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Rateable Value Per Head

Volume 949: debated on Friday 12 May 1978

The text on this page has been created from Hansard archive content, it may contain typographical errors.

'In the determination of a local authority's rateable value per head for the purposes of Part III of Schedule 2 to the Local Government Act 1974 the total rateable value attributable to the hereditaments granted rebates under section 2 of this Act shall be deducted.'.—[ Mr. Sainsbury.]

Brought up, and read the First time.

11.45 a.m.

I beg to move, That the clause be read a Second time.

It might be helpful if I set the scene for the new clause by reminding the House of the purposes of the Bill which are relevant to the reason for introducing the new clause. The original draft of the Bill set the position out clearly. It said:
"This Bill provides for rating authorities in England and Wales and Scotland to grant a rebate in respect of the rates chargeable for properties used by disabled persons, in place of the existing relief granted unde Section 45 of the General Rate Act 1967".
It is well known that relief granted, or not granted, under that section has proved to be a problem because of the difficulties of interpreting the section. To that extent, this is a commendable Bill which has received all-party support.

It is always easy when we are considering giving financial help to particular categories of people—and in this case we are trying to help the disabled—to overlook the source of that help and to forget those who are expected to provide it.

One can draw an analogy with the attendance allowance which provides a rebate for taxation.

The Inland Revenue forgoes taxation that it would otherwise receive in respect of providing help for the disabled. That loss of revenue to the Inland Revenue is spread throughout the country. It is a burden on all taxpayers. That is the proper place for that responsibility.

That is not the situation provided by this Bill. If relief is granted by way of a rebate on rates, the cost will be a charge upon the ratepayers in the rating authority where the relief is granted. This is clear from the original text of the Bill, which states that there will be no additional Exchequer expenditure. It was not envisaged that central Government funds would be used to relieve the adverse effect upon the ratepayers. I found that a little surprising in view of certain Government intentions to which I shall refer later.

It is clear that the cost of the relief will come from the general body of ratepayers. I shall explain why I am proposing this new clause, first by reference to the effect of it and then by turning to the reasons why I believe that it is required.

In order to explain the effects of the new clause, I must turn to the complexities of the rate support grant. On this occasion I am glad to say that we do not have to consider the infinite and almost incomprehensible complexities of the needs element of the rate support grant. I shall not advance the proposition that I have advanced before, that the multiple regression analysis is defective by reason of its multi-colinearity or even follow my other hon. Friends who have criticised the defects of the needs element. It is the resources element that we are concerned with here.

The rate support grant is fixed each year as a percentage of the relevant expenditure of all local authorities. It is not necessary for the purposes of my argument to go into the make-up of "relevant expenditure", but, broadly speaking, it is all the accepted expenditure of local authorities.

The Government of the day determine what percentage of that relevant expenditure will be made available in the form of rate support grant. In 1976–77, the percentage was 65½. In 1977–78, it was 61, and the same percentage applies in the current year which has just started.

In the allocation of that grant between the various elements, there are deductions of specific and supplementary grants to be made in the first place. Then there is the domestic element, which is 18p in the pound, which goes to all domestic ratepayers, and that, too, has to be deducted. The remainder is then divided between the needs element and the resources element.

In practice, the division between resources element and needs element of the balance has, in every year since the present system of allocation of rate support grant has been in existence, been 32½ per cent. to the resources element and 67½ per cent. to the needs element. As far as I can determine, this division between the two is not fixed by statute. However, because it has been used every year since this system of rate support grant has been in use, I think that it can be assumed for the purposes of argument that it is likely to continue at that level.

The clause that I am proposing would result in a minor reallocation of that part of the total rate support grant which is attributable to the resources element. It follows that all that we are talking about is a little less than one-third of the rate support grant which covers a little less than two-thirds of the total relevant expenditure of local authorities.

The effect of the clause would be to ensure that a local authority's loss of rate income as a result of the enactment of the Bill would be taken into account in determining the entitlement of that local authority to a resources element of the rate support grant.

I am not suggesting that we are dealing with enormous sums of money. The size of the rate support grant is very large. The resources element alone in the current year is £1,901 million out of a total of £6,521 million, so that the resources element there is 29·1 per cent. I suggest, therefore, that it is not unreasonable to reallocate a very small proportion of this enormous total to make sure that the individual ratepayers of an authority where there is a concentration of hereditaments which would be in receipt of rebates as a result of the enactment of this Bill do not have to carry too much of an additional burden.

The allocation of the resources element and the calculation of how it is distributed obviously are very important. It is payable to the district authority; it is not payable to the county authority. The resources element, unlike the needs element, is payable to the district authority. The needs element goes to the county authority.

To distribute the resources element, what happens is that every year the Secretary of State prescribes in the annual rate support grant order what is called a national average rateable value per head. In fact, it is not a national average; it is the figure that the Secretary of State decides is appropriate for the allocation of the resources element of the rate support grant, because it tends to go up year by year and, if it is increased sharply, it pushes more of the total rate support grant on to the resources element and to that extent detracts from the needs element.

For the current year, the so-called national average rateable value per head is £177. Last year, it was £173. Only the local authorities whose aggregate rateable value per head is below that level receive help from the resources element, and the help that they get is the local average rateable value deficiency, multiplied by the population as agreed for rate support grant purposes, multiplied by the rate poundage that the local authority has declared.

Most authorities receive this grant, which supports my contention that the so-called national average rateable value per head is not an average but a figure arrived at by the Secretary of State purely for the purposes of distributing the grant. In 1976–77, there were only 26 rating authorities which did not receive a resources element, and that is only 6.5 per cent. of authorities. That indicates that, if the clause is accepted, we shall be providing help to the vast majority of local authorities which receive resources grant.

Those local authorities which do not receive resources grant—the 6.5 per cent. in 1976–77—would be the better-off local authorities and the ones where help is least likely to be required and where the ratepayers are most likely to be able to carry any additional burden which might be imposed upon them by the reliefs which would arise from the enactment of this Bill. I suspect that in a number of those most wealthy local authorities a substantial proportion of the total rating would fall upon commercial heriditaments rather than upon residential ones, and that again would minimise the problem.

To show how significant this resources element is, of all the estimated expenditure of local authorities in the current year this resources grant is no less than 16.5 per cent.

In the determination of whether a local authority gets a resources grant, the rateable value per head is critical, and Part III of Schedule 2 to the Local Government Act 1974 provides the principle for determining rateable value per head. The clause simply provides for the total rateable value of the heriditaments covered by the Bill to be deducted in making that calculation, thus reducing the numerator and increasing the sum obtained by the local authority.

I take the example of my own constituency, which is contiguous to the borough of Hove. In the case of Hove my proposal would reduce the numerator by £71,000. That is the first rough calculation of the rateable value of the premises which would be eligible for rebate in the borough as a result of the enactment of this Bill. It is a rough calculation which has been done by the borough treasurer, and it is based on his assessment in the light of his knowledge of the extent of the claims for rebate which are likely to arise in the borough. The rebates granted would decrease the rateable value per head in Hove, if we ignore that £71,000 for the purposes of rate support grant, from £161.29 to £160.49. That does not sound much, but, because of the resources element, the effect of the reduction in the current year will be to increase Hove's resources entitlement by nearly £60,000—which is almost exactly the same as would be necessary to compensate for the loss of rate income which is expected to be attributable to the Bill.

12 noon.

The poorer authorities, which receive a greater proportion of rate support grant, will suffer most. They tend to have higher rate poundages because of low rateable values. The new clause will concentrate the compensating help on that type of authority. This method of restoring the position will be effective in concentrating help where it is needed. The new clause will restore the position to what it would be without the original rating relief for charities and the disabled. It would also put the position in regard to resources element to where the Lay field Report and the Government's response implied that it should be.

Talking of relief for charities, the Layfield Committee said on page 168 of its report:
"If the present form of relief is to continue, the question arises how it should be financed. For that element which is discretionary, it seems to us right that the cost of local decisions should be financed through taxation."
I entirely agree; but the Bill deals with mandatory, not discretionary, relief. The report went on:
"But in respect of mandatory relief, over which local authorities have no influence, we consider that the local authorities should be compensated through the grant arrangements."
That is exactly what I propose.

It might help the hon. Gentleman and the House if I were to give an assurance—I was not privy to the details of what went on in Committee—that we propose to continue exactly the same arrangements under the Bill as have been operating under the old provisions. That is to say, the rate support grant will continue to help local authorities which require the asssistance exactly as they have been assisted in the past.

