Orders of the Day — Local Authorities (Partnership Expenditure)

– in the House of Commons at 12:33 am on 23rd July 1981.

Alert me about debates like this

Photo of Mr George Cunningham Mr George Cunningham , Islington South and Finsbury 12:33 am, 23rd July 1981

I wish to raise a specific point in relation to the distribution of block grant by the Department of the Environment to local authorities—a point relating specifically to the partnership agreements between the Government and a number of local authorities, and particularly my own local authority, the London borough of Islington in association with the neighbouring borough of Hackney. Now, as in the past, the Islington borough council is extremely grateful to my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) who, when Secretary of State, initiated the partnership programmes. I am sure that all beneficiaries and other authorities will join in the congratulations for an imaginative initiative.

It is a topical time to be considering the matter—the Secretary of State is in the area of one of the partnership authorities, Liverpool—and it is an appropriate time, if only because the Secretary of State will have to do something when he has finished his listening period in Liverpool. The proposal that I am putting forward tonight is one sensible thing which should have been done some time ago and which could be put into a package of measures very relevant to recent events.

This is not the first time that I have raised the point. It was discussed at some length at a meeting at the Department of the Environment between representatives of Islington borough council, myself and Lord Bellwin on 1 October last year. At that meeting, I think that we persuaded the Minister of State that on another issue we were right on facts and he was wrong, and I hope that as a result of this debate and the correspendence that has taken place on the issue we can satisfy him and the Secretary of State—and the Minister of State who is with us tonight—that we have reason on our side.

Any discussions about rates have suffered enormously from the change in the system, because some hon. Members had just about got used to understanding the old system when we went over to the new one, and block grant distribution methods are of such complexity that it usually takes hon. Members a year or two to begin to understand them.

The Secretary of State has on occasion said that he is open to persuasion that changes are required. There are some rather obvious changes that are required, as illustrated by headlines that have appeared recently. It is, for example, the case that when, let us say, the GLC or the ILEA announces a supplementary precept, or any other precept, on the London boroughs, it is usually expressed in net terms. For example, the ILEA has recently announced a supplementary precept of 3·2p. But that is a net figure, and in order to collect that amount of revenue Islington borough council, because of the effect on the block grant of imposing that increase, would have to levy a rate of 4·7p.

The reason for that, of course, is that in London—I am not sure that this applies outside London—the block grant, although calculated separately for the precepting and the rating authorities, is distributed only to the rating authority, and the upper tiers, the GLC and the ILEA—and the Home Office in respect of the Metropolitan Police precept—are to some extent insulated from the block grant consequences of the precepts that they make.

That is contrary to the principle of direct accountability that was supposed to be behind the new system. I realise that that point is a little to the side of the subject matter of this debate, but it is well worth the Minister of State's looking at it, because it is in conflict with the principle of accountability, and I hope that the Minister will look at it at leisure.

Islington's position on block grant can be put baldly like this. This is before we come specifically to partnership expenditure. In 1980–81, Islington's total expenditure—including that in respect of others—was about £103 million, and our grant from the Government was £42 million. So we were getting about 40 per cent. of total expenditure from the grant, which over the years has been about the normal average percentage.

In 1981–82, our total expenditure as at this moment stands at about £112 million, and our grant expectation—subject to some qualifications that I shall make later—is about £31 million, which means only 28 per cent. of expenditure being met from the block grant—an enormous reduction from the previous figure of 40 per cent. But those figures do not take account of the penalties and the clawbacks, which reduce the figure of £31 million block grant to £25·3 million block grant, which means that the block grant will be meeting only 23 per cent. of total expenditure, compared with a figure of about 40 per cent. over the years and as recently as 1980–81.

I mention that background, because that is the enormously serious change that we have endured. It is against that background that we come to the specific partnership point. In Islington, approved partnership expenditure in the present year is approximately £6 million, of which roughly £2 million is capital and £4 million revenue. The £2 million capital partnership expenditure is not really relevant to the argument tonight, so we are left with the £4 million of revenue expenditure. That is money that is met 75 per cent. by the Government and 25 per cent. by Islington borough council on the rates.

