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Commons Chamber

Volume 113: debated on Wednesday 25 March 1987

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House Of Commons

Wednesday 25 March 1987

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

Oral Answers To Questions

Trade And Industry

Westland Plc


asked the Secretary of State for Trade and Industry when he intends to respond to the Trade and Industry Committee's report on Westland plc.


asked the Secretary of State for Trade and Industry when he expects to reply to the report of the Trade and Industry Committee on Westland plc.

The Secretary of State for Trade and Industry and President of the Board of Trade
(Mr. Paul Channon)

Yesterday I wrote to the Chairman of the Committee with the Government's response to the report.

Will the Secretary of State tell the House whether that response contained an acceptance that an illegal concert party was in operation? Does he recommend that the Select Committee's view on transparency in share dealings should be taken so that such illegal activity is not possible in the future?

It is for the Select Committee rather than for me to reveal the exact reply that I gave, but I can tell the hon. Gentleman—I do not think that the Committee will mind if I do—that it made two recommendations, one of which related to the disclosure of material interests. I said that those were being examined under the review of the operation of the takeover panel that I announced to the House on 28 January.

Is the Secretary of State aware that Government policy has led to the loss of 1,800 jobs at Westland? Does he think that Government aid will be required?

I have no reason to assume that the company will require Government aid. The company had an extremely good year last year, and I hope that it has a prosperous future ahead of it.

I was very pleased yesterday to receive my right hon. Friend's reply, which has been placed before the Committee. We shall be considering his response, and I hope that the Government will not hesitate to make the kind of progress that the Committee has called for, especially in relation to business ethics, with which the Committee is particularly concerned.

I hope that the review will be completed by the end of April. I shall inform the House of the Government's conclusions at a very early date.

Does my right hon. Friend agree that if we are to be able to obtain information about the ultimate beneficial owners of shares hiding behind nominees and other banks, we shall need legislation to bring that about?

That may well be so. I would not rule that out. However, I should like to wait for the review before making recommendations to the House.

In view of the undertaking that the Secretary of State has already given about limiting the ownership of Rolls-Royce shares to 15 per cent., is it not essential that legislation on the lines just referred to should be introduced before he proceeds with the privatisation of Rolls-Royce?

Order. There is another question about Rolls-Royce. This question is about Westland.

With respect, Mr. Speaker, the recommendation concerns not only Westland, but companies in general. I submit that my question is in order.

I think that the hon. Gentleman should reserve his fire until we reach the question on Rolls-Royce.

Does my right hon. Friend agree that the prospects of the helicopter division of Westland are linked closely with European collaboration? Will he confirm rumours in Europe that the British Government are not to proceed with collaboration on the NH 90?

With respect, I feel that that is a matter for my right hon. Friend the Secretary of State for Defence. I know that my right hon. Friend intends to make a statement to the House about helicopters soon.

Does the Secretary of State recall assuring the Select Committee a year ago this month that he was watching the stock exchange inquiry "like a hawk"? Now that the stock exchange inquiry and the Select Committee have both concluded that the absence of a concert party strains their credulity, would it not he appropriate for him to try swooping "like a hawk"? Is it not now abundantly clear to those who want to see that the Sikorsky deal was secured by Rupert Murdoch and Lord Hanson being prepared to pay over the odds for enough shares to secure the result that the Prime Minister wanted? Is not the real reason why there was no DTI inquiry into those share dealings that they both had more influence at Downing street than the Secretary of State for Trade and Industry?

Budget Proposals


asked the Secretary of State for Trade and Industry what effect he estimates the Budget proposals will have on the level of United Kingdom trade and commercial activity during 1987.

I expect the Budget proposals to contribute to a seventh successive year of growth in the economy.

Does my hon. Friend agree that the latest CBI survey bears out the Chancellor's statement that the prospects for output and exports are now better than they have been for many years? Should not the Bank of England follow the lead of my right hon. Friend the Chancellor of the Exchequer and reduce interest rates further, which would be of particular help to manufacturing industry in the north?

My hon. Friend is right about the survey, which was carried out before the Budget. The responses on order books and the expectation of future output were higher than at any point in the history of the survey. I have little doubt that next month's figures, which will be based on a survey after the Budget, will show an even higher level of confidence. Nor is that confidence confined to the United Kingdom. My meetings abroad, with such hardheaded judges as the Swiss and the Germans, show that they also believe that permanent and beneficial changes have taken place in the United Kingdom economy.

What does the Minister say about the value of the pound against foreign currencies? Is he satisfied with its current rise? Does he have any view on how far it should rise before it becomes counter-productive?

Hello! I thought it was only a few months ago that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was predicting a sterling crisis because the value of the pound might fall. Perhaps he and the hon. Gentleman should have a quiet word about the appropriate angle of approach on this subject.

Does my hon. Friend agree that he might he being unfair to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who predicted a stirling crisis, because the excellent policies that we are now following means that the pound is bound to be strong? Does he also agree that in this excellent Budget the Chancellor of the Exchequer did not want interest rates and the pound to go too high? Would not our best hope be for the Bank of England to follow the Chancellor's excellent lead?

We have many expectations and hopes, and whether that is the best my hon. Friend may be able to judge better than me. What is certain is that matters relating to the exchange rate and the value of our currency are entirely for my right hon. Friend the Chancellor of the Exchequer.

I hope that it will not have escaped the Minister's attention that the Chancellor predicted that at the end of 1987 our deficit on the balance of trade in manufactured goods will be £8 billion. What does the hon. Gentleman say about that? Does he agree with the Chancellor, who said, from a sedentary position, that that was neither here nor there? Does the Department of Trade and Industry share that thoroughly irresponsible view of the handling of Britain's economy?

