§ The Secretary of State for Wales (Mr. David Hunt)
With permission, Mr. Speaker, I should like to make a statement about my proposals for local government finance in Wales for 1992–93.
First, however, I would like to refer to the council tax. I am pleased to be able to tell the House that after consultation I have decided to create an additional band at the top end of the property banding scale in Wales. The additional band, band H, will cover houses in Wales worth more than £240,000. Houses in Wales in band H will be subject to a council tax of three times the amount for a dwelling in band A. I believe that that strikes the right balance, and will be seen as fair by the majority of council tax payers. 1 shall also publish a consultation paper on the internal management of local authorities next week. It will invite comments by the end of November.
To put my proposals for local government finance into context, let me refer to the excellent package that I provided for the current year, 1991–92. Total standard spending was increased by 8 per cent. compared with budgets, and aggregate external finance by 11.2 per cent. In short, the settlement more than adequately provided for inflationary and other pressures on spending. On 21 March, I announced an additional £300 million to fund the £140 general reduction in the community charge announced by my right hon. Friend the Chancellor of the Exchequer in his Budget statement.
Against that background, it is very disappointing that many Welsh local authorities failed to set reasonable budgets for the current year. They chose instead to impose what I consider unnecessary burdens on their charge payers. Overall, they set budgets that exceeded my plans by £76 million, or 3.1 per cent. Charges were therefore set at £33 above what was appropriate. That overspending reversed the trend of recent years, when Welsh councils set budgets closer to the Government's plans than their counterparts in England. It is important to bear that in mind in considering my proposals for this year's settlement. It is also important to recognise that the Government's success in bringing down the rate of inflation is easing the pressures on local government spending considerably, and that there is also scope for councils to increase their efforts to identify and implement efficiency savings.
Taking those and all other relevant considerations into account, I propose a level of total standard spending for 1992–93 of £2,639 million. That is an increase of £206 million on the level for 1991–92, and represents an increase of 8.5 per cent. over the equivalent figure for this year.
I propose to set the level of aggregate external finance for 1992–93 at £2,383 million. That is 6.7 per cent. higher than this year's level. The community charge for standard spending in Wales will therefore be £118—£3 lower than the actual average charge this year. That figure for total standard spending means that local authority spending in Wales will be £1,207 per charge payer, to which, on average, the charge payer will contribute £118. In the autumn, I will announce my decisions on the apportionment of AEF between revenue support grant, the distributable amount of national non-domestic rates and certain specific and supplementary grants towards current expenditure.
1063 Hon. Members will already be aware of the significant increases in local government spending in recent years. With the settlement that I am announcing today, spending will have risen by over 30 per cent. in only three years. That must be a solid foundation, but we are all determined to being inflation down, and it is important for local government to play its part in this by constraining its spending to the level that I have proposed.
The settlement figures for 1992–93 will be adjusted in due course to reflect the transfer out of local authority control of the six major higher education institutions in Wales, including the Polytechnic of Wales as from 1 April 1992. Provisional estimates indicate that TSS and AEF will be reduced by about £34.6 million on this acount, leaving the community charge for standard spending unchanged. I have already discussed that with the local authority associations, and I will of course take their views into account in reaching my decision on the amounts to be deducted.
As the House will know, the Local Government Finance and Valuation Bill—which is currently being considered in another place—considerably increases my charge-capping powers, and thus my ability to protect all charge payers in Wales from any irresponsible and excessive budgeting for 1992–93 and beyond. Although some Welsh councils have increased their spending by more than I thought necessary, I have not so far exercised my existing capping powers. I very much hope that it will not be necessary to use my enhanced powers in the future.
Local authorities, however, should be in no doubt—especially against the background of this settlement—of my determination for the resources that I provide for local government to be used for the benefit of charge payers, and not to fuel unnecessary spending. If it is necessary to cap councils to achieve that, they should know that I shall not hesitate to do so.
I believe that the settlement is fair and realistic. With inflation falling, it gives local authorities a further opportunity to demonstrate that they have the best interests of charge payers in mind in setting budgets in line with these plans, keeping community charges low and avoiding capping.
