Orders of the Day — Rate Support Grant (Wales)

– in the House of Commons at 9:28 pm on 15th July 1987.

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Photo of Mr Peter Walker Mr Peter Walker , Worcester 9:28 pm, 15th July 1987

I beg to move, That the Welsh Rate Support Grant Supplementary (No. 2) Report 1986–87, which was laid before the House on 8 July, be approved. In presenting this report I must say how impressed I am by the good working relationships that have been forged between central and local Government representatives in Wales since the inception of a separate Welsh rate support grant system in 1981, and by the effectiveness of the process of consultation between central and local Government in Wales.

The main purpose of this report is to ensure that additional expenditure provision and grant in respect of the teachers' pay award for 1986–87 is incorporated into the RSG settlement for that year. The report increases provision for relevant expenditure by £7 million in respect of the teachers' pay award and increases block grant by £5 million on that account.

The teachers have been awarded a substantial pay increase and my right hon. Friend the Secretary of State for Education and Science has asked them to be open-minded about devising effective, long-term machinery for settling questions affecting their pay and conditions. I am obviously encouraged that one union at least has decided to forgo further disruptive action and I hope that we shall now see an end to the disruption that has affected our schools for the past two years.

I have taken the opportunity, in the light of information now available from local authorities, to increase specific grants by £2·7 million to £177·4 million. This, together with the increase on account of teachers' pay, means that the report increases aggregate Exchequer grant by £7·7 million to £1,081·3 million. The aggregate amount of rate support grants and block grant are increased by £5 million to £822·1 million and £856·3 million respectively.

The first supplementary report for 1986–87 stated that the education pooling adjustment between England and Wales for the year would be carried out following the enactment of the Local Government Act 1987. That Act has now received Royal Assent and this report makes the adjustment, which each year compensates English authorities for the fact that more Welsh students are educated in England than are English students in Wales. A transfer of £3·5 million is made on account of that position.

In this report local authorities' revised estimates of current expenditure are £10·1 million higher than their budgeted expenditure reported in the first supplementary report and some £57 million, or 4·1 per cent. higher. than the Government's provision for current expenditure for the year. Total expenditure is some £31 million higher than provision; representing an overspend of £38 million by county councils and an underspend of £7 million by district councils. Ratepayers in Wales felt the consequences of this overspending by county councils in their rate demands for 1986–87.

When I met the Welsh Consultative Council on Local Government Finance last Friday I emphasised the need for all councils to work within the Government's expenditure plans. I would also remind it that extra grant is available to it if budgeted spending for 1987–88 is reduced. It knows that I am anxious to encourage local authorities throughout the Principality to adopt the best and most efficient management practices available, and I urge it to review the savings that could be achieved. Successive Audit Commission and Local Authorities Management Services and Computer Committee studies indicate the scope for real progress.

In my previous incarnation as Secretary of State for Energy, I looked into the potential for improving energy efficiency in local authorities throughout the United Kingdom. Some of the local authorities in Wales were some of the best authorities at coming forward with programmes that had reduced their expenditure on a considerable scale. Others are not pursuing such programmes. I would welcome a discussion with the local authorities on ways in which we could co-operate so that when there is some technical or management breakthrough or some management method that produces results that make expenditure more effective, it can be put into operation quickly throughout Wales. I commend my proposals for the supplementary report to the House.

Photo of Alan Williams Alan Williams , Swansea West 9:32 pm, 15th July 1987

I will be abnormally brief, partly because the Secretary of State and I have spent a long time in each other's company today discussing issues in relation to Wales, and partly because I find the rate support grant such algebraic gobbledegook that I am still trying to master the definitions of the definitions. However, I cannot promise that such brevity will be characteristic of our future exchanges on these issues.

The Secretary of State referred to the need for cooperation with the local authorities. I know from the district councils that they welcome such co-operation. I understand that there was a meeting, which they described as amicable—that is what we could expect with the Secretary of State—last Friday. The Secretary of State may care to tell us whether any meaningful progress was made.

The district councils have made it clear that they want more and better planned medium-term resources and a degree of stability rather than volatility in relation to the block grant settlements and capital spending powers. Whether these are long-term objectives that the Secretary of State sees as unattainable, I do not know. As a newcomer to the subject, I would appreciate his assessment.