Certainly, if there is one element in our trading affairs that is less satisfactory than others, it is that relating to manufactured exports and the balance of trade for manufactured goods. We do not deny that. However, that the Opposition should make such a meal of it, singling out the one element in our trading picture where they can find a deficit, is entirely unjustified. Our trade position has to be looked at in its entirety. Our manufacturing output continues to increase. It will increase by 4 per cent. Next year. As my right hon. Friend the Chancellor said in the Budget debate on Monday, the prospects for an improvement in that sector are increasing.

National Quality Campaign


asked the Secretary of State for Trade and Industry if he will make a statement on his Department's national quality campaign.

The Parliamentary Under-Secretary of State for Trade and Industry
(Mr. John Butcher)

The campaign was launched in 1983 to raise British industry's awareness of the importance of quality for economic success, to help firms to raise the level of their quality performance and to enable firms to demonstrate their achievements. To date, over 50,000 firms have been contacted through the campaign, and there is no doubt that Britain's quality performance has improved as a result. Nevertheless, much remains to be done, and the commitment of all sections of industry and commerce to quality remains vital.

Does my hon. Friend agree that all the advantages that we have with regard to increased competitiveness, lower interest rates, and lower inflation, and the advantages in price and the other things that go with it, could be set at naught if we do not achieve the highest quality possible in our goods and services, so that we can beat off the foreign imports on our own terms and show, as we used to in the past, that "Great Britain" means "great" in manufacture and services?

I am sure that my hon. Friend will celebrate with me the recent figures, which show that the rate of growth of manufactured exports is slightly higher than the rate of growth of imports. I am sure we all hope that that trend will continue for the foreseeable future. My right hon. Friend is also right in linking non-price factors, such as improved quality and design, as part of the cause of that healthy trend. The national quality campaign has been the key in changing attitudes in British industry.

May I congratulate my hon. Friend on an excellent quality campaign? May I reassure him that "Best made in Britain" is a good policy? Our companies are competitive. Provided we deliver our goods on time, even in Leicester, we have much to celebrate. The campaign should be supported by the Opposition, because it ensures that British goods are the best made and the best for our country's future.

My objective is to double the number of companies that take part in the national quality campaign, by implementing quality programmes within companies. This year we shall also take a more targeted approach, concentrating on and helping major companies and their suppliers, concentrating on individual sectors and also involving regional campaigns in the approach.

Rolls-Royce Plc


asked the Secretary of State for Trade and Industry what arrangements he has made to discuss with the trades unions of Rolls-Royce plc the consequences of privatisation.

None. Relations with the Rolls-Royce trades unions are a matter for the company.

Why will the Minister not meet the Rolls-Royce trade unions if, as other Ministers have stated, they believe that most workers in the company are in favour of privatisation? Why will he not meet them to explain that the Government are writing off £645 million of company debt effectively to give away Rolls-Royce, and that the management is planning to close the East Kilbride works, threatening 2,500 jobs, and generally to run down the business's dependence on aero engines, threatening thousands of jobs? Why will he not meet the unions to explain those real consequences of privatisation?

At the press conference last week the chairman of Rolls-Royce specifically denied the East Kilbride allegations as having no foundation in fact. The answer that I gave to the hon. Gentleman still stands—relations between the trade unions and Rolls-Royce are a matter for the company. The Rolls-Royce employees are well aware that their order book is now standing at higher levels than ever before. The prospects are better than they have ever been.

Does my hon. Friend agree that it would be more useful if the trade unionists from Rolls-Royce met their brothers from Jaguar and had a word with them about the privatisation experience?

Does the Minister accept that there is a national interest here which must be protected and which led to Rolls-Royce being brought into public ownership in the first place? Will he therefore reconsider his plans and retain at least 50 per cent. of the shares in public ownership, thereby enabling the employees to have a share of their own company and enabling private capital to be brought in as well?

No, there is no case for that. I notice that the hon. Gentleman is sitting on the 50 per cent. fence in this case. Rolls-Royce needs to be free of public sector control to be able to make its way successfully in the private sector, and we have every confidence that it will do well.

My right hon. Friend is well aware of the excellent relationships that generally exist between the trade unions and management of Rolls-Royce. Referring to the order book that he mentioned, will he assure me that, as privatisation approaches, there will be a clear declaration by the Government, heard by the employees, managers and shareholders — the public — that the contracts into which Rolls-Royce has entered, such as those for the V2500 and the Superfan engine, will be indemnified by the Government against any consequential problems?

The V2500, as my hon. Friend well knows, is the subject of launch-aid already; and that should effectively dispose of his question on that matter.

The Superfan is the subject of a later question on the Order Paper.

As the employees of any company determine its success or failure in the final analysis, has the Minister no concern for the fact that Rolls-Royce has made no attempt to explain the possible implications of privatisation?

That is not the in Formation that I have. The management of Rolls-Royce has assured me that it has carried out an extensive programme in all its plants of explaining exactly what the implications of the policy are, by means of fortnightly employee meetings and printed material. I shall be happy to obtain some of that material and send it to the hon. Gentleman if he wishes.

Will my right hon. Friend draw a distinction between the official position of the unions on this matter and the steady stream of employees from Rolls-Royce who have come to my surgery and to the surgeries of hon. Members representing neighbouring constituencies wanting to know when they will get the opportunity to buy shares in their own company?

I am sure that my hon. Friend is giving only the latest example of what has happened in other privatisations. The work force will seize the opportunity to participate in an undertaking, which is, after all, something in which it is involved.