§ Mr. Barry Jones (Alyn and Deeside)
Does the Secretary of State understand that last year's settlement was not an excellent package? His criticism of local authorities is unfair: he did not fund them adequately for this year. Does he accept that Welsh local authorities have made efficiency savings, and that the proportion of such savings is better than that of their English counterparts?
The right hon. Gentleman has threatened councils—possibly all the councils in Wales—with charge capping. I challenge him to name an irresponsible local authority in Wales. We look forward to his response.
Does the right hon. Gentleman appreciate that his statement leaves a serious gap between what councils need and the cash that he has made available? That will lead to the prospect of a decline in local services, with councils finding it difficult to meet their obligations under legislation.
I welcome the fact that the right hon. Gentleman has backed down on banding. Even if he is just tinkering at the edges, and despite other defects, an additional band is welcome. He may agree that the rich must pay their share, 1064 and it is clear that the Government have yielded to our pressure. Even so, how many homes worth £240,000 or more are there in Wales? There are not many in the valleys, and I do not want the right hon. Gentleman to assume that he has the balance right on banding.
Against a background of serious and rising unemployment, for which the right hon. Gentleman has some responsibility, councils in north and south Wales will find it harder to plan to rebuild their economies. Local authorities are making tremendous efforts to restore the economy of Wales. Does the right hon. Gentleman accept that the settlement lets down our go-ahead local authorities, many of which are Labour? Why do the Government never give sufficient grant to cover the proper level of pay awards and the cost of Government-inspired legislation which local councils must implement? I have in mind many new and major responsibilities, such as the development of community care, the Environmental Protection Act 1990, the food safety legislation and the national curriculum.
The Prime Minister's charter relates directly to the local government services involved in today's statement. Where is the new money in Wales for the Prime Minister's charter? We have had no information about new money. We have concluded that this is a pre-general election gimmick designed only to save Conservative seats, or what is left of them, in Wales.
Neither the local government settlement nor the Prime Minister's charter will solve the severe problems faced by the 70,000 people on housing waiting lists, the large number of crumbling schools in Wales and the numerous local roads and bridges that are in need of repair.
Why is the Secretary of State still refusing to listen to all those in local government who are telling him that the cost of administering the collection of the poll tax from those who pay only 20 per cent. far outweighs the cash received? The 20 per cent. rule harms the most vulnerable and disadvantaged, particularly the disabled, the young, the elderly and those who are studying.
Will the right hon. Gentleman take this opportunity to disown the remark made by his Parliamentary Under-Secretary, the hon. Member for Pembroke (Mr. Bennett), who alluded to homeless people with mental health problems as the modern equivalent of village idiots? That Minister should apologise for making that insensitive remark.
The people are tired of the Government's handling of local government finance in Wales. They have been appalled by the poll tax fiasco and are offended by the so-called council tax. They yearn for a general election so that they can usher in a Labour Government with just and practical policies.
§ Mr. David Hunt
The hon. Member for Alyn and Deeside (Mr. Jones) made 13 points—unlucky for him, fortunate for me, because I can answer all of them.
He said, first, that the level of spending was unfair. Is an increase of 30 per cent. in three years unfair? The hon. Gentleman is living in cloud cuckoo land.
He dealt, secondly, with efficiency savings. I pay tribute to local authorities in Wales for their willingness to consider the efficiency initiative launched by my predecessor, but I am disappointed that, in the report from my expenditure sub-group, only £7 million out of all that spending is offered in savings. That is hard to reconcile 1065 with the latest findings of the Audit Commission, which said that Welsh authorities have the potential for a further £32 million of savings.
§ Mr. Hunt
The Audit Commission has not lost touch with reality, and the hon. Gentleman should reconsider that remark. The commission does a fine job, and people should heed its recommendations.
The answer to the hon. Gentleman's third point, about capping, is that I may be announcing my criteria for capping in due course. I do not, and I did not, have to exercise my powers this year, and I very much hope that I shall not have to do so next year.