I am very far from reassured. By that intervention, the Minister has justified the new clause. I can only assume that he was consulting someone and did not hear what I said. This is the very worry—that if the rate support grant is handed out as it is now, it takes no account of the mandatory rate relief given to charities or to premises for the disabled.

That is borne out by what the Government said in a document which I hope the Minister has read, the Green Paper on local government finance, paragraph 6.24 of which on page 20 said:
"… and the Government propose that local authorities shall be"—
not "are being—
"compensated for the rate relief they are required by Parliament to give to charities."
I understand that in a circular letter, which I regret I have not seen and which was dated 7th November 1977—the reference was FLGI 91060/3/3—which was sent out to all rating authorities, the Government accepted that local authorities should be compensated for the 50 per cent. rate relief which they are now required to give under section 40 of the General Rate Act 1967.

Of course, this Bill would extend substantially in respect of some authorities that mandatory relief to a new category of hereditaments and would cost some local authorities a substantial amount.

This is a well-intentioned Bill which provides rebates to the disabled, but those rebates will have to be provided by the other ratepayers. The new clause would compensate the other ratepayers through the resources element.

Of course, this relief is entirely justified. The Layfield Report has given it its blessing and until the Minister intervened I had understood that the Government intended to implement that aspect.

My constituency is one of those—there are others, on the coast and elsewhere—where the Bill would have a particular effect. One must take into account that the Government's plans for district expenditure, which we can find in the 1978 public expenditure White Paper, will allow growth of only 1½ per cent. in each of the years 1980, 1981 and 1982. That implies that there is no great extra source of income from Government funds.

Being a progressive borough and very well managed—with 33 Conservative councillors, one ratepayer and two Labour—Hove has held this very week a conference on "Hove in the 1980s". As always, finance was a key element. Representatives of all parties attended and all shared the concern about the effect that the Bill could have. I can do no better than quote from an excellent paper submitted to the conference by the borough treasurer:
"In any discussion looking into the future, there is often a tendency to pursue the unattainable. To produce grandiose plans which subsequently gather dust is to raise false hopes and generally discredit those concerned. One should therefore have regard to the likely cost of any such aspirations and to the ability of ratepayers to meet these costs."
In that context, he had to point out that approximately one in three residents in Hove is on a fixed income. In the 1971 census Hove had 27,718 persons of pensionable age—over 30 per cent. of the population. That is nearly twice the national average. That population, like that of the country as a whole, is getting older. There is an increasing number of people over the age of 75.

Is my hon. Friend aware that Worthing has the highest proportion of over 65s in the country and that the second greatest number of over 65s is in my constituency? We all have an intense fellow feeling in Sussex for the views expressed by my hon. Friend.

My hon. Friend the Member for Eastbourne (Mr. Gow) is merely drawing attention to the fact that there are many places that have concentrations of the elderly and where one is likely to find a concentration of hereditaments which will be entitled to relief under the Bill.

We have to take into account that, whereas the new pension proposals that have recently come into operation ensure that in future pensions will be inflation-proofed and that everybody will have a second pension, in the next 20 years or so, until that comes fully into effect, many retired people will be largely dependent upon fixed incomes. They will inevitably have difficulty in meeting the inflationary cost of existing services, let alone being asked to bear, through the rate burden, part of the cost of expanding services.

An excellent survey entitled "Beyond Three Score and Ten", commissioned by Age Concern and called "The First Report of a Survey on the Elderly", shows that over 40 per cent. of those interviewed said that they had money worries about meeting the existing burdens on their resources.

In many areas, and certainly in Hove, there is no prospect of large scale redevelopment within the borough because of the absence of land on which to carry out new development and the absence of the need for redevelopment in the parts that are already developed. In many places the loss of rate income resulting from the Bill could be rapidly offset by developments which would bring in fresh sources of rate income. In areas such as Hove this is not possible.

The area of Hove is only 2,386 hectares. It has by far the smallest land area of any authority in East Sussex. Such undeveloped land that we have is mostly north of the borough and forms part of the South Downs. The South Downs are nationally and internationally renowned for their landscape beauty. The policy of district and county authorities and national and European policy is to protect these areas from urban development. Down land is very open and even a small amount of development is visible and damaging to the nature of the area.

In Hove and similarly placed boroughs the nationally-held policies, the existing pattern of development and the land available make it almost impossible to envisage further significant development which will generate fresh sources of rateable income to compensate for any loss from another direction. The increase in the rateable value in Hove over the years, at 1·2 per cent. has been substantially less than the national average.

12.15 p.m.

To make matters even worse in my borough, for good reasons, because the standard of housing accommodation in older property is being improved and the density of occupation reduced, the population is declining. It has declined from 91,229 in 1971 to an estimated 88,300 now. The result is that the borough receives in rate support grant no less than about £350,000 less than it would if the population had remained as it was. Without land we cannot increase the population, and we are not increasing our rateable resources. This means that any loss of rateable income resulting from the Bill will fall as a burden upon the existing body of ratepayers unless we do something about it. My clause is designed to do something about that.

Another adverse factor which lies within the ability of the Government to deal with, and I hope that they will consider it when looking, as they are beginning to look, at the rate support grant allocations for next year. If the Government continue to transfer grant from non-metropolitan areas to metropolitan areas, as they have started to do, there will be a further loss of resources to the very areas about which I have spoken and to which my hon. Friend the Member for Eastbourne drew attention.

As the complexities of the rate support grant have a damping mechanism which spreads changes over a period of four years, the transfer that the Government saw fit to embark upon in the current year will continue through four years and be accentuated in the years ahead unless something is done to offset it. In a well-run borough such as mine, expenditure has been held down at the request of the Government. There have been substantial economies. I am glad to say that the rates have also been held down. There is no further scope for preventing an increase in the burden on other ratepayers by bringing about economies.

The rate product rules of 1974 now require that the cost of the rate relief to which I am referring cannot be shared with the precepting authorities, namely, the upper tier authorities. Therefore, the cost is bound to fall entirely on district authorities.

I refer briefly to the sort of thing which could be done with the money that I am talking about. There may still be some hon. Members—I hope not—who feel that this is not enough money to worry about. The first and proper priority for Hove must be to provide group schemes such as sheltered accommodation for elderly persons. There is an inadequate supply of such accommodation. That would help people of a similar group to those whom we are trying to help in the Bill. It would be counter-productive if in providing help to one disadvantaged group we took away the possibility of providing help to another similar disadvantaged group.

We are talking about a loss of over £60,000. I am told by the borough treasurer that we could have nearly 20 road sweepers to offset the economies over the past few years. We could reopen public conveniences, some of which have recently been closed. We could provide money to plant 7,000 trees to replace the ravages of Dutch elm disease. If we reopened public conveniences and planted trees, we would be providing relief to the human and animal populations. We could provide an extra £3 per head in travel concessions. That is exactly the sort of help which hon. Members on all sides have wanted to be given to the elderly, some of whom are also disabled.

This is a well-intentioned Bill but, unfortunately, as drafted it puts the burden on other ratepayers in the boroughs where the hereditaments which will be helped are located. There are likely to be in those boroughs, as there is in mine, a concentration of elderly people, a concentration of people on fixed incomes and an absence of opportunities to increase a rateable value by other means.

I hope that I have demonstrated that the burden should be spread more widely. The new clause spreads it more widely through the mechanism of the rate support grant, and I am glad that it conforms with the Government's expressed intentions in the Green Paper. I therefore hope that it will commend itself to the House.

I wish to support my hon. Friend the Member for Hove (Mr. Sainsbury). There is a marked difference between my constituency and his. He represents a seaside town with a large number of elderly people. I have the honour to represent a new town which was designated in 1968. Northampton is the fastest expanding town in Western Europe. It is therefore appropriate that I should support my hon. Friend, because one could probably not find two towns more unalike than ours.

I view the Bill as a rating Bill and I consider its impact on local government, a subject in which I am particularly interested. I recognise that my hon. Friends and the hon. Member who has sponsored the Bill see it for the help that it will give to handicapped people. Of course, I share that view about the merits of the Bill and I hope that it will have a speedy passage. I also share their concern. There is in my constituency a very good disablement group and a disabled drivers' group. Anything I can do to assist them I shall most willingly do.

My hon. Friend the Member for Hove has put his finger on some of the key points. However, I should like to examine the elements of the Bill which affect new towns, because that is a different dimension. I am glad that the Under-Secretary is to reply to the debate. I have had the pleasure of welcoming him to Northampton. He has shown a degree of understanding of the problems of new towns that we have not perhaps always experience before. He has provided a ready response whenever I have put questions to him. I therefore hope that today he will show his usual understanding of our problems.

