Local Government Finance (Wales)

Part of the debate – in the House of Commons at 4:24 pm on 20th July 1989.

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Photo of Mr Peter Walker Mr Peter Walker , Worcester 4:24 pm, 20th July 1989

I congratulate the hon. Member for Alyn and Deeside (Mr. Jones) on the thunderous cheers that he received at the end of those remarks. It is easy for someone in his position to say, "What a dreadful thing is being imposed on us." Wales is having 85 per cent. of all local government expenditure being financed by the Government and only 15 per cent. being put on the community charge. That would be the envy of England and Scotland, yet the hon. Gentleman says, "How terrible it is."

Let us consider what the local government associations have said about the talks and so on and about how disappointed they are at the figures. On every occasion—certainly in my lifetime, and I am sure the same is true of the hon. Gentleman—all local authorities under all Governments have been disappointed at the figures. I am sure that in the last few years they have been disappointed while we have been in power, when the support to local authorities has gone up by only a small amount in real terms, and I admit that.

But how they must have felt when the hon. Member for Alyn and Deeside was a Minister at the Welsh Office I cannot imagine. In 1976–77, the figure went down by 4 per cent. in real terms; in 1977–78 it went down by 8 per cent.; and in 1978–79 it went down in real terms by 4 per cent. If they are unhappy now, they must have been in tears when Labour was last in office. I suggest, therefore, that the hon. Gentleman should not concentrate on that aspect.

In terms of the retail prices index, it must be remembered that we are referring to the year 1990–91 and that we cannot be certain what the rate of inflation will be at that time. The hon. Gentleman referred to interest rates in relation to inflation. With house mortgage interest rates, it stands at 8·3 per cent., and without them it is 6 per cent.

In terms of local authority interest rates, a great volume of borrowing has been borrowing long, so the average increase in their interest rates is far lower than, for example, the average for house purchase. Thus, without that aspect they are much nearer the 6 per cent. than the 8·3 per cent. now.

I am the first to admit that the standard community charge, with the safety net, will mean an increase for the Rhondda. But I am glad to say that next year Rhondda will remain the lowest community charge authority in Wales—and, if it were in England, it would be the lowest community charge authority in England.

We appreciate that there are many people on low incomes in the Rhondda. The benefits under the rebate system will mean that in the coming year, with the safety net, the average payer in the Rhondda will obtain £72 more in rebate and service charge than he or she will pay in community charge. Therefore, instead of a rebate of 100 per cent. under the rating system, they will be getting a rebate of 130 per cent. under the new system. I hope that hon. Members will ensure that the people of Rhondda are aware of those benefits.

I am glad to say that it is estimated that businesses in the valleys will benefit as a result of the change in the business rate by about £10 million a year.