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Rate Support Grant (Wales)

Volume 113: debated on Wednesday 25 March 1987

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10.15 pm

I beg to move,

That the Welsh Rate Support Grant Report 1987–88 (House of Commons Paper No. 221), which was laid before this House on 19th March, be approved.

With this, I understand we are to consider also the motion

That the Welsh Rate Support Grant Supplementary Report 1986–87 (House of Commons Paper No. 222), which was laid before this House on 19th March.

The main report for the forthcoming financial year is customarily laid in the preceding December and debated in the following month. This time, difficulties over the definition of total and relevant expenditure, recently resolved by the passage of the Local Government Finance Act 1987, meant that the normal timetable for both reports could not be met. Nevertheless, in my statement to the House on 16 December I gave full details of my firm intentions for the 1987–88 settlement and the 1986–87 supplementary report, to give councils adequate time to draw up budgets and set rates. So that they could do so with certainty, I said then that no data received subsequently would alter my intentions. That is the situation.

The reports laid before the House last week reflect, with one minor exception concerned with inter-county education pooling, precisely my intentions announced in December. These education pooling adjustments will now be made in supplementary reports following the enactment of the Local Government Bill. Until they are made, Welsh counties will have a cash flow advantage of around £7 million. I do not intend, therefore, to spell out again the details of the 1987–88 report, but it is important to set out certain of its main features, particularly to provide a context for what I shall have to say later about the spending and rating policies of some Welsh local authorities.

The 1986–87 settlement was a good one for Wales. The 1987–88 settlement is even better. Relevant expenditure is increased by 6·1 per cent. to £1,734 million, current expenditure by 4·8 per cent. to £1,496·5 million, aggregate Exchequer grant by 8·4 per cent. to £1,157 million and block grant by 6·1 per cent. to £901·7 million. All these increases are higher than the 4·5 per cent. forecast rate of inflation. It is also important to recognise that there is provision for extra capital spending in 1987–88. Allocations for capital investment have been increased by £47 million, or 14 per cent., to a record £369 million, following a £60 in Ilion increase in the previous year. This increases the total investment in capital projects since 1979–80 to £3·5 billion, and that does not include the multiplier effects created by urban programme and urban development grant expenditure in the private sector.

The first supplementary report for 1986–87 distributes the full amount of block grant provided under the settlement. Provision for aggregate relevant expenditure has been increased to allow for increases in police pay, expenditure on midday supervision in schools and GCSE. Block grant has therefore been increased by £1·3 million. Specific grants are now £5·2 million higher at £174·7 million. The total of local authorities' GREs for the year has been reset in line with provision, but authorities' block grant entitlements will not be affected on this account.

On the basis of the 1987–88 settlement, ratepayers, both business and domestic, were entitled to expect very low average rate rises, and rate reductions in some cases. I am sorry to say that too many local authorities have simply ignored the opportunity that they were given to take responsible and moderate decisions which could and should have provided their ratepayers with significant benefits. Far from exercising restraint, they have chosen to budget for very high levels of spending and therefore to set rates at a much higher level than was necessary.

The county councils together have budgeted to increase their expenditure by 9·1 per cent. compared with an increase of 7·1 per cent. allowed for in the settlement after taking into account the effect of increasing teachers' pay. In Dyfed there has been a real terms spending increase, which I have to say I regard as disgraceful and indefensible. The county council was presented with a golden opportunity to reduce its precept substantially. By spending in line with the settlement, a 6 per cent. reduction could have been achieved. Instead, Dyfed ratepayers face an increase of 7 per cent., in part to pay for a significant increase in the number of staff employed, something that other counties in Wales do not seem to find necessary. That is an astonishing performance by a council professing to be anxious to secure better employment prospects for its area, and is not the way to attract investment and extra jobs, nor to protect the interests of domestic ratepayers. Ratepayers in Gwent are also faced with similarly damaging increases in expenditure and rates, and in every county in Wales rates have been set higher than can possibly be justified on the basis of this settlement.

Will the Secretary of State explain to the House why he needs to persist in attacking Dyfed county council when he has now announced his retirement as a Dyfed Member of Parliament? Will he explain why it is wrong for a local authority that requires to increase employment in its area to increase its staff? Why is it only the private sector that wins plaudits from the Secretary of State?

If the hon. Gentleman does not yet understand that, if one increases rates by a substantial margin, one discourages private business from setting up and generating employment, I am afraid that it is much too late to start teaching him the lesson. However, it is certain that businesses understand perfectly well and they will have taken note of the damaging and unnecessary increase by the Dyfed county council.

District spending as a whole is set to increase broadly in line with the settlement, but while many district councils have sought to hold their rates down, some have budgeted for spending increases which they will have to justify. However, they cannot possibly justify them on the ground that the resources that they have been given under the settlement are inadequate. Of the seven districts which should have been able to reduce their rates, only one has actually done so. Three of the others have expenditure and rate rises well above the average, and in Colwyn a spending increase of 8·5 per cent.— almost double the forecast rate of inflation — results in an increase in average rate bills which is almost double that of other districts in Clwyd. I warmly congratulate Cardiff, which is in the middle of major and ambitious schemes, on its good management and good sense in reducing rates. Rate bills in Cardiff will go up by 3·6 per cent., which is less than half the all-Wales average of 7·8 per cent.

I thank my right hon. Friend for that appropriate reference to Cardiff, but I hope that he will take the opportunity to emphasise that the reverse has been achieved by South Glamorgan county council. Its precept has gone up by 4·1 per cent., but it has not followed my right hon. Friend's advice and formula in his settlement. In fact, it is levying an extra precept on the ratepayers of Cardiff, particularly business ratepayers, of effectively a 6 per cent. increase.

South Glamorgan undoubtedly had an opportunity to hold its precept with virtually no increase, but it has chosen to increase it by more than is necessary. That is undoubtedly true. The action of the city council in reducing expenditure below what we had expected has had the effect of pulling the total rate bill for local ratepayers down below what it would otherwise have been. I congratulate the city on that result and on its decision.

All the councils which have set their rates and budgets above the settlement level bear a heavy responsibility for their decisions. I am sure that their ratepayers and electors will look hard at the reasons for such behaviour and draw their own conclusions in holding them accountable. The counties should know that, as a consequence of their decisions, the aggregate budget overspend for the year amounts to £24 million. This means that they have planned to underclaim available grant by a staggering £12 million.

Ratepayers should know that under the Rate Support Grants Act 1987 each council which reduces its spending will attract additional grant directly to itself. Many districts have, in fact, done that, and as a consequence the districts as a whole can expect to receive about £0·4 million more than allowed for under the settlement. Ratepayers should know that it is entirely the responsibility of the counties to put matters right. They can do so and avoid forfeiting £12 million in grant by spending in line with the settlement, I trust that each will do so. They have only to look at more prudent councils to see the benefits that more responsible action could bring.

We read in the Western Mail today:
"Shadow Welsh Secretary Mr. Barry Jones is set to launch a bitter attack on the Government's record of funding Welsh councils, in a Commons debate tonight."
I see that the hon. Gentleman is going to challenge me to justify the more than 10 per cent. cut in rate support grant to Welsh councils since the Conservative Government took office. He plans to counter criticisms of councils' rate increases. I read that "Mr. Jones" will also protest that Government grants cuts have meant that councils have had to turn to their ratepayers to raise more revenue.

I am all for this new convention of publishing speeches in advance. I shall answer the hon. Member for Alyn and Deeside (Mr. Jones). First, on the question of the grant reduction since 1978–79, we have reduced grants to local authorities by around 6 per cent., not 10·9 per cent. The hon. Gentleman has forgotten the £40 million increase in specific and supplementary grants. We did it deliberately because we are determined to improve accountability. [AN HON. MEMBER: "It does not."] The hon. Gentleman says that it does not. However, that is the policy of the Association of District Councils which, in its response to our proposals for the reform of local government finance said that
"their long term aim is to ensure that the aggregate revenue received locally exceeds that provided by central government".
I am afraid that I have some way to go. Such a policy would involve a reduction from the present 66·7 per cent. to less than 50 per cent.

Now, unfortunately for the hon. Member for Alyn and Deeside, this policy cannot possibly be taken as an excuse for increases in rates this year. The reduction took place in the period before 1985–86. The grant percentage has been kept fairly constant for the last two years. As usual the hon. Gentleman is living in the past. The interesting thing is that in the period of reduction up to 1985–86, rates rose by 7 per cent. less than the retail prices index. During the last two years when the grant percentage has been stable, rates have risen by 14 per cent. more than the RPI.