The Bill is supposed to impose no cost on the Exchequer. If that is true, it is perhaps disappointing and a reflection on the workings of the House that hon. Members were not told, either during the Committee stage or in some form of preparatory paper, exactly what would be the cost of the rebate and who would pick up the bill. Clearly there will be a cost to someone somewhere. As my hon. Friend said, that will fall on the district council. It is disappointing that we are unable today to be told the global cost of the scheme so that we could then calculate the figure for our own district councils and the extent of the burden that will be imposed upon the rates.

It is necessary here to consider two small elements of Part III of Schedule 2 to the 1974 Act. I hesitate to correct my hon. Friend, but perhaps I may remind him of paragraph 8 of the schedule. It states:
"In relation to the resources element, the national standard rateable value per head of population shall be of such amount as may be prescribed."
So we are talking here not of an average amount but of a standard figure.

I thought I had explained that, although the term used was "average amount", in practice it was merely a figure laid down by the Secretary of State. Therefore, the very fact that more than 90 per cent. of local authorities received the help implied that it could not be an average.

I am sure that my hon. Friend is right. The key point is that the figure is prescribed, and it is worth getting on the record that it is not an average but a standard.

The fundamental part of Part III, coming under the heading "The Resources Element", is paragraph 7, which reads:
"No payment in respect of the resources element shall be made to a local authority for any year unless in that year the rateable value per head of population of the authority's area is less than the national standard rateable value per head of population."
That is the fundamental element, because it means that if an authority had a certain element of rebate it would be taken off the margin and would then be eligible for extra help.

When my hon. Friend said that the figure for Hove ran into well over £50,000 on an initial guesstimate, he gave some indication that the sum could be significant and could shift a local authority from one category to another. Some hon. Members might feel—and I hope that they do not—that the sums involved would be so relatively insignificant that the total effect could be ignored. The problem is that over the years the rate support grant formula has been changed. Only recently a factor was included to cover unemployment. This has helped to skew resources to the areas with unemployment, which tended to be the inner city areas, which in any case have been helped disproportionately over the last few years.

I think I am right in saying, although I do not wish to challenge my hon. Friend, that the unemployment criterion was put in for 1976–77 but was omitted in 1977–78 and is not included in the future criteria for the needs element of the rate support grant.

I support my hon. Friend in the point he is making about the completely unsatisfactory nature of the criteria used for the distribution of Exchequer aid to local authorities, but, whereas two years ago the Government maintained that unemployment was an important factor, they do not now recognise it as such. That supports my hon. Friend's argument.

I am not sure whether the Government regard unemployment as an important factor, but the fact is that the elements have changed. For all we know, that aspect may be reintroduced in 1979–80. We do not yet know what the elements of the formula will be for that year.

I am deeply concerned about the new towns. I have been unable to do a calculation similar to that worked out by my hon. Friend the Member for Hove, although some preparatory work is being done. I am worried, in view of examples provided from similar areas to mine, about the effect on new towns. There is one aspect of this matter that I find tiring. In spite of that, I shall remain as vigilant as possible. I am sure that my hon. Friend the Member for Daventry (Mr. Jones) will do the same. We tend to have to join forces because he, too, represents an expanding town and we both represent the same county.

The tiring aspect of this matter is that, every time some form of help is provided for a particular section of society, the central Government forget that the population of a new town is always ahead of their statistics. It means that new towns are always disadvantaged. About 5,000 to 6,000 persons a year are coming into my constituency. We say locally that there should be proper financial provision for them. This matter has an unhappy history because, as the Under-Secretary knows, it was only after much petitioning that we managed to get a grant for the county council to cover the undue burden which was arising, particularly in education. That is a criticism not of the present Government but of central Government in toto. In other words, they do not understand—they certainly did not in the early stages—what a burden an incoming population can be to a new town, with all the starting-up costs involved.

12.30 p.m.

My hon. Friend the Member for Daventry and I thought that the central Government had learnt their lesson over the protracted negotiations which took place following designation. However, in regard to the National Health Service, which impinges on the category of person in question, we found exactly the same situation—namely, that no allowance was made for the increased numbers of persons coming in. Even more surprisingly, there was no understanding that the birth rate was rising in Northamptonshire. We were told that the birth rate nationally was going down and we had to conform. It is a hard fact of life that the maternity services are under greater pressure in Northamptonshire because the birth rate is growing.

Let me give a further example. In the case of Milton Keynes, which is similar to our situation and very close to us geographically, the majority of people when they are ill now come to Northamptonshire. After 15 months of hard bargaining, and after initial rejection by the Secretary of State for Social Services, we have reached the situation that we have now been given—I am grateful to the Government and certainly to the Under-Secretary of State for the Environment for their support—an ex gratia grant for three years to support the Health Service element. Initially the Department was less persuaded of our case than was the Minister, but all came well in the end.

We now have the Bill before us and we must consider its effects on those concerned. A recent report by the East Midlands Planning Council says specifically that the new towns must take a larger share of disadvantaged people. I tabled a Question asking what authority there was for that statement, and I was told that it flowed from a statement made by the Secretary of State for the Environment last summer on the cut-back on the total number of people coming to the new towns. It was said that there must be a change of mix and that we must no longer attract those who were coming to take up a job—in our case, people from London—but must take a larger share of disadvantaged persons. The Greater London Council as an exporting authority says "You may not have our skilled people because we wish to keep industry in inner London, but you, as new towns with nice green field areas, must take on many more handicapped and mentally ill persons, as well as the elderly and the one-parent families."

We know that we are under pressure. It is against that background that I have examined the effect of the cost of the Bill. Its purpose is laudable, but one cannot ask district authorities in the new towns, particularly the towns which are still expanding, to take on yet another burden at a cost to their own domestic ratepayers. Each time a further burden is placed on a new town, disharmony is caused in the minds of the long-term residents. I believe that we in the House have an obligation to make sure that the new towns are a success. I believe that the new town concept is a good one and that my new town in Northamptonshire is reasonably successful, but each time an extra burden is landed on us there is a local outcry and considerable aggravation and disharmony. I have not been able to calculate the actual cost to Northamptonshire, but obviously it will be yet another burden.

My hon. Friend the Member for Hove was right to say that the clause will help, if only marginally. The nature of the formula is such that the greatest help will go to areas of greatest need. That is a philosophy which I know all Conservative Members will favour.

I believe that it is not a bad thing occasionally for the central Government to aim at a greater degree of statistical accuracy than has been experienced to date. Unless an adjustment is made after rebate has been given, we shall be moving ahead on a basis which is not very accurate. It will help all of us who have to make these calculations, particularly in rating, if the figures are as accurate as possible. I hope that the clause, which has behind it the thought that we should not place any extra burdens on the district authorities, will commend itself to the House.

Both hon. Members who have put their names to the new clause have now spoken, and I must offer my apologies to the hon. Member for Hove (Mr. Sainsbury). Because of an unavoidable engagement elsewhere, I missed the first part of his speech. However, my right hon. Friend the Minister for Housing and Construction was able to report the hon. Gentleman's remarks to me.

I well understand the anxieties felt by the hon. Gentleman, and also by the hon. Member for Northampton, South (Mr. Morris), that it is possible that this well-intentioned Bill will impose a burden on other ratepayers. It is important that I should take part in the debate at this point to assure both hon. Gentlemen that the financial effects of the Bill as it stands will be very small and that it will not involve additional expenditure by the Exchequer.

Relief which is currently given under Section 45 will not be substantially extended, but in the case of institutions provision is made for a small extension partly on the ground of equity and partly to eliminate disparities north and south of the border. Compensation to local authorities will be provided by means of the rate support grant.

The hon. Member for Hove suggested that the recommendation contained in the Green Paper on local government finance should be carried out. I give him the absolute assurance that the commitment in the Green Paper to compensate local authorities for mandatory rate relief in this year's rate support grant order was carried out in November 1977. The same is proposed in the Bill.

Hon. Members have asked where the money comes from. If there is no additional Exchequer expenditure, and if the Bill is not to impose any sort of burden on other ratepayers living in a district where there is a high proportion of disabled people, where does the money come from? The answer is that it is contained within that sum of money which is the rate support grant, and that is why it is properly contained within the rate support grant order.