At the moment, Islington is in excess of the penalty threshold in the year 1981–82 to the tune of £1.4 million. But the rise in partnership revenue expenditure over the relevant period, that is from 1978–79 to 1981–82, has been £2.4 million. Both those figures are 100 per cent. partnership expenditure, that is, the part that is met by Government and the part met by the borough council. The whole of the excess over the threshold is accounted for, and more, by the rise in partnership revenue expenditure. If the partnership revenue expenditure rise were excluded from the calculation, Islington would be £1 million below the threshold. If we deducted only the Government's 75 per cent. of the £2.4 million figure, Islington would be approximately £500,000 below the revenue threshold. It means a lot to us. It is the partnership expenditure only that has put Islington over the top of the penalty line.

I contend that it is of the nature of partnership expenditure and the intention behind it that it should be additional to other expenditure—additional in the sense of being additional to one authority in relation to other authorities. I do not imply that it must be free of Government expenditure control. Of course it must not. The Government will take partnership expenditure, both by themselves and by the local authorities, into account when they are deciding the total of public expenditure. It will be a line in the PESC calculations. That goes without saying. But the partnership idea makes no sense if it does not result in a relatively greater expenditure in those areas that are partnership authorities compared with those that are not.

I accept that many of the projects and purposes upon which partnership expenditure goes are projects and purposes that could be financed out of normal local authority expenditure, but I make two points on that. First, some of those projects and purposes are not the same as those financed from normal mainstream finances. Secondly, even in the case of expenditure that is the same as that which is financed normally, we have additional expenditure on that kind of project and purpose, and it was the intention of the partnership programmes to ensure that certain purposes were met which would not otherwise be met and that certain kinds of expenditure which might otherwise have been restricted were less restricted as a result of this new programme of money provision.

The fact that in Islington's expenditure under the partnership schemes there is expenditure of a kind which is very similar to items on the mainstream budget is not an argument against my case.

Let us imagine a situation in which a partnership authority went just up to but not beyond the penalty threshold, and the local authority, in agreement with the Government, decided that a certain project of a significant size under a partnership scheme ought to be initiated. The effect of that, under present arrangements, would be to push the authority into the penalty area, and a penalty would be imposed upon it because the Government thought that a certain project was a good one, the local authority agreed, and that project was initiated. I have only one word to describe such a situation. It is absurd.

The most explicit formulation of the present position that I have seen was given in a letter at official level to Islington borough council dated 15 April 1981: Ministers have repeatedly said that if an authority decides to increase expenditure in one particular area within the current expenditure definition, counterbalancing savings must be made in other areas. So far as it goes, that is sensible. It is not possible to work local authority expenditure control on any other basis as a general rule. But the letter goes on: This argument applies to the case of Partnership expenditure as much as to any other element of current expenditure. That is where I say that that is absurd.

There is no point in having this programme unless in some sense it is seen as an addition which does not have to be compensated for by reductions elsewhere.

Photo of Anthony Steen Anthony Steen , Liverpool Wavertree

As I understand it, the hon. Gentleman is making two points. The first is that the partnership money should be taken out of the prescribed levels and should be completely separate. The second is that, if it stays in, because it is under the urban aid programme and the 25 per cent., the more money the Government give, the poorer the less well-off local authorities will become.

Photo of Mr George Cunningham Mr George Cunningham , Islington South and Finsbury

I am not sure that I have understood the second part of the hon. Gentleman's question. But I understand the first part, and the answer is "Yes". Although the Government must have control over partnership expenditure, as over other expenditure—and not only as to the individual project, but as to the total—it makes no sense to put the partnership expenditure in with all other local authority expenditure and to assume that when the partnership expenditure is increased, other expenditure must be decreased. Manifestly, that makes nonsense of the concept, and the Government can give up that notion without giving up the control of public expenditure generally or local authority expenditure generally.