The fact is that this year, as last, grant has not been reduced. The settlement has been generous and too many local authorities have deliberately chosen to put rates up. If the hon. Gentleman now changes tack and challenges the level of service and justifies authorities that try hard to spend more, I have to remind him that Welsh local authorities are already spending 4 per cent. more in real terms than they were in 1978–79, and on present plans will be spending about 5·5 per cent. more than they were in the harsh post-IMF days of the Labour Government.

It is a matter for regret that some authorities have chosen to increase the burden on their ratepayers instead of making better use of the many opportunities open to them to obtain savings and to ensure better value for money. The Audit Commission, whose illuminating reports have covered most of the key areas of local authority spending has made many suggestions for achieving better use of resources. Sensible cash flow management, for example, may not attract many votes or the direct attention of ratepayers, but the savings available in this area alone could lead to significant reductions in budgeted expenditure. No one could possibly argue that that would represent an assault on services. There are many other opportunities available. In pursuing them authorities should take advantage of the substantial increase in capital allocations that I have made available for 1987–88 to achieve revenue savings. Education authorities, for example, should take steps urgently to cut the number of empty school places. I have expressly provided in the increased capital allocations for 1987–88 for the capital costs to enble them to do this. Responsibility now rests with local education authorities to pay for better quality education instead of empty desks.

Local authorities have a major responsibility to provide effective, efficient and economic services on behalf of their communities. If they do not, they will be failing in their duty towards their domestic and commercial ratepayers, who have a right to expect a fair deal and financial prudence. Councils which have not taken the opportunity provided by the settlement to maintain services and keep rate bills down will have to answer to their electorate. The councils concerned still have an opportunity to bring their spending, which is far above what they were spending under the Labour Government, back into line with the settlement and so to attract at least the full amount of grant that I have made available for next year. I urge them to do so. I commend my proposals for 1986–87 and 1987–88 to the House.

10.31 pm

We have heard tonight one of the most unpleasant speeches of any of our debates. It was full of bluster and ill-will and was a desperate attempt to rewrite history. The Secretary of State in none of his utterances showed the House that he understood that this was a debate about matters which affect the lives of many ordinary people or showed the human face that his office requires of him.

The Secretary of State made crude, unjustifiable attacks on Welsh councils. We know that the right hon. Gentleman is playing politics and electioneering, but the truth is that he has not given sufficient money to our councils. Now the luckless councils must pick up the pieces. Today he has tried to whip up hysteria against local authorities, but with his speech he has condemned his record of eight years in office.

Between 1979 and 1986 there were seven Acts of Parliament on local government finance. Three further Bills appeared this year, retrospective legislation and frequent changes in reports such as these. During the 1980s the Government's incompetence has destabilised local government, particularly local government finance, in Wales. The Secretary of State has been uniquely implicated in that sorry saga.

The House of Commons research staff has told me that the cumulative cut in rate support grant since 1978–79 is £672 million at 1986–87 prices. When we take that into account, the right hon. Gentleman's vicious attack is seen to be most unjust and reprehensible.

Having outlined the amount that local authorities have been denied since the Secretary of State took office, I must state the problems that local authorities are having to cope with. In December 1985 there were 181,000 people unemployed in Wales, yet in December 1979 there were 78,000. In effect, in a very few years, the right hon. Gentleman had pushed unemployment up by about 131 per cent. The case that the Opposition make to the Secretary of State is that the reports that we are debating tonight are insufficient to respond to the social consequences of such tragic figures. For example, there are 32,000 people unemployed in mid-Glamorgan. Blaenau Gwent has a male unemployment rate of 23 per cent. There are 15,000 people jobless in Gwynedd, and in the Shotton travel-to-work area male unemployment hovers on 21 per cent.

Those statistics mask despair. The reports give insufficient cash to the local authorities which must pick up the pieces. The reports do not repair the damage caused by the years that have passed since the Secretary of State and his Government have been responsible for the economy and local authority matters in Wales.

I have established that the cuts in manpower in local government have led to a deterioration of services. For example, the number of manual employees employed in the collection and disposal of refuse has dropped by 26 per cent. The number of manual council employees in building work has gone down by 31 per cent., the local authority transport provision has dropped by 12·5 per cent., and the number of ancillary staff in local authority education services has fallen by 12 per cent.

The reports are oblivious to the demands made by the public upon our local authorities when they have less money and manpower to respond to the services that the public demand.

The hon. Gentleman has argued his case as persuasively as he can about the problems of unemployment in Wales. Is he contending now from the Dispatch Box that the main generator of jobs in Wales will be the local authorities, which the ratepayers will have to pay for?

I will make my speech in my own way and the hon. Gentleman will understand my points more fully by the time that I have finished.

I was about to give an example of one of the services that have to be provided which are now very much at risk—education. I want to quote from a letter that I have received from a parent-teacher association and a headmaster:
"However, of late, in spite of careful spending of the School Capitation money, we find ourselves supplying such basic items as paper and stationery. Recently we have paid £600; part of £1,000 spent by the school to provide basic text books in English to the Junior Department. Is this trend likely to continue? If so, what of those schools who have no PTAs or other financial support?
The letters then states:
"This PTA objects strongly that they are having to provide basics in the school. Surely the right of every child is to be equipped with the basic tools for education?"
One of the results of the way in which the Secretary of State has managed local government finance since he came to office is that the vital services across the board in Wales are not delivering at the standard that parents and recipients require because they are starved of cash. Nothing that the right hon. Gentleman has said this evening will put that right.

I want to describe the position as the counties see it. Perhaps their greatest bone of contention is the decision to end recycling because, with negative marginal rates of grant, there is a likelihood that total grant claimed according to terms set out in the RSG report will add up to less than the total of block grant. For 1987–88, both Secretaries of State have legislated to empower them to withhold any underclaimed grant that might arise if authorities spend more than Government assumptions. They say that the proposal seems to be a return to the worst aspects of the target penalty system that the Secretary of State claimed to have abolished last year.

We now know that, because of what the right hon. Gentleman has introduced, the counties in Wales may well lose about £11 million to £12 million, but he has launched an attack on the very counties that are to lose heavily under his new dispensation; and worse, the formula for the distribution of grant still leaves all counties on negative marginal rates of grant, rising to 94p for South Glamorgan. Under the right hon. Gentleman's system, for every extra pound spent, 94p is taken away. That is a very harsh penalty. The Association of District Councils says that some districts' negative grant rates are much more severe. So it was wrong of the right hon. Gentleman to launch his attack on those local authorities when what he proposes tonight is deeply injurious to the authorities that want to provide services to our people.

For the districts, I can best exemplify the problems faced by Swansea. The council has told me that for 1987–88 it has lost £522.000 — about a 4 per cent. reduction. It has had to put up the rates by 3p, or 7·5 per cent. Without the grant loss, its rate increase would have been just 1p, or 2·5 per cent. Surely there is the answer to the unpleasant approach that the Secretary of State adopted in his typically undignified manner in his speech.

The council in Swansea has been able to increase expenditure in cash terms by only 1·5 per cent., which, with a predicted inflation rate of 4·5 per cent. means real terms cuts. For example, it has had to use £1·2 million of prudently accumulated reserves, cut £3 million from the draft budget and cut £120,000 from job creation schemes run in conjunction with the Manpower Services Commission. That is just one small example of the havoc that the right hon. Gentleman is playing with the budgets and objectives of our local authorities.

The district councils tell me that the Welsh districts' block grant has virtually stood still since last year, and has been reduced by £1·2 million when account is taken of the revisions in the supplementary rate support grant report for 1986–87. Furthermore, they tell me, in some anger, this year's settlement has reduced Welsh districts' block grant by £5·3 million, or 3·5 per cent., from the provisional settlement announced by the Secretary of State in July. Not only has this been a poor settlement for Welsh districts, but it has come as a severe blow, bearing in mind the detailed statements made by the Welsh Office and the Secretary of State last July of individual Welsh districts' GREs, block grant entitlements and published district rates.

The Secretary of State has made great play about rate increases, and has denounced them, but the districts tell me that they have managed to keep their rate increases under control only because they have made further cuts in services and costs to keep their own expenditure within the Government's stringent spending guidelines for the fifth year running and by their use of scarce and valuable reserves to reduce the cost to the ratepayer.