I perfectly understand the purpose of the new clause. It is designed to distribute the rate support grant so as to compensate local authorities for the loss of rate revenue as a result of rebates under the Bill. I am pointing out that the Government entirely accept the objectives of the new clause in principle. In fact, they are already carrying them out. Indeed, when the Bill becomes law, as I hope it will—and as, I believe, Opposition Members hope it will—it will be operated so that the healthy constituents about whom the hon. Member for Hove is concerned will not as a consequence find an extra charge on their rates as a result of the relief given to those of his constituents who are disabled.

I find it difficult to follow the Minister. Apparently he is talking about a global sum which includes the resources element, and within that element there is a figure to support the relief proposed in the Bill. Surely, if that relief did not exist, the global sum would be reduced by that amount.

The fact that there is a global sum which includes a series of elements cannot mean that, if an additional element is put in which has the effect of requiring further central Government support in terms of resources, there is no financial consequences. I think that in Committee—this is col. 17 of Hansard—the hon. Gentleman referred to a figure of £300,000 at 1976–77 prices. Surely there must be an element of additional expenditure from central Government funds, although within a global figure, and, similarly with the rate support grant arrangement at 61 per cent., the balance will have to be found by the ratepayer.

We are dealing with small sums, but some of us regard the principle as important. We are concerned lest the central Government allow legislation to be passed without due regard to its consequences for ratepayers. The Minister will be aware that there have been many examples of that happening in the past. Some of us, therefore, are concerned to examine legislation and the effect that it will have on ratepayers.

I am not satisfied with the Minister's explanation that there will be no cost to the central Exchequer, not outside but within the global sum, since there must surely be an additional demand.

I am sure that the hon. Gentleman knows enough about central and local government finance to know that decisions are made about the rate support grant and what the global sum will be. I gather that the concern expressed this morning is that a local authority—perhaps Hove or perhaps another—which has within its area a high proportion of people who claim and are entitled to relief under the Bill because they are disabled will have to impose an extra burden on the ratepayers in general. I understand that point. What I am saying is that the purpose within the rate support grant is to ensure that distribution of the global sum is made in such a way as to be fair to local authorities throughout the country. as has already been done.

12.45 p.m.

That, briefly, is what I am saying, and I add the point that, in effect, the Bill is designed to clarify the law and to make it possible for rate relief to be given to disabled people without the sort of legal challenge which has arisen in the past. As hon. Members know, rate relief has been given to disabled people in the past under Section 45, and that arrangement will continue. That is the sense in which I have made the point that no significant additional Exchequer expenditure is involved under the Bill.

But that partially denies what the Minister said earlier, that there is no additional demand on central Government resources. One question is that of demand on the taxpayer and ratepayer. The other is the method by which the resources are raised and charged. I agree that across the country as a whole, by reason of the rate support grant arrangement, the Minister is correct, but surely it cannot be right to say that no additional central Government expenditure is involved. It is in the omnibus figure, but it must be a constituent part, and its absence would mean that there would not be the increased charge required when the Bill is enacted.

The hon. Gentleman was not a member of the Standing Committee and he may not have appreciated that the purpose of the Bill is not to introduce a new form of relief in the sense that we have not provided rate relief for the disabled hitherto. We are continuing to do so, but we are doing so by a different method which will not significantly increase the Exchequer contribution to this particular purpose. That is the sense in which I have just explained—though it seems that I did not make myself clear—that there is no significant additional Exchequer expenditure in order to finance the purposes of the Bill.

I take it that the Minister has been saying that the intention of the new clause will be achieved through the rate support grant. I further took him to imply that, in so far as rebates were being granted already under Section 45, this was covered under the rate support grant arrangement. Will the hon. Gentleman explain how that is being achieved now and how it is proposed to achieve the further compensation to local authorities such as mine through the rate support grant in the future?

Secondly, will the hon. Gentleman assure me that any help which is given through the allocation of the resources element of the rate support grant will take into account the rebates which are granted during a year? He will appreciate that somebody applies for relief and gets the rebate that year after the resources element of the rate support grant has been handed out. How will the Minister deal with that? Certainly in the first year's operation of the Bill it could be a substantial matter for local authorities such as mine.

The hon. Gentleman is interested in the mechanism whereby this is done. I have to admit that I could not explain all the details now. Perhaps the best thing would be to write to him. I should like to give him the answer to his question, and these are technical points. On the general issue, however, I give the House again the absolute assurance that the Bill does not involve a significant additional Exchequer contribution and, further, that local authorities such as Hove, about which the hon. Gentleman is concerned, have no reason to fear that there will be an increased burden on other ratepayers as a consequence of the relief in so far as it is mandatory—on the discretionary element, yes, of course, but not in so far as it is mandatory.

Therefore, I assure the House that the new clause is not necessary. The purpose behind it is accepted by the Government, and I recommend that it should not be added to the Bill.

My hon. Friends and I are not totally reassured by what the Minister has said. We fully accept the proposition that he has advanced, and that which is printed in the Bill, that there is no net increase in Exchequer funds. But the whole case of the arguments of my hon. Friends the Members for Hove (Mr. Sainsbury) and for Northampton, South (Mr. Morris) was that the redistribution of the burden within an existing global figure would disadvantageously affect the ratepayers in Hove and Northampton.

I hope that on the narrow point of the likely extra burden the Minister will give an undertaking to consider in detail the claim made by my hon. Friend the Member for Hove that there will be an extra burden upon Hove ratepayers of about £60,000 as a result of the extra mandatory duties placed upon that borough by the Bill. The sum of £60,000 is substantial in the context of the figures the Minister gave to the Committee on 3rd May of, I think, a total net increase of £70,000-odd arising from the non-institutional beneficiaries of the Bill. He gave a figure of a loss of £235,000 in 1976 rising to about £300,000. That is the increase in respect of the non-institutional section, worth about £70,000, and it is apparently almost entirely taken up by the Hove figure alone, if the Hove figure is right. I hope that at some stage the Minister will look seriously at these Hove figures.

The figure to which I referred covers the relief in both Clause 1 and Clause 2—the institutional and the personal, although I believe that the vast majority of its falls within the Clause 2, institutional, relief.

Then we have an overall figure of £3 million plus £70,000. If Hove accounts for £60,000 of that out of all the 400 local authorities in the country, that still means a fairly substantial burden.

If the Minister is right and the extra mandatory burden imposed by the Bill will be taken up simply by a redistribution within the existing rate support grant, that can mean only one thing as I understand it—that the operation of the social factors in the needs element will operate in such a way that it picks up the extra burden of the disabled in particular situations, in particular local authorities, and causes a shift in the distribution under the needs element head.

Clearly it can have nothing to do with the resources factor, because, as my hon. Friend the Member for Hove pointed out, the Layfield Committee said at paragraph 45 in chapter 12, of its report:
"We suggest in Chapter 10 that arrangements should be made to compensate local authorities through the grant system for the mandatory relief from local taxation afforded to charities. This might best be done by basing the resource element distribution only on the amount of rateable value effectively taxed."
That is precisely the purpose of the new clause, but it is clear that this Layfield recommendation has not been taken up, so it must be that the compensation of which the Minister speaks will be effected through the needs element.

I should like to point out to the Minister a serious deficiency of the needs element as a means of redistributing the available global total of RSG in the direction of places such as Hove or Northampton. First, the social factors taken into account in the needs element do not contain the specific sub-head of disability. This means that disability is not picked up as a local phenomenon. It may very well be a feature of places such as Hove with a large retired population. but disability is not specifically picked up as one of the determining characteristics of the local authority area, simply because it is not listed in the social factors.

Is my hon. Friend aware that it has been the cause of a good deal of grievance that in no way has this been allowed since the passing of the Chronically Sick and Disabled Persons Act? Those of us who are very much involved in the matter of disability have found this one of the difficulties in persuading local authorities to go as far as many of us would like them to go in implementing that very important Act.

That is a valid and important point. It is striking that the "Social Factor" subhead of the needs element does not contain a disability title.

But the position is worse than that. The social factors as now itemised are counter-productive in terms of the phenomenon of disability, because they include the sub-head "Elderly people living alone". One of the features of a disability phenomenon is that one cannot be alone. Therefore, if there is a disability factor in a local area it almost logically and necessarily diminishes that heading.

Another important feature of the social factor list is that it includes people living in houses lacking basic amenities. Again by definition, when one has a high disability factor one tends to play down not only the numbers living alone but the number of houses lacking in basic amenities, because both phenomena tend to be absent in the case of the disabled. Probably through public funds, disabled people have many of the basic amenities provided for them and some extra ones relating to their disability.