The hon. Gentleman's next question was whether I thought there was a serious gap between the announcement and the level of funding. I repeat that I am allowing for spending per charge payer in Wales of £1,207, towards which, on average, the charge payer is asked to contribute £118, against a charge this year of £121. If there is a serious gap, it is in the hon. Gentleman's thinking. [Interruption.]
I have responded to consultations with the local authorities. I am still waiting for the hon. Member for Alyn and Deeside to consult on the future of local taxation. Is he yet prepared to withdraw his ridiculous proposal to bring back the unjust inequitable rating system, which the Leader of the Opposition condemned, and to introduce revaluation? Rates plus revaluation is a prescription that the Welsh people will reject.
The hon. Gentleman asked, sixthly, how many were in band H. I think it is about 1 per cent. of properties in Wales. He next asked what was the proper level of pay awards. What does he believe the proper level to be? I have allowed in the AEF increase 6.7 per cent. extra; in the TSS, 8.5 per cent.; and on budgets, 5.1 per cent. Towards the end of this year inflation will fall below 4 per cent. At that low level of inflation we shall see spending needs start, as at 1 April next year, and I have allowed for that.
Next, the hon. Gentleman asked whether I had allowed for sufficient new money. I have taken everything into account in announcing the settlement. I believe that the preliminary reaction of local authorities will be that they must now consult. This is a proposal for consultation, but it is a settlement better than expected.
The hon. Gentleman asked, ninthly, about collection costs, and suggested that it was a poll tax fiasco. I have been told by local authorities in Wales that, unlike the rest of the United Kingdom, they expect to collect 100 per cent. of what they budgeted to collect.
§ Mr. Hunt
The hon. Gentleman shakes his head in disagreement, but local authorities have told me that they expect to collect 100 per cent. of what they budgeted to collect—[Interruption.]—and instead of shouting at me, Labour Members should pay tribute to the hard work of local authorities, the staff of which are to be congratulated on what they have achieved.
The hon. Gentleman went on to say that the 20 per cent. harmed vulnerable people in Wales. He will be aware, in respect of the calculations, that those on benefit in Wales receive more than 20 per cent. of the community charge that they must pay.
1066 In making his next point, the hon. Gentleman misquoted my Parliamentary Under-Secretary who, it transpires, was announcing an extra £100,000 for the homeless.
The hon. Gentleman went on to say that it was a pre-general election gimmick. I suppose that that sums up his attitude to the settlement, because it is better than expected, because it is a good deal for Welsh charge payers and because we shall get the reward for that at the next general election.
§ Mr. Speaker
Order. I draw the House's attention to the fact that there are 36 amendments to the Ports Bill and eight consolidation measures. Will hon. Members ask brief questions, because we are getting rather bogged down?
§ Sir Anthony Meyer (Clwyd, North-West)
Does my right hon. Friend share my sense of relief that there are so few English Members present in the Chamber? It would be most unfortunate if news were to leak out of the exceptionally favourable statement that my right hon. Friend has been able to secure for Wales and the extraordinary clout that he has exercised in the Cabinet over this settlement and the preservation of the Royal Welch Fusiliers. Is he aware that his efforts are very much appreciated and have resulted in an excellent by-election win in Clwyd and another one to come in Rhuddlan?
§ Mr. Hunt
It has been a good day for Wales, and I congratulate all hon. Members who participated in the campaign to recognise the independence, integrity, tradition and history of the Royal Welch Fusiliers and the Royal Regiment of Wales. It must be athwart logic for the Opposition to suggest that the community charge settlement is a bad settlement when, under this spending, the community charge will be £118 whereas at present it is £121 in Wales.
§ Mr. Richard Livsey (Brecon and Radnor)
I take an alternative view about the closure of Army headquarters, Wales. That is not such good news.
§ Mr. Livsey
Does the Secretary of State agree that an 8.5 per cent. increase sounds reasonable in general terms but, when one looks at the requirements of new legislation such as the Children Act 1989, the Environmental Protection Act 1990, the national curriculum and many other such measures, one sees that it is inadequate to cover them. Given that there will be a reduction in services for the reasons that I have stated, surely the Welsh Office should apply the Prime Minister's citizens charter and censure itself in this matter.