Therefore, the Secretary of State is wrong to launch this attack upon our local authorities. He referred to the supplementary report. I shall too, briefly. In the report the Secretary of State confirms the implementation of the full recycling of grants for 1986–87. So why did he cause so much uncertainty by threatening not to recycle grants? As legislation has had to be introduced to stop the recycling of grants in 1987·88, the right hon. Gentleman was clearly making not just an empty threat, but an illegal threat. That was a rather shabby moment in his tenure of office.

The districts have lost £1·3 million of block grant in the supplementary report for 1986–87. In rate poundage terms, the largest grant reductions are for Blaenau Gwent, with a block grant down by £160,000 — equivalent to a 3p rate — and Taff Ely, with a block grant down by £250,000 — equivalent to a 2·7p rate. Those are the consequences of the Secretary of State's policies.

To sum up, this is a complicated set of proposals, the system is too volatile, the districts are upset at the decrease in their block grants, the counties have exposed the iniquities of ending grant recycling, everybody in local government finance acknowledges that the system is overcomplicated, and all say that high negative marginal rates of grant create major difficulties. They are, in effect, penalties by another name.

Our people, communities and valleys need an increase in public investment in Wales to counteract the acknowledged economic and social deprivation. The settlement fails to give Welsh local authorities the opportunity to increase investment in their communities and improve the lives and livelihoods of their inhabitants.

We say that the settlement is no relaxation of the tough controls applied by the Government since 1981–82 on the spending of local authorities. In effect, the Secretary of State's proposal is a confidence trick and some Welsh councils may find it impossibie to use the whole of their capital spending powers in the next year, because of his system and grant losses on marginal spending.

The Government have cut back harshly on the funding of our local authorities—by at least £672 million in real terms since 1978–79. That is the scale of the damage. At the same time, the government have been content to drive up unemployment, and thus our councils have been forced to do much more with much less. The Secretary of State has been a party to an unforgivable policy, and Wales will never forgive him for that.

Order. This is a short debate and brief speeches would be appropriate.

10.48 pm

Wales has once again fared very well under the rate support grant settlement announced by my right hon. Friend the Secretary of State. It has fared substantially better than England, thanks to my right hon. Friend's powerful advocacy in Cabinet and, as he has said trenchantly, the settlement should result in low rate increases or rate reductions.

There is certainly no reason why Clwyd should be raising its precept yet again, even though the extremely generous pay settlement given to the teachers—despite the appalling behaviour of most of their union leaders throughout the dispute — creates problems for the treasurer. Those problems could have been resolved if Clwyd had not dithered about closing half-empty schools.

Within the rate support grant system the effect on districts is, as so often under an increasingly rickety system, unpredictable and sometimes seemingly unfair. The system is meant to ensure that decisions to increase spending should result in a reduction of RSG in most cases, and that a decision to reduce spending should result in considerable rating benefits. However, other factors are at work, applying grotesquely complicated formulae for assessing special elements, on top of an already complex system.

That has led to the situation in which Colwyn, hitherto a prudent spender, has had to increase its rate by no less than 26 per cent. from 38p to 48p. If I were making party political points — which I am not — I might establish some connection with the fact that this year the Liberals have a firm grip on the council, whereas previously they were merely the largest political group on the council. As such they have systematically cushioned the rate increases by running down the balances. This year, however, there are no balances to run down.

Much of the explanation for the sharp rise in Colwyn's rates lies in the random effect of the various special factors determining rate support grant. [Interruption.] The borough treasurer said in a letter to me:
"My members are totally bemused by the RSG system. They cannot understand that, for an authority which has kept to spending targets in the past, they are treated in this way. I find it difficult, if not impossible, to give a satisfactory answer. Then seem unimpressed with the explanation that the whole thing is a mathematical exercise"—

This debate is being rendered extremely difficult by a severe attack of verbal diarrhoea on the part of the hon. Member for Caerphilly (Mr. Davies), who has consistently been muttering. It would make things much easier if he would shut up.

The treasurer goes on to say:

"They seem unimpressed with the explanation that the whole thing is a mathematical exercise, the formulae having been the subject of consultation with the local authorities associations. The whole thing appears to be a huge lottery, and the dice do not fall kindly for Colwyn."—

Colwyn has pointed out that this time the special needs element has operated rather more favourably for Rhuddlan. It should not be supposed that Rhuddlan is entirely happy. [Interruption.] It is concerned about the capital allocation for its housing improvement programme. Like every council, it would like a larger housing allocation. [Interruption.] Rhyl is suddenly becoming aware that it has a problem of alarming— [Interruption.] It really is extremely—

Order. I think that the hon. Member for Caerphilly (Mr. Davies) should take account of what I said earlier. I hope that he will.

Perhaps a bucket of cold water would do the trick.

Rhyl is suddenly becoming aware that it has an alarming problem of deteriorating housing, analogous to that in some of the city centres. It needs a crash housing action programme, especially in the west end of the town, where deteriorating housing, mostly in multi-occupation, is interacting with poor social conditions, aggravated by the influx of jobless youngsters from Mersyside. Some rather frightening results have been produced.

This morning Colwyn council told the Select Committee on Welsh Affairs that it could use an extra £500,000 straight away. It said that it would have no problem in spending it wisely on housing improvement. No doubt Rhuddlan would like an equally ambitious expansion. of its programme. The present worry is the Treasury insistence on year-end accounting. The council says that that makes it impossible for it to spend its full allocation in any given year. It says that the receipts from council house sales come in throughout the year in random fashion and that the proportion of the money from those council house sales that it may spend is liable to arbitrary variation by the Government, with little notice.

Improvements grants authorised in one year may not be spent until the next. All this is a nightmare for the borough treasurer.

I am not surprised that Rhuddlan should resent reproaches levelled at it by my hon. Friends on the Front Bench, who claim that it cannot need more money for housing as it is not spending its full allocation.

I must say that Rhuddlan has had an exceptionally generous settlement, because GRE is up by 10 per cent. due to the projects for regional and national importance capital allocations. It budgeted to spend 3·6 per cent. above that exceptionally generous settlement.

I was not maintaining that Rhuddlan had been particularly harshly treated. All I am saying is that it is extremely difficult for that council to plan ahead in view of the insistence that it must spend all its money by the end of the accounting year.

I do not suppose that we will have many more of these RSG debates, in which those of us who speak from the Back Benches are probably talking through our hats, while Ministers clearly know what they are talking about.

We are to have a new system. I have the gravest reservations about whether the community charge —excellent in principle—can possibly be made to bear the heavy load of expenditure that will be placed upon it. I also have grave doubts about the wisdom of eliminating domestic property tax. If a tax becomes unbearably heavy, that is not necessarily a good reason for sweeping it away altogether. It is an argument for shifting some of the burden that it creates.

10.54 pm

The Secretary of State told us, and I am prepared to believe him, that Wales has done marginally better than local authorities in England in the allocation of rate support grant for 1987–88. It may even be true that this settlement is an improvement on those we have had in the recent past. Many of my parliamentary colleagues may disagree with me, but I am sure that the Secretary of State is a reasonable man. He has been obliged to listen to representatives of local authorities, whose first concern is providing services and value for money. Having said that, I can only come to the sad conclusion that, although the right hon. Gentleman may have listened, he has been unable to deliver the goods to the satisfaction of the authorities, and especially not to those who expect and deserve the services provided by them.

The overall effect is that, once again, the Government seem to be using the system as a means of curbing local authority expenditure, although the ratepayers invariably come out in favour of better, more efficient services.

The majority of county and district councils are suffering negative marginal grant rates, which means that, as expenditure increases, their grant entitlement is reduced. Ceredigion district council, although it has one of the lowest district rate levies in Wales at 19p this year, increasing to 21p for 1987–88, faces a penal negative marginal rate of grant of 79 per cent. Any growth in its budget means that, for every £100 spent, the grant will be cut by £79. It is manifestly unfair that high and low-spending authorities alike are penalised, and there are no rewards for being careful.

Ratepayers will be asked to fund all additional expenditure in full, and a relatively small increase in expenditure can result in a disproportionately large increase in the rate levy. The problem for the majority of district councils is that, over many years of cuts in public expenditure, they have had to pare back to the bone, and there is little, if any, flesh left to cut. The only way in which many authorities have survived recently is by using substantial sums from their reserves, but those reserves are fast disappearing, as are many essential services.