Not only is disability not mentioned, two factors that are mentioned tend to be offset by the presence of disability. This is one reason why places such as Hove will not receive compensation through an internal shift of the resources available under the needs element.

Another factor which supports my hon. Friend's very well argued case is that there is no social factor for over-75s. It is in that population group that we find a particular concentration of those who are disabled and those who are partially disabled but perhaps do not fall within that category.

I am grateful to my hon. Friend for that additional reference to the limitations of the social factor heading under the broad needs element factor in the RSG.

There seems to be a certain misunderstanding here. The Minister for Housing and Construction, in what I can describe only as a hit-and-run raid, visited the Chamber and burst into the debate to tell us blandly that the whole problem was dealt with by public funds already. The Under-Secretary, with his greater expertise in this matter, has followed the rather different course of drawing a discreet veil over the intricacies of this internal piece of machinery. It is our conviction, however, that the operation of the existing machinery of the rate support grant arrangements, within which this new mandatory duty must be picked up by public funds, will not have the effect that the Minister suspects of helping places such as Hove and Northampton and any other areas where there is a signifiant disability factor. Indeed, the needs element will be counter-productive.

I hope that we may have some further reassurance that perhaps at a later stage—because we do not want to delay matters—the Minister will see whether there is another method to make certain that disability really is taken into account. We are dealing with substantial increases in burdens—the £3 million and so on at stake here.

Perhaps I can help the House on the two points that the hon. Gentleman has raised. The first question was how this was done—through the needs or the resources element. The answer is that it is done through the resources element and it has nothing to do with the needs element.

The hon. Gentleman made the perfectly reasonable suggestion that disability might be used as a social factor, an indicator, under the needs element. I do not know whether this matter has been considered by the grants working group. Perhaps it has been. The hon. Member will know that such proposals need to be considered first of all in the light of available objective statistical information. If they are not so considered, it is impossible to apply them according to the principles upon which the needs element is normally founded.

1.0 p.m.

A possible second reason why this system has not been adopted—if it has been looked at, and I do not know whether that is the case—is that there would have to be shown objectively a definite relationship, clearly established, between the existence of high levels of disability, particularly in local authority areas, and an enhanced need to spend per head of the population in the area. If that can be shown and if statistical information is available to enable the need to be properly assessed, there is no doubt that the working group would wish to make that a recommendation as one of the social factors in the needs element. Otherwise, I am afraid that it is unlikely that such a thing would be recommended.

The Minister will know that one of the objectives of the Chronically Sick and Disabled Persons Act was that every local authority should determine the number of seriously disabled people in its area. This is something of a chicken-and-egg situation. In so far as local authorities have not completed this work, that may be due to a lack of resources. The whole idea is that they should do so and that the information should be available. If that information is not available, it is because the authorities are not being adequately supported. I suggest that the Minister might give instructions to his Department to break through this situation.

I support the points made by my hon. Friend the Member for Hove (Mr. Sainsbury), who at the same time has introduced us to the bracing sea air of the South Coast and the intricacies of "Hove in the 1980s". My hon. Friend should not think that he has it all his own way. We have a campaign running called "Wake up Wallsall". The points made by my hon. Friend have their effects in my part of the world. My hon. Friend the Member for Northampton, South (Mr. Morris) spoke about the new towns and of the value of a different dimension being cast on the matters raised by my hon. Friend.

Perhaps I might give a further dimenension in speaking for the urban areas with many inner city problems, problems which the Government have recently accepted as being of such an urgent and pressing nature. I did not find entirely convincing the Minister's explanation as to how, in terms of the financial effects of this Bill, two plus two equalled only three and a half. However, I would not wish to get involved in the intricacies of the rate support grant. When Greek meets Greek, who am I to referee?

The problems of the urban areas, especially the inner areas, are serious. The Minister was on the Front Bench a week or so ago when we discussed the Report stage of the Inner Urban Areas Bill, a Bill which tries to do something about the cycle of deprivation that exists within these areas and in our older urban areas generally. One of the features of such parts of the country is the decline in the economic base as firms have moved to new towns and development areas. As the jobs have gone, so, too, have many of the young and ambitious people. As a result in our city centres in the older towns there is a much higher proportion of elderly people, and that means, as my hon. Friend the Member for Hove pointed out, a higher proportion of handicapped people.

When the Minister seeks to rebut the arguments put forward in favour of this new clause, he should bear in mind the efforts which the Government are making through the Inner Urban Areas Bill to break into the existing cycle of deprivation. The effect of much of this Bill, if unamended, will be to undo some of the help which the Government seek to give through the Inner Urban Areas Bill.

My other point concerns the drafting of the Bill. The Bill is commendably flexibly drawn so as to allow local authorities as much tolerance as possible in its application. I think it is critically important that we obtain the good will of local authorities. The fact that the Chronically Sick and Disabled Persons Act has not yet been fully implemented in some parts of the country is a great pity. Perhaps in some cases local authorities felt that something was being imposed on them. If local authorities feel that the imposition of this measure is likely to lead to a deterioration of their general financial position and consequently an increase in the rate burden on those of its citizens who do not qualify for the benefits within its provisions, they are likely to take a more robust view as to how it can and should be applied.

It is important that it is realised that this new clause not only involves the righting of an unfairness and the helping of areas with an undue proportion of elderly and handicapped people but also concerns means of ensuring the good will of local authorities so that the spirit as well as the letter of this measure it complied with. In that way, the help which we all agree is needed for handicapped people can be fully and fairly implemented.

We all feel rather sorry for the Minister, and I do not believe that he is very happy with his current position. He cannot say at one moment that there will be no additional expense upon the Exchequer and then pretend at the next moment that the cost involved will not be put on to the backs of ratepayers in one way or another. My hon. Friend the Member for Hove (Mr. Sainsbury) has made it clear that, on careful and detailed investigations, this measure will cost about £60,000 to £70,000 in his own distinguished borough. We are delighted to have him next door to Brighton. In Brighton, with an even greater number of elderly people, the figure could easily rise, on the basis of my hon. Friend's calculations and comparisons, to £100,000 a year.

What would be totally wrong would be for my constituents in Brighton—of whom about 23,000 are of retirement age, many of them, tragically, disabled in one way or another—to have their rates increased to help other sections within the same town. This is robbing Peter to pay Paul. The Government are doing nothing. They are giving no extra help. We ask the Minister to think about this again.

I welcome the Bill, as does my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery), because we are conscious of the considerable help and assistance that it will give to a large number of people within our district council area. We are concerned about the potential substantial loss of rate income if the Bill remains in its present form. In recent years there have been substantial increases in the domestic rate in towns such as Brighton. We have to bear in mind that there is a high proportion of retired people in these towns living on small fixed incomes or pensions who are gravely affected by inflation. It would be wrong to place on such people a disproportionate burden for helping the disabled. I do not believe that the House would want this to happen.

Brighton is often described as being part of the prosperous South-East. We know that as a whole the South-East is the most prosperous area in the country, but there are areas within the South-East Region which have special problems. We talk gaily and blandly about the region being prosperous and we assume that that applies to all parts of it. But there are pockets—too many in the South-East—of which my own town is one, which have very serious problems. They have problems not only in relation to the numbers of elderly people but also with regard to the levels of unemployment. The unemployment level in Brighton is consistently above the national average.

All these things tie in together on the rate burden, on the numbers who need help, on the disabled and on the ability of the ratepayers and residents of those areas to pay. I hope that the Government will think long and hard about the new clause. If they cannot accept it. I believe we should have from the Minister an assurance that he will look at it with his colleagues. He should concede the principle of the new clause. If he were to do that, I think that it would be warmly welcomed by the House.

During the Committee stage the words of Lord Wilberforce were quoted, when he described the existing law as

"a labyrinth and a minefield of obscurity".—[Official Report, Standing Committee C, 3rd May 1978; c. 30.]
Anyone listening to the debates that we have had on the complexities of the rating system would entirely endorse that view of the legal situation. It is, therefore, perhaps useful to reflect on the fact that we are discussing an immensely welcome piece of legislation. It is a proposition which in itself is extremely commendable.

In these difficult financial discussions one tends to forget the original intentions of the Bill. It is worth recalling, particu larly for hon. Members who did not take part in the earlier proceedings, that this is a worthwhile measure which does its bit to relieve the disabled of a rating burden upon extensions to their houses or upon extra facilities that are necessary to help them to overcome some of their disabilities. I offer my congratulations to the hon. Member for Aberdeen, North (Mr. Hughes) on introducing the Bill. He should take comfort in the sure knowledge that the Bill will reach the statute book and will be of real assistance to the disabled.

