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Local Authorities (Expenditure)

Volume 990: debated on Thursday 7 August 1980

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asked the Secretary of State for the Environment whether he is now in a position to let local authorities know what the Government's overall target for volume of local authority current expenditure for rate support grant purposes is in 1981–82; and how this compares with 1980–81.

In March 1980 the Government set out in the public expenditure White Paper (Cmnd. 7841) their expenditure plans for the years 1980–81 to 1983–84. These plans envisaged a fall in the volume of local authority current expenditure, of around 2 per cent. in 1981–82, 1 per cent. in 1982–83 and 1 per cent. in 1983–84.The regular annual review of public expenditure is now in progress. The Government attach the highest priority to reducing public expenditure to a level that can be financed without excessive public borrowing, thus exerting a downward pressure on interest rates. The refunds that the United Kingdom has now secured from the European Community budget will reduce the cuts in the previous Government's spending plans which would otherwise have been needed to achieve this objective, but they do not open the way to increases in aggregate expenditure on other public expenditure programmes above the levels planned in Cmnd. 7841.Final decisions on the distribution of the totals over the whole range of central and local programmes do not have to be reached yet. However, local authorities are beginning to plan their budgets for next year, and need to know the Government's view, on the basis of the review of expenditure plans that has so far taken place, on the overall level within which they should contain their volume of current expenditure in 1981–82. In reaching this view we have taken account of the recently concluded discussions with the local authority associations in the consultative councils on local government finance and their expenditure groups.For 1981–82 the Government expect local authorities in England and Wales to plan an aggregate for a volume of current expenditure for the purposes of RSG of £13,044 million at November 1979 prices. This is a further 2 per cent. below the targets local authorities were set in 1980–81 at the time of the rate support grant settlement last November and which the Government have asked local authorities to secure in the call for revised budgets. When the rate support grant settlements for 1981–82 are announced the amount of grant available will again be stated as a cash total.The Government have indicated the priority which they attach to the law and order services, while recognising that local authorities must have discretion to decide how to allocate resources between services in the light of local needs. The Government's priority remains, but law and order services should not be regarded as wholly exempted from the search for economies.In making this early announcement to assist local authorities with their planning, the Government have borne in mind the action which is being taken at present to deal with the excess spending which local government planned for in the current financial year. We cannot emphasise too strongly to local authorities that the Government are planning for a steady reduction in local authority current expenditure over the coming years. The achievement of these plans is a most important part of the Government's economic strategy.We must therefore make it clear that we expect authorities not only to eliminate this year's overspending, but also to achieve the lower target set for the next year. Reductions in manpower levels will obviously have to continue at a faster rate than has been achieved so far if our spending targets are to be met. The response of local government to our call for revised expenditure plans for 1980–81 will obviously be one factor which will influence our decisions on the financing of local authority expenditure for 1981–82.