Many county councils are worried that, although the settlement in some measure takes account of past pay awards, it does not make enough provision to cope with pay settlements that are in the pipeline, at all levels, which are outside the authorities' control. Indeed, the restructuring of teachers' pay scales has not been catered for adequately.

The Tory Government have no sympathy for local government, and this exercise in cheeseparing, as demonstrated by the Welsh rate support grant report, shows that they have no interest in maintaining support for local services or in encouraging the growth of local democracy. They relate matters only to central control and manipulation.

However, the British electors have demonstrated many times during the past couple of years, and no doubt will do so again soon, that they want more local control and better and more efficient services, with vigorous local authorities directly answerable to the electorate, not controlled by puppetmasters in London.

In my view, electors want to see school buildings better maintained and educational facilities improved. They want to see rural roads in good repair, better transport, vastly improved housing, and extended social services. They want to see local government involved in building up the economy of the area, making more opportunities available for jobs and generally reacting to the needs of inhabitants. Instead, they have to watch the morale of local authorities drain away while they wrestle with impossible restrictions imposed by central Government. They have been asked to preside over shrinking and inadequate budgets while demands on resources grow remorselessly.

The time has come for a change in the attitude of central Government, and a realisation that local government matters and can contribute a great deal not only to the basic needs of the people it serves but to the health and democracy of the country.

I was surprised that the Secretary of State was critical of Dyfed county council. From my experience as one of the ratepayers in the county, I am well aware that the chief executive and the councillors—never mind which party they represent—have given their best for many years as members of the Dyfed county council. It is a great shame that the Secretary of State has singled out one of the best local authorities in Wales, which cares for those who live within our community.

11.1 pm

I shall begin my remarks by making a general point. Wales's share of total grant for England and Wales has steadily increased under the Government. It is a great tribute to my right hon. Friend the Secretary of State for Wales, as the champion of Wales and the Welsh people, that although in the 1970s Wales's share of the total grant for England and Wales was 7·25 per cent., by 1981–82 it had risen to 7·4 per cent., and now in 1986–87 it stands at 8·3 per cent. In the coming year that will make a substantial difference of £142 million over comparable figures for the 1970s. Of course, there is also the increase in current expenditure of 4·8 per cent. above 1986–87 budgets in Wales—1 per cent. higher than in England. My right hon. Friend has been a doughty fighter for the Principality and its people. We shall greatly miss him when he retires.

Even the shadow Secretary of State for Scotland, the hon. Member for Glasgow, Garscadden (Mr. Dewar), almost every time that Scottish business is moved on the Floor of the House, is inclined to grumble about how well my right hon. Friend is doing because of the way in which the differentials between Scotland and Wales are narrowing. I am sure that the one or two Scottish Members present can confirm that comment. That shows how well my right hon. Friend has done for Wales.

Even Clwyd county council has been kind. In the words of the county treasurer, Ralph Greening:
"This is not an unreasonable settlement. I am not unhappy about it."
Coming from Clwyd, that is the equivalent of at least six curtain calls at Covent Garden.

In the current year, the settlement has led to a lower than usual rate rise of 4·8 per cent. That is just as well when we remember that since 1984 county rates have risen from 148p to 198p. My right hon. Friend the Secretary of State put it succinctly to the House on 23 July last year when he said:
"More than 50 per cent. of the rate income in Wales comes from non-domestic ratepayers. High and unpredictable rate rises are bad for business, hinder expansion and put jobs at risk." [Official Report, 23 July 1986; Vol.102, c. 341.]
This excellent settlement gives the opportunity to local authorities not only to pass on low, or relatively low, rate increases to ratepayers, but also to maintain services. Whether that opportunity is taken depends of course on the decisions of those local authorities.

I take Clwyd county council to task on that point. Too often empire building and castle converting have come before statutory services. I give three instances. The first is manpower. There is no single way more guaranteed to create unemployment in local industry than for local government to have a bloated staff. Just look at three departments in Clwyd county council. The Audit Commission profile for 1986–87 shows that the chief executive, legal and secretarial department is 128 per cent. larger than the average for the family of directly comparable authorities. The engineering department is 112 per cent. larger. The architectural department is 82 per cent. larger.

The chief executive of Clywd county council, Mr. Mervyn Phillips, has described the Audit Commission profiles as "worthless", yet the Hay-MSL report on the opportunities for economy in the services and structure of Clwyd county council has confirmed that the Audit Commission is hitting the right targets in regard to overmanning at shire hall. It indicted Clwyd county council as "top heavy" with senior administratives—with too many chiefs in relation to Indians. The figures I have given highlight that indictment.

The second instance is surplus places. The current number of surplus school places in Clwyd is absurdly large, standing at 22,300. That figure is made up of 11.700 at primary level and 10,600 at secondary level. The cost of keeping them empty is about £3·5 million a year—the equivalent of 6p or 7p on the rates. Just meeting the Government target of removing two fifths of those places would produce substantial revenue savings that could be redeployed with great advantage elsewhere. They could be spent on the school library stock, which in 1984–85 was slashed from £75,000 to £15,000, on school building maintenance, which last year was cut by £11,000, and on providing further resources for the GCSE.

Is the hon. Gentleman saying that in his view it is Government policy that village schools and small high schools should be closed, that children should be bussed over enormous distances and that the whole fabric and tradition of Welsh education should be dismembered, just to save a bit of money and justify this rotten rate support grant settlement?

The hon. and learned Gentleman made an exactly identical intervention during the speech of my right hon. Friend the Secretary of State for Wales in last year's debate. He was humiliated by my right hon. Friend, for the simple reason that it is hypocritical of the Liberal party to call for money to be spent on empty school places and at the same time to say that more money should be spent on library books, capitation and the GCSE. If the hon. and learned Gentleman thinks that he fools even some people some of the time, I have to tell him that he does not. It was a silly intervention. He has repeated last year's intervention when he was so effectively put down by my right hon. Friend.

No, I shall not give way. I should have thought that one humiliation for the hon. and learned Gentleman would be enough.

I have been saying for a long time that Clwyd has not been removing surplus school places fast enough. I am glad to have the support of the chairman of Clwyd's policy, finance and resources committee, Councillor Rhys Webb. Earlier this month he issued a statement in which he said:

"It is not going as quickly as I would like."
Thirdly, I refer to major capital projects, projects which have nothing to do with statutory obligations. I speak principally of Bodelwyddan castle. Even after having set aside the massive capital expenditure so far of £1,799,000 and the £1,350,000 that is to be spent in the current year, the revenue implications of the project are horrendous. The annual running costs now amount to a massive £545,000 a year, with offsetting income at a mere £11,000. How can such expenditure possibly be justified when, since 1984, the school library stock budget has been slashed? In 1984–85 it stood at £75,000 in Clwyd. In 1985–86 it was slashed to £15,000, and it has stood at that figure ever since. This year an additional £18,000 will be made available exclusively for the GCSE, although that figure has been whittled down from an original £60,000.

The truth is that statutory services and obligations are suffering severely to pay for the Bodelwyddan castle project. That is wrong. Indeed, it is worse than wrong. In the words of several anxious parents to whom I spoke yesterday, when they were lobbying me in the House, "it is wicked".

At primary level, project-based work has been undermined because books can be borrowed for only a month rather than a full term as before. Non-fiction was bought for primary level for the first time in 18 months last month. The schools library service has had to abandon its support for the prepared reading schemes because the service is not buying fiction in sufficient quantities.

At secondary level, a survy has shown a totally inadequate and deteriorating library stock. Indeed, many schools that I have visited cannot afford a decent newspaper, let alone a decent weekly magazine.

In February 1986 Clwyd's Education (Schools and Special Services) Sub-committee adopted the LISC report—"School Libraries—Foundation of the Curriculum"—but only lip service has been paid to it ever since. Some 12 months on, the report to that sub-committee reported a further deterioration in the school library stock. This is the truth—

On a point of order, Mr. Deputy Speaker. Will you confirm that at the start of the debate you asked hon. Members to restrict their remarks to a reasonable time because so many hon. Members wished to speak? Will you confirm that the hon. Member for Delyn (Mr. Raffan) has spoken for eight minutes—

Order. I take the hon. Gentleman's point, but he is taking up valuable time. It is not a point of order, but it is a matter of concern. I hope that the hon. Member for Delyn will recognise that a number of hon. Members are seeking to take part in the debate.