In the new clause my hon. Friend the Member for Hove (Mr. Sainsbury) is in no way casting doubt on the intention of the Bill. What he has done, I think very helpfully, is to direct the attention of the House to how these rating reliefs are to be paid for. The new clause is a reflection on our most extraordinary taxation system. We are arguing about whether disabled people should pay taxation on their lavatories or on their bathrooms. We have often heard arguments about minor improvements causing a person to pay extra tax. We have had the whole rigmarole of earlier legislation, court interpretations and further legislation to put the situation right. What is the argument about? It is about whether people should pay a tax on extensions to their homes and whether, in this case, a disabled person should pay tax for the fact that he has an additional bathroom installed downstairs.

The present rating system is preposterous and the sooner we get a major reform of it the better. This is not the time to go into the various options of other tax systems, but if I were challenged I could mention four or five other systems that I would prefer. The example about which we are talking today is a clear demonstration of the follies of the present rating system, with its tax on the notional rental value of property.

My hon. Friend the Member for Hove has drawn attention to the question who should pay for this rating relief. My interest in this point was aroused by the Explanatory Memorandum to the original Bill, because it stated quite clearly that there would be no extra burden on the Exchequer. That is a helpful and welcome statement. Any Bill which makes such a statement is to be welcomed. I like the idea. I only wish that more Bills said that. However, it aroused my suspicions. I therefore looked at the reports of the Committee proceedings and read what the Minister had said about the extra cost. It became clear that a substantial additional cost would have to be borne by the local authorities.

1.15 p.m.

Nothing that the Minister has said today in any way satisfies me that there will not be such an additional burden. His remarks today were really in direct contradiction to what he said in Committee. I should like to refer to the Committee proceedings because I am still not clear about what is a very important matter to my constituents. In Committee the Minister made it clear:
"The best estimate by the valuation office is that about 14,000 dwellings currently receive relief under Section 45, giving a total rate loss of about £235,000 The additions under the Bill might take this up to about £300,000 at 1976–77 prices."
He continued:
"In respect of institutions the extensions of relief"—
I emphasise "extensions of relief", because he was rather implying that this was simply a different way of giving the same relief as existed before—
"proposed in the Bill might cost an additional £¾ million in rate loss per annum, in addition to the £3 million per annum which is a broad estimate of the net cost of the present relief to institutions."
He added:
"Therefore, £3 million is the net cost."—[Official Report, Standing Committee C, 3rd May 1978; c. 16–17.]
It is not clear whether the Minister is lumping the cost all together. It is very confusing, and a degree of clarification would have been welcomed.

What seems to come through quite clearly is the fact that there would be an additional £750,000 in rate loss per annum as a result of the extensions of relief proposed in the Bill. Here we have a quite clear statement that someone has to pick up the bill. We have a clear statement from the Government that there will be no Exchequer contribution. The Minister also said that there will be no extra burden on the ratepayers. But he must be wrong. Someone must meet the bill. Even though the bulk of the cost might well come from the global sum given for rate support, presumably that rate support grant total would be that much less if this extra relief were not being given.

Perhaps the Minister is relying on the use of lotteries for this extra money.

He has not offered that solution. If one were trying to decide which of his answers was correct, that would be a lottery in itself. At present one can take one's pick.

I should like to emphasise how important this matter is in terms of cost. My hon. Friend the Member for Hove mentioned a figure of £60,000. That does not sound unrealistic when we are talking in terms of a cost of £1 million or £2 million throughout the country. My hon. Friend's constituency, in some ways like mine, contains perhaps a larger number of elderly and disabled people. Therefore, that does not sound an unreal figure. A figure of that kind is significant. Some may argue that it is of marginal significance, but to many district councils figures of £30,000, £40,000 or £50,000 present real problems, because they are already squeezed dry.

As evidence of that one has only to look at our experience during the recent flooding. I shall not go into that in great detail, but when calculating the cost of compensation for flood damage in relation to the penny rate product in our own districts I can assure the Minister that amounts of £30,000. £40,000 or £50,000 were absolutely critical. I can also tell him that many housing improvement schemes have had to be postponed because of a lack of money. My own district council in Swale would regard sums of £30,000, £40,000 or £50,000 as extremely important. My district has an elderly population. It is a seaside constituency. I am not saying that we have a campaign for "Swale in the 1980s" or a campaign such as "Wake up Walsall". The nearest we can get is to invite hon. Members to come to sunny Sheppey. We have a large number of retired people in the constituency. I suspect that therefore we have a considerable number of disabled people. But we cannot claim the affluence of Hove. I am not denigrating the prosperity or potentiality of my constituency, but we do not have a very high rate product.

It seems, therefore, quite unreasonable for the Government and the hon. Member for Aberdeen, North—in reality, it is the Government—to say to a district council "Parliament will impose on you yet another mandatory obligation" but pass the buck to the local ratepayers. This happens so often. How often do we hear this complaint? We heard it with the Chronically Sick and Disabled Persons Act. Parliament passes legislation which generally has universal support, but then refuses to will the means to the district councils to carry out its desirable ends.

This Bill is a classic and bald example. The Explanatory Memorandum to the Bill stated that the cost to the Government would be nil. The Under-Secretary of State proclaims almost proudly that there will be no cost to the Exchequer. But this is the point. Here again we are putting a further and not insignificant burden on the district and other rating authorities to carry out a duty imposed on them by the House. We are dodging our responsibilities.

The Minister has suggested that we are wrong. He tried to argue that the districts would get full compensation. He seemed to get himself rather tied up in an exchange with my hon. Friend the Member for Eastleigh (Mr. Price) about whether the compensation could be granted. He was in doubt about whether it could be done.

The only sensible way to eliminate the doubt is to accept the new clause. The hon. Gentleman said that he accepted it in principle, and that it was the point he was trying to achieve. But there is at least considerable doubt in his mind, and certainly in our minds, as to whether he can achieve it through the existing rating system. Why, therefore, not accept the new clause? Clearly the Minister has no fundamental objection to it.

It is because we at present do the job being asked for through the regulations, and therefore it would be inappropriate to put the new clause in the Bill. I have explained to the House and have offered to write to the hon. Member for Hove (Mr. Sainsbury).

It is nice to have letters written to my hon. Friend the Member for Hove, but it would be more helpful to have the point cleared up now, for the sake not only of hon. Members but of the local authorities as well. The hon. Gentleman claimed that he was achieving 100 per cent. compensation to the local authorities but he has not sustained his case. If he is saying that, presumably he is also saying that the local authorities are getting full compensation for rate relief on charities. Is he saying that, too? If that is the case, I am puzzled.

The representation of the Rating and Valuation Association says:
"The Layfield Committee proposed that local authorities should be compensated for the 50 per cent. rate relief which they are compelled to give in respect of properties occupied by charities. The Green Paper on Local Government Finance accepted this principle."
That is what we are asking for now. It went on:
"It is understood that in due course the Government will promote legislation to implement this proposal. In view of this undertaking the Association strongly contends that the central Government should extend this obligation by reimbursing local authorities with the full cost of the mandatory relief granted under the provisions of this Bill, together with the full administration costs."
That is another argument, but if the local authorities are already getting 100 per cent. compensation, it is strange that this has escaped the notice of the Rating and Valuation Association, whose members of all people, would be aware of what was happening in rating.

I do not see how local authorities could be receiving such 100 per cent. compensation, since I presume that the means of giving them that compensation are essentially through the rate support grant, and the level of the grant is 61 per cent., so surely at least we are saying that local authorities must be bearing the balance, which in turn means that it is being borne by the ratepayers. The Under-Secretary of State still owes us a clear explanation of how this measure is to be funded, and of the total cost; he has not given it to us so far.

I think that the House must come to a conclusion on this new clause. I have given every conceivable assurance that I should have thought that the House would accept. The hon. Gentleman has just quoted part of a paper, paragraph 2(iii), sent out on behalf of the Rating and Valuation Association. I have already given an assurance that what is asked for in that paragraph has already been done under the rate support grant regulations. I do not know what else the hon. Gentleman wants. I have assured the House of that fact, and that is the reply. I stand by it.

