Local Authorities (Expenditure)

Oral Answers to Questions — Employment – in the House of Commons at 12:00 am on 8th December 1982.

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Photo of Mr Anthony Durant Mr Anthony Durant , Reading North 12:00 am, 8th December 1982

asked the Secretary of State for the Environment if he is satisfied with the capital expenditure plans of local authorities.

Photo of Frank Dobson Frank Dobson Shadow Spokesperson (Education)

asked the Secretary of State for the Environment when he proposes to inform local authorities of their additional capital expenditure allocations, pursuant to his departmental letter of 29 October.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

Forecasts following first quarter returns suggested that local authorities would underuse their capital resources this year to a disappointing extent. I therefore announced at the end of October that additional allocations would be available to any authority able to achieve extra capital work in the present financial year and that authorities could increase their spending on improvement grants this year without limit. There has been an encouraging level of demand for additional allocations, which are being issued as quickly as possible to give authorities the maximum opportunity for investment this year.

Photo of Mr Anthony Durant Mr Anthony Durant , Reading North

Is my right hon. Friend aware that many local authorities are nervous of the revenue implications of his proposals? However, will he remind them that improvement grant, land clearance and share purchase arrangements are avenues that could be pursued and have small revenue implications?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

I am grateful to my hon. Friend for making that point. He is right. That is why so many local authorities have taken advantage of our offer.

Photo of Frank Dobson Frank Dobson Shadow Spokesperson (Education)

If the Minister is so proud of the extent to which local authorities have used capital receipts from non-housing sales, will he explain why he intends that in future they should be permitted to spend only 50 per cent. and not all of their capital receipts from non-housing sales? Is this just another sign of the right hon. Gentleman's incapacity to put the interests of local government and the people who depend on its services before those of the Treasury?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

The hon. Gentleman does not understand how the system works.

Photo of Frank Dobson Frank Dobson Shadow Spokesperson (Education)

I understand it only too well.

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

The object of introducing the 50 per cent. constraint is to enable us to make larger allocations to other organisations, including local authorities, which want to spend money, as there are so many local authorities which are not spending the facilities that are available to them.

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill

Will the right hon. Gentleman explain how he squares his advice to local authorities to spend, spend, spend on capital projects with his decision last week to reduce Liverpool city council's housing investment programme for capital schemes by £7 million?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

The hon. Gentleman must realise that that is not what has happened. He is confusing the facility of the city council to spend with the allocations that are issued. He has taken no account of flexibility or the capital receipts that are available to that authority.

Photo of Mr Den Dover Mr Den Dover , Chorley

Will my right hon. Friend report whether he is making any progress with regard to the ability of local authorities to roll their capital allocations into the next financial year if they are unable to spend them before the end of March?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

Local authorities have some flexibility to carry forward their programmes. They have complete flexibility to carry forward their capital receipts. A substantial flexibility has therefore been introduced by the Government. The fact remains that there are significant numbers of local authorities that are not spending within the ceilings available to them. The Government's desire to secure constraint on current consumption is perfectly compatible with our anxiety to achieve the capital programmes for which we have made public expenditure provision.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

Is the right hon. Gentleman aware that my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) was right and that the right hon. Gentleman is in conflict with his own statement on the subject? Why has he changed the rule to reduce the amount of capital allocation spending to 50 per cent.? Is he aware that prudent local authorities of all political persuasions which have saved up their capital receipts for major capital expenditure now find themselves in the most serious circumstances? Will this apply to capital receipts that have already been built up for that purpose to 1 April next year? Is he aware that in my constituency there is a major saving programme to build a leisure centre and that the local authority has prudently saved the money from capital receipts rather than borrowed it? Is he aware of the local authority association's anger at his decision and will he revise it?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

No. To revise that decision would mean withdrawing the substantial increases that I have made for the derelict land programme, the urban programme and the water programme because of the capital receipts that are available. I cannot believe that even Opposition Members would want us to do that.

Local authorities that have a specific plan to spend over and above the ceilings that are now prevailing are, in the vast majority of cases, in contact with our Department to see how we can overcome their problems.

Photo of Mr Peter Rost Mr Peter Rost , Derbyshire South East

Is my right hon. Friend encouraging local authorities to increase spending on energy conservation in buildings that are under their control? Does he agree that that can be increased quickly and reduce revenue costs?

Photo of Mr Michael Heseltine Mr Michael Heseltine Secretary of State for Environment

Many local authorities make those decisions for themselves. Although we are sympathetic to programmes of that type, we have not given direct advice about how local authorities should increase capital programmes. Each local authority reaches its own priority. The ceiling of headroom within which they are now able to increase expenditure is so substantial that there is no need to specify the areas to which they should give priority.