I would have been a great deal quicker if I had not been subjected to the continual heckling of Opposition Members, and the pointless interventions of the hon. and learned Member for Montgomery (Mr. Carlile) and of the hon. Member for Caerphilly (Mr. Davies).

There has been a scandalous neglect of statutory services to pay for the Bodelwyddan castle project, which the county cannot afford. I am glad that my concern about the county's cock-eyed priorities is shared by members of all political parties. It is a tragedy when so much fine work is being done by individual departments at Clwyd—by the education department under its director, Mr. Keith Evans, the social services department under its director Mr. Gledwyn Jones, and the finance department under the county treasurer, Mr. Ralph Greening. Such fine work and service are being given, but the ability to give a better service is being undermined by projects such a Bodelwyddan. The budget for the school library stock could be doubled, trebled, quadrupled, or more, out of the running costs of Bodelwyddan, and it should be.

I and many others will continue to speak out as often and as loudly as we can until what we say is not only heard but acted on, until Clwyd county council not only reflects but acts upon the views of the people it purports to but does not represent.

Lastly, I turn to the speech of the hon. Member for Alyn and Deeside (Mr. Jones). The best comment on it, on Labour's position—I shall continue to repeat that until Opposition Members listen—comes not from me but from the people of Clwyd—indeed, from the people in the hon. Gentleman's own constituency. At county council by-elections last Thursday the Conservatives gained Hope, Penyffordd and Caergwrle from Labour. Labour sank from first to third place—and in Buckley Labour only just held on humiliatingly by the skin of its teeth. The hon. Gentleman's speech will not win any seats from us. I doubt whether it will even save his own.

11.9 pm

This has been a remarkable mini debate. We have had the usual froth and bluster from the hon. Member for Delyn (Mr. Raffan), and we have had the hon. Member for Clwyd, North-West (Sir. A. Meyer) rallying to the cause of the Government, which is a sure sign of the approach of an election. We have had the Secretary of State providing a remarkable swansong to these rate support grant debates. One would hope that the right hon. Gentleman would have a certain humility as he surveys the wreckage of Wales around him. As he sinks beneath the waves one would hope that there would at least been the cry from him,

"I have sinned; I have been wrong,"
but he is still a true monetarist, and that false dogma is shown to be wholly inappropriate to Wales.

Many of the criticisms that we may have made of the Budget are equally applicable to the RSG settlement. In 1979 the Government claimed that they would institute a regime of tax cuts and protect the ratepayer, but there has been an increase in the burden of taxation on the ordinary family, and there has been an increase in the rate burden. This has been the direct result of Government policy. We know that the Government have reduced the percentage of relevant expenditure that is covered by the Exchequer. In 1981–82, the first year of the disaggregation of the England and Wales figures, the Exchequer provided 62·7 per cent. of expenditure. This has been reduced to 53·5 per cent. in the current settlement.

The Welsh ratepayer pays a water rate, and by failing to tackle the high water rates in Wales the Welsh Office has failed the Welsh nation. In 1982–83 the differential in domestic rate relief that was intended to reflect the higher level of water rates in Wales was abolished. I should say that the domestic rate relief was halved from 36p to 18·5p. The increased burden fell directly on the consumer in Wales. On the best comparable basis, the Welsh water rate is about two thirds above the average of the other authorities in England and Wales. The Government have done nothing to carry over the interim settlement which the previous Labour Government bequeathed to them with their equalisation legislation. They seem content that the Welsh people should bear an excessive and unjust water rate burden.

I shall not weary the House with the effects of the Government's policy on the Swansea council, as this has already been touched upon by my hon. Friend the Member for Alyn and Deeside (Mr. Jones). The reduction in central Government money would have meant a rate increase of 4 per cent. in cash terms. We know that positive Government policies could have led to increased potential for job creation by local authorities, but the Government have prevented the authorities from playing a full role at local level. At a time of mounting social problems of unemployment and homelessness, the Government have chosen to restrict expenditure.

Even with the greatest fantasy of the Conservative press, the Government cannot claim that they are dealing with loony authorities. Swansea council and other authorities in Wales are highly responsible and dedicated to the welfare of those whom they represent. The Secretary of State has frequently paid tribute to the Swansea city council for working closely with central Government and seeking to stimulate private investment in the marina project in the enterprise zone.

The settlement and the constant turning of the screw upon Welsh local authorities reflect the prejudices and bombast of the Chancellor of the Exchequer and that of the Welsh Office, and the continuing trend of denying the local authorities the support that they need to do the job for which they are equipped and are anxious to carry out.

11.18 pm

We have seen worse rate support grant settlements than the one that is before us, but that says more about previous settlements than about the current one. The hon. Member for Swansea, East (Mr. Anderson) has spoken of the way in which services that are needed by our communities are being restricted, and that is the major problem.

The humbug that we have from central Government gets up the nostrils of those who are engaged in local government more than anything else. Central Government have screwed down local government and have taken powers to the centre. They then tell local government that there should be no rate increases in their areas. The Government have told Gwynedd that, if expenditure can be held down to 4·8 per cent., there should be no rate increase. The Government knew, however, that the pressure on expenditure in the county was so high that there would be an increase in the rate of 7p to 8p on account of the teachers' settlement alone, and a 2p or 3p increase on account of road repairs. The costs of road repairs have been borne by capital account instead of revenue account because of the desperation of those who were responsible for the authority's funds. The impact of the police settlement is another element coming through, yet Gwynedd is castigated.

In the context of Dyfed, which the Secretary of State mentioned rather than Gwynedd, he said that no manufacturing industry jobs were coming to Dyfed because we had increased the rates. Gwynedd has had the lowest rate in Wales in recent years, but no jobs are coining to Gwynedd. It is little wonder that local authorities are becoming desperate and saying that, if jobs are not coming in the private sector, we should try to create them as directly as we can, particularly in view of the pressure on services in the county.

I draw the Secretary of State's attention to the increasing problems of maintaining the highways in rural counties. This is largely on account of the Government's decision to go for heavier axle weights on lorries. The pressure on bridges and roads is enormous and is leading to inevitable increases in expenditure on rural roads in the counties of Gwynedd, Dyfed and Powys. Of course, it has also led to increased expenditure on roads in urban areas.

There is also increased pressure on the social services because of the mushroomlike growth of private nursing homes and private residential homes in our counties. That inevitably leads to a demand for services. Gwynedd is facing an increase of 15p in its rates this year, and that still leaves the county £1 million below its GRE. The Secretary of State has a habit of castigating counties for spending less than the GRE because they are increasing rates in order to maintain services on which there is great pressure.

Although this year's capital grant has been better than in previous years and has the smack of an election about it, one of the most difficult and frustrating matters is the lack of certainty about the future. It is not enough to say that 80 per cent. of a certain figure can be guaranteed next year. When the figure is worked out, it shows that, of the £10 million for capital expenditure in Gwynedd in the coming year, in practice there is a guarantee of only about £5·4 million. We need a rolling capital programme for several years and much greater certainty if we are to have a pattern for our capital expenditure.

Finally, I should like to deal with the rate support grant formula. The Green Paper contains suggestions about further simplification. The formula for England is considerably more complex than that for Wales and, if the formula is over-simplified, there will be a danger that some of the necessary variations that are needed from area to area in Wales because of the diverse nature of our country will be lost. I hope that, when simplification is considered, the diverse nature of Wales will be taken into account, and that sensitivity will be maintained to ensure that the rural counties and the areas of great social deprivation in the valleys will be properly catered for in the rate support grant settlement.

The Government should not play with figures to try to justify what they are doing this year compared to last. We need to look at the needs of our areas and compare those needs with the services that we get. We ought to have a radical new think on how we can improve those services, and we should get the finance to do so.

11.24 pm

The plea by the hon. Member for Caernarfon (Mr. Wigley) precludes looking at the economy as a whole. Unless we get the economy right, we will not have the money to fund the things he wants. That is part and parcel of these rate settlements. I say that because I think that people sometimes lose sight of it.

I congratulate my right hon. Friend the Secretary of State on the work that he is doing. I say that for what seems like the umpteenth year, and I am sure it seems like that to my right hon. Friend. As my hon. Friend the Member for Delyn (Mr. Raffan) said, we shall miss him in future rate support grant debates.

