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Local Authorities (Expenditure)

Volume 76: debated on Wednesday 3 April 1985

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asked the Secretary of State for the Environment if he will abolish spending targets for all local authorities.

I have said that we would like to do so.

Does the Minister agree that we have an absurd system of local government finance — [HON. MEMBERS: "Yes."]. I shall come to that point in a moment. The Government's new so-called objective targets under the GREA are completely ignored by the Government in the vast majority of cases when they set spending targets. Are not those spending targets a sign, first, of the Government's desire to run local government and, secondly, of their complete failure to reform the rating system?

The purpose of the targets has been to rein back the growth of local authority current expenditure. They have succeeded in reining back that growth from over 3·5 per cent. a year above the rate of inflation to under 1 per cent. The targets have worked, and the great majority of local authorities have co-operated with them. That has been a solid gain for the country and the ratepayers.

When my right hon. Friend is carrying out the urgently necessary review of local authority finance, will he talk to our right hon. Friend the Secretary of State for Education and Science about alternative ways of funding education? That could lead to two advantages: first, the reduction of the rates burden; and, secondly, the removal of the discredited Burnham system for the negotiation of teachers' pay.

The second part of that question should be addressed to my right hon. Friend the Secretary of State for Education and Science. On the first part, I have the impression from hon. Members on both sides of the House that people wish to see local decisions taken locally. That is one of the main purposes of the studies on which we have embarked. It is difficult to see how such a development could be consistent with centralising substantial areas of education spending at the Department of Education and Science.

Despite the operation of target, which was deliberately designed to hit Labour authorities more than Conservative ones, the average domestic rate bill in the shire county areas is over 40p a week higher in the Conservative-controlled shires than in the Labour-controlled shires. Does that not show that people get more for less in Labour areas?

On the future of the target system, does the right hon. Gentleman accept that the problem associated with target is the operation of penalties, and that it would be unacceptable to Conservative as well as Labour authorities if, instead of the target and penalty system, we had a penalty system based upon GREAs?

The hon. Gentleman makes a naive comparison. The system is intended to reflect differences in resources among authorities. It is clear that in the past four years the average increase in rates in Labour county councils has been 62 per cent. while in Tory county councils it has been 31 per cent.—exactly half. That is the true comparison that should be made between authorities under Conservative and Labour control.

Secondly, I have made it clear that the extent to which we are able to move away from targets in the coming year will depend in part on what local authorities budget for this year, and in part on the mechanism that we may be able to put in place to exercise a restraining influence on budgets in 1986–87.