.

In the light of the report, I am today announcing detailed proposals for consultation with the local authority associations for the reimbursement of these costs. I propose that authorities' preparation costs for the scheme, largely for computer software and related expenditure, should be reimbursed in full on the basis of the actual expenditure incurred, as confirmed by the authority's auditor. The consultants' report estimates preparation costs to be about £7 million in total.

I propose that the general administrative costs which authorities will incur as a consequence of the scheme, in particular dealing with inquiries, should be reimbursed at a flat rate of 27p per charge payer, with an allowance for higher costs in London. On this basis, the administrative costs grant would be about £9.5 million in total.

The report recommends that the cost of dealing with applications from elderly and disabled persons and the cost of issuing any second bills to charge payers should be reimbursed on the basis of an amount per application and an amount per bill. I propose that applications should be reimbursed at a rate of £3 per charge payer for each application made, including the cost of dealing with unsuccessful applications.

I continue to expect that wherever possible authorities should send out bills in good time reflecting entitlement to community charge benefit and transitional relief where appropriate. However, where bills are sent out without taking into account transitional relief, and second bills have to be issued, I propose that the cost of printing and postage for such bills should be reimbursed at a rate of 50p each. This would not apply where the second bill relates to a substitute charge.

The total cost of this package of grant aid to meet authorities' costs would be about £21 million. These proposals and a copy of the recommendations and cost summary have been sent to the local authority associations for their comments before final decisions are made.