I should like to take up a point that my right hon. Friend made about south Glamorgan. In the settlement, south Glamorgan was given a chance to reduce its rate. It did not reduce it but chose to put it up. In the six years that the Labour party has controlled that county, the rate has gone up by 80 per cent., including at one time a supplementary rate. The action of Cardiff city council has been rather different. It is a Conservative council and, despite the change from the provisional figures last year and the eventual outturn weighing against that council, it managed to reduce the rates. After four years in office, the council is still levying the same rate poundage that it levied when it came to power. That is a responsible attitude by a responsible council which is promoting the most exciting city in the country, with major capital investment and the forward-looking Cardiff bay development just coming off the blocks.

I regret to say that the populist approach of the Liberal party, confirming yet again that it is angling for any old vote that it can find, shows that it is clear that it will not have to operate power, and so can make promises where it will. Like all the Opposition parties, it wants higher public expenditure, although I do not know where it thinks that that will come from. It comes from taxation, rates, businesses and people's pockets. The whole point of this debate and all the similar ones is to control local authority expenditure, inflation and borrowing, and to bring down interest rates. The recent fall in interest rates will bring great advantage and benefit to local auhorities. If he can, I would like my right hon. Friend to estimate what the fall in interest rates is worth to Welsh local authorities, and the leeway that that gives our treasurers.

Cardiff city council has managed to put down its rates while not cutting expenditure in any department, or any service, contrary to what the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) said. Promoting industry and jobs in Wales depends on keeping costs down and making our local authorities and cities and towns more attractive to incoming industry, and able to help established businesses to grow. High rates and taxes are inimical to that, and the Government and the Conservative party are doing all that they can to bring jobs and industry to Wales. They are making a first-rate job of it.

11.26 pm

I cannot understand why, from the Government Benches, we have had lots of statistics and figures about how Welsh local government is doing well and spending more money than ever before, when in Wales one can see the infrastructure deteriorating in front of one's eyes. They have said that local government expenditure is going up, but they have not said that it is going up in line with central Government expenditure, because that has been increasing even more. The Secretary of State said that local government was spending more in real terms. I have not studied these matters closely over the past two or three years, but I wonder whether that is because housing benefit is included, or the Clegg award, made by the last Labour Government. I should be interested to see what local government has to say about the Secretary of State's speech.

The hon. Member for Delyn (Mr. Raffan) said that RSG in Wales is better than that in England. That may be so, but, in a world of diminishing resources, RSG as a proportion of total spending has been cut severely. It is not enough to make a simple proportional comparison and say that the Secretary of State has done well. I suspect that council expenditure in England has been extremely severely pruned, and both Secretaries of State have done badly. I would prefer to put it in this way: the Secretary of State for Wales has done less badly than the Secretary of State for the Environment.

Why do we have all these figures? It is simply because the facts do not bear out any justification given by Ministers. In Wales one can see that everything is deteriorating. The roads in urban areas are full of potholes, when they were not seven years ago. One can see many people with nothing to do, standing around listlessly on pavements because they do not have a job. The social services are creaking under the strain, with old people being shunted out into the community simply because the Government want to save money.

Housing lists in Wales are increasing. Councils cannot afford to build new houses or do up council houses. I know that, and I think that every Opposition Member knows that. The facts belie what the Government are trying to put across in their figures and misrepresentations.

We should look at education. I agree with the hon. Member for Delyn: hon. Members should look at the report on the state of school books in Clwyd. Clwyd is a rotten council and it has got its priorities wrong. One should look at the staffing, the low morale, the lack of teachers and the extremely had service we get in education throughout the Principality because of the policies of the Government.

Will this be the last statement we have from the present Secretary of State? I hope so. We have had centralising Government over the past seven years and it is time that we had a change.

11.30 pm

This is yet another debate on rate support grant. Contrary to what the Secretary of State has told us, the concern and resentment of our local authorities is as great as ever. They feel that over the years they have suffered from the diktat of central Government. Their argument now, essentially, is that the cumulative effect of decision-making by the Government has left its mark.

Ratepayers in Wales have certainly felt the impact of the reduction in taxpayers' contribution to local government services, as my hon. Friend the Member for Alyn and Deeside (Mr. Jones) so clearly pointed out. In line with that trend, the Government have increased the proportion of specific grants as opposed to block grants. That increases central Government influence and correspondingly diminishes local control. That is a far cry from the days when the Conservative party argued that local decisions should be taken locally.

From a constituency standpoint, Gwent county council has announced that it proposes to increase the rate in the county by 11 per cent. It blames the teachers' pay award and cuts in Government grants. I appreciate that Gwent has budgeted for the full Advisory, Conciliation and Arbitration Service pay award. It argues that ACAS provides for extra supply teachers, whereas the Secretary of State for Education and Science's package does not. Gwent has also made provision for modest improvements in services — 50 extra police officers, a bit of extra provision for the elderly, the disabled and children in need. There is also £750,000 allocated for the new GCSE examination system. That is a worthwhile and necessary provision.

There is nothing revolutionary about Gwent's proposals; they are examples of ordinary run-of-the-mill decision-making. What is more, before any final decisions were taken, there was wide consultation, particularly with Conservative opposition. Then, in the more formal council proceedings, there was all-party support for the proposals. Surely that is a model of how local government should function. It certainly does not need the interference of junior Ministers to tell such experienced public representatives how they should carry on their business.

The district councils cannot make rhyme nor reason of the settlement—and, I should add, not without just cause. For example, relevant expenditure increased by over 8 per cent. yet the block grant to district councils has increased by less than 1 per cent. over the 1986–87 settlement level. They are concerned about the volatility that the settlement brings about. It can result in rates varying between an increase of 20 per cent. and a reduction of 10 per cent. The Welsh District Councils Association claims that the severity of the settlement makes it difficult to maintain existing service levels.

The entire thrust of the Government's policy is to move tax from central Government to the local community. The difficulty is that in Wales there are fewer people with high incomes, so the burden on the local community is even greater. To paraphrase Professor Galbraith's famous words, we have the public squalor but not a lot of the private affluence. Meanwhile, our local authorities strive manfully to maintain services.

The local authorities in my area have acted responsibly throughout. However, despite their efforts—our councils would be the first to admit it—Wales has become a shabby society. That is detrimental to its interests in every way. What has happened is no accident; it is directly due to the Government's doctrinaire approach to the public sector of the economy. There is now a need for a fundamental change in approach and attitude. We need a general election before we can bring about those changes.

11.35 pm

The phrase used by the hon. Member for Newport, East (Mr. Hughes) was echoed by the hon. Member for Wrexham (Dr. Marek) at greater length. However, the hon. Member for Wrexham did not say that in Wrexham there were two priority estates programmes making a major reformation of formerly rundown local authority housing, that there has been massive restructuring of old industrial premises, a huge number of new industrial projects, a large road programme going on all around Wrexham and a new hospital. He did not mention any of those striking improvements in Wrexham.

The hon. Member for Ceredigion and Pembroke, North (Mr. Howells) made an eloquent speech in favour of high rate burdens. In a thoroughly bad-tempered intervention the hon. and learned Member for Montgomery (Mr. Carlile) argued for educational waste and inefficiency.

The debate started with a tear-jerking piece of charlatanism from the hon. Member for Alyn and Deeside (Mr. Jones). He said that the Government had destabilised the local government scene in Wales. That is not the view of Mr. Richard Tettenborn, the financial adviser of the Welsh Counties Committee who wrote of the absence of the extremes of political polarisation and of spending patterns.
"it is pleasant to be able to report that consultation is alive and well and happening in Wales "
He also said that the settlement is a significant improvement on some of its predecessors—[Interruption.] I am told that I am being selective. I accept the verdict that this is not a giveaway. I never suggested that it was. However, it is a good settlement and the hon. Member for Alyn and Deeside should acknowledge that.

For some peculiar reason, the hon. Gentleman gave us the unemployment figures for 1985 and stopped there. I wonder why? Clearly he did not wish to refer to the fact that, since the early part of 1986, Welsh unemployment has fallen faster than that in any other part of the United Kingdom. It has fallen for 10 out of the past 11 months, and for nine consecutive months, by a further 15,000 from its peak. The truth is that the hon. Gentleman so hates to have good news about unemployment that he has tried to stop the clock in 1985. That reveals the hypocrisy of the hon. Gentleman and the fact that he is not in the least concerned about unemployment or the welfare of the people of Wales. He is concerned only about his shallow shabby political ambition.

