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Rates

Volume 889: debated on Tuesday 25 March 1975

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12.51 a.m.

I am grateful to have this opportunity of raising the subject of rates in South-East Cornwall—a matter which in the past year has provoked widespread concern and intense feeling throughout the area.

The reasons that I wish to bring this important issue to the attention of the House and to the Minister are very clear indeed. Within the Bodmin parliamentary division are located three district authorities. Of these, two, namely, Restormel and North Cornwall, are only partly within the Bodmin division, while the whole of the Caradon District Council area falls within my constituency. All ratepayers, whether domestic or commercial, within these three local authorities have had to face very large increases in the actual amounts they have to pay in rates over the past two years.

I wish to give some examples of the magnitude of the increase which domestic ratepayers are having to meet in the Bodmin constituency. If we compare the total rate demand that a person living in that part of Caradon which corresponds to the area covered by the former Liskeard rural district council will have to pay in the forthcoming financial year 1975–76 with what he paid two years ago in the financial year 1973–74, we see that, on average, he now faces an increase of 145 per cent. I emphasise that that is the actual payment he is obliged to make.

Likewise, for the remaining constituent parts of Caradon, domestic ratepayers living in the former St. Germans Rural District Council will have to find on average an increase of 141 per cent. in the former Saltash Borough Council area, the figure is 124 per cent.; in Liskeard Borough Council, 117 per cent.; and in the case of Looe and Torpoint Urban District Council areas the increase is 105 per cent. in just two years.

Taking a typical household in Bodmin, which now forms part of the North Cornwall district authority, the average increase in rates for the same two-year period has been 118 per cent., while the domestic ratepayer in the former rural borough of Lostwithiel, now located in Restormel, has had to meet rate increases of about 120 per cent.

The Minister may remind the House that increases of the scale that I have mentioned are not peculiar to my constituency. However, I remind him of two additional facts. First, these significant rate increases have been imposed on an area in which average incomes are significantly below the national average. In fact, in the year ending April 1973 average weekly earnings in Cornwall were 14 per cent. below the national average gross weekly earnings figure of £41·90.

Secondly, 18 per cent. of the population of the Bodmin division are of retirement age or over. In other words, they are people who depend on fixed incomes of one kind or another. These people form the very section of the community who are most vulnerable to changes in their financial commitments of the scale demanded by these rate increases and least able to remedy their personal financial situation.

I ask the Minister to consider urgently the possibility of introducing some form of local income assessment as an additional criterion in determining the level of Government assistance to local authorities through the rate support grant system.

The various reasons for ratepayers having to face these enormous increases during the past two years have been well rehearsed both inside and outside this House, the principal ones being the effect of inflation, the introduction of a new structure of charges for water and sewerage, and the withdrawal of the differential domestic element of the rate support grant. This latter change by the present Labour Government in April 1974 has had a particularly penal effect in South-East Cornwall.

This brings me to the crucial question of what can and should be done to alleviate the burden for the coming year, 1975–76.

I believe that the Government will shelter behind two facts. First, they will point out that they have established the Layfield Committee to inquire into the whole matter of the financing of local government.

Secondly, the Minister, in his reply, will no doubt, understandably. mention that for the year 1975–76 central Government's contribution to local government expenditure through the overall rate support grant will be just over 66 per cent., compared with 60·5 per cent. last year. This I accept, but it brings small comfort to those ratepayers in South-East Cornwall whom I have already described at a time when inflation alone is running at a level of 20 per cent.

Furthermore, while we recognise that the domestic element has been increased from 13p to a flat rate of 18·5 p in the pound for the forthcoming year, we in the rural South-West observe that the corresponding figure for Wales this coming year will be 36 per cent.

My constituents are still awaiting a satisfactory explanation of the reasons for this differential in favour of Wales. The combined average amount of general rate and regional water authority general services charge payable in 1974–75 per domestic hereditament in Caradon was £67·64, compared with a combined average figure for Welsh districts of £45·78.

I now turn to the position of water and sewerage charges. All three local authorities represented in my constituency are paying a disproportionate burden. Former local authorities constituting Caradon undertook major sewage disposal projects in recent years. The South West Water Authority fixed a levy of 16p in the pound on the ratepayers for 1974–75. Had the principle of equalisation of sewerage charges been introduced in 1974–75, the equalised sewerage charge in Cornwall would have been 7·84p in the pound, and ratepayers in Caradon would be paying 8·16p in the pound less. Restormel ratepayers would be paying 2·46p in the pound less, and those living in North Cornwall 0·58p in the pound less. I hope that the Minister will put the maximum pressure on the South West Water Authority to equalise its charges.

I believe that local authorities which at present pay sewerage rates above the equalisation figure should not be subjected to any further increases until their current figure is reached, otherwise existing inequalities will be perpetuated, which can only lead to even greater changes in the distribution of emphasis when equalisation is eventually introduced—something which the Jukes Report was anxious to avoid.