Before proceeding with the privatisation of Rolls-Royce, is it not essential for the Government to introduce legislation requiring the disclosure of voting rights in shares? Such legislation should be on the lines suggested in an earlier report, which I shall not mention. If the Government do not, how can they guarantee the undertaking that they have already given — that not more than 15 per cent. of the shares in Rolls-Royce will be allowed to pass into foreign ownership—if foreign companies acquire shares through British nominees?

We shall he taking steps in the privatisation to ensure that there is a 15 per cent. limit on any single shareholding, be it foreign or domestic.

Does my right hon. Friend agree that the history of privatisations has been one of great benefit to the companies that have been privatised, to their work forces, to the economy and to the taxpayer, who gains twice: once when the shares are sold and secondly when the increased profits of privatised companies are taxed?

Is it not true that privatised companies do not have the monopoly of job losses? After all, under previous Labour Governments, nationalised industries, such as steel and coal, took more than their fair share of job losses.

My hon. Friend is right. The list of successful privatisations in which productivity, performance and employee participation have increased to a remarkable extent bears eloquent testimony to the success of the policy.

Will the Minister confirm that although Rolls-Royce has denied that it is actively considering the closure of its East Kilbride plant, it has been revealed that the document referring to that has been superseded by another, which refers to rationalisation at several places in the United Kingdom? Will he confirm that there is a widespread fear that such rationalisation will inevitably lead to redundancies?

If the Minister is to commend the suggestion by the hon. Member for Solihull (Mr. Taylor), that the trade unionists of Rolls-Royce should talk to their brothers at Jaguar about privatisation, should not the same trade unionists also speak to their brothers at Coventry Climax about their experience of privatisation?

The hon. Gentleman will be aware of the press reports which I also saw last week referring to East Kilbride. As I said in my original answer, the chairman of the company went to great lengths to deny these allegations and to say that the document was no more than a management exercise by someone at a rather junior level in the company.

Nationalised Industries


asked the Secretary of State for Trade and Industry how much his Department will be spending on support for nationalised industries in 1986–87, as compared with 1978–79.

The total external financing requirement for the Department's nationalised industries is expected to be £177 million in 1986–87, compared with £845 million in 1978–79. This is a reduction of nearly 90 per cent. in real terms.

Does my right hon. Friend agree that these excellent figures are the result of determined Government policies and effective management of these industries over the years? Does he also agree that these reductions have enabled resources to be released which are much better and more effectively used in other parts of the economy?

I entirely agree with my hon. Friend that the management of the nationalised industries and also the privatisation programme have been of immense benefit to the British people.

If these industries are such a liability, as has just been mentioned by the hon. Member for Mid-Worcestershire (Mr. Forth), why is it that we saw such indecent scandals going on in the stock exchange when people were eagerly wanting to buy up the shares in these very industries?

The question that I have been asked is what the financing requirements are of the nationalised industries that I have in my Department. As to the question of privatisation, the whole House knows that the Government have transformed the prospects of the majority of the nationalised industries in this country. They have been placed in a situation in which they can be privatised, to the immense benefit of all concerned.

Does my right hon. Friend agree that the huge sums of money that have been expended on supporting the nationalised industries over the years have held back the British economy for too long, and that the sooner the rest are brought back to profitability and the private sector the better it will be?

I am sure that we should have an increasing programme of privatisation. I agree with my hon. Friend that the sums that had to be spent in the past were a great drain on the economy, and nothing illustrates that better than the example of British Steel.

Will support include non-financial matters, such as not forcing Austin Rover to give commercial information, which the right hon. Gentleman's predecessor and his Department did, although this was resisted by senior management and was extremely damaging to Austin Rover, particularly to sales of the Metro? Will the right hon. Gentleman explain why this was done, and will he assure the House that it will not be done again in the future?

I do not accept what the hon. Gentleman says, nor does this question refer to Austin Rover.

In congratulating my right hon. Friend on these excellent figures, may I invite him to suggest to the House that the fact that other countries are following precisely the policy followed by this Government is in itself a major tribute to their success?

I think that that is right. All over the world people are following the privatisation policy. It is only the out-of-date dinosaurs on the Opposition Benches who will not do so.

Does the Minister not realise that the benefits that he talks about are somewhat illusory? Does he not recognise, for example, that it is very hard to convince the consumer, in relation to British Telecom, that he or she has benefited from the privatisation? Does he not realise that £2,000 million private monopoly profit is not difficult to achieve, exercising monopoly power, but does he recognise that that means that the Government have imposed £2 million of Tory doctrine tax on consumers linked to the British Telecom system?

I do not agree with that at all. The privatisation of British Telecom has led to an upsurge in new industries and in new suppliers and to a very considerable increase in activity in the economy. The duopoly policy is also extremely successful. When one looks at the other nationalised industries, one sees that the Post Office has made very considerable strides, and I notice that the right hon. Gentleman did not mention British Steel.

Export Credit Insurance


asked the Secretary of State for Trade and Industry what information he has on the extent to which the private sector is providing cover for export credit insurance; and if he will make it his policy to encourage this development.

There are no published figures. Our impression from a variety of sources is that private sector credit insurers cover a very small, though growing, proportion of United Kingdom exports. I welcome any cost-effective developments which benefit our export trade.

Is it not a sign of the Department's inefficiency that in 1985–86 it employed 1,769 people to write just over £15 billion worth of business, whereas over the same period the private sector dealt with a greater volume of work and employed fewer than 400 people in connection therewith? When will the Department be instructed to allow United Kingdom exporters to have the choice of placing all their business in the private market? Is not the present monopoly on some work indefensible?