No, I shall not give way. I shall not give way to a man who has revealed his contempt for the Welsh people—[Interruption.] I have no intention of giving way to the hon. Gentleman.

I have nothing but contempt for the contribution made by the hon. Member for Alyn and Deeside who wished me to give way to him. The truth is that the hon. Gentleman does not care about the unemployed; he cares only about his political skin. That truth has been revealed to the Welsh people tonight.

The hon. Gentleman referred to the lack of basic tools of education but failed to say that more is being spent on education in Wales than under the Labour Government, despite the substantial reduction in the number of schoolchildren. He refused to acknowledge that the failure to tackle the problem of 150,000 surplus places in schools results in a lack of resources for his priorities. That is what local government should be tackling at present.

The hon. Gentleman referred to this as a poor settlement for the districts. It is not, which is why districts have been able to maintain their services, certainly at the level they had when the Government came to office. The increase in the rate support grant this year of 7·5 per cent., including specific grant, has allowed the districts to budget in line with the settlement and to increase average rates by less than 2p. The fact that so many districts in Wales have succeeded in reducing rate burdens and offsetting the rate increases imposed by the counties shows that it is a reasonable and a good settlement.

My hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) attacked the present system. I remind him, as I have done on previous occasions, that he also refused to consider the proposed change in the system. It is not good enough for him to attack the present system for being unworkable, to refuse to produce an alternative and to attack the Government's proposals for reform. In an intervention, I referred to the settlement in Rhuddlan. In Colwyn, the council has chosen to increase expenditure by 8·4 per cent., or 3·8 per cent. above the settlement level. As a result, it forfeited £104,000 of block grant. Its expenditure is now 8 per cent. above GRE, so it is hardly surprising that there is a large poundage increase.

No. I wish to reply to the debate and to the excellent speech from my hon. Friend the Member for Delyn (Mr. Raffan) who referred to a rate increase by Clwyd of 4·8 per cent.

It was a poundage increase of 4·8 per cent., when on the basis of the settlement there could have been a reduction. That will produce a 5·5 per cent. increase in the poundage rate. I am glad to say that, thanks to the good performance again by the Delyn district authority, the rate burden for his constituents will be reduced, so that the increase will be only 4·9 per cent. in Delyn. That is an absolutely splendid example of an authority which is doing an outstanding job of providing services while running one of the best enterprise zones, yet can reduce the rate burden. That proves conclusively the nonsense of the argument that rate burdens must be increased to improve services.

The hon. Member for Caernarfon (Mr. Wigley) asked for a radical new look at local government finance and said that, in considering the system of allocation, we should take particular careful—

I have no intention of giving way to the hon. Gentleman—not after the speech he delivered.

The hon. Member for Caernarfon made, as he often does, a serious point about allocations to local authorities. Obviously, we shall take careful account of the varied needs of Welsh local authorities and we shall not make a change unless it is necessary. He asked for a radical new look at local government finance. I can promise him that, in the first Session of a Parliament after a general election, the next Conservative Government will introduce a radical reform Bill to put local government finance on a sounder basis and to remove the unfair burdens that this complex system has introduced. I am happy to give that pledge to the hon. Member for Caernarfon.

Question put:—

The House divided: Ayes 294, Noes 157.

Division No. 126]

[11.45 pm


Adley, RobertBottomley, Mrs Virginia
Aitken, JonathanBowden, A. (Brighton K'to'n)
Alexander, RichardBoyson, Dr Rhodes
Ancram, MichaelBrandon-Bravo, Martin
Arnold, TomBright, Graham
Ashby, DavidBrinton, Tim
Aspinwall, JackBrittan, Rt Hon Leon
Atkins, Rt Hon Sir H.Brooke, Hon Peter
Atkinson, David (B'm'th E)Brown, M. (Brigg & Cl'thpes)
Baker, Rt Hon K. (Mole Vall'y)Browne, John
Baker, Nicholas (Dorset N)Bruinvels, Peter
Baldry, TonyBryan, Sir Paul
Banks, Robert (Harrogate)Buchanan-Smith, Rt Hon A.
Batiste, SpencerBuck, Sir Antony
Beaumont-Dark, AnthonyBulmer, Esmond
Bellingham, HenryBurt, Alistair
Bendall, VivianButler, Rt Hon Sir Adam
Benyon, WilliamButterfill, John
Best, KeithCarlisle, John (Luton N)
Biffen, Rt Hon JohnCarlisle, Kenneth (Lincoln)
Blackburn, JohnCarlisle, Rt Hon M. (W'ton S)
Body, Sir RichardCarttiss, Michael
Bonsor, Sir NicholasCash, William
Bottomley, PeterChalker, Mrs Lynda

Channon, Rt Hon PaulHurd, Rt Hon Douglas
Chope, ChristopherJackson, Robert
Churchill, W. S.Jenkin, Rt Hon Patrick
Clark, Hon A. (Plym'th S'n)Jessel, Toby
Clark, Sir W. (Croydon S)Jones, Gwilym (Cardiff N)
Cockeram, EricJones, Robert (Herts W)
Colvin, MichaelJopling, Rt Hon Michael
Conway, DerekJoseph, Rt Hon Sir Keith
Coombs, SimonKellett-Bowman, Mrs Elaine
Cope, JohnKershaw, Sir Anthony
Couchman, JamesKey, Robert
Critchley, JulianKing, Roger (B'ham N'field)
Crouch, DavidKing, Rt Hon Tom
Currie, Mrs EdwinaKnight, Greg (Derby N)
Dickens, GeoffreyKnight, Dame Jill (Edgbaston)
Dorrell, StephenKnowles, Michael
Douglas-Hamilton, Lord J.Knox, David
Dover, DenLamont, Rt Hon Norman
Dunn, RobertLang, Ian
Durant, TonyLatham, Michael
Edwards, Rt Hon N. (P'broke)Lawler, Geoffrey
Eggar, TimLawrence, Ivan
Emery, Sir PeterLee, John (Pendle)
Eyre, Sir ReginaldLeigh, Edward (Gainsbor'gh)
Fairbairn, NicholasLester, Jim
Fallon, MichaelLewis, Sir Kenneth (Stamf'd)
Farr, Sir JohnLightbown, David
Favell, AnthonyLilley, Peter
Fookes, Miss JanetLloyd, Sir Ian (Havant)
Forman, NigelLloyd, Peter (Fareham)
Forsyth, Michael (Stirling)Lord, Michael
Forth, EricLuce, Rt Hon Richard
Fowler, Rt Hon NormanLyell, Nicholas
Franks, CecilMcCurley, Mrs Anna
Fraser, Peter (Angus East)Macfarlane, Neil
Freeman, RogerMacGregor, Rt Hon John
Gale, RogerMacKay, Andrew (Berkshire)
Galley, RoyMacKay, John (Argyll & Bute)
Gardiner, George (Reigate)Maclean, David John
Glyn, Dr AlanMcLoughlin, Patrick
Goodlad, AlastairMcNair-Wilson, P. (New F'st)
Gorst, JohnMcQuarrie, Albert
Gower, Sir RaymondMadel, David
Grant, Sir AnthonyMajor, John
Greenway, HarryMalins, Humfrey
Gregory, ConalMalone, Gerald
Griffiths, Peter (Portsm'th N)Maples, John
Grist, IanMarland, Paul
Ground, PatrickMates, Michael
Grylls, MichaelMather, Sir Carol
Gummer, Rt Hon John SMaude, Hon Francis
Hamilton, Hon A. (Epsom)Mawhinney, Dr Brian
Hamilton, Neil (Tatton)Maxwell-Hyslop, Robin
Hampson, Dr KeithMellor, David
Hanley, JeremyMerchant, Piers
Hannam, JohnMeyer, Sir Anthony
Hargreaves, KennethMiller, Hal (B'grove)
Harris, DavidMills, Iain (Meriden)
Harvey, RobertMiscampbell, Norman
Hayhoe, Rt Hon Sir BarneyMoate, Roger
Heathcoat-Amory, DavidMonro, Sir Hector
Heddle, JohnMontgomery, Sir Fergus
Henderson, BarryMoore, Rt Hon John
Hickmet, RichardMorrison, Hon P. (Chester)
Hicks, RobertMoynihan, Hon C.
Higgins, Rt Hon Terence L.Mudd, David
Hill, JamesNeale, Gerrard
Hind, KennethNelson, Anthony
Hirst, MichaelNewton, Tony
Hogg, Hon Douglas (Gr'th'm)Nicholls, Patrick
Holland, Sir Philip (Gedling)Norris, Steven
Holt, RichardOnslow, Cranley
Hordern, Sir PeterOppenheim, Phillip
Howard, MichaelOppenheim, Rt Hon Mrs S.
Howarth, Alan (Stratf'd-on-A)Osborn, Sir John
Howarth, Gerald (Cannock)Ottaway, Richard
Howell, Rt Hon D. (G'ldford)Page, Sir John (Harrow W)
Hubbard-Miles, PeterPage, Richard (Herts SW)
Hunt, David (Wirral W)Parkinson, Rt Hon Cecil
Hunt, John (Ravensbourne)Patten, Christopher (Bath)

