Orders of the Day — Local Government Finance (Wales)

Part of the debate – in the House of Commons at 8:46 pm on 12th February 1992.

Alert me about debates like this

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor 8:46 pm, 12th February 1992

The altercation that I had with the Secretary of State about finance in Powys is causing serious concern within the county, and I hope that there will be an early opportunity for the chief executive and representatives of that council to meet the Secretary of State to discuss the matter. The standard spending assessments hardly cover inflation, especially when it comes to current teachers' salaries.

There will be further expenditure which local authorities will have to incur because of recent legislation. The Children Act 1989, in particular, places responsibilities on local authorities necessitating more resources. The same is true of community care and other recent legislation.

In the settlements recently announced by the Secretary of State there are winners and losers. I thank him for a good settlement in Radnorshire. Unfortunately, his Department has blotted its copy book with Radnorshire in the past couple of days, something that I shall refer to later.

The Secretary of State has been a little miserly in the settlement for Powys. Powys is setting a community charge of £100 which is spot on what the Secretary of State proposes. It has tried its best to work within his guidelines. The inevitable result, given the threat of capping, of some current settlements that authorities have achieved will be a cut in services in the coming financial year. In the districts there is a very sad story, with the failure to release funds from council house sales which has failed to fund the necessary housing to rent and will certainly fail to solve the housing crisis and resulting homelessness. As has already been mentioned, just over 70,000 people in Wales are on housing waiting lists. That is a serious and human problem, which confronts families every day.

The Secretary of State has engaged in a discussion—almost a debate—with the hon. Member for Swansea, East (Mr. Anderson) about the level of community charge collection. In previous years, the collection rate in my part of the world has reached 97 per cent., which is higher than the average of around 94 per cent. to which the Secretary of State referred. Local authorities in the area have been very responsible, although, like some hon. Members, they do not agree with the principles of the community charge.

The Government's distribution of cash to local authorities is very much a lottery. As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) pointed out, the system is complex and difficult to understand. It needs to be simplified, because the formulae involved create distortions.

As I have said, we in Powys are very dissatisfied with our standard spending assessment. In an earlier intervention, I made a slight slip. I said that the revised assessment was 6·3 per cent., against a Welsh average of 8·2 per cent.—about 2 per cent. behind. Every time the Welsh Office revised the figures over the months between December and the present time, slightly less was allowed for in Powys. I do not mean that as a deliberate slight on the Secretary of State and his staff, but the fact remains that the regression analysis used to calculate the figures appeared to give Powys a smaller reward over those months.

That needs some examination. The knock-on effect has meant a cut of £600,000 in Powys's education budget, and many schools in the local management of schools scheme are having to cut their budgets. In recent weeks, I have come across many village primary schools whose LMS budgets face cuts of between £12,000 and £20,000—and that, of course, means cuts in essential services.

It is an enormous problem and it is compounded to some extent by the teachers' pay settlement. It all depends on how the counties have made their calculations for the coming year. We in Powys welcome the 7·5 per cent. settlement: teachers deserve a good settlement. It could have been better, but at least they have reaped some reward—although I suspect that it constitutes something of a sweetener. We have seen the same kind of sweetener in many parts of the public sector; we are, after all, within weeks of a general election.

Although it is welcome, that 7·5 per cent. settlement does not cover the requirements of teachers' pay throughout 1992. The local authority must find a further 2·3 per cent. from the previous year. My authority's full-year costs for 1991–92 represent an additional I per cent., and it faces a total 9·8 per cent. increase in teachers' salary costs. That shortfall must be met from the SSA settlement of 6·1 per cent.

We must take account of the precepts on county budgets. The Dyfed-Powys police authority, for example, has a precept of 11 per cent. in the coming financial year. That is way above the inflation level, but the county must find resources to assist the police authority. The land drainage precept has been increased by 10 per cent.—again, way above inflation. That puts the county budget in a difficult position. Then there are capital financing charges of 8·7 per cent. That must be added to the cost of extra pupil numbers in schools, and the implementation of the Children Act 1989. The additional demands on the county budget must be met; something has to give.

The district councils are also experiencing variable results. Until the announcement by the Welsh Office on 11 February, we thought that the Radnorshire settlement announced on 20 January was fair. Somewhere along the line, however, Radnorshire lost £90,000 between the two dates. That is causing considerable problems for the Radnorshire treasurer, because many details of the budget had already been worked out. I know that the Secretary of State will be receiving representations from the district. In local authority finance terms, £90,000 may not sound much, but—as the Secretary of State well knows—Radnorshire is a relatively small authority.