There are absolutely no constraints whatever on United Kingdom exporters placing their insurance wherever they wish.

I am pleased to hear the Minister's response. Will he confirm that the Government intend to maintain the present system, recognising its importance to many United Kingdom manufacturers, such as GEC, which simply could not compete in world markets without the existing Government-sponsored insurance scheme?

The Export Credits Guarantee Department has an obligation to break even, and that exercises a discipline on its judgments. However, there are, of course, certain sectors of the insurance market and certain policies which the private sector—to which my hon. Friend the Member for Derby, North (Mr. Knight) referred — simply will not touch. In those sectors, if British exporters are to have a reasonable level of assurance, the ECGD is the only recourse available to them.

Is my hon. Friend aware that he is not quite correct to say that there are absolutely no restrictions? The ECGD operates restrictions in that it deals with the basket of an exporter's insurance needs, whereas in the private sector the exporter can choose to insure with different companies for different markets. The ECGD will not permit that.

I think that the difference between my hon. Friend and me is only one of semantics. The ECGD has to exercise the comprehensive principle, but if an exporter does not like the basket approach, to which my hon. Friend referred, he has the clear option to withdraw his custom and place what insurance he can where he can.

Has the Minister seen the illuminating document, "Export Goods Not Jobs" published today by the Society of Civil and Public Servants on behalf of its members in his Department? Will he confirm that, under this Government, the Export Credits Guarantee Department has been obliged to double its premiums and that, as a result, it has lost one third of its share of the market? Will he confirm that, in the same period, the number of export support staff in his Department has fallen by two fifths, and that the number of overseas commercial officers in the Foreign Office has fallen by one seventh? Is it any wonder that exports are rising at one third the rate of imports, when the Government have been so busy pulling the rug from under the feet of British exporters?

I doubt very much whether the comparative import and export rates — to which I have already referred and which we would all like to be in better balance — have anything to do with difficulties in getting insurance cover. They certainly have very little to do with it. I am afraid that I have not seen the document to which the hon. Gentleman referred—he said that it was only published this morning — and comment on it will therefore have to wait until I can communicate with him personally.

Does my hon. Friend share my concern that the ECGD lost nearly £55 million last year on covering commercial risk, whereas the private sector manages to provide cover on commercial risk at a profit? Does that not suggest that we need to examine closely the manning levels and cost structures of ECGD, to stem the haemorrhage of taxpayers' money?

The losses to which my hon. Friend refers may relate to some extent to the internal arrangements of the ECGD, and when I went to Cardiff a few weeks ago I was very impressed by the changes that were taking place in that regard. Nevertheless, as I said earlier, we have to make available a service to British exporters to cover the sectors which, for one reason or another, the private sector flinches from entering. There are restraints, there are some sectors in which even the ECGD will not provide cover, although they are marginal. It is perfectly justifiable that some public money should be at risk in this area.

Regional Development Grants


asked the Secretary of State for Trade and Industry what has been spent on regional development grants in England so far in 1986–87; what he expects to spend in 1987–88; and if he will provide figures for the north-west.

Provisional figures for payments of regional development grants in 1986–87 to the end of February are £226·8 million in England and £91·3 million in the north-west region. The 1987–88 provision for regional development granta for England, as incorporated' in the Supply Estimates, is £105 million. Future provision for expenditure on regional development grants is not allocated at the regional level. The actual distribution will depend on the pattern of demand.

I acknowledge those figures — one is always grateful for small mercies under this Government—but is the Minister aware that the north-west region still has the second highest number of unemployed in Britain outside the south-east and London, and that far more money is necessary to get greater financial investment moving in that area and to create safer and more secure jobs? Is he further aware that the 1981–84, census taken by the Department of Employment reveals that 158,000 jobs were lost during that period in the northwest region? Is that not the result of the Government's complete neglect of a once great industrial region and the fact that they continue with their senseless and futile economic policies?

The hon. Gentleman will, on reflection, realise that the massive contribution of inflation to the health of the north-western economy is something for which he and other supporters of the Labour Government should take at least some responsibility. The north-west region will be a beneficiary of the improved economic climate and the £230 million of selective assistance that is being distributed, of which the north-west has £67 million, to create 17,000 jobs in recent years, is at least a start in the right direction.

Does my hon. Friend agree that large parts of the south-east are over-priced, over-congested, overrated and thoroughly disagreeable, and that that will become far worse in the next 20 years or so? Should not northern Members of Parliament be emphasising the positive advantages of their area, which is ideally built for future business expansion, with its marvellous infrastructure, marvellously cheap places to build businesses and homes, good schools, roads, and commercial infrastructure? If business men came to our region, particularly to the metropolitan borough of Bury, regardless of regional aid grants, they would find a wonderful place for their businesses for the future.

Notwithstanding the reply that the Minister has just given, does he not recognise that in the north-west there are large areas of dereliction, factories which have closed and many people out of work, and that the Government's hands-off approach has only been compounded by the giveaway Budget, which did nothing to provide additional resources for less prosperous regions? Will not the absence of a regional policy to provide new work, new hope and new prosperity, simply suck away yet more of our people and resources to the south-east?

I am astonished at the rashness of the hon. Gentleman, coming as he does from an area of Merseyside where more public money has been spent over more years than in any other part of the United Kingdom. Has he forgotten the creation of the urban development corporation, the enormous effort made to reclaim large parts of Liverpool's city centre and the substantial number of jobs created in many urban developments within the Liverpool area to try to deal with the problem of neglect?