Photo of Anthony Steen Anthony Steen , Liverpool Wavertree

The second point was that partnership money comes under the urban aid programme. The whole concept of partnership in the White Paper "Policy for the Inner Cities" was that it would be financed in an additional urban aid programme. It was lumped together with the urban aid programme and called partnership money. Therefore, a little of the urban aid programme was called partnership funds, but they were still under the 75–25 per cent. formula. Therefore, the greater the 75 per cent. that the Government give, the greater will be the 25 per cent. that the local authorities give. The poorer local authorities, which got the partnership money anyway, became poorer the more the Government gave of the 75 per cent. Does the hon. Gentleman see what I mean?

Photo of Mr George Cunningham Mr George Cunningham , Islington South and Finsbury

I think I do, but I do not think that there is a way out of that. It: is important that there should be a local authority contribution to the expenditure to instil a degree of responsibility in the projects put forward. The more expenditure there is—unless it is financed 100 per cent.—the more these particularly deserving local authorities will have to raise to meet their part of the total. But, in order to instil financial discipline and responsibility into the initiation of projects which come from local authorities, there should be a minimum percentage—whether 25 per cent. is right or not—for the authorities to meet out of their own resources.

I should like to refer to another sentence in a letter from Lord Bellwin to me dated 25 November last year. I had put to him the question: what happens when an additional project is chosen which puts an authority over the top of the penalty threshold? He said: If an authority were to bring itself within the scope of the transitional arrangements"— in other words, the penalties— by taking on an additional partnership project, it would have increased its volume of planned expenditure. It would have the choice of making an offsetting reduction elsewhere in its budget. That is an illiterate way of saying that it would have to make an offsetting reduction elsewhere in its budget if it did not want to incur the penalty. The Government are clear that this is the consequence of the present method of doing things. I assert that that is absurd and not in the spirit of the intention of the initiation of the partnership idea.

I am less certain whether my argument in respect of partnership expenditure should be extended to all other expenditure of a similar type where the Government meet 75 per cent. and the local authority meets 25 per cent. But perhaps I am now speaking very much as a representative of a partnership authority. There are specific grants which are not intended to be discriminatory as between one authority and another, but partnership money is absolutely discriminatory. The whole purpose was for it to discriminate.

The degree of Government control over partnership expenditure is very high and detailed compared with most other forms of local authority expenditure. Each project has to be approved by the Government. I have been told—and I can hardly believe it—that when Islington receives requests from firms for small grants, rent-free periods, or other matters of that nature, individual applications of that sort have to be approved by the Department of the Environment, or at least there is a trend towards requiring individual approval of such applications—not programmes—for assistance of this kind.

The Department of the Environment has all the control that it needs over the total and the detail of partnership expenditure. It does not need this belt and braces method of controlling it in its own right in detail, at the same time pushing it in with general local authority expenditure in the way that it does now.

Again, Lord Bellwin acknowledged the extent of the Department of the Environment's control in his letter to me of 25 November last year. He said: I would not dispute that partnership expenditure is particularly subject to Government control, in the obvious sense that Ministers are personally and permanently involved in the decision-making process in each partnership area. This clearly differs from their much less direct involvement in spending on the other services supported by specific grants. Moreover, as you say, the ultimate control over all partnership spending does lie with Ministers. So the Minister is acknowledging that, in respect of partnership expenditure, there is a different regime of control from the one that applies to other expenditure, and that in itself would justify the change that I am urging tonight.

What kind of thing is this money used for in the case of Islington, which I expect is fairly typical of the practice in other partnership authorities? Out of the £6 million total to be spent this year on both capital and revenue, the three biggest classes of use are employment, housing and social services. Employment-related expenditure accounts for more than a quarter of the total. Housing, which is mainly capital, accounts for about £1 million out of this £6 million. Social services account for rather more than £1 million.

Looking at individual projects, and now only individual projects in their revenue expenditure, Inner Urban Areas Act rent-free periods are likely to account for about £300,000 in the present year. The borough's employment office, which is so much needed in an area where the rate of unemployment is pushing 15 per cent., accounts for something approaching £100,000. Unemployment is difficult to assess, because people can register in more than one unemployment benefit office—either they live in another area and register in ours, or they live in ours and register elsewhere.