I do not intend to pursue the matter at great length because we are getting into very deep water on the calculation of the rate support grant formula. But if there is confusion it has been caused by the Under-Secretary of State. If we had a clear statement that there is a nil cost to the Exchequer, and that there is a nil cost to the local authorities because 100 per cent. compensation is being paid to them, the hon. Gentleman must have been wrong in the first place, and there is a true cost on the central Government in meeting the cost of the amount of extra relief proposed.

I think, as my hon. Friend says, that the Under-Secretary of State has succeeded in confusing us all. There is a sad alternative. There could be a nil cost on central Government funds because the resources element of the rate support grant is not increased. There could be an almost nil cost to an individual rating authority because its loss of rate revenue through mandatory relief could be compensated through the reallocation of the total rate support grant. This is what I am proposing to achieve through the new clause, and the Minister has been, rather unfortunately, trying to persuade us that this reallocation will be or is being achieved. There would obviously be a slight cost to individual local authorities, but the overall cost would be spread among all local authorities in receipt of resources element rate support grant.

I should be following my hon. Friend into complex arguments if I tried to follow him on that point. However, his new clause meets a real difficulty. I am concerned because we have had a clear statement that the Bill will not involve any additional Exchequer expenditure. I has now become clear that it will involve additional Exchequer expenditure. We do not know how much—it might be £250,000 or £1 million. I suspect that it will be about £1 million. If that is true—and the Minister's an swers confirm that it is—I suggest that we should have another financial resolution before the House. Indeed, I wonder about the validity of the Bill itself in its present form.

I have no wish to undermine the Bill because we want it to go through, but I ask the Minister to give serious thought to this question. I am sure that as the Bill stands it is in order, but let us not jeopardise its future proceedings because of any doubt about this aspect. My sympathies go to the Under-Secretary of State because he probably was not responsible for the bald statement on the original Bill. The situation has now been clarified substantially, but it may be that the new clause would clear it up once and for all and would be very helpful.

1.30 p.m.

I intend to intervene only briefly in the debate. I am sure that as you, Mr. Speaker, have been absent for some time during the debate, both you and others, when you read the debate, will not be wrong if you have the impression that so far more concern has been expressed about money than about the plight of the many disabled in this country. It is unfortunate that the burden of the Bill, which is to assist thousands of disabled people in a tangible way, has so far been debated in this financial penny-pinching way.

It is noteworthy that the hon. Member for Barkston Ash (Mr. Alison) has not referred to the Conservative Party's past support for the abolition of the rating system. That would transfer responsibilities for such matters as these to the national Exchequer. In turn, we have heard no references to the actions of the Conservative Party this week in obtaining substantial tax handouts, thereby reducing the amount of revenue available to the Exchequer, which for the most part benefit the very rich and certainly do very little to benefit the disabled.

I should like to refer to some rather hard-faced Victorian attitudes and policies of the Tory-controlled Calderdale Council, especially in regard to its housing policies as they affect the disabled. The Bill, which I hope becomes law, will have to be enacted by that local authority. Its latest objectionable policy is to separate rent and rates payments for all council tenants. The rent is paid to rent collectors, but the rates now have to be paid at council offices. That involves considerable inconvenience and—

On a point of order, Mr. Speaker. May I inquire what the separation of rent and rates payments by council tenants has to do with the new clause?

Order. During my earlier period in the Chair I had some doubts about much that was said about the new clause. I confess that I have had my doubts during the morning. To make the record clear, I was away only for my lunch. I hope that the hon. Gentleman will link his remarks to the new clause and all that it means.

This is in no way a rebuke to you, Mr. Speaker, but I was drawing your attention to the fact that, while you were absent having your lunch, we were treated to extensive comments about "Wake up Walsall", "Sunny Sheppey" and various references to Hove and other places throughout the country. I am drawing attention to a policy of separating rent and rates payments which is of direct relevance to the Bill. I appeal to the Government, when the Bill is enacted, to give guidance to my local authority to ensure that the disabled are assisted rather than hindered in the payment of rates.

There have been extensive expressions of concern in the Balderdale District Council area, in the local paper and elsewhere, about the extreme difficulty which the disabled have in paying their rates. Although the Bill will clearly be of substantial benefit to them, the benefits that they will receive under it could be dissipated and considerably lessened unless guidance is given by the Department of the Environment to local authorities to ensure that the disabled are not forced by policies of this kind to go to council offices to pay their rates. I think that exceptions must be given to help the disabled if the Bill is enacted.

The hon. Gentleman has raised the important issue of whether guidance will be given. It would be helpful if, before we conclude our deliberations on the new clause, the Minister who is now on the Government Front Bench could give us some indication whether that will be done.

I am sure that the necessary reply to these matters will be given in due course. That is why I chose this opportunity to place on record at the earliest moment my concern for such guidance to be given. Unfortunately, I have not yet had my lunch. As we seemed to be spending so much time on the financial aspects of the matter as they relate to local authorities' procedures and practices, I felt that it was relevant to place my concern on record at this stage rather than at a later stage of the debate.

I am sorry that the Under-Secretary of State for the Environment is not present, because I want to pursue, only briefly, some of the points which have already been discussed with regard to the responsibilities which will lie on the central Exchequer and local authorities flowing from the provisions of the Bill. I warmly welcome these provisions and the extension of the financial concessions which are to be made available to the handicapped. We all know of the circumstances of those unfortunate enough to be handicapped for one reason or another, and any help that can be given to them should be made available.

I think that the hon. Member for Sowerby (Mr. Madden) treated us somewhat harshly in looking at the financial consequences of the Bill. Inevitably, we must have regard to where the incidence of meeting the financial responsibilities should lie. I maintain that continuing to introduce central Government legislation and imposing the burden on the ratepayer is wrong, particularly when it is of a mandatory nature. In the past, we have seen much of the burden levied on the ratepayer without regard to local circumstances. They are essentially of an overall character and the bill has to be picked up by local authorities within, of course, the incidence of the rate support grant arrangements.

I am not sure that what the Under-Secretary said about the bill being picked up by the resources element in the rate support grant is correct. Indeed, it is to some extent denied by what the hon. Gentleman said in Committee:
"My advice is that the change to the giving of domestic relief by way of a deduction from the rate bill rather than a reduction of the valuation of the property will not affect the overall cost."—[Official Report, Standing Committee C, 3rd May 1978; c. 16.]
I recognise that, when what the hon. Gentleman said this morning was that the expense would be picked up by the resources element of the rate support grant procedures. Those will be upset by an arrangement of this kind where the relief is not to be based on a rateable value figure but is to be given by way of a reduction from the rates bill. Here again we have a new introduction of rate relief which is in contradiction to the whole concept of the rate support grant arrangements.

I know that the Under-Secretary has undertaken to write to my hon. Friend the Member for Hove (Mr. Sainsbury) and to set out the detail. However, I am surprised that in the circumstances he is not prepared to accept the wording of the new clause, for which there is widespread support by the Opposition. We have had no positive opposition and, in my judgment, no satisfactory explanation of why the new clause should not be accepted.

I wish to intervene only briefly. First, I observe that the Under-Secretary of State for the Environment has left the Chamber. I assume that he has gone for his lunch. If that is the only reason for his departure, I think it is a gross discourtesy, because the debate has largely been an attempt by hon. Members to get information from him before the matter was concluded. If there is some other explanation, I shall apologise to the hon. Gentleman later for that comment.

We are in a ludicrous position, because the only person on the Government Front Bench is the Under-Secretary of State for Education and Science, who has no reason to know anything about the Bill.

I hope that the hon. Member will not be too hard on my hon. Friend the Under-Secretary of State for the Environment. I hope to respond to some of the points that have been made in the debate.

I have no desire to be unduly hard on the Under-Secretary of State. I have no doubt that he needs his lunch as much as do the rest of us. This debate, however, has been an attempt to extract clarity from the Government about the rate support grant and what the Government's intentions are. It is useless to have a debate of this kind without the presence of the Minister who has some responsibility for the departmental interests involved.

Having listened carefully to almost all the debate, I remain as confused as I was at the beginning. The Minister has given us no clarity. He has acknowledged that there is a net additional cost involved in the Bill. It has emerged in the debate that there are three ways in which that cost can be met. The first is by the Government. But we have been told that it is not to be met by the Government because there is no net cost to the Exchequer.

The second method is that it will be a charge on the ratepayers of the districts in which disabled people live. We have been told that that is not the way in which it will be met because it will be coped with through the rate support grant. That leaves a third possibility—that it will be met by the ratepayers of the districts in which there are not large numbers of disabled people.