Will my hon. Friend accept from me, representing a north-west constituency as I do, that the Budget was warmly welcomed by industry from every sector? Will he also accept that, far from the whingeing that we have heard from the Opposition, if we had responsible councils seeking to reduce rather than increase rates to and planning departments that were prepared to be flexible in accordance with the Government's requirement, the opportunities for industry, which in my area are immense, could be repeated throughout the north-west region?

My hon. Friend is right and I am sure that he, like others who live in that part of the north-west, will welcome the creation of the urban development corporation in Trafford Park, which I am sure will have a major influence on the centre of Manchester.

Can the Minister confirm from his figures that the cuts in regional development grant in England will be £121 million in the coming year, and that, on top of cuts in Scotland of £70 million and in Wales of £40 million, that makes a total cut in regional development grant of £230 million, the biggest single percentage cut in any one year since regional policy was established, and at a time of growing and deepening regional divisions? Given the catastrophic fall in manufacturing investment value, manufacturing employment and in manufacturing output since 1979, what possible sense does £230 million worth of cuts make? How many jobs will be lost as a result?

The hon. Gentleman should know perfectly well that the national expenditure on regional assistance is now £419 million, which represents a £36 million, or 9 per cent., increase on the previous year. The hon. Gentleman should also know perfectly well that there has been a change in the pattern of assisted areas, which has now includes 70 per cent., or thereabouts, of all those in the working population. That is the benefit of redrawing the map to ensure that all assistance reaches the parts that need it most. As the hon. Gentleman wants to discuss manufacturing investment I trust that he will take heart from the fact that, although manufacturing investment in the north has indeed declined substantially, and in the north-west it declined between 1979 and 1984 by 31 per cent., there has now been a substantial growth in manufacturing investment in the north-west. In the northern region as a whole there has been a growth of 26 per cent. in one year, and in the north-west that growth has been 10 per cent. in one year.

Company Law


asked the Secretary of State for Trade and Industry what plans he has to seek to reform company law on nominee shareholdings.

The possibility of changing company law on nominee shareholdings and other matters is already under consideration as part of the review of the operations of the takeover panel which I announced in the House on 28 January.

Why has the Secretary of State embarked on a programme of determined inertia and felicitous procrastination as regards the breaking up of offshore syndicates run by eminent and distinguished merchant bankers, accountants and solicitors who deal in nominee shareholdings? Can the Secretary of State tell us what progress has been made in the discussions between his Department and the Channel Islands and the Isle of Man, which act as havens for fraudsters in this sphere?

We have had discussions with a number of regulatory authorities, and these are proceeding extremely satisfactorily. As for determined inertia, that is hardly a fair accusation when I have already told the House that I hope to make an announcement about the review of the operations of the takeover panel next month.

Would it not be a simple matter immediately to implement the recommendations of the stock exchange, which are that nominee shareholdings should be unable to exercise voting rights or to nominate proxies?

Yes, that is certainly one of the matters presently under consideration.

Is it not possible that Marketing and Acquisition Consultants, a firm in Jersey, is a receptacle for large amounts of money belonging to Guinness, which is being fed into the island illegally? Why do the Government not find out who owns that company? Why do they not make extraordinary efforts, as against using the mechanisms that are currently available to them? The Government can find out who is behind that company if they wish to know. It is in the public interest to find out. Why do the Government not make a greater effort?

The hon. Gentleman knows perfectly well that a number of investigations are taking place. I really do not believe that it is proper for me to go further than that in the House at this time.

Research And Development


asked the Secretary of State for Trade and Industry what has been the change in real terms in Government support for civil research and development since May 1979.

My Department's support for civil research and development in this financial year is forecast to be £372 million. This is some 60 per cent. higher in real terms than in 1979–80.

Does the Minister accept that the expenditure on civil research and development in this country lags far behind that of our major competitors in other parts of the world? Will the Minister tell the House why the Government have not done more to increase that expenditure and to encourage companies to increase their research and development expenditure? Does the Minister not hang his head in shame at the way in which he and his colleagues have, in the past 24 hours, torpedoed the European Commission's proposals for increasing expenditure on research and development?

If I can take the last point first, having just returned from the particular research council, we have not torpedoed anything. What we are insisting upon is that, before we agree an expenditure of more than £5 billion, the Commission should have a sensible series of programmes with which it can convince us about what it is trying to achieve. We must also know whether the proper methods of evaluation have been put in place and whether it is possible to turn off some of those programmes if they are not achieving their targets.

As regards the hon. Gentleman's other points, he will be interested to know, from a press release from my Department on 26 February 1987, that civil expenditure on research and development in 1985 was £4·8 billion at current prices. That represents an increase of 16 per cent. on the £4·2 billion figure in 1983—two years before.

Despite the increase in 1979, does my right hon. Friend agree that scientists become somewhat blinkered about the value of projects? Is it not necessary that projects are correctly evaluated for their commercial potential? Is my right hon. Friend satisfied that the evaluation process that is carried out by the Government is sufficient, bearing in mind the vast sums of taxpayers' money involved?

Quite frankly, I do not think that one can ever be satisfied. The evaluation and monitoring procedures have improved a great deal in recent years. My hon. Friend is right. I do not see why, in the public sector, one should accept lower standards than one would in private business or, indeed, in one's personal life. If public money is involved, lower standards of monitoring and evaluation seem to obtain.

Will the Minister accept that the money that is made available for civil research and development is not fairly distributed throughout the regions of the country, because there is a tendency to go where the head offices of industries are located—in the south-east? Will he take some positive steps to ensure that regions such as the north-west get a fairer distribution of this important work?

It is not actually the head offices that do research, as the hon. Gentleman knows. It is where the laboratories are situated. I visited several excellent research establishments in the hon. Gentleman's part of the country, which shows that some good research is going on in the north-west as well.