Assistance to firms is likely to be about £500,000. Housing neighbourhood management will be about £400,000 and race relations-related projects will be about £110,000. I pick out of that housing neighbourhood management, likely to cost about £400,000. That clearly is an example of expenditure of a nature that could be met out of normal local authority revenue. It is not different in kind in the way that employment expenditure is different in kind from the rest. But part of the idea behind the partnership proposal was that there were some parts of the country that had problems, not least housing problems, that did not need a different kind of expenditure, but needed far more expenditure than could otherwise take place. That is what justifies the expenditure of £400,000 or so on housing management.

Let me now try to anticipate, and I hope rebut, some of the arguments that the Minister will bring forward and with which we have become so familiar over the months. He will say, first, that there are no sharp lines of division between different forms of local expenditure, that at any rate urban aid and partnership expenditure can certainly be compared with expenditure that is subject to other specific grants, perhaps transport-specific grants. I would dispute that, on the ground that the transport-specific grant, for example, is one that applies throughout the country and was never intended to provide a benefit and increased expenditure for some selected areas as compared with other selected areas.

Secondly—and I hope that the Minister will not make this point, because we have heard it so often and it it totally irrelevant—it may be said that it would mean that the Government would lose control of public expenditure. Of course the Government must have control of all expenditure, and they would say that they must have exact control of all local expenditure. I do not agree, but even if I put myself in their position for the moment, I maintain that they can have control of all local authority expenditure, while still making the change that I am recommending, and which has been put to the Department of the Environment by Islington borough council.

Would the change undermine the Government's control? No, it would simply apply it by a different method. I make that point, because in a letter to me of 25 November 1980 Lord Bellwin made a great issue of it. He talked of the need for the same overriding constraint of our policies of public expenditure as a whole being needed in this area. He said that these grants remain within the overall framework of the Government's public expenditure plans. At the end Lord Bellwin said that the Government must ensure that local authority spending is consistent with its own spending plans. He said all that as if it was the answer to my proposal. But all that it totally irrelevant to my proposal, because he can have all that and still alter the arrangement.

I suggest that for the purposes of assessing whether a local authority has passed the threshold for having a penalty imposed in its block grant, partnership money should be excluded. Either 100 per cent. of the money—the Government bit and the local authority bit—should be excluded or, at least, the 75 per cent. Government bit should be excluded. There can be arguments about which approach is right.

If the partnership money were excluded, the Government would retain complete control over how much was spent on partnership, and no one has questioned their control of that, and, under the present arrangements, complete control—though they should not have it—over all the rest of what local authorities spend. It is only a question whether they have control one way or another way. The way that we do it now negates the purpose of partnership; the way that I suggest it should be done would retain the purpose of the partnership, while retaining complete control for the Government.

As I said at the beginning, we should consider this specific point in relation to recent events—the riots and the now acknowledged need to renew our interest and activity to assist the inner city areas with their severe problems. The Secretary of State is in Liverpool and will have to put together a package of measures to assist these areas. Therefore, he has the impulse to do something at this stage. He has a small change here which can easily be done. It has been pressed on him by me, Islington borough council and by the AMA, with which there have been discussions. I strongly advise the Minister that this is the time to make the change and that it positively begs to be made.

It is clearly a change that should be made in respect of 1982–83 and thereafter, but, in the light of recent events, it is essential that it should also be made in respect of 1981–82, even if that means, as I acknowledged that it may, some additional expenditure compared with what would otherwise have been made.

Photo of Anthony Steen Anthony Steen , Liverpool Wavertree 1:04 am, 23rd July 1981

I shall not detain the House for long, but I feel that the important matter raised by the hon. Member for Islington, South and Finsbury (Mr. Cunningham) calls for comment from this side of the House. It demonstrates that an overall urban strategy is needed by the Government—if not a Minister for urban areas, at least a strategy for urban areas.

This Government, like all Governments in the past, suffer because one Government Department does one thing and then another Government Department does another and negatives the thrust of the first Government Department. In this case, it is worse, because the pull and push back both come from the same Government Department. One part of the Department of the Environment says that it must revitalise the urban areas, and another part is clawing back the funds which the other part gave.

