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Orders of the Day — Local Government Finance

Part of the debate – in the House of Commons at 4:40 pm on 1st February 1995.

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Photo of John Gummer John Gummer Secretary of State for Environment 4:40 pm, 1st February 1995

I beg to move, That the Local Government Finance Report (England) 1995–96 (House of Commons Paper No. 161), which was laid before this House on 30th January, be approved. I understand that with this it will be convenient to discuss the following motions: That the Special Grant Report (No. 12) (House of Commons Paper No. 162), which was laid before this House on 30th January, be approved.That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1995–96 (House of Commons Paper No. 163), which was laid before this House on 30th January, be approved. Our proposals this year are rigorous, as they need to be if local government is to play its part in fighting inflation and to increase prosperity and jobs in commerce and industry. They are also, inevitably, more complex this year because of the establishment of the new police authorities. We have worked with local government to minimise any turbulence resulting from that change, and I am particularly grateful for the practical help that local authority associations continue to give, even where we may differ on the political judgments that have to be made.

On 1 September, I issued my settlement proposals for consultation. They included the total provision for local authority spending, the central support for that expenditure and my proposals for calculating standard spending assessments. I also announced provisional capping criteria. My right hon. and learned Friend the Home Secretary announced his proposals for police grant on the same day. Since then, my colleagues and I have met many delegations from local authorities and received many written representations.

We considered carefully all the points that were made during the consultation. My final decisions in respect of grants and notional amounts are embodied in the reports before the House. Of course, final decisions on capping criteria are taken after local authorities have decided their budgets.

Local authorities account for about a quarter of Government spending. Any Government who are serious about controlling public expenditure must, therefore, take real account of what councils spend.

I announced on 1 December my proposal for total standing spending for England for 1995–96 of £43.51 billion. I hope that the House will recognise just how large that figure is and how important, therefore, it is in the general consideration of the health of the economy. It included the English element of police grant, which is distributed on a formula basis in England and Wales. In the light of consultation—the details of which I shall come to later—we have decided to adjust slightly the balance of police funding between England and Wales, with the result that the final TSS figure for England for 1995–96 will be £43.507 billion. That represents an increase of £843 million—or 2 per cent.—compared with last year's figure. It includes £647.6 million transitional community care special grant.

Leaving aside the increase in provision for community care, my proposals still amount to an increase of just under 1 per cent. in provision year on year. The total aggregate external finance for England will be £34.686 billion. The revenue support grant element of that total will be £18.314 billion.

We have had to make tough decisions on all areas of public spending this year, and this settlement is no exception, but I believe that, seen against the background of low inflation, low pay settlements and the scope for efficiency, the provision is fair and realistic.