Rate Support Grant (Hansard, 21 December 1981)

§ Mr. Heseltine

On 2 December I announced the Government's proposals for the key elements of the 1982–83 rate support grant settlement in England. Since then I have consulted further with local government in Consultative Council on Local Government Finance and the Housing Consultative Council. In the light of these consultations I have now decided to confirm these proposals, subject to some detailed modifications. The total expenditure provision will be £18 billion, allocated between services as set out in my answer to my hon. Friend the Member for Chorley (Mr. Dover) on 2 December—[Vol. 14, c. 161–63.] That is some £1 billion more than the provision for 1982–83 implicit in Cmnd. 8175, and it is about 2 per cent. more than local authorities are budgeting to spend in 1981–82.

Aggregate Exchequer grant will be paid at the rate of 56 per cent. on relevant expenditure of £20.5 billion. Total grant will thus be £11.5 billion. That means we are providing for over £½ billion more in grant than was provided in the year's settlement for 1981–82.

Specific grants are estimated at £1,662 million. Transport supplementary grant will total £457 million. National parks supplementary grant will total £5 million. 323W The amount remaining for rate support grant will thus be £9,335 million. The Government have decided to leave domestic rate relief unchanged at the 1981–82 level of 18½p in the pound. That will cost £678 million. The amount remaining for distribution under block grant will thus be £8,657 million.

The settlement takes account of the Government's cash factors for the public sector of 4 per cent. and 9 per cent. in pay and prices respectively. The recent offer to local authority manual workers will make it more difficult for local government to achieve the planned level of cash expenditure. I cannot stress too strongly, therefore, that higher pay rises can only lead either to faster staff reductions within local government, or to higher rate increases, and hence higher unemployment, in industry and commerce.

I am making a separate announcement today about local authority housing expenditure in 1982–83.

As I indicated to the House on 2 December, I propose to give authorities individual cash expenditure targets for 1982–83. I remain convinced that only individual targets can concentrate minds sufficiently on the reductions that need to be made. I am today sending all authorities a memorandum setting out their individual targets.

In setting these targets we have taken account of authorities' past performance both in relation to their grant-related expenditure assessment and against the volume targets for 1981–82. The targets are also constrained so that no authority is asked to make more than a 7 per cent. real terms reduction below the lower of its original or revised budget; and no authority is expected to increase its expenditure in real terms over that budget. Overall, our targets represent about a 3½ per cent. reduction on that basis.

Historic Grant Shares and Shares under 1982–83 Block Grant Needs and resources element/block grant shares 1974–75 to 1982–83
(Percentages)
Area	1975–76	1976–77	1977–78	1978–79	1979–80	1980–81	1981–82	1982–83
							Settlement estimate	Revised budgets	After holdback	Spending at Target	†Spendi-ng7.5 per cent, above 1981–82 Revised Budget
Non-met areas	57.3	56.1	54.8	53.7	53.4	53.6	54.4	55.4	55.9	53.4	54.7
Met areas	29.4	29.0	30.1	29.6	29.6	29.7	29.8	30.9	30.8	29.8	30.0
London	13.3	14.9	15.1	16.7	17.0	16.7	15.8	13.7	13.4	16.9	15.3
Partnership^* and programme authorities	21.8	22.1	22.9	23.1	23.5	22.3	18.3	18.7	18.6	18.6	18.6
^* Includes grant share of lower tier authorities only—i.e. metropolitan districts and London boroughs and so on. In 1981–82 grant paid direct to metropolitan counties for the first time.
† With holdback of £380 million.