The Government have inherited this situation. In my view, the partnership is a misnomer, and begs the question. First, it is no partnership. Partnership means that all parts of the community come together for the benefit of the community. Yet the one aspect of the partnership set by the Labour Administration is that it excludes the private sector, and it also excludes the community, the neighbourhood groups and the voluntary organisations. It should be made clear that here partnership means Government, local government and the health authorities. It does not mean the community or the neighbourhood. It is certainly no partnership.

If I have a criticism, it is that the partnership is no more than the topping up of the urban aid programme, and the piece that it has topped up has a huge bureaucratic administration which controls, administers and organises the tiny piece at the top. For the rest, the ordinary urban aid principles apply. The local authority submits its list to the Department of the Environment, missing out the bureaucracy of the partnership committee, and then the Department of the Environment merely sends it back to the local authority, disapproved or approved, and pays over the 75 per cent. for the schemes that have been approved. But for the tiny piece of topping-up partnership money, there is a bureaucracy—in some areas, I am told that as many as 60 people attend the meetings—made up of local officials, health authorities, local authority and Government, and various civil servants from Whitehall, who determine how that tiny piece is to be used. It is nonsense in Toxteth in Liverpool, which is part of a partnership area, that the black groups, the community groups, the neighbourhood groups and the settlement houses there are all excluded from the partnership, as are the private sector, private industry, private finance, insurance companies and building societies. That Leaves solely the Government, local government and the health authorities to control that small piece.

The important issue that the hon. Gentleman raised is the tip of an iceberg. It raises a series of other questions. It should be put in the context of the Government's approach to urban areas. It is not just an inner city problem, but an outer city problem as well. The problems of the vast council estates on the edges of the great industrial cities are as serious and as great as those of the inner areas. However, whenever one talks about urban areas or cities, people immediately think of the inner city. The inner city is the flashpoint at the moment, but as most of the population has deserted the inner city—except in the case of London—and has gone to the outer areas, the Government would be unwise, in considering partnership and the urban strategy, not to look at the flashpoint of the future. I believe that that flashpoint will be the vast soulless and apathetic council estates on the edges of the city, on former green field sites, where there Is no community, little neighbourhood and where the family unit has been destroyed.

The hon. Member for Islington, South and Finsbury raised matters which are specific and important for Islington but probably equally important in the other partnership areas.

I hope that the Minister will not only deal with that specific point but will tell the House about the problems of partnership. I hope that he will re-examine the programmes which I have always thought to be of little consequence. In practice they have involved many people in deciding how to spend a small amount of money. The schemes were little more than window-dressing by the last Administration to convince the electorate that the Government cared about the inner cities. In fact, they have done little either to bring more money into the inner cities or to involve the community. It must be involved if the problems of inner neighbourhoods are to be tackled effectively. We cannot expect partnerships to work if they exclude the people for whom they aim to provide and if they are administered by a bureaucracy, central or national, which tells the community what it thinks is good for it.

The argument is that, since the local authority puts up 25 per cent. of the money, it will vet the applications. The system does not work like that. Often local authorities are told that for 25 per cent. they can have a new scheme because the Government will provide 75 per cent. of the cost. I know of one local authority which has told voluntary organisations "Raise the 25 per cent. and we shall put your application forward. It will cost us nothing since the Government will provide the other 75 per cent."

Clearly that was not the Government's intention. The whole matter must be reviewed. The partnership was never a partnership and has outlived its useful purpose. The Government must embark upon an urban strategy which considers the city as a whole and does not depend on a little extra public money to top up an already expensive urban aid programme which does not involve the people, the community or private sector in the decisions which affect the people living there.

I hope that the Minister will in his answer give some hope to people living in both the inner and outer city.

1. 12 am

Photo of Mr Tom King Mr Tom King Minister of State (Department of Environment) (Local Government)

I shall first respond to the points made by my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) because he has taken the debate wider. I should like to comment on the present structure of the partnership programme and the way in which the arrangements work. The Government have sympathy with the partnership concept.

The hon. Member for Islington, South and Finsbury (Mr. Cunningham) set out the objectives. The Government have endorsed and supported those objectives, although they were initiated by the Labour Government. The mechanisms are becoming complicated and bureaucratic. They involve much paper work and many committees and they are losing sight of the objectives in the original concept.