Before leaving the subject of the regional water authority, I request the Minister to use his influence to prevent the South West Water Authority from going ahead with its present intention of introducing direct billing. This seems to me to be insensitive and unproductive. We are all anxious to save unnecessary further expenditure. It is estimated that direct billing will cost £300,000, which can be passed on only to the consumer. Local authorities already have the structure, and there will be no savings in costs. While the water rate and general services charge are linked to rateable value, it appears to me both sensible and practical to ask local authorities to continue with this function.

Finally, I turn to the position of the smaller commercial ratepayers. During the past few years these people have been subjected to a number of financial pressures, including increased taxation, pricing policies by successive Governments, increased wages for their staffs, the increase in the national insurance contribution if they are self-employed and increased rents. Those are common characteristics throughout the country, but not least in South-East Cornwall. Many small business men and traders face acute financial problems. I ask the Minister to consider the suggestion of bringing small businesses, subject to a maximum rateable limit, within the ambit of the domestic element relief provisions.

I hope that the Minister will not hide behind the Layfield Committee. We cannot wait until the autumn, when the report is due and then for a further period while the Government deliberate the findings. Immediate interim action is urgently required. This could take two forms—either a continuation in 1975–76 of a further variable domestic relief on the lines of the July measures of 1974 or a switching of responsibility from local to central government for teachers' salaries and the provision of essential services like the police and fire service. There are more than twice as many taxpayers as ratepayers in this country. Such a decision would ensure a wider and fairer method of meeting the cost of these services. Ratepayers in South-East Cornwall are looking to the Minister tonight not only for sympathy for their problems but for a promise that he will be prepared to take the necessary remedial action.

1.06 a.m.

In Bodmin, parties come and parties go. I am very optimistic, but I hope that it will be third time lucky for the Labour Party there. As an old friend of his in the House, I am delighted that the hon. Member for Bodmin (Mr. Hicks) is back to raise the problems of his constituents. His predecessor, during his very brief spell, was tireless in raising the problems of rating and water charges in the constituency, and the hon. Member is not to be outdone. Only last week I answered a Question from him on the same subject and already he has raised the matter on the Adjournment. I make no complaint about that. It is the prerogative of hon. Members to raise questions which concern their constituents.

The previous incumbent of the hon. Member's seat set an excellent example by his strenuous efforts to bring the rate rebate scheme to the attention of his constituents. The hon. Member said that many are old-age pensioners and low-paid workers. I make no excuse for repeating that the rate rebate scheme, which was introduced with the present rating system, and which in fairness is basically the scheme introduced by the hon. Member's party, with some amendments by us, can give considerable relief to many people who are not claiming it, particularly pensioners and low-paid workers. Knowing the hon. Gentleman as I do, I know that he will urge all those entitled to make a claim, because they will only be asking for that to which they are entitled.

I am glad of the chance to set the record straight about the rate support grant in Bodmin. These are complex matters, and public understanding is not helped by the frenetic attempts of some righ hon. and hon. Members opposite to conceal the inglorious role they played in them. It is clear that a certain bewilderment persists in Bodmin, where the electors chose the hon. Gentleman. I am glad that they did, but he and his Government were the progenitors of the 1973 Act of which he so bitterly complains and they unseated the hon. Member who was one of its fiercest opponents while he was here.

I shall have more to say about the consequences of the Water Act for South-East Cornwall. For the moment, I merely remark in passing that many of its most eloquent critics are now to be found on the Opposition benches. I lost count of the number of times they have urged me to extend the rate rebate scheme to cover water charges—which are not, under the Act, charges for services—in exactly the same way as gas or electricity charges, or have asked me to intervene in water authorities' decision about the levels of charges—a power which, I regret to say, is denied to me by the Act. It is fortunate that, no doubt by an oversight, the terms of the Act allowed us to end the scandal of the full sewerage charge being levied on properties that were not even connected to main drains.

The hon. Gentleman talked about the percentages in his constituency—and very high they seemed. The new grant distribution arrangements introduced in 1974–75 have had a significant impact on the rates in South-East Cornwall. For these, too, with the exception of the question of domestic relief, the Conservative administration were responsible—responsible but not blameworthy, because here reform was long overdue. They rightly recognised that a formula which had remained unchanged for seven years, with complete disregard for such events as the rapid development of the social services, had to go. The injustices done to the areas of decline at the heart of our conurbations had become too flagrant for any Government of any party to countenance. Hence the changes, which in the main we supported, in the needs element and the resource element.

