§ Mr. Gristasked the Secretary of State for Wales what are his proposals for the rate support grant settlement for Wales for 1982–83.
§ Mr. Nicholas EdwardsI am today issuing a consultation paper to the Welsh local authority associations setting out my proposals for the 1982–83 rate support grant settlement for Wales. I shall be discussing these with the Welsh consultative council on local government finance next week. The outturn for local authority expenditure in Wales in 1981–82 implied by local authority budgets is significantly closer to target than in England or in Scotland. The Welsh local authority associations have expressed concern that cash figures based on the plans in Cmnd. 8175 would face local authorities with a level of spending reductions in 1982–83 which they would find difficult to achieve. Taking these factors fully into account I am therefore proposing a cash provision for local authority current expenditure of £1,126 million, an increase of £94 million over the 1981–82 settlement figure. I also intend to take the factors into account in setting the level of capital allocations. Total relevant expenditure for RSG purposes is proposed to be about £1,290 million, depending on final decisions on capital and on the level of council house rents. The latter are the subject of separate consultations with housing authorities on the basis of a proposal for an average increase of £2.50 per dwelling per week. I propose that the rate of Exchequer grant should be 72.5 per cent. Aggregate Exchequer grant for 1982–83 would then amount to about £935 million.
The general effect of these proposals, if local authorities rate in accordance with the assumptions underlying the settlement, is that there should be no increase in the average general rate poundage in Wales. Against that background I think it right to take this opportunity to alter the balance in favour of non-domestic 126W ratepayers by reducing the domestic rate relief from 36p to 18½p, the levl prevailing in England. The resources thus released will be added to block grant. The consequence should be a reduction in rates for non-domestic ratepayers next year, with a single figure increase in the average domestic rate.
In general, I propose that the block grant mechanisms used in the 1981–82 settlement should continue for 1982–83, except that further pressure will be applied to overspenders by increasing the power of the curve in the grant related poundage schedule from 1.35 to 1.45. I also propose to limit the effects of the change in GRE assessments and the residual effect of moving to the percentage basis of equalisation by applying a single stage safety net of 5p at the ratepayer level.
My final decisions on the settlement will be taken after I have consulted the Welsh consultative council on local government finance.