Anyone starting such a project is bound to run into problems. Our aim is to find ways of simplifying and streamlining the system. We have sought to streamline the partnership arrangements. We have sought to involve the voluntary and private sectors. My right hon. Friend the Secretary of State has been especially active in trying to involve, for example, the chambers of commerce in the economic part of the urban programme because they have a major contribution to make.

My right hon. Friend is currently in Liverpool, both as a senior member of the Government and as the chairman of the Liverpool partnership. That enables him to discuss with the county council, the city council and a whole range of other bodies in the city the issues that they face. His unusual position as chairman of the partnership, has given him the opportunity to discuss matters more widely and with much greater freedom than might fall to another Minister without that responsibility. I understand what my hon. Friend the Member for Wavertree says. I understand why he is anxious to stress not only the absolute inner city issues but the peripheral problems of the major cities, of which we are conscious.

I turn to the speech of the hon. Member for Islington, South and Finsbury, which was on a specific aspect of the treatment of urban programme funds, possible treatment under block grant, and any proposals for hold-back of grant that might apply in any targets or spending levels that the Government seek to achieve. We are referring to the question of the treatment of such urban programme funds for 1981–82, which comes under Class XVIII, Vote 1. We are not dealing with 1980–81, which is a separate issue. He will understand why I cannot make any comments on that matter.

I accept the hon. Gentleman's fair presentation of the arguments. It was extremely well researched, as we expect from him. I understand that, although as the hon. Member for Islington, South and Finsbury he has an interest in a certain authority that is a recipient of partnership funds, he was seeking to make his point not exclusively in connection with that but with the general principle of the treatment of urban programme funds. He made certain general points about the principles on which they should be treated. He correctly said that the issues have been raised by the Association of Metropolitan Authorities, not on behalf of any individual authority, but on the general principle for all authorities in receipt of urban programme funds.

The hon. Gentleman referred to the complexities of block grant. I never allow a moment to pass without defending the logic, clarity and simplicity of the block grant system, which I am sure appeals to an intellect of his capacity. He is familiar with the previous system. He knows that it was not of such clarity as to make it comprehensible to the layman. He referred also to the problems that arise under block grant with the complexities of the precepting arrangements. There are real problems in precepting. The concept of two tiers of authority in which one authority is the rate collector for another is one that introduces complications and confusion about accountability. I understand the difficulties that arise.

Photo of Mr George Cunningham Mr George Cunningham , Islington South and Finsbury

Is the Minister able to tell me—I genuinely do not know the answer to this—whether the arrangement that applies in London also applies outside London whereby the block grant, although calculated for the various tiers, is distributed only to the bottom tier? Is that the situation generally throughout the country, or is it special to London?

Photo of Mr Tom King Mr Tom King Minister of State (Department of Environment) (Local Government)

I have an awful feeling that someone will say "You have forgotten the Isles of Scilly" or something like that, but, leaving out irrelevancies of that sort, it is true to say that the arrangement is exclusive to London. It was done at the request of the GLC. The arrangement applied previously and it was felt that the issue would be confused if the arrangement were changed. It is a matter of judgment whether it is the best arrangement.

Photo of Mr George Cunningham Mr George Cunningham , Islington South and Finsbury

Recently when ILEA, for example, decided to precept to the tune of 3.2, that was the figure that was announced publicly, even though the grossed up figure that one would need to levy would be in Islington's case 4·7.

Photo of Mr Tom King Mr Tom King Minister of State (Department of Environment) (Local Government)

London poses particular problems. In the rest of the country only two authorities are involved. In inner London there is the GLC, ILEA, the Metropolitan Police and the London boroughs. One cannot blame London ratepayers if they become confused about where their ire should be directed, for example, following the announcement of substanial rate increases. It is confusing. In the rest of the country there are only two authorities—the district, or borough council, or the metropolitan district, and the county council. That is much simpler, but even that is not perfect.

