HC Deb 04 April 1995 vol 257 cc1047-50W
Mr. Clifton-Brown

To ask the Secretary of State for the Environment if he will list those local authorities which are considered to be debt free; and what are the Government guidelines on the debt to equity ratio for local authorities. [17372]

Mr. Robert B. Jones

A local authority is debt free if it has a nil or negative credit ceiling at the beginning of the current financial year and has no outstanding borrowing, other than short-term borrowing repayable within not more than 12 months or borrowing under the City of London (Various Powers) Act 1924. The following local authorities declared themselves to be debt free as at 30 September 1994:

  • Dorset
  • Bedford
  • Bracknell
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  • Breckland
  • Broadland
  • Chiltern
  • Christchurch
  • Corby
  • Dacorum
  • Daventry
  • East Cambridgeshire
  • East Devon
  • East Dorset
  • Epsom and Ewell
  • Hambleton
  • Hertsmere
  • Leominster
  • Medina
  • Mid Bedfordshire
  • Mid Sussex
  • Newbury
  • Rochester upon Medway
  • Ryedale
  • St. Edmundsbury
  • South Bucks
  • South Northampton
  • South Shropshire
  • South Wight
  • South Coastal
  • Surrey Heath
  • Swale
  • Tonbridge and Mailing
  • Tunbridge Wells
  • West Sussex
  • Barking and Dagenham
  • City of London

There is no real equivalent to shareholders' equity in local authorities, and therefore no guidelines on the ratio of debt to equity. But the local government capital finance system effectively regulates authorities' new borrowing and requires provision to be made for debt redemption. We will continue to encourage local authorities to reduce their outstanding debt using sums which they have set aside for this purpose.

Mr. Kevin Hughes

To ask the Secretary of State for the Environment what plans he has to reduce the rate support grant to local authorities. [18236]

Mr. Robert B. Jones

Revenue support grant funds the difference between local authorities' standard spending assessments and what they can expect to receive from council taxes, non-domestic rates and from other grants. The relative levels of these components are considered annually by the Government as part of the public expenditure round.

Mr. Evennett

To ask the Secretary of State for the Environment if he will announce his capping principles for 1995–96 and the list of authorities which he intends to cap.

Mr. Gummer

My capping principles for 1995–96 are as follows:

  1. (i) for police authorities:
    • any increase of more than 2.5 per cent. over the 1994–95 base budget is an excessive increase if it gives rise to a 1995–96 budget requirement over SSA;
    • any increase of more than 1.5 per cent. over the 1994–95 base budget is an excessive increase if it gives rise to a 1995–96 budget requirement over 5 per cent. above SSA;
    • any increase of more than 0.5 per cent. over the 1994–95 base budget is an excessive increase if it gives rise to a 1995–96 budget requirement over 10 per cent. above SSA;
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  2. (ii) for inner London boroughs and the metropolitan county fire and civil defence authorities:
    • any increase of more than 2 per cent. over the 1994–95 base budget is an excessive increase if it gives rise to a 1995–96 budget requirement over SSA;
    • any increase of more than 1.25 per cent. over the 1994–95 base budget is an excessive increase if it gives rise to a 1995–96 budget requirement over 5 per cent. above SSA;
    • any increase of more than 0.5 per cent. over the 1994–95 base budget is an excessive increase if it gives rise to a 1995–96 budget requirement over 10 per cent. above SSA;
  3. (iii) for all other authorities:
    • any increase of more than 0.5 per cent. over the 1994–95 base budget is an excessive increase if it gives rise to a 1995–96 budget requirement over SSA;
  4. (iv) for all authorities:
  • any 1995–96 budget requirement more than 12.5 per cent. above SSA is excessive save that an authority will not be designated if:
  1. (a) its 1994–95 SSA was reduced by 10 per cent. or more purely as a result of the 1993 SSA review and its 1995–96 budget requirement is a cash freeze or reduction on its 1994–95 base budget;
  2. (b) its 1995–96 budget requirement is 30 per cent. or less above SSA and is a cash freeze or reduction on its 1994–95 base budget;
  3. (c) its 1995–96 budget requirement is 60 per cent. or less above SSA and is at least 5 per cent. below its 1994–95 base budget;
  4. (d) its 1995–96 budget requirement is at least 10 per cent. below its 1994–95 base budget.
with the general proviso that: no authority is to be designated if its budget requirement is £10,000 or less above the limit implied by these principles.

In accordance with sections 54 and 56 of the Local Government Act 1992, I have decided to designate the authorities listed. The amount given in brackets after each authority is the amount which I am proposing should be the maximum amount calculated by each authority as its budget requirement for 1995–96—in the case of billing authorities, the amount is gross of local precepts:

  • Devon county council—£592.046 million
  • Gloucestershire county council—£300.714 million
  • Shropshire county council—£239.364 million
  • Somerset county council—£262.321 million
  • Sheffield city council—£392.763 million
  • Newcastle upon Tyne city council—£233.991 million
  • Barnsley metropolitan borough council—£150.626 million
  • Norwich city council—£16.378 million
  • Lincolnshire police authority—£58.577 million
  • South Yorkshire fire and civil defence authority—£32.934 million

I have placed in the Library of the House a table which gives further details.

Authorities which have been designated for council tax capping now have a period of 28 days, starting today, in which to inform us whether or not they accept their proposed cap. It they accept, the cap is confirmed by notice and the authority can set a revised lower budget and lower council tax bills forthwith. The exception is South Yorkshire fire and civil defence authority which has been designated at the budget it originally set and therefore does not have to reduce its budget nor incur rebilling costs. If an authority challenges, it must propose an alternative together with its reasons for doing so. At this stage, authorities have the opportunity to meet us to explain that case. Once we have considered all the available information, we shall propose final caps which will be included in an order, a draft of which is debated by the House of Commons. If the draft order is approved, final caps are set by notice and revised budgets and council tax levels must then be set by the authorities concerned.