The main financial element in this is the sum of £7 million towards the teachers' pay settlement. Settlement is the wrong word; I should say the pay imposition. We welcome the fact that belatedly and inadequately there is to be at least recognition by the Government that they got it wrong in relation to teachers. I am glad that this extra money is to be made available.

The tragedy for education is not just that we had the dispute but that in the course of the dispute and in the lead up to it—in the several years of erosion of the relative earning power of teachers—there has been a desperate loss throughout the country of key specialists and we will find it exceedingly difficult to attract them back. There is certainly a severe shortage of teachers, especially in the fields of mathematics, physics and design and technology. The Minister said that he hopes this will be the end of the dispute. I speak as one whose wife is a teacher, but net a militant one, and a member of one of the main teacher unions.

There is a tendency for the Government to misunderstand the sheer depth of anger among teachers who are not of a militant disposition because, as they see it, they have been despised over recent years. They are also angry because the Government have imposed rather than negotiated a pay settlement and have arbitrarily torn up the previous arrangement for negotiating. After all, we are dealing with mature, educated people who want at least to have a say in their own lives and prospects. In consultations with his colleague the Secretary of State for Education and Science the Minister will have to recognise that there is little chance of achieving the sort of peace that we want in our schools, certainly not with this £7 million, unless the Government come forward with some proper arrangements to provide meaningful pay negotiations.

I was alarmed by a report that the Secretary of State for Education is now talking in terms of imposing a no-strike rule on teachers. I hope that the report was incorrect. I know that the Secretary of State would be involved in such discussions. In a democracy I have no objection to people entering into no-strike agreements as long as they enter into them of their own volition. However, I find repugnant and unacceptable the idea that the Government would impose a no-strike arrangement on teachers. I hope that the Secretary of State will take this opportunity to say that the report which appeared the other day was a mistake. At least the extra money now available is a partial payment of the arrears owed to the teachers, and in that sense we certainly do not want to block it.

Photo of Mr Keith Raffan Mr Keith Raffan , Delyn 9:38 pm, 15th July 1987

As I understand it. this debate is on a Welsh rate support grant supplementary report to a Welsh rate grant supplementary report to a Welsh rate support grant report. I have every sympathy with the right hon. Member for Swansea, West (Mr. Williams) because it takes a bit of working out to find exactly where we are in terms of the annual debate on the rate support grant.

I was glad to catch the tail end of the previous debate and somewhat relieved to hear the assurance by my hon. Friend the Under-Secretary of State for the Environment that we shall have to go through this process for only another two years. In view of the difficulties that the right hon. Member for Swansea, West shares with me about understanding the RSG, I hope that this will convert him to the Government's proposed rate reforms.

These matters are complex and almost impossible to understand, though they can usually he simplified to the following equation. The Government provide increased grant, the Opposition says that it is not enough, to which we retort that we are not even convinced that local authorities are spending even their existing resources efficiently and effectively. As my right hon. Friend and the right hon. Member for Swansea, West have said, the biggest item in this second supplementary report is in respect of increased expenditure by county councils following increases in teachers' pay. My understanding of it is that there has not been a mistake by the Government that has led to the extra £7 million being provided. This was promised all along to allow for the May increase to the teachers for 1986–87.

As I said, when we discussed the last rate support grant supplementary report on 5 May, the Government's pay proposals for teachers are extremely generous and give the teachers a 16·4 per cent. pay rise which, added to existing increases, will mean that teachers will have received a 25 per cent. increase between March 1986 and September of this year. That pay award is unique in its generosity, and most other groups would be delighted to receive it.

Most of us know from our increased contact with the electorate over the past few weeks, particularly that with the teaching profession, on the doorstep if not actually in the schools, that pay is no longer an issue between the Government and the teachers. Negotiating machinery is still an issue and one that I hope that the Government will resolve, certainly by March 1990.

The Government have shown their generosity and determination to improve education and educational standards. I hope that local authorities, and especially Clwyd county council, will respond by ensuring that resources are spent more efficiently and effectively.

