Rate Support Grant

Part of the debate – in the House of Commons at 12:00 am on 12 December 1974.

Alert me about debates like this

Photo of Sir John Morris Sir John Morris Secretary of State for Wales 12:00, 12 December 1974

We are dealing with the rate support grant—in other words, with current expenditure. That is the basis of the guidance that will be issued.

I was asked about the starting point in terms of various authorities, which may vary as regarding existing staff, and the need for some flexibility. We feel that it is an essential feature of the rate support grant settlement for 1975–76 that local authorities should provide for no extension in present total staff numbers beyond small increases necessary to meet inescapable commitments. Central and local government will institute joint arrangements for keeping a watch on local authority staffing, but it will be for individual local authorities to decide how to allocate their staff resources in a period of restraint. So far as it goes, I hope that that will provide the necessary flexibility which has been urged upon us.

I was asked whether the Government estimate of a 25 per cent, average increase in rates took account of the July special rate relief scheme. I think that my right hon. Friend answered that point in the affirmative in his speech earlier in the debate. As to distribution, no scheme is perfect, and certainly no scheme would meet with a unanimity of welcome from all parts of the House. One hon. Member some years ago, in view of certain criticisms which had been levelled on that occasion on a rate support grant system, thought that there would be less criticism if the Secretary of State chartered an aircraft, loaded it with gold, took it over the various local authority areas and, according to his fancy and what he saw beneath him, handed out large amounts of gold.

Some of these schemes have been the object of criticism in the past. What we have done this time is certainly an improvement on what was done in the past. I think that speeches today have indicated that the differences and objections are very much less than they were previously.

First, it is right to point out that the basis of the formula is fairer. This time we have been looking at the new local authorities' expenditure estimates for 1974–75, not at what the old local authorities spent in the past year. These estimates are more up to date and avoid all the problems of apportioning figures to one area which originally related to a somewhat different area. Besides, in our calculations we have adjusted the figures to avoid penalising low-income areas.

Secondly, we are using better social indicators. The 1974–75 formula included something called a "personal social services unit" based on the numbers of social workers, home helps, and so on. That was not an indicator of social need at all. It measured what authorities were doing about their social needs. That is a completely different matter which depends as much as anything on what the authority can afford to spend. Therefore, this year we are using indicators of general social conditions: high population density and population decline, which are generally symptomatic of stress areas, and the numbers of elderly people living alone who not only place a substantial demand on the social services in themselves but tend to be concentrated in areas of poverty and deprivation.

Thirdly, next year we shall be getting rid of the so-called "high cost weightings" which the last Government added to the formula at a very late stage. These gave more money to the inner and outer South-East counties and the outer West Midlands, but not, be it noted, the West Midlands conurbation. We sought in vain at that time for some explanation why goods and services were supposed to be cheaper in Birmingham than in Bromsgrove.

Fourthly, we are giving more help to London. I realise that my hon. Friend the Member for Woolwich, East (Mr. Cartwright) and the hon. Member for Hampstead (Mr. Finsberg) would like substantially more. I think that everyone agrees that London has unique problems. Indeed, that could be said in varying degrees about other parts of the country. Rate bills in London are very high. The previous administration included a 3 per cent, weighting in the 1974–75 formula— less generous than their inner South-East weighting.

This year there has been a substantial increase in the London and fringe area location allowances—far more than the authorities concerned had budgeted for in setting their rates. In the increase order we are making a special addition to the London grant and, to demonstrate our complete impartiality, to the grant paid to the counties round London which also had this new burden thrust upon them. Next year, too, London will have an 8 per cent, weighting as against the original 3 per cent, for the current year.

Fifthly, we are increasing the resources element from 27½ per cent, to 32½ per cent, of the aggregate of the needs and resources elements. This will benefit areas, including Wales, which are relatively poor in rateable resources. These are all improvements. While they will help many deserving areas, of course authorities elsewhere will do less well.