More for the cities inevitably meant less for the rural areas, such as Cornwall. Change is always painful to those who lose by it, and in a controversial matter such as the assessment of local authorities' needs it it hardly surprising if the losers think that they have been robbed. But to any objective observer who sees that the 1973–74 average domestic rate in Caradon was less than half of that at Manchester, and that the average rate payment was less than two-thirds the national average, it must be self-evident that Cornwall has in this respect been astonishingly lucky in the past. Its luck could not hold for ever. When the hon. Gentleman talks to me about the increase in percentages, I must ask him. "Percentage of what?" The average rates in his constituency are considerably lower than the national average, and infinitely lower than many of those in the big conurbations, which have faced an increase in rates of a lower percentage but a considerably greater sum of money than the average householder in the hon. Gentleman's constituency.

I represent the constituency next door to that of the hon. Member for Bodmin (Mr. Hocks). I have long been suspicious of percentages, but if the percentage argument is logical this year, what was so illogical about it last year, when the special rate relief, which was so appreciated in many areas, was granted? People in Cornwall would like to know the logic that denies the special rate relief this year but allowed it last year.

That was the next point to which I was coming. The hon. Member for Bodmin made a passionate plea for an extension of the special rate relief introduced last July. That relief was introduced because the local authorities and the ratepayers had been totally misled by the assessment of the right hon. and learned Member for Hexham (Mr. Rippon) that inflation would be 9 per cent. Many local authorities, taken in by the vapourings of the right hon. and learned Gentleman, found themselves in very severe difficulties concerning their ratepayers.

Attempts were made by the previous Conservative Government in the variable domestic relief, which worked very unfairly for our cities, although I confess that it may have helped some of both of the hon. Member's constituents, and we could not countenance the way that the previous Government had done this. Because of this, in July of last year the Labour Government, recognising that there was rough justice in the assessment we made in March when we came into office and found the previous settlement, decided that those who had increases greater than 20 per cent. should, as ratepayers, receive back 60 per cent. of the increase.

We did that as a "one off" measure. It was made very clear at the time to the House and to all ratepayers that that was the position. If we were to repeat it, first it would become a standard practice for Governments to bail out local authorities in that particular way. Secondly, it would be most unfair to those authorities which had endeavoured to keep down their rates. I am not criticising constituents of the hon. Member for Bodmin or his local authority in this respect. However, it would affect very adversely those authorities which had kept down their rate increases if local authorities could believe that if they had large rate increases the Government would step in and act as ratepayers, and give the money back to ratepayers

There could be no central Government control of local government finance in any way if that sort of system were to operate, if the belief existed that central Government would step in in these situations and bail out the ratepayers concerned in a particular area. I repeat that it was a "one off" measure last year because of the special circumstances in which we found ourselves.

The hon. Member for Bodmin mentioned—I say this with some pride—that the present Government increased from 60½ per cent. to 661½ per cent. the amount of money going from central Government to local authorities. We also adjusted—I think beneficially—the needs element of the rate support grant. We also cleared off most of the debts that local authorities had and most of their difficulties of last year by an increase of over £1,000 million in the increase order. As a Government we did our level best to help local authorities.

Of course, local authorities are faced at present with inflation, as is the whole nation. Some areas—the hon. Gentleman's area is one of them—face very steep percentage increases. Again I repeat to the hon. Gentleman—percentage of what? The average rate in Cornwall, and in Caradon, is very much below the national average.

I assure the hon. Gentleman that we shall look at the rate support grant formula for next year. It is by no means a perfect instrument. We hope that it can be improved, and I shall endeavour to improve it. I certainly take the hon. Gentleman's point about equalisation. Incidentally, on this matter the Government have made it very clear to regional water authorities that they should proceed with equalisation very cautiously indeed, because it can have some very adverse effects.

The hon. Gentleman mentioned that Wales receives a 36p domestic element as against 18½p for his constituency. But it is not only water; it is the very serious effects of local government reorganisation in Wales—again not our doing—that have led to an astronomic rise in rates in Wales. Indeed, in many areas of Wales the percentage rise is on a par with the percentage rise that his constituents are facing, even despite the fact that we are giving 36p in domestic rate relief to the Welsh authorities.

I assure the hon. Gentleman that we have regard to the fact that Cornwall is a low income area. I am not relying upon Layfield. Whatever the results of the Layfield inquiry produce this year, we shall have the present rating system for this year and next year, and possibly the year after. I take note of, and we shall consider, the question of the low-paid areas. We are trying to deal with them via the rate support grant.

I congratulate the hon. Members for Bodmin and for Truro (Mr. Penhaligon) on bringing to the attention of the House the special problems of the Cornish authorities. We are indeed aware of them. But I must point out that, on the whole, this is an area where rates at present are low, and that in many areas of the country, particularly the conurbations, the rates paid by the average householder are infinitely higher than the rates paid, whatever may be the percentage, by the average ratepayer in most of the Cornish authority areas.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes past One o'clock.