I can give two instances of where this is not happening in Clwyd. The first is surplus places. There are 22,300 surplus places in primary and secondary schools, in the county costing £3·5 million a year to keep empty. The Government have no wish to remove all those surplus places. Our target is to remove two fifths of them. That would save £1·4 million, which could be reallocated to good effect in the education budget. It is important that Clwyd makes progress in removing these places.

The Government are not anti-rural schools. We do not want to close all, or even many such schools. However, it is absurd to have schools with only nine pupils. That is not in the interests of the educational and social development of the children. They cannot have a school football team or a choir. Nor is it a way of realising the full potential contribution of a teacher when he or she has to teach so few pupils, often of different ages but in the same class. We have to look at this problem, particularly as I have in my constituency so many hard-pressed urban primary schools, some of them with classes numbering up to 43.

The second example of the inefficient use of resources by Clwyd county council, of its wrong set of priorities, is its arts project centred on Bodelwyddan castle. The project is costing a massive £545,000 a year to run, offset by an income of merely £11,000. I do not want to be thought idiosyncratic, but the expenditure at Bodelwyddan has risen to a worrying extent. I was reassured when, during the election campaign, my right hon. Friend's predecessor as Secretary of State was in my constituency, having recently visited Bodelwyddan castle. He thought that the whole project was "a shambles" and he was concerned about the amount of money that Clwyd was spending on it. Having visited the castle, he saw the points that I am making.

I see the hon. Member for Clwyd, South-West (Mr. Jones), who is a member of Clwyd county council smiling benignly. I do not want to put the hon. Gentleman on the spot in the way that I have put so many of his colleagues on the spot, but I notice that he is not rising to intervene and say that he is greatly in favour of the project. I know that he is one of the sensible people who is opposed to it and he is worried about the cockeyed priorities of the council.

Such expenditure of well over £500,000 cannot be justified when the schools and libraries book budget has been slashed since 1985 from £75,000 to £15,000. It has remained at that figure ever since, although an extra £18,000 was allocated for GCSE books this year. I regularly go round my constituency, as no doubt many colleagues go round theirs, and I am appalled by the state of the school library book stock.

The last time that I raised this subject in the House, I had the support of the hon. Member for Wrexham (Dr. Marek). I hope that the hon. Member for Clwyd, South-West will endorse my point as well. It is wrong that the county council in Clwyd is spending so much money on an arts project when it is not fulfilling its statutory obligations with regard to education.

I am also very concerned about the cuts in real terms in the school maintenance budget that have taken effect over the past few years. As a result of my visits to schools, I can endorse what the hon. Member for Clwyd, South-West said earlier this afternoon in the Welsh Grand Committee. He referred to the neglect of school building maintenance within the county. There is no doubt that that is false economy.

I recently visited Ysgol Bryn Coch junior school in Mold. The headmaster took me around the building. It has not been painted internally for 18 years. Posters are stuck up to prevent the plaster falling down on to children's heads. He showed me various spots which can be pressed in the corridor ceilings, from which water comes through even when it is not raining. The water drips gently when it is not raining, but they have to put out buckets when there is a heavy shower. Last Friday I visited Ysgol Gwenffrwd at Holywell. The window frames at that school have not been regularly repainted. As a result they are now completely rotten. The headmaster told me that an estimate has been obtained for completely replacing the window frames and that estimate was between £100,000 and £200,000.

Clwyd county council is neglecting its statutory obligations with regard to the education of children in the county. Parents have a right to be annoyed. I for one am quite prepared to go to the Welsh Office and ask my right hon. Friend the Secretary of State for more money for education in the county, but only when I am convinced that existing resources are being spent efficiently and effectively. At the moment, they are not. Clwyd is a rotten council and it has got its priorities wrong."—[Official Report, 25 March 1987; Vol. 113, c. 547.] Those are the words of the hon. Member for Wrexham, not mine. However, they reflect my sentiments. I hope that we members for Clwyd can form an alliance—with a small "a"—across the Chamber. We are members of different parties, but we represent the people and the children of the county. Together with the Government, the Secretary of State and the Welsh Office I hope we can bring home to Clwyd county council the fact that it has its priorities completely wrong. It must get its priorities right for the sake of the people of the county and of their children.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarfon 9:46 pm, 15th July 1987

