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Rate Support Grant (England)

Part of the debate – in the House of Commons at 5:11 pm on 26th July 1983.

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Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford 5:11 pm, 26th July 1983

The two reports and our debate are part of the long saga of successive Governments' efforts to persuade local authorities to keep their spending within what the nation can afford. The saga stretches well back into the previous decade. The first crunch came in 1975. That was the year in which local authorities overspent at today's prices by about £300 million. The House will recollect that it was one of my predecessors, the late Anthony Crosland who, speaking in Manchester town hall in May 1975, told local authorities bluntly "the party is over." The simple truth is that some of the guests are still carrying on their merry-making unrestrained by any thought of what either the nation or their ratepayers can afford.

My two immediate predecessors, my right hon. Friends the Secretaries of State for Defence and for Transport found themselves obliged to apply ever more stringent disciplines on local authorities to try to persuade them to budget responsibly. Many local authorities have done so but a good many—;too many—;have not. So we have had, in succession, block grants with taper, and targets with holdback. It is with the latter, for the two years 1981–82 and in the current year 1983–84, that these two reports are principally concerned.

In 1981–82 local authorities were budgeting above the expenditure targets laid down by Government. It was therefore decided to hold back Government grants worth £201 million. In the event, some of the local authorities concerned spent below their budgets. It is, therefore, right that the grant holdback should be reduced. The figure in the report is now £124 million. The main purpose of this third rate support grant supplementary report for 1981–82 is to implement that reduction.

The purpose of the other report—;the first 1983–84 supplementary report— is to implement the Government's proposals for block grant holdback for authorities that have budgeted in excess of their 1983–84 expenditure targets. On the basis of those authorities' budgets—;I stress that at this stage we can go only on their budgets—;the 1983–84 holdback amounts to £280 million. Both reports also make various technical adjustments, including a correction, in the 1983–84 report, of a mistake to authorities grant-related expenditure assessments and to block grant entitlements.

The two reports do not reflect any new policy or any new decisions by the Government. All they do is bring before the House the consequences for the relevant local authorities of their own spending decisions in the light of announced Government policy. When these reports were published at the beginning of the month, the right hon. Member for Manchester, Gorton (Mr. Kaufman) treated the announcement as though it were some terrible. new, shock-horror story that I had somehow sprung on an innocent and unsuspecting local authority world. Of course, the right hon. Gentleman knew that it was nothing of the kind. Every authority named in the report knew how to calculate and almost certainly had calculated how much the grant holdback would be in respect of the two years in question. For the current year, 1983–84, the targets were announced a year ago. The details of rate support grant and of the holdback scheme were announced last December. As the right hon. Gentleman will know because he took part in it, they were approved after a debate in the House last January. So, when the authorities drew up their budgets for this year, they have what the consequences for their rate support grant would be.