§ Mr. Hunt
Not at all. I believe that the hon. Gentleman has misunderstood the settlement. Last year, I announced a settlement of £2,433 million, and this year I have announced a settlement of £2,639 million. That is an increase of £206 million. As I have already said, that is £1,207 for every charge payer in Wales, towards which the charge payer will contribute £118. That is a good deal by any marker.
§ Mr. Ian Grist (Cardiff, Central)
I congratulate my right hon. Friend on his statement. A 30 per cent. rise in expenditure over three years is a matter for concern as for congratulation when one is thinking in inflationary terms. 1067 To get on top of inflation, should we be considering putting out even more services to private tender so that we obtain value for money and better performances?
§ Mr. Alan Williams (Swansea, West)
Will the Minister confirm that, based on his own figures, the incurease in resources available this year will be not £200 million but £130 million? That is an increase not of 8.5 per cent. but of 4.9 per cent., which is less than the rate of inflation and substantially lower than the rising costs facing councils. Will he confirm that, out of that low and inadequate settlement, councils are expected to meet extra statutory duties? Let the right hon. Gentleman look at his own figures, and he will see that my analysis is correct.
§ Mr. Hunt
I hope that the right hon. Gentleman will look at the figures a little more carefully. He will then see that the increase in revenue spending is 8.5 per cent. over the settlement that I announced last year, and 5.1 per cent. over the budget of local authorities this year. With inflation falling below 4 per cent. by the end of the year and with low inflation predicted for next year, the right hon. Gentleman will recognise that it is a good settlement for Wales.
§ Mr. Gwilym Jones (Cardiff, North)
I pay tribute to my right hon. Friend's effective leadership of a unique all-party campaign to preserve that fine regiment, the Royal Welch Fusiliers. I welcome my right hon. Friend's statement. He provides for spending of more than double the rate of inflation, which should be more than adequate. Accordingly, will the community charge reduction of £140 be revalued? In line with the principles of the citizens charter, will he spell out as soon as possible the parameters for capping councils so that citizens may see the protection working?
§ Mr. Hunt
I appreciate my hon. Friend's comments and I pay tribute to the part that he and other colleagues and other hon. Members have played.
It is wise to recollect that, this time last year, we were talking about a community charge of £232. I predicted a settlement of £228. Since then, my right hon. Friend the Chancellor of the Exchequer announced in his Budget—and I was able to announce it—an extra £300 million. I can confirm that that money is in the settlement. The £140 reduction remains and, instead of a community charge of £232, the reduction should mean a community charge of £118.
§ Mr. Gareth Wardell (Gower)
May I return to the fifth question asked by my hon. Friend the Member for Alyn and Deeside (Mr. Jones)? Will the Secretary of State answer that question, and not with the answer that he gave previously? My hon. Friend the Member for Alyn and Deeside asked how many houses in Wales have a value of over £240,000. Will the right hon. Gentleman tell the House what will be the yield from that tax as a percentage of total revenue of local authorities, net of the collection charge for band H?
§ Mr. Ieuan Wyn Jones (Ynys Môn)
The Secretary of State will be aware that one of the reasons why many councils in Wales increased their poll tax last year was that local authorities did not regard his settlement as being as generous as he announced to the House, much because of the points made by the right hon. Member for Swansea, West (Mr. Williams). The cash increase given to local authorities will be substantially lower than he has announced today. For example, in order to produce a standstill budget and to account for the increases in spending through legislative changes, Gwynedd county council had to increase its poll tax, not giving any benefits to Welsh poll tax payers. Bearing that in mind, does the right hon. Gentleman regard his extra capping powers as totally unnecessary?
§ Mr. Hunt
No. Parliament believes, and I agree with it, although it is being considered in the other place, that it is right to extend my powers to cap. I hope that it will not be necessary for me to use those powers. On the hon. Gentleman's first point, I wonder how many people in Wales realise that the settlement that I have announced today will mean that their local authorities will be spending £2,639 million—£1,207 for every charge payer in Wales. That is a marvellous settlement. We have to ensure that there is value for money and that that money is properly targeted.