Although I welcome the increase of 60 per cent. in real terms that my right hon. Friend announced, does he agree that a great deal more could be done by private industry, particularly when its profitability is sharply increasing?

I agree with my hon. Friend. The House will he interested to know that, although British industry expenditure on research and development has gone up 20 per cent. in the past 20 years, during the same period industry expenditure in Germany and France has doubled, and in Japan it has trebled.

What does the Minister intend to do about the figures that he has just given? Is he not worried that we have an escalating brain drain of our top scientists? What does he intend to do about that? Does he realise that that is an absolutely essential area for Government activity? What proposals does he have to offer?

The right hon. Gentleman may have forgotten the Link programme that was announced in November, which is a £420 million programme designed specifically to attack the exploitation problem that we have in this country of the extra time that it takes to develop an innovation or an idea into a marketable product. It is a large programme, working with the academic sector, Government and industry, and is designed to bring everyone together and to pull new products through.

Purchasing Initiatives


asked the Secretary of State for Trade and Industry if he will make a further statement on the implementation of his Department's public purchasing initiatives.

The public sector spends about £40 billion each year on assets, goods and services. My Department is enhancing its programme to promote, with public bodies and their suppliers, the advantages of positive purchasing with the aim of achieving value for money in this spending and, at the same time, improved competitiveness in firms.

Does my hon. Friend agree that a more efficient expenditure of that enormous sum of money could have a dramatic impact upon our economy? Will he do all that he can to achieve, say, at least a 5 per cent. improvement in the efficiency of the spending of that cash this year? Will he do the same in future years, if he can?

There are two objectives of my Department's public purchasing initiative. The first is to support the central unit on purchasing on value for money. Secondly, through the application of the principle of positive purchasing, we seek to ensure that, when the money is spent, a number of British companies become more competitive as a result of enlightened purchasing procedures and, therefore, supply more products into these contracts.

Does the Minister accept the fact that given the size of the public sector and its purchases there is a real opportunity to use it to encourage regional industry, such as in the northern region and the north-west of Scotland, and so on? There should be a specific and clear criterion. The Minister did not mention that, but said that he would take this regional distribution of purchasing into account to support the industries.

I am grateful to the hon. Gentleman for his observation. He is anticipating a certain part of our thinking on the public purchasing initiative. We have now agreed guidelines for the PPI principles, and we shall be pleased to present them either on a sectoral basis or on a regional basis. However, I accept the hon. Gentleman's point.


asked the Secretary of State for Trade and Industry if he will make a statement about the current balance of trade with Japan.

From the provisional figures for the 12 months ended December 1986, United Kingdom trade with Japan showed a balance of trade deficit of £3·7 billion.

I thank my hon. Friend for his reply, although it brings me no comfort. What evidence is there that the various undertakings that are contained in the Japanese action programme to facilitate the access of British imports to Japanese markets have been honoured by the Japanese?

Does the Minister accept that in the constituencies of various hon. Members there are electrical appliance industry and other interests which are very concerned that the Japanese people and their Government, while making encouraging noises about their desire to import, nevertheless impose such stringent and sometimes ludicrous conditions regarding the safety of various appliances that they seldom, if ever, get into Japan? If we in this country were to impose such stringent conditions as theirs, there would hardly be a Japanese product that could enter the United Kingdom.

The right hon. Gentleman is entirely right. He cites one example of, I am sorry to say, a large number of British goods that would otherwise be competitive but that are excluded by Government or quasi-governmental devices.

Will my hon. Friend take this opportunity to condemn the Japanese Ministry of Posts and Telecommunications action in blocking Cable and Wireless investment and United States investment, as allowed by Japanese law? Will he also take this opportunity to say what he hopes Her Majesty's Government can do, in the face of this acid test, to persuade Japan to allow British investment in that country?

This is certainly an exemplary situation, which completely encapsulates the Japanese attitude and the difficulty of breaking into a most important sector. The British Government have been active. My right hon. Friend the Secretary of State—[Interruption.] I do not understand why the Opposition are reacting in this way. This is practically the most serious single topic with which we are dealing. [HON. MEMBERS: "What is the hon. Gentleman going to do about it?"] I am telling hon. Members what we have done. My right hon. Friend the Secretary of State wrote to Mr. Karasawa on 13 February. He received no reply. My right hon. Friend the Prime Minister wrote to Mr. Nakasone on 4 March and has had no reply. I know that a number of senior members of the American Administration have also written about it. [Interruption.]

I assume that the Opposition's attitude is good-natured, but I detect in it a strong undertone of indignation, which I know is shared on this side of the House. In the course of time this level of indignation, which is widely held in this country, in the Community and in the United States, will finally find expression —[Interruption.] Hon. Members know very well that in GATT, in the Treaty of Rome and in all our treaty obligations there are very powerful restraints on retaliatory action, but the House is demonstrating this afternoon a level of indignation that ultimately will make such action inevitable.

Is the Minister aware that if I were standing in his shoes at the Dispatch Box answering questions in that way I would be thoroughly ashamed of myself? I thought that the Government were asking people to buy British. How can they when they look in the warehouses, the retail outlets and the shops and all the goods are made in Japan? Why does the Minister not take the short walk to No. 10 and tell the Prime Minister that he has failed in his duty and resign?

I notice that neither the hon. Gentleman nor his hon. Friends actually come out and recommend import controls—or do they?

May I say how refreshing I find the candour of my hon. Friend the Minister? May I also say that expressions from the Opposition Benches about this unsatisfactory situation are not just widely, but are wholly, shared by Conservative Members? The Japanese Government must be given to understand that their behaviour in this regard militates against a healthy and natural expansion of the world economy. They are not serving their own interests in the long run and we hope that the day will come quickly when Her Majesty's Government, in company with our partners in the Community, will be able to get some effective action against these pirates.