Having made my customary remarks about the Secretary of State for Wales at another time, I welcome him to this continuing saga of debates on the Welsh rate support grant formula. Those of us who take part in these debates are becoming a bit of an inward-looking small crowd. The hon. Member for Delyn (Mr. Raffan) has hit upon a theme that he has hit on many times in these debates. I have been doing my homework. I looked at the similar debate on 18 July 1984when the hon. Member for Delyn spoke. Apart from attacking Clwyd county council, not surprisingly, he concentrated on Bodelwyddan castle. He referred to that in column 430 of the Official Report. Lo and behold, on 16 January 1985 in another rate support grant for Wales debate at column 434 of the Official Report, the hon. Member for Delyn again concentrated on Bodelwyddan castle. When the Secretary of State has had an opportunity to travel around Wales, he will get to know places Ike Bodelwyddan castle. However, in the meantime he will hear plenty about such places from his hon. Friend the Member for Delyn.

The other familiar feature of these debates is that we are discussing an incredibly complicated subject. It is the old saw that there were only three people who knew anything about this: one is dead, one has forgotten, and the other has gone mad. That is the feeling we get in these debates every year. The Secretary of State is new to this version of rate support grant debating. Some of us are perennially doomed to go on in every debate on the same subject.

Seriously, the right hon. Gentleman will have noticed already since he became Secretary of State for Wales that there is a different tenor to our debates on local government finance from those that he may have been used to in the English context. Sometimes, we have criticised Welsh local authorities for not pressing harder to spend where services need expenditure. However, by and large, over recent years, those authorities have followed Government guidance. To that extent, many authorities have asked whether we need the same mechanism in Wales as exists in England, which has been used in England against local authorities.

If the formula involves a punishment of loss of grant if expenditure exceeds a certain threshold, it inevitably causes difficulties for the treasurers on the finance committees of local authorities because they cannot plan ahead. That is especially so when there are uncertainties outside their own control, such as teacher's pay, for which they have to make forecasts for the coming year and make provision. It is not until three months after the end of a financial year that they know the exact amount of money that is coming through. Assurances will have been given but authorities would be afraid of overspending because of the loss of grant that would result. Often they will have held back on expenditure and then towards the end of the financial year, thinking that they will be all right, decide to accelerate certain projects. The result is that expenditure patterns may not follow real needs within local authority areas.

In opening this short debate, the Secretary of State underlined his hope that local authorities would underspend, as that would give them more grant. That is the logic of his remarks. If grant-related expenditure has any meaning at all, it reflects need in an area. Local authorities should be encouraged to spend up to that level and not to underspend. If they are underspending, they may not be providing some of the services that are needed so desperately in many communities in Wales.

The Secretary of State will be coming increasingly aware over the next few months of the various forms of deprivation that exist in various communities, and not only in urban areas. There is deprivation in the valleys, where there are housing problems, for example, and there is deprivation in rural areas that do not have the wealth of some of the richer English rural areas such as Worcester. In some rural areas in Wales income is particularly low, the maintenance of services is extemely expensive, and the expense falls on a relatively small rate base. This means that the pressure on local authorities to maintain a basic level of services is great. They have little room in which to manoeuvre.

I hope that we may move away from the sort of rate support grant debate that we are having this evening and which we have had over recent years. As the right hon. Member for Swansea, West (Mr. Williams) said from the Opposition Front Bench, we should be looking for greater stability. There should be a regime in which local authorities know what their resources will be and in which they will he compensated when changes take place that are outside their control. A rolling capital programme would enable them to make a coherent attack on needs in their areas. The present ad hoc capital programme often results in a rush of finance immediately before a general election, for example. We all know that many road improvement schemes were visible during the general election campaign. That cannot be said of this Government alone, because every Government will use the same tactics. There is a need for greater stability and a pattern within which planning and strategy can be shaped to meet real needs.

If there is a change from the present rate support grant structure and rate structure, I hope that there will be a means of maintaining equalisation in a way that meets the needs of communities. One of the factors that the Secretary of State may not have come across very often in England—it is to be found in certain English counties but in many areas of Wales—is sparsity and super-sparsity. I have no doubt that he will come across the factor increasingly in his deliberations with local authority associations.