§ Mr. Alan W. Williams (Carmarthen)
Since he is an expert on the poll tax, will the Secretary of State give us an estimate of how much the poll tax fiasco has cost Wales? We know that estimates in Britain are about £14 billion. Also, the preliminary reports on the census show that about 1 million people in Britain are missing from the registers. How many are missing in Wales thanks to the poll tax? How will the Minister make those estimates?
§ Mr. Hunt
I do not know whether the hon. Gentleman was present when I explained that I have been told by local authorities that they expect to collect 100 per cent. of what they have budgeted to collect. That is a remarkably good result, and far better than in England and Scotland. It is a great tribute to all those in Wales involved in local government.
I have now calculated that, with the community charge reduction scheme and with benefits, the average community charge payment in Wales this year is £78. I should not have said that loudly, in case there are any English Members present.
§ Mr. Huw Edwards (Monmouth)
Does the Secretary of State accept that his statement will give no reassurance to local authorities in Wales which are facing a massive housing crisis, that, even in the Conservative-controlled borough of Monmouth, homelessness is set to double this year and that local authorities such as that in Monmouth are embarrassed at their incapacity to respond effectively to that growing problem?
§ Mr. Hunt
I deplore the language used by the hon. Gentleman. I hope that he will recognise that Tai Cymru now expects to build a record number of homes—3,300 1069 this year, which is a remarkable result—and that everyone involved in Housing for Wales should be congratulated on that. If the hon. Gentleman studied the subject, he would realise that the individual standard spending assessments are not being published today—they are a matter for my statement in the autumn.
§ Mr. Jimmy Hood (Clydesdale)
On a point of order, Mr. Speaker. Will you tell the Secretary of State that "homelessness" is not an unparliamentary word?
§ Mr. Win Griffiths (Bridgend)
Can the Secretary of State tell us how much of the money announced today is to be set aside for disabled people? I am receiving details of more and more cases related to education. Because of the large amount of money—sometimes in excess of £50,000—which enables a student to take a course at a college of further education, the authorities are having problems finding the money. As that money gives the opportunity of a lifetime to such students, the Welsh Office should make special extra provisions because the needs of those students go way beyond those covered by any settlement based on inflation.
§ Mr. Paul Flynn (Newport, West)
Will the Secretary of State promise us that he will not this year again impose on Welsh charge payers the deranged system that he used last year for calculating individual bills, which resulted in families receiving bills that were sometimes 50 per cent. higher than those of their neighbours for no reason other than they were based on the old rating system? Can we have a system this year which is fair and rational?
§ Mr. Hunt
I remind the hon. Gentleman that the system that I introduced last year was not a new one, but followed closely the principles for the previous year which had been agreed with the local authorities. The difference was that provided substantial extra money for the community charge reduction scheme, which was targeted especially on those who historically had a low level of rates. Clearly, I am now considering how best to progress with the community charge reduction scheme, which will, of course, continue. I shall be announcing details in the autumn.
§ Mr. Donald Anderson (Swansea, East)
The Secretary of State will be aware that, even after issuing 300,000 court summonses in the past financial year and thus criminalising so many of the Welsh population, Welsh local authorities have so far been able to collect only 94 per cent. of the sums due for the poll tax in the financial year 1990–91. To what extent has that shortfall in the collection of the poll tax—6 per cent. for the year 1990–91—been taken into account in the current settlement?
§ Mr. Hunt
I have already mentioned that the 94 per cent. was the figure that local authorities budgeted to collect, and they have recovered 100 per cent. of what they budgeted for. At the start of the year, local authorities said that they would recover 94 per cent. of the community 1070 charges in their area on average, and they have recovered 100 per cent. of that figure. That is a cause for commendation rather than for the language used by the hon. Gentleman.
§ Mr. Rhodri Morgan (Cardiff, West)
Does the Secretary of State agree that his statement has already been outdated by the Prime Minister's announcement yesterday about the citizens charter? How will a citizen be able to sue a local authority to get a refund for a failure to provide a service within a reasonable time or to provide a service of a reasonable quality, such as the provision of speech therapists for children with learning handicaps or the provision of a classroom without a leaking roof? Does that not also imply a right for the local authority to sue the Welsh Office for a refund to provide the additional capital expenditure for the roof to be repaired?