I am grateful to my hon. Friend for his support. For some reason, Opposition Members refuse to acknowledge that there is a comprehensive system of international trade treaties which regulate world trade. These treaties have been built up over a long period to restrain and deter trade wars. Where one country deliberately flouts, ignores or circumvents that system, it has only itself to blame for the consequences. To put those consequences in order—[Interruption.]

I do not object to what Opposition Members are doing; I welcome it. This indignation, which has not been shown in the House before, is timely and is a great help. But hon. Members and the House must realise that to take action involves a consensus of agreement with our trading partners. It involves getting the United States and the Community on side, and it may ultimately involve action outside GATT.

Miti and Japan are planning world domination through trade. Their respect for international conventions, as the Minister will know, as a historian, is hardly honourable. There are the examples of non-tariff trade barriers, the dumping of credit and the capturing of international markets. We have Nomura moving into the City of London and the financial institutions from Japan are moving to take over the City. If my hon. Friend wants a weapon, he has it there. Tell the Japanese to take their financial operations out of the City, remove their trading markets and let them go home.

My hon. Friend is quite right. Indeed, the principle of reciprocation is embodied in the Financial Services Act. This is the one sector where we have the possibility of immediate retaliation where appropriate. My hon. Friend the Under-Secretary is going to Japan in a few weeks' time and he will make that perfectly clear.

Does the Minister understand that, having invited the House to be indignant, he has now heard its indignation expressed clearly and forcefully? Does he appreciate that, for a Government who have been in office for eight years, it is not good enough for them to come to the Dispatch Box and wring their hands about the difficulties in dealing with the Japanese? Let me tell him what he might consider doing—do to the Japanese what they do to us.

I wish that I could. As the right hon. Gentleman well knows, we do not have at our disposal the same kind of administrative machine as the Japanese, and that at present we are constrained by a whole range of international treaties, to deviate from which would require the consent and approval of our partners.



asked the Secretary of State for Trade and Industry when he expects to announce his decision on launch-aid for Superfan.

Rolls-Royce has not yet submitted a full application for launch-aid. Any application will be considered in the usual way.

Does my hon. Friend agree that perhaps the best way in which he could advance any future application for launch aid for Superfan would be an early and favourable decision on British participation in the A340 Airbus, particularly in the time scale within which he indicated to me earlier this year it would be taken, that is by the end of March?

I do not expect Rolls-Royce to put in its launch-aid application quite as soon as my hon. Friend has said. Perhaps it will do so in the next two to three months. My hon. Friend and the House will be pleased to know that Rolls-Royce today announced that it has signed a business agreement with Boeing to install the 211 engine—the 524D4D in the 767 family of Boeing aeroplanes. That is very good news.

Could the Minister be a little more precise about the business of the launch-aid for the Superfan, because it is very much bound up with the success of the A340? It would help the House and those of us who are interested in the A340 Rolls-Royce engine to know exactly when all this will be resolved.

As I said in my original answer, we have not yet received a launch-aid application from Rolls-Royce for the Superfan. The situation about the Superfan in relation to the A340 is that the arrival of the Superfan engine will certainly improve the selling and marketing prospects of the A340. It is not essential but it makes the aeroplane still better. I understand that the International Aeroengines consortium, of which Rolls-Royce is a member, will take a decision fairly soon about whether to proceed with the Superfan. All these decisions have to be taken in sequence.

Elimination Of Poverty In Retirement

3.33 pm

I beg to move,

That leave be given to bring in a Bill to provide for old age pensions of a sufficient level to eliminate poverty in retirement; and to ensure that these are regularly increased in line with the average earnings of those in work.
The existing levels of old-age pension of £38.70 for a single person and £61.90 for a couple are a disgrace in a civilised society. Even with the increase in pensions proposed in April, they will still only be £39.50 for a single person and £63.25 for a couple. Those rates compare extremely unfavourably with any western European rates. The French pay £78 a week and Luxembourg pays £69 a week.

I propose this Bill to draw attention to the miserable life of many elderly people and ask the House to understand the increased costs faced by pensioners compared with the rest of the population. For example, every winter this House debates the problems of fuel poverty among elderly people. We wring our hands for a couple of months while the cold weather is here and then forget all about the pensioners. We fail to realise that, because of the low level of the pension and the need for pensioners to keep their homes warmer in winter than the homes of the rest of the population, they spend on average 10 per cent. of their income on heating, compared with rather less than 6 per cent. spent by the rest of the population.

The same applies when purchasing goods, because younger, wealthier people are able to buy in greater bulk than pensioners. Any comparison of the normal retail prices index with the retail prices index for pensioners would show that the so-called drop in the consumer prices index that the Government keep telling us about is irrelevant when talking about small consumers such as old-age pensioners. Pensions should at least have some regard to the retail prices index as it affects pensioners.

My Bill also seeks to draw attention to the problems of bad health that elderly people suffer. We have discussed, particularly during the cold weather spell, the serious problem of deaths from hypothermia. It is not a disease in the sense of cancer, pneumonia, bronchitis or anything like that: it is a disease that is solely the fault of badly designed and badly built houses, too low an old-age pension and too many pensioners living in too much cold throughout the miseries of winter.

There were 166 recorded deaths from hypothermia in the first quarter of 1983 in England and Wales. In 1984, there were 205; in 1985, 363; and in 1986, 355. In the case of Scotland, the figure is proportionately higher, from 116 in the first quarter of 1983 rising to 135 in the first quarter of 1986. That does not include the figure of deaths from hypothermia through the miseries of last winter, when even the increases in heating allowances that the Government promised have been eaten up by standing charges and high fuel bills.

