HC Deb 18 November 1983 vol 48 cc591-2W
Mr. Mark Robinson

asked the Secretary of State for Wales if he will make a statement about his proposals for the Welsh rate support grant settlement for 1984–85.

Mr. Nicholas Edwards

I am today circulating to members of the Welsh consultative council on local government finance a consultation paper setting out my proposals for the key elements of the 1984–85 rate support grant settlement for Wales. They are as follows:

RELEVANT CURRENT EXPENDITURE

Relevant current expenditure is proposed to be £1,253 million. When allowance is made for the 1.5 per cent. reduction in the national insurance surcharge local authority employers will pay from next April, and changes related to the way in which housing benefit administration costs are counted for rate support grant purposes, this total is £57 million—4.8 per cent.—more than the current expenditure provision underlying the 1983–84 settlement.

AGGREGATE EXCHEQUER GRANT

Aggregate Exchequer grant is proposed to be £996 million. This is £21 million, 2.2 per cent., more than the figure in the main rate support grant report for 1983–84, and £36 million, 3.8 per cent., higher than the amount authorities have included in their budgets for the present year.

GRANT HOLDBACK

In order to increase the cost of spending in excess of the targets, I am proposing to strengthen the scheme for withholding block grant. As in the present year, grant withheld would amount to 40 per cent. of any excess up to 1 per cent. above target. The rate of holdback would then increase up to a maximum rate of 90 per cent. at 5 per cent. above target, compared with a maximum rate of 75 per cent. at 6 per cent. in the current year.

Any authority which spends at, or below, target will be exempted from both grant holdback and close-ending. The limitation of grant holdback for low resource authorities introduced in the present year will be retained for 1984–85.

DISTRIBUTION OF BLOCK GRANT

Block grant will be distributed in accordance with grant related expenditure — GRE — formulae agreed by the Welsh local authority associations. As regards the block grant mechanisms, I do not propose to adjust either the slope of the grant-related poundage schedules adopted for the present year, or the position of the threshold above GRE. I also propose to retain the same safety net for limiting any loss of grant associated with changes in GRE as used in the present year.