My own local authority in South Glamorgan has an estimated backlog of £30 million for school maintenance. The Audit Commission has commented on that as a major problem, so how does the Secretary of State square the statement today with the additional rights being conferred on the citizen to demand and obtain a refund and a guarantee that a sufficient amount of capital expenditure will be provided to ensure watertight schools and an adequate supply of speech therapists, and to fulfil other requirements?
§ Mr. Hunt
The hon. Gentleman criticises the Audit Commission, but he and the hon. Member for Cardiff, South and Penarth (Mr. Michael) should talk to each other; otherwise, they will both be defeated at the next general election and Cardiff will return to all-Conservative representation. I must say that of course we have taken into account all the appropriate spending demands in reaching the settlement. A total of £1,207 for every charge payer in Wales is a good spending level, towards which the chargepayer will on average contribute £118. The bad news for Wales is that the Labour party is the party of high spending and high taxes, and the people of Wales have every right to be reminded of that at the next election.
§ Mr. Alun Michael (Cardiff, South and Penarth)
In the Secretary of State's statement and answers today, there has been no word of apology for the immense burden that his inefficient and costly poll tax has placed on local authorities in every part of Wales. My hon. Friend the Member for Swansea, East (Mr. Anderson) rightly took him to task for the cost of collection of that tax. That burden still rests on their shoulders, and does not the Secretary of State think that an apology is due?
The Secretary of State made no apology for the theft of our colleges, but gave us the news that he will take away the cash as well as the functions. Has he no word of regret? Apparently, he has no word of apology for the homeless whose lives have been ruined by the Government. Does not he accept that the poll tax can go down only if the grant goes up faster than the standard spending assessment? He said in his statement that the percentage increase in the SSA is greater than the aggregate external finance. Therefore, he must know that he is pushing up the poll tax. Does he accept that his statement fails to recognise the fact that last year's local authority budgets were realistic and modest, at about 2 per cent. above SSA? He must know that, this year, keeping to his target figures for spending and for poll tax levels means a cut in real terms and in real services.
1071 The right hon. Gentleman gave no answer when we asked where was the cash to meet the additional burdens loaded by the Government on to Welsh local authorities or to meet the introduction of the council tax. Does he not also accept that the recession and unemployment have placed an extra burden on local authorities in Wales? He gives them no scope to expand their role in economic development or to take new initiatives. Will he reconsider, and give them the extra cash for that purpose?
I ask the Secretary of State for two specific assurances. First, will he fund the full cost of new obligations in community care in addition to the funds he announced today? Secondly, will he fully fund in revenue and in capital any fresh obligations placed on local authorities to provide secure accommodation for young people on remand? We have been told that, in both those cases, the cash will be allowed for in the formula. There is no cash for either in today's settlement, any more than for all the other obligations that the Government have placed on local authorities. In summary, will the Secretary of State please take away this inadequate statement and think again?
§ Mr. Hunt
And the expenditure. Secondly, on community care, of course I have taken into account in deciding the settlement the increased pressures caused by the need to prepare for the new community care regime.
The hon. Gentleman takes me to task on a number of percentages. Let me repeat them again. We are talking about TSS—total standard spending—of £2,639 million, an 8.5 per cent. increase on the settlement and a 5.1 per cent. increase on budgets. I am talking about aggregate external finance of £2,383 million—a 6.7 per cent. increase on the settlement.
I ask the hon. Gentleman to study the figures again. He will find that the settlement is pretty fair. The only message coming from the Opposition is, "Spend, spend, spend." We need not only a realistic view of spending, which the Government provide, but a commitment to the citizens charter, which will give the public the right to the service that they deserve. All that the hon. Gentleman offers is high spending and high taxes. I reject those. The only apology that I make is to my hon. Friends who represent English constituencies, for having produced a settlement by which the community charge on standard spending in Wales is only £118.