The hon. Gentleman referred to penalties. There has been no decision on whether to impose penalties. My right hon. Friend the Secretary of State said that if the excess expenditure over the Government's public expenditure targets were of the order that the original budgets indicated he had in mind to propose to the House a hold-back of grant of £450 million. Until we receive the revised budgets—the closing date is 31 July and they take some time to assess and quantify—we shall come to no decision whether there will be any hold-back, or penalties, whatever term the hon. Gentleman chooses to use. Even then Ministers will not make an arbitrary decision. The issue will have to be submitted to the House. The implications and consequences will have to be presented clearly and the House will have to take a decision. Much depends on the outturn whether there will be any hold-back or penalties.

The hon. Gentleman's arguments are directed to the inclusion of the urban programmme—revenue expenditure—within the target. He fairly accepted that it is public expenditure. It is not a different form of money that counts in the overall range of the Government's public expenditure concerns. We have heard the point which the hon. Member made and we recognise that it has certain force. It is a specific direction of public funds identified and supported by Government to a significant extent—the 75 per cent. level mentioned by the hon. Member—in recognition of what are felt to be particular areas of need on a scale greater than in other authorities.

Having made his arguments that this should be excluded from the normal criteria of targets, the hon. Member then said that certain arguments would be advanced by me which he thought he would deal with in advance so that I would not need to deploy them. I was not going to use any of them, but I am willing to allow the hon. Member the freedom of the air to put up some arguments and knock them down again.

The hon. Member has made certain points about the way in which the urban programme funds should be fairly treated in any assessment of penalties and hold back for this year and the way in which the baseline and the target levels should be calculated. He mentioned the urban programme. He will not be surprised to hear that a range of authorities have mentioned to us many different reasons why, in their case, or in the case of their class of authority, there was an issue of general principle. That could be a question of target levels or baselines which were inappropriate because of a general issue which should be taken into account in the treatment of such baselines or target levels.

I have made it clear that we have taken no decisions on that matter yet, nor shall we consider those issues until we have the revision of budgets. If that is satisfactory, there will be no question of any hold-back in any case. If the revision of budgets does not produce sufficient evidence that the outturn for local government will be in line with the public expenditure figures which the Government have suggested in their public expenditure White Paper the country can afford, we shall have to consider the issue of hold-back. We shall then have to consider the issues of principle that have been raised and the general application which might affect groups of different authorities.

Photo of Anthony Steen Anthony Steen , Liverpool Wavertree

Perhaps my right hon. Friend can help me on this point. With regard to the urban aid programme in the partnership authorities, am I right in thinking that the partnership funds, although under the urban aid programme, are treated in a different way because they are subject to the partnership committee's decisions, whereas the other part of the urban aid programme which existed before the partnership committee came along and has gone on expanding is not subject: to the partnership committee?

Photo of Mr Tom King Mr Tom King Minister of State (Department of Environment) (Local Government)

Not as far as I am aware. If that is incorrect, I shall write to my hon. Friend.

We shall consider the matter, but we shall not: take decisions until we know the outcome of the revision of budgets. However, we are willing to listen to representations on general points of principle such as those the hon. Member for Islington, South and Finsbury has raised. He put his case fairly. There is an obvious point of principle, which it is fair to raise. I regret that I am unable to give an assurance as to what our judgment will be. However, I can say that we shall consider the points as objectively as we can. I understand why he has taken the opportunity to raise them.

Photo of Mr George Cunningham Mr George Cunningham , Islington South and Finsbury

Perhaps the Minister can be a little more helpful on timing. He said that no decision would be reached until better figures came in from the local authorities at the end of July. Are local authorities likely to have an answer by, say, the beginning of September? Decisions will have to be taken by them around that time. Would it be unrealistic to expect an answer by the end of August?

Photo of Mr Tom King Mr Tom King Minister of State (Department of Environment) (Local Government)

It would be optimistic to think in terms of the end of August. However, we are anxious to provide this information at the earliest possible date, for the reasons that I know are at the back of the hon. Gentleman's mind. I cannot give him an undertaking. He will appreciate that we cannot anticipate the quality of the returns, and there may be a number of queries that need resolution and clarification. A lot of work will have to be done, and decisions will have to be taken. I can give no assurance about dates. I entirely understand why the hon. Gentleman emphasises the importance of an early answer, and we shall be anxious to make the earliest possible announcement. However, it is not possible to indicate the time scale tonight.