Photo of Mr Dafydd Elis Thomas Mr Dafydd Elis Thomas , Meirionnydd Nant Conwy

Will my right hon. Friend accept that there is such a problem in areas such as the vale of Aberconwy, which is a sparsely populated area within my constituency? There is a much heavier density of population in the coastal area that comes within the constituency of the Minister of State, the hon. Member for Conwy (Mr. Roberts). There is the additional problem of the massive influx of tourists and the on-costs of tourism that are not reflected adequately in the rate support grant.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarfon

Indeed. This issue arose in the tourism debate two Fridays ago. We know that tourism brings advantages and resources to certain areas, but it brings additional costs as well. For example, there are the costs of maintaining roads, car parks and environmental services generally. In national park areas, there are costs to be met as well. We are looking for a formula—we work to one now and I have no doubt that we shall do so in future—that is sufficiently finely tuned to meet the deprivations of the valley communities, which are great, the problems of inner-city Cardiff, Swansea and Newport, and also those of the rural areas. It is necessary to have the wisdom of Solomon to arrive at the right balance.

We should be aiming at a level of service and if we can maintain a level throughout Wales in terms of social services, education, roads, environmental services and leisure services that is to be found in some of the more prosperous counties in England. we shall increase the real standard of living and the quality of life of our people. That must be our target—to establish standards in terms of what is obtained for the residents, and then to find a means of financing it. I know that it is easier said than done, but I hope that, as we move ahead from the present structure of local government financial support, it will be the main determinant of our policies.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor 9:54 pm, 15th July 1987

I welcome the Secretary of State's announcement of an additional £7 million for teachers' pay. However, I should like to concentrate almost entirely on one aspect of county council spending—that is, education spending. It is clear from the figures presented by the right hon. Gentleman that education spending accounts for £708 million, and is thus way ahead of any other part of the expenditure.

I want to concentrate on that because, as it is the biggest part of the expenditure, there are difficult problems to grapple with, particularly in Wales. I should particularly like to follow on from what was said by the hon. Member for Caernarfon (Mr. Wigley) about population sparsity in rural areas. In Powys, part of which I represent, the population is 111,000—only 4 per cent. of the total population of Wales—yet Powys covers 25 per cent. of the country's surface area. That creates tremendous problems of population sparsity. Powys also has 25 per cent. of the roads in Wales. The county council has to grapple with those factors to balance its budget.

I criticise the activities of the Audit Commission in this context. I know that the Secretary of State and his predecessor have relied on Audit Commission reports to make decisions. Those reports have been given to county councillors, who have also tended to make decisions on that basis. As a result of one such report, 13 small village schools in Powys were in danger of closure. The matter hung in the balance. Fortunately however, after two debates in the county council the proposals were thrown out. I think that the county council was quite right to make that decision, because only three weeks later the Secretary of State for Education had a conversion on the road to the general election and announced that village schools in England could stay open as well.

The district audit service paper set out to analyse and criticise the county council's expenditure programme for education. It calculated that Powys was spending £4 million above average on primary education. That analysis was wholly misleading, as no attempt was made to quantify the additional cost to the county of providing education in the most sparsely populated area in the whole of England and Wales. Powys is unique in that respect, and the additional cost is therefore fundamental The analysis also turns out to be educationally unsound.

It is all due to a lack of finance to take account of the sparsity factor. The distribution in Powys is one pupil per 26 hectares. The average in Wales being 4 hectares. The English average in non-metropolitan counties is 2·5 hectares. As a result of that disparity, school transport alone cost £1 million more in Powys than the average for primary and secondary schoolchildren and is three and a half times the Welsh average—just to cart schoolchildren around for excessive distances from their homes to their schools.

Photo of Mr Keith Raffan Mr Keith Raffan , Delyn

I should like to pin the hon. Gentleman down. He is always on about the issue of rural schools. But is his party prepared to support any rural school, irrespective of how small it is? Does he believe that it is in the interests of children to be taught in schools that are down to eight or nine pupils? Will the hon. Gentleman answer yes or no to that question?

