Welsh Rate Support Grant

Part of Points of Order – in the House of Commons at 11:27 pm on 20th December 1988.

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Photo of Paul Flynn Paul Flynn Shadow Spokesperson (Health) 11:27 pm, 20th December 1988

The town of Newport has been uniquely punished by the settlement. Newport's block grant for 1989–90 is to be £5,810,000—a mere £245,000 higher than the grant for the current year, if the council spends precisely at the level that the Welsh Office is assuming for grant purposes. It represents an increase of 4·4 per cent. in grant, which is expected to cover inflation —the Government forecast that it will be 5·3 per cent.—the preparation costs for the community charge, which the Welsh Office estimate will amount to £450,000, and the library service in Newport, which is being transferred in April from Gwent county council at a cost of about £1 million.

Newport is sharply disappointed about the settlement. Just four weeks earlier the Welsh Office published provisional information about Newport's claim. The Secretary of State said that these sums are sometimes beyond the comprehension of ordinary people, but the extraordinary people in the Welsh Office and in Government got their figures wrong to the tune of 55 per cent. The settlement means that Newport's grant for next year will be £318,000 lower than the previous settlement.

The grant settlement implies a rates increase of 16 per cent., if we disregard the libraries. We do not know whether the county council precept is to be reduced. If it is not, there will be a 21 per cent. rates increase. But it could be even worse. The Government's assessment of inflation at 5·3 per cent. appears very optimistic, especially as local authorities are affected mostly by pay inflation. Inflation is running at about 6·4 per cent., but pay inflation is about 9 per cent. Interest rates are high and seem set to remain high for a long time.

The Welsh Office has produced an arithmetic explanation for Newport's grant, but that has highlighted and concentrated attention on the Byzantine intricacy of the scheme. It may be thought reasonable to bamboozle members of the public and ratepayers, but it is not a good scheme if it manages to bamboozle the experts who administer it so that they produce an error of 55 per cent.

If Newport increases expenditure by 5·3 per cent. for inflation and adds the community charge preparation costs, the grant settlement implies a rate increase of at least 16 per cent. The Welsh Office consoled Newport council by saying that it was no worse off than 12 other Welsh councils. How do we square that with what the Secretary of State said about modest rate increases? We have to look to the transfer of the library services and perhaps the Secretary of State can tell us something about that when he replies.

For some 18 months we have had the experience of the Secretary of State for Wales in his intensive peregrinations around the country stirring up a manic optimism which has had a considerable effect in Wales. Last Friday the first national opinion poll showed that since the Secretary of State took office support for Labour has risen by a heartening 8 per cent. and support for the Conservative party has plummeted. There is a record number of Labour councillors on Newport borough council and Labour gained four seats in this year's election. That is not entirely due to the Secretary of State for Wales and his contribution to Welsh life, although he has contributed to the resurgence and consolidation of the strength of the Labour party in Wales. It is also due to the work of the local authorities. The Newport local authority has a splendid record of fine stewardship of the town's affairs, and providing good services at good value prices.

The people of Newport will not blame the local authority for the swingeing increases. They will point the finger for the unreal and unfair settlement at the Secretary of State. He is picking the pockets of the ratepayers in Newport.