§ Mr. Wardasked the Secretary of State for the Environment whether he will now give further guidance on the level of expenditure by local authorities in 1975–76.
§ Mr. CroslandThe Consultative Council on Local Government Finance held its first meeting on 12th May. I was impressed and heartened, as were my ministerial colleagues on the council, by the clear recognition by the local authority members of the council of the gravity of the country's economic position and of the obligation on local authorities to play 511W their full part in the Government's measures for dealing with it. This means in particular rigorous adherence to the limits placed by the Government on public expenditure. This was considered by the council at its first meeting.
I and my colleagues willingly accept the responsibility on central Government, to which the local government members of the council drew attention, to give clear and specific guidance to local authorities about what is expected of them by way of restraint on expenditure. For the current year the crucial requirement is that local authorities should without fail restrict their expenditure within the limits set by the rate support grant settlement. I cannot over-emphasise the importance of this, though I readily acknowledge the difficulties it will present for many authorities. But if these limits are not observed the recovery of the economy will be hampered and fulfilment of the further restrictions on public expenditure in 1976–77 announced by the Chancellor in his Budget speech will certainly be made even more painful.
It is much too early in the year to be able to predict what the outturn of the local government expenditure in 1975–76 will be. It is, however, clear that some local authorities have thought it right to raise revenue in excess of what is required for growth and inflation as assumed in the RSG settlement. This may well be because they wished to protect themselves against an even faster rate of inflation. However, restraint of expenditure within the RSG limits for 1975–76 and the capital programmes for that year set out in Circular 171/74 is so important that I must once again, with the backing of the council, stress the need for every local authority to conform rigorously to these limits, and if it finds that it has over-provided for inflation in its rate call to make sure that the surplus is carried forward in aid of next year's rates and not used to finance further expenditure in 1975–76 or 1976–77.
In their plans to achieve these objectives I ask for the co-operation of all local authorities in interpreting rigorously the definition of inescapable commitments in relation to their own programmes as this is crucial to restraint on growth of local government expenditure.
512WIn his Budget Statement the Chancellor of the Exchequer gave notice of the need to ask local authorities to make reductions in their capital and revenue programmes for 1976–77. He focussed on that year so as to allow reasonable time for adjustment of plans. Nevertheless, in order to meet the Chancellor's requirements for 1976–77 some local authorities may need to consider reductions in capital expenditure in the current year both in the locally determined and the key sectors. Further guidance on the key sector will be given as soon as individual Government Departments have had the opportunity to clarify in detail as a matter of urgency what is involved in the cuts in capital expenditure required in 1976–77.
§ Mr. John Evansasked the Secretary of State for the Environment what steps he intends to take to restrain the growth of local authority expenditure in the long term.
§ Mr. John SilkinI shall be discussing the growth of local authority expenditure with the Consultative Council on Local Government Finance and in the context of the RSG settlement.