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor

There are some unique cases. En my constituency there is a school with only 16 pupils. If, however, that school were closed, children aged four, five and six would have to make a 24-mile round trip for their education. That is a unique case, and the school must be kept open. Primary schools with 20 or 25 pupils need to be kept open in predominantly rural areas. In Powys, there are 46 primary schools where there are no more than 50 pupils on the school roll. Due to the geography, 41 per cent. of schoolchildren in primary schools live outside the large areas of population. In Powys, large areas of population mean communities of about 1,200, but that unique factor is not taken into consideration. Education in Powys costs 16 per cent. more than the average for the rest of Wales, but it receives only 11 per cent. of additional funding.

Because of the sparseness of population, the fire service costs 12 per cent. more than it does in the rest of Wales, and roads cost 128 per cent. more because the road system in Powys accounts for 25 per cent. of the Welsh road system. There are 1,700 road bridges in Powys, about half of which need to be repaired. The rate support grant settlements take no account of that fact.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

Does my hon. Friend agree that in the context of a Government who believe in parental choice for education it is most important that village primary schools should be maintained? The vast majority of parents in rural mid-Wales, particularly in my hon. Friend's constituency and in mine, infinitely prefer to send their children to village primary schools, and if necessary they are prepared to pay for the education of their children.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor

My hon. and learned Friend is correct. That is why there have been so many battles to keep certain schools open. It is the preferred option of those communities, some of which have grown in recent years. The school rolls have increased because people prefer to live in smaller communities.

Libraries cost Powys 15 per cent. more than the Welsh average. The Audit Commission's categories of local government expenditure bear no relationship to the sparsity of population in many parts of Wales.

Housing in Wales is crucial. For much of the day we have been discussing in the Welsh Grand Committee the poor housing stock in Wales. The Secretary of State should provide more houses to rent. He should also encourage housing associations to build more houses for key workers. Until the funds from the sale of council houses are released for the building of more houses, there will he insufficient houses to rent. We favour the sale of council houses to their occupants, but if insufficient houses to rent are being built there will be a housing crisis and long waiting lists. The Government must take that major factor into account.

I ask the Secretary of State to back the initiative of Powys, Dyfed and Gwynedd who have approached the European Community to obtain more funding and greater recognition of their plight because of sparsity of population. We suffer from under funding because we are not recognised as being eligible for grant aid. Intermediate development grant aid was taken from Powys in 1983. Therefore, that precludes us from financial assistance from the European Community—and is a source of funding that would assist us all round and, I believe, the Secretary of State, too.

Photo of Mr Peter Walker Mr Peter Walker , Worcester 10:04 pm, 15th July 1987

I share completely the view of the right hon. Member for Swansea, West (Mr. Williams) about the jargon of the rate support grant. When I was privileged to be the first-ever Secretary of State for the Environment—a position that I enjoyed immensely and that I found was one of the most exciting positions that one could occupy—the only thing that spoilt that position was having to deal constantly with the rate support grant. The only pleasure that I had in leaving that position was that I thought that at least I should never again have to deal with it. I believe that the unbelievable jargon of the rate support grant—this will doubtless cause me great difficulty in any coming negotiations—has been invented by the Treasury so that nobody can understand what is happening.

The right hon. Member for Swansea, West asked me about a point about stability that was put to me when I had a meeting with local authorities in Wales last Friday at the request of the district councils. Of course, I should like planning arrangements that would give local authorities the maximum stability. In fairness to all of us who are involved in government, whether local or central, I should say that the reality is that we are happy with stability when the level of expenditure is to our satisfaction, but we are massively against stability when it is not.

One point that was mentioned by the hon. Member for Brecon and Radnor (Mr. Livsey) was housing problems. From previous experience I know that one of the problems of suddenly increasing expenditure on housing improvements is that the jerry builder comes in on a massive scale very quickly and a lot of bad work is done very suddenly. It would be better if such things could be organised on a more planned and arranged basis.

On the teachers' pay offer—the right hon. Member for Swansea, West said that it had been imposed—I believe that many people in the country would like such a pay increase to be imposed on them. That increase was provided by the Government and I hope that as a result of it relationships will be improved. All of us are constituency Members of Parliament and, over the years, meet teachers and visit our schools, and we have immense admiration for the great majority of teachers and for the dedicated work that they do for our children.