Pattie, Rt Hon GeoffreyStewart, Allan (Eastwood)
Pawsey, JamesStewart, Andrew (Sherwood)
Percival, Rt Hon Sir IanStokes, John
Pollock, AlexanderStradling Thomas, Sir John
Porter, BarryTapsell, Sir Peter
Portillo, MichaelTaylor, John (Solihull)
Powley, JohnTebbit, Rt Hon Norman
Price, Sir DavidTerlezki, Stefan
Pym, Rt Hon FrancisThomas, Rt Hon Peter
Raffan, KeithThompson, Patrick (N'ich N)
Raison, Rt Hon TimothyThorne, Neil (Ilford S)
Rhodes James, RobertThurnham, Peter
Rhys Williams, Sir BrandonTownend, John (Bridlington)
Ridley, Rt Hon NicholasTownsend, Cyril D. (B'heath)
Rifkind, Rt Hon MalcolmTracey, Richard
Roberts, Wyn (Conwy)Trotter, Neville
Robinson, Mark (N'port W)Twinn, Dr Ian
Roe, Mrs MarionVaughan, Sir Gerard
Rost, PeterViggers, Peter
Rowe, AndrewWaddington, Rt Hon David
Rumbold, Mrs AngelaWakeham, Rt Hon John
Ryder, RichardWaldegrave, Hon William
Sackville, Hon ThomasWalden, George
Sainsbury, Hon TimothyWalker, Bill (T'side N)
Sayeed, JonathanWaller, Gary
Shaw, Sir Michael (Scarb')Walters, Dennis
Shelton, William (Streatham)Wardle, C. (Bexhill)
Shepherd, Colin (Hereford)Watson, John
Shepherd, Richard (Aldridge)Watts, John
Shersby, MichaelWells, Bowen (Hertford)
Silvester, FredWells, Sir John (Maidstone)
Skeet, Sir TrevorWheeler, John
Smith, Sir Dudley (Warwick)Whitfield, John
Smith, Tim (Beaconsfield)Whitney, Raymond
Soames, Hon NicholasWinterton, Mrs Ann
Speller, TonyWinterton, Nicholas
Spencer, DerekWolfson, Mark
Spicer, Jim (Dorset W)Wood, Timothy
Spicer, Michael (S Worcs)Woodcock, Michael
Squire, RobinYeo, Tim
Stanbrook, IvorYoung, Sir George (Acton)
Stanley, Rt Hon John
Steen, AnthonyTellers for the Ayes:
Stern, MichaelMr. Michael Neubert and
Stevens, Lewis (Nuneaton)Mr. Robert Boscawen.


Anderson, DonaldCook, Frank (Stockton North)
Archer, Rt Hon PeterCook, Robin F. (Livingston)
Ashdown, PaddyCorbett, Robin
Ashton, JoeCorbyn, Jeremy
Atkinson, N. (Tottenham)Craigen, J. M.
Bagier, Gordon A. T.Crowther, Stan
Banks, Tony (Newham NW)Cunliffe, Lawrence
Beckett, Mrs MargaretCunningham, Dr John
Beith, A. J.Dalyell, Tam
Bell, StuartDavies, Rt Hon Denzil (L'lli)
Benn, Rt Hon TonyDavies, Ronald (Caerphilly)
Bennett, A. (Dent'n & Red'sh)Davis, Terry (B'ham, H'ge H'l)
Bermingham, GeraldDewar, Donald
Bidwell, SydneyDixon, Donald
Blair, AnthonyDobson, Frank
Boothroyd, Miss BettyDormand, Jack
Boyes, RolandDouglas, Dick
Bray, Dr JeremyDubs, Alfred
Brown, Gordon (D'f'mline E)Duffy, A. E. P.
Brown, Hugh D. (Provan)Dunwoody, Hon Mrs G.
Brown, N. (N'c'tle-u-Tyne E)Eadie, Alex
Brown, R. (N'c'tle-u-Tyne N)Eastham, Ken
Brown, Ron (E'burgh, Leith)Evans, John (St. Helens N)
Caborn, RichardFatchett, Derek
Campbell-Savours, DaleField, Frank (Birkenhead)
Carlile, Alexander (Montg'y)Fields, T. (L'pool Broad Gn)
Carter-Jones, LewisFisher, Mark
Clark, Dr David (S Shields)Foot, Rt Hon Michael
Clarke, ThomasForrester, John
Clay, RobertFoster, Derek
Clelland, David GordonFoulkes, George
Coleman, DonaldFraser, J. (Norwood)
Conlan, BernardFreeson, Rt Hon Reginald

Freud, ClementMorris, Rt Hon J. (Aberavon)
George, BruceNellist, David
Gilbert, Rt Hon Dr JohnOakes, Rt Hon Gordon
Godman, Dr NormanO'Brien, William
Golding, Mrs LlinO'Neill, Martin
Gould, BryanOrme, Rt Hon Stanley
Hamilton, James (M'well N)Park, George
Hancock, MichaelPatchett, Terry
Hardy, PeterPendry, Tom
Harrison, Rt Hon WalterPike, Peter
Hart, Rt Hon Dame JudithRaynsford, Nick
Haynes, FrankRedmond, Martin
Heffer, Eric S.Richardson, Ms Jo
Hogg, N. (C'nauld & Kilsyth)Robertson, George
Holland, Stuart (Vauxhall)Robinson, G. (Coventry NW)
Home Robertson, JohnRooker, J. W.
Howells, GeraintRowlands, Ted
Hoyle, DouglasSedgemore, Brian
Hughes, Robert (Aberdeen N)Sheerman, Barry
Hughes, Roy (Newport East)Sheldon, Rt Hon R.
Hughes, Sean (Knowsley S)Shields, Mrs Elizabeth
Hughes, Simon (Southwark)Shore, Rt Hon Peter
Janner, Hon GrevilleShort, Mrs R.(Whampt'n NE)
John, BrynmorSilkin, Rt Hon J.
Jones, Barry (Alyn & Deeside)Skinner, Dennis
Lambie, DavidSmith, C.(Isl'ton S & F'bury)
Lamond, JamesSmith, Rt Hon J. (M'ds E)
Lewis, Terence (Worsley)Soley, Clive
Litherland, RobertSpearing, Nigel
Livsey, RichardStott, Roger
Lloyd, Tony (Stretford)Strang, Gavin
Lofthouse, GeoffreyStraw, Jack
Loyden, EdwardTaylor, Matthew
McDonald, Dr OonaghThomas, Dafydd (Merioneth)
MacKenzie, Rt Hon GregorThomas, Dr R. (Carmarthen)
McTaggart, RobertThorne, Stan (Preston)
Madden, MaxTinn, James
Marek, Dr JohnWardell, Gareth (Gower)
Marshall, David (Shettleston)Welsh, Michael
Martin, MichaelWigley, Dafydd
Maxton, JohnWilliams, Rt Hon A.
Maynard, Miss JoanWinnick, David
Meacher, MichaelYoung, David (Bolton SE)
Meadowcroft, Michael
Michie, WilliamTellers for the Noes:
Mikardo, IanMr. Allen McKay and
Millan, Rt Hon BruceMr. John McWilliam.
Miller, Dr M. S. (E Kilbride)

Question accordingly agreed to.


That the Welsh Rate Support Grant Report 1987–88 (House of Commons Paper No. 221), which was laid before this House on 19th March, be approved.

Rate Support Grant (Wales)


That the Welsh Rate Support Grant Supplementary Report 1986–87 (House of Commons Paper No. 222), which was laid before this House on 19th March, be approved.—[Mr. Sainsbury.]