HC Deb 24 November 1978 vol 958 cc781-3W
Mr. Jeffrey Thomas

asked the Secretary of State for the Environment whether he will now make a statement about the rate support grant settlement for 1979–80.

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 relevant expenditure of £14,109 million—at November 1978 prices. The planned level of local authority current expenditure in 1979–80 shows an increase of 1.6 per cent. over what authorities are now expected to spend in 1978–79. The total of relevant expenditure takes account of my decision not to introduce charging for building regulations work in 1979–80.

The total amount of additional grant that may be payable under any increase orders relating to 1979–80 will be, as in previous years, subject to cash limits. These limits accord with the Government's pay and anti-inflation policies. The cash limit on rate support grants is £417 million; on transport supplementary grant £25.9 million; and on national parks supplementary grant £0.3m.

The 1979–80 rate support grant distribution continues the policy of concentrating resources in those areas with the most pressing social and economic problems. However, the increase in the size of the needs element, and the further steps taken to limit changes in the pattern of distribution, will minimise the extent of grant losses by individual authorities. The 1979–80 needs assessment formula has been produced by multiple regression analysis carried out on the same basis as in 1978–79. The period of "damping" will be extended from four years to five years, and a safety net will ensure that no authority loses more needs element than the equivalent of a 2p rate in real terms. London's needs element will increase by £41 million. The within-London arrangements will be set to secure a relative advantage to inner London, to compensate for the higher rate burdens its ratepayers are now having to face. This continues the advance for inner London and is consistent with the thrust of the Government's policies towards the inner cities.

The national standard rateable value for the distribution of resources element will be £175. Domestic rate relief will be maintained at 1978–79 levels, namely 18½p in the £ for England and 36p in the £ for Wales.

There will be one major innovation; needs element will be paid to non-metropolitan districts. By providing some compensation for variations in districts' expenditure needs, it will put the district ratepayers' burden on to a more equitable basis.

The cash limit on rate support grants for 1977–78 has been further revised to take account of changes in the variables items. It now stands at £273 million. This is £40 million below the amount of grant already approved by Parliament. I do not, therefore, propose any further increase in rate support or national parks supplementary grant. Transport supplementary grant will, however, be increased by £2.4 million.

The cash limit on rate support grants for 1978–79 has been adjusted to take account of the national insurance surcharge; the decision not to increase the school meals charge—the Government are reimbursing authorities in full for this; the police and firemen's pay settlements; and the downwards movement in the variable items. It has been reduced by £3 million to take account of the chief executives' and related pay settlements, which were outside the pay guidelines. It now stands at £541 million. The cash limit on transport supplementary grant has been adjusted to take account of the national insurance surcharge and now stands at £22.1 million. The increase order I propose to make will increase rate support grants by £534 million, transport supplementary grant by £22.1 million, and national parks supplementary grant by £0.3 million. This will not exhaust the cash limit on rate support grants. This will be adjusted further for changes in the variable items; the Government do not, however, propose to make any further changes either in it or in the cash limits on the supplementary grants.

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.