My hon. Friend the Member for Delyn (Mr. Raffan) rightly referred to the problem of tackling surplus school places. It is not only a negative problem. As we all know from our constituency experience, the closure of any school of any description is unpopular with the parents whose children attend that school. However, we must weigh up carefully the costs that are involved in those surplus places and consider what that amount of money could do for education if it was better applied.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

Will the Secretary of State accept that when one is considering the closure of village schools, one of the factors that one should take into account—I recognise that it is only one of the factors—is the position of the school as part of the community, and not only its position as an educational institute?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Yes, of course I do. Indeed, there was specific mention of that in my party's manifesto at the recent election. I recognise that it would be easy for us all, as politicians, to say that we shall never be in favour of the closure of any school of any description and that that would be popular with the people who are immediately concerned. However, we do not have to face the other side of that equation. If the number on the school's roll is such that the expenditure involved is depriving other areas of education, a balance must be made. It is difficult ever to obtain that balance and to obtain popularity by supporting the idea that using that money elsewhere in the education system is wise and sensible.

My hon. Friend the Member for Delyn gave some examples of the expenditure priorities for his county council. He rightly concentrated on the important factors that parents consider to be the correct priority.

The hon. Member for Carnarfon (Mr. Wigley) dealt with some of the problems of planning and specifically mentioned the problems of tourism in some areas. I recognise that. At present a working party chaired by the tourist board with local authority and Welsh office representation has a remit to look for better methods of reflecting tourism needs. In due course I shall take account of the report and its results and consider them carefully. The potential of tourism in Wales is considerable, not just in terms of income and revenue, but in terms of job creation because it is a labour intensive industry. As the hon. Gentleman rightly said, tourism has far-reaching implications which affect local authority expenditure. I welcome the fact that at present this is being investigated and I shall examine the report with great interest.

The hon. Member for Brecon and Radnor concentrated on education and criticised the Audit Commission. I have seen the work of the Audit Commission in a range of Departments and it does a sophisticated, good job. Obviously, if auditors are suddenly called to investigate a matter, they are not aware of all the implications. I would hate us to get into the habit of thinking that the Audit Commission is foolish, so we will reject everything it says. As a Secretary of State in various Departments I have found that it has come to correct, sensible conclusions which have resulted in considerable improvements in efficiency.

On the other hand, if we think that the Audit Commission has reached conclusions without considering all the factors, the right process is for us to say immediately to it, "Interesting report, but we do not think that you have considered a, b and c. Look at those factors and come to a conclusion." The Audit Commission and LAMSAC, which is the local authorities' organisation for looking at efficiency, have produced good, valid reports. One of the disappointments is that some local authorities take them up and others do nothing about them. There is no doubt that when seeking to improve the efficiency of local authority expenditure we could learn a great deal from independent investigations which come up with ideas and suggestions.

I should like to discuss with local authorities in Wales how, when reports are produced, we can, throughout the Principality, consider them quickly and decide whether they are a bad idea. We can decide then not to put them into operation because they are wrong for whatever reasons, or to implement them because they are a good idea. If we do that we shall improve the efficiency of both local and central government.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarfon

The Secretary of State will be aware that from time to time the Audit Commission in Wales has been criticised. Sometimes it has been felt that the Audit Commission relates to a norm, an average or its experience in a generality of circumstances which may not correspond to highly different circumstances and localities, whether regarding rural matters or the Welsh language. Can the Secretary of State impress on the Audit Commission the need to be sensitive to the differences that exist from area to area?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Yes, of course. When we feel that the Audit Commission has got it wrong, instead of merely talking about it in a debate we should go directly to it and say, "You have done this before. We think you have got the report wrong for these reasons and we would like your comments on our argument against the report." Our relationship with the Audit Commission should not be hostile or particularly friendly; I want a genuine dialogue. We should look objectively at what it recommends arid take advantage of what we can.

I commend the order to the House. It will provide the local authorities of Wales with additional money which they require for the purposes related.

Question put and agreed to.

Resolved,That the Welsh Rate Support Grant Supplementary (No. 2) Report 1986–87 (House of Commons Paper No. 23), a copy of which was laid before this House on 8th July, be approved.