That means that the cost of the Bill is to be met by shuffling it from one group of ratepayers to others. I might be wrong, but that is the logical deduction. Districts with relatively few disabled people will have their rates increased to pay subsidies to districts in which large numbers of disabled people live. I find that unsatisfactory.

The costs should be met by the Exchequer through an addition to the rate support grant so that the burden falls on taxpayers and does not add to the burdens of ratepayers in any part of the country. I wish to know whether my deduction is right and, if it is, whether the Minister will do something about it. I cannot get that assurance because the Minister is not here. This is a silly way to carry on since I assume that the Minister is as anxious as the rest of us to ensure that the Bill goes through.

I hope that my intervention will be even shorter than the two that we have just heard. I am anxious not to hold up the Bill, which the hon. Member for Aberdeen, North (Mr. Hughes), for whom all hon. Members have great respect. However, there are constant complaints throughout the country about the charges that are laid on local authorities by legislation when Parliament does not afford them the funds to carry it out.

The Government say that no charge will be laid in this case. The Under-Secretary of State asked the House to give him the benefit of the doubt. As my hon. Friends have said, he had difficulty in explaining, in an area of Byzantine complexity, how that end would be achieved. Hon. Members who have been present today have been fulfilling the duty of the legislature by coming back again and again to the Government to ask how the objective is to be achieved.

Another complaint that is made in the country is that members of the legislature are not sufficiently tight in controlling the Executive. We have had a good opportunity to do that today. I can understand the impatience of those who wish to see the Bill passed, but the House has been fulfilling its true role by imposing pressure.

I give the Under-Secretary of State the benefit of the doubt. In spending this amount of time, about which the hon. Member for Sowerby (Mr. Madden) expressed impatience, we have been fulfilling exactly the same role as was fulfilled by my constituent Mr. Vandyk in bringing the test case which led to this cause being discussed.

We are dealing with an important issue. I hope that the Under-Secretary of State at the Dispatch Box can undertake to provide copies of the correspondence to all hon. Members who have taken part in the debate.

1.45 p.m.

Most politicians begin speeches with the humorous aside "Unaccustomed as I am to public speaking". I should begin by saying "Unaccustomed as I am to public silence". I have been silent for two reasons. When I became an Under-Secretary of State at the Scottish Office under my redoubtable right hon. Friend the Member for Kilmarnock (Mr. Ross), I was advised "Never mind the flowery speeches. Get the Bill through." But perhaps the most compelling reason is that it is difficult enough for me to understand the complexities of the Scottish rating system without becoming involved in the English rating system, which appears from the speeches that have been made to be as complex, if not more so, as the system in Scotland.

I do not complain about hon. Members raising these issues on behalf of constituents. The question of how the cost is to be met is important and it is their public duty to raise the matter. Naturally, I have been bearing my silence with more and more impatience since we have another 15 groups of amendments and little time to consider them.

I have been given an assurance on costs. It revolves around whether the recommendations of the Layfield Committee on mandatory relief are introduced. They relate to charities under Section 40 of the General Rate Act. The hon. Member for Faversham (Mr. Moate) referred to a letter, which only English Members have seen, from the Rating and Valuation Association which states that they have not been introduced. I am assured that the rate support grant regulations for 1977 made provision for compensation to be paid to local authorities for the relief that they are required to give to charities under Section 40 of the Act.

I understand that the effect of this will be felt in the 1978–79 year. Provision has therefore been taken to cover that question. I do not know precisely how it will be done, but the regulations apparently already make provision for Section 40 relief.

I am assured that the Government's intention is to introduce similar regulations to cover any additional burden that might fall upon local authorities as a result of this Bill. If that is so, there will be precise compensation for the local authorities and the objectives of the new clauses will be met.

I understand the difficulties of acceping such an assurance from a Back Bencher, but I understood that that was the assurance which the Under-Secretary of State gave on behalf of the Government. I am simply reiterating my understanding. We gave as much information as we could in Committee. I shall draw my hon. Friend's attention to the request that the information that is to be sent to the hon. Member for Hove (Mr. Sainsbury) should be sent to all hon. Members who took part in the debate. If they are still not satisfied, there is, of course, the possibility of raising the matter further in another place.

I take it that we have the assurance of the hon. Member for Aberdeen, North (Mr. Hughes), as the sponsor of this very worthy Bill, that he supports the objectives of my new clause.

There has never been any intention in drafting the Bill to lay additional burdens on local authorities or ratepayers. On the financial side, the intention has always been that there would be compensation to local authorities.

I conclude on what may be thought to be a provocative note. There are times when there are worthy objectives in Bills when perhaps it is necessary to ask ratepayers who are physically and financially better off to make a contribution. Therefore, I do not take the absolute view that at all times local ratepayers have no responsibility to their fellow ratepayers.

I accept the objectives of the new clause. My understanding from Government assurances is that the objectives are met and will continue to be met. Having had that assurance, I hope that the hon. Member for Hove will not seek to withdraw his clause.

On a point of order, Mr. Speaker. May I seek your guidance? My hon. Friend the Member for Hove (Mr. Sainsbury) is just about to wind up this debate. We have had a long debate on this very important matter. I am not sure whether the Under-Secretary of State for the Environment is ill, in which case I shall be the first to offer my condolences. If, however, he is not ill and he is in the House, I wonder whether it might be for the convenience of hon. Members to adjourn for a few moments so that the hon. Gentleman can join us and we can complete our consideration of the clause. In any event, I do not think that we are being altogether fair to the Under-Secretary of State for Education and Science.

Further to that point of order, Mr. Speaker. I hope that the hon. Member for Northampton, South (Mr. Morris) will not proceed with that suggestion. If there is any blame attaching to the Under-Secretary of State for the Environment for not being here, I must share it because it is partly for my convenience as well as for his own that he has left the Chamber. I hope that the hon. Member will not pursue his point of order seriously.

In any event, I understand that the Minister has already addressed the House.

We have had a very important and interesting debate. I am grateful for the support that the objectives in my new clause have received from hon. Members representing a variety of different types of constituency. My hon. Friend the Member for Northampton, South (Mr. Morris), with the problems of new and expanding towns, my hon. Friend the Member for Wallsall, North (Mr. Hodgson), with an industrial urban area, my hon. Friend the Member for City of London and Westminster, South (Mr. Brooke), with, I suppose what is an inner city area these days, and my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden), who has an area which is very similar to my own, my hon. Friend the Member for Faversham (Mr. Moate), with another seaside area, my hon. Friend the Member for Daventry (Mr. Jones), who, like my hon. Friend the Member for Northampton, South, has the problems of an expanding town, and my hon. Friend the Member for Braintree (Mr. Newton), who has a more rural area, have all supported the objectives of my clause.

I am also grateful to have that same support from the Bill's sponsor, the hon. Member for Aberdeen, North (Mr. Hughes). I thought that his intervention at a late stage in the debate was the most helpful one to come from the Government Benches. He put over much more clearly than did the Minister or the Under-Secretary what we were trying to achieve, which is to spread the relief which will be given by the Bill over the body of taxpayers or ratepayers rather than to concentrate it in specific areas.

I suspect that, if the Under-Secretary of State had been a little more clear in what he said, he would have drawn attention to paragraph 9(2) of Schedule 2 to the Local Government Act 1974, which provides
"For the purpose of subparagraph (1) above"—
which relates to the calculation of the rateable value for resources element purposes—
"'effective rateable value', in relation to any hereditament, means such value as may be determined in accordance with regulations made by the Secretary of State; and any such regulations may make different provision in relation to different types of hereditament."
In the light of the helpful speech by the hon. Member for Aberdeen, North, I suspect that the Government intend that the regulations will be made to cover the objectives of the clause. I say only that regulations which can be made and unmade without reference to this House are not the most satisfactory way of dealing with a financial matter which could result in some hardship to the ratepayers of an area such as the borough of Hove and the areas of which my hon. Friends have spoken.

However, it is not the intention of any Opposition Member to delay the Bill, because we all wish it well. In the light of the assurances that we have had from the Under-Secretary of State—I am glad to see that he has nearly got back into the Chamber—and his undertaking to write to me about these matters, and in the light of the further undertaking given by the hon. Member for Aberdeen, North that that letter will be sent to all hon. Members who have taken part in the debate, I shall seek to withdraw the clause on the understanding that we shall study the letter and, we hope, discover that it covers satisfactorily the matters which concern us. If it does not, I hope that the letter will be received sufficiently speedily to enable the other place to look again at the matter if necessary.

I beg to ask leave to withdraw the motion.

Motion and new clause, by leave, withdrawn.