We have observed, when looking at the condition of pensioners, that they often wait a long time for hospital treatment. Because of the lack of sufficient old people's accommodation provided by local government, geriatric patients often spill over to general wards, thus exacerbating the problem of hospital waiting lists. While the Government will tell us that they have a target figure for many services that should be provided for the elderly, in the case of the Health Service or in local government, very infrequently are these targets met.

I have before me an excellent report produced by my union, the National Union of Public Employees, entitled, "Time for Justice". It is a report on care for the elderly and it is produced by people who work day in day out caring for the elderly, and who have analysed the problems of Health Service provision and local government provision. It gives as an example the provision of home helps per thousand of population aged over 65. Of the 108 local authorities, only 18 are above the target figure recommended by the Government. Worst is the council of the Isle of Wight, which provides only 2·67 home helps per thousand of population. The highest, other than the City of London, which is an exception in itself, is Newcastle, with a provision of 16. Most authorities are unable to meet the target, and it is not always the fault of the local autorities either, because central Government rate capping and expenditure policies mean that these services have often been badly cut.

In every area, the provision of services for the elderly is inadequate and insufficient. Demand, as reported in the recent edition of "Social Trends", has increased considerably, for example in the number of people treated by home nurses and chiropody services. In no way does the increase in the services meet the increased needs of the elderly population. My Bill seeks to draw attention to some of these problems.

The first thing we propose is that the pension level should be dramatically increased. In 1980, the Government broke the relationship of the old-age pension to earnings, and that means that pensioners are worse off. A single pensioner is worse off by £7·20 and a married couple by £11·40 a week, compared with when the Government came into office eight years ago. My Bill proposes that in future the level of pensions should be linked, as a minimum, to that of the average industrial earnings. That was the proposal of the National Pensioners Convention which lobbied the House on 5 March. I wonder how many hon. Members, particularly Conservative Members, met people who came on that lobby and said, "What a good idea. How well we understand you and we go along with your proposal." At the same time, they support the Government that have done nothing about that but have increased and exacerbated poverty among the elderly.

If the Bill passes into law, as I hope it will, under the National Pensioners Convention demand, the married couple pension would increase to £86·57 and the single pension to £57 a week. That is still comparable only to the level provided by other western European countries, so is not an awful lot to look at. The Government have recently altered the tax thresholds. If the single person's pension was merely increased to the level of the single person's tax allowance, the single person would be better off by £371 per year. That is an indication of the poverty in which many elderly people live.

The other simple but important proposals in the Bill are that each local authority should be asked to report once a year the condition of the elderly people within its area, the effectiveness of the provisions of its services and how near it is to meeting Government targets. The report should include the provision of home helps, occupational therapists, chiropody services where appropriate for local government, and, above all, the provision of housing accommodation and what research has been done into the design of housing for the elderly.

The Bill also requires local health authorities to do exactly the same. As in the case of local government, health authorities have guidelines on the provision of geriatric beds but very seldom are those guidelines adhered to or the targets met. Again, it is not always the fault of the health authority. If one lives in an area such as mine, where the health authority is having, in real terms, a cut of 15 per cent. in expenditure this decade, it is hardly surprising that the provision of health care for the elderly suffers as a result.

The final proposal is that, instead of wringing their hands and saying that the problem of the elderly is somebody else's problem, the Government should appoint one Minister responsible for co-ordinating all aspects of policy in respect of the care of the elderly, including transport, housing and health. That Minister should present an annual report to the House which would show the deprivation and poverty in which many people in this country are forced to live.

When the Government introduced their so-called social security reforms last year, they announced that in future they would have to encourage private pension arrangements because this country could no longer afford a high level of basic old age pension. It is a scandal that they should say that, and it is nonsense.

What I am arguing in the Bill, and what other hon. Members who support the Bill are arguing, is that the country must afford to look after its elderly in a decent manner. It must afford to ensure that they are properly cared for throughout their retirement and that proper services are provided. It is no good merely encouraging City spivs to make a killing out of private pension plans, while in real terms reducing the level of the old age pension. This Bill provides an opportunity to give some decency in retirement to the elderly people of Britain who are forgotten for most of the year.

Question put and agreed to.

Bill ordered to be brought in by Mr. Jeremy Corbyn, Mr. Don Dixon, Ms. Jo Richardson, Mr. Harry Cohen, Miss Joan Maynard, Mr. Bob Clay, Mr. Dennis Canavan, Mr. Dennis Skinner, Mr. Tony Banks, Mr. Bill Michie, Mr. Chris Smith and Mr. Tony Benn.

Elimination Of Poverty In Retirement

Mr. Jeremy Corbyn accordingly presented a Bill to provide for old age pensions of a sufficient level to eliminate poverty in retirement; and to ensure that these are regularly increased in line with the average earnings of those in work. And the same was read the First time; and ordered to be read a Second time upon Friday 1 May and to be printed. [Bill 125.]

Orders Of The Day

Rate Support Grant (England)

3.43 pm

I beg to move,

That the Rate Support Grant Report (England) 1987–88 (House of Commons Paper No. 253), which was laid before this House on 20th March, be approved.
Perhaps it will be for the convenience of the House if we also consider the other two motions relating to English reports:
That the Rate Support Grant Supplementary Report (England) (No. 3) 1985–86 (House of Commons Paper No. 259). which was laid before this House on 20th March, be approved.
That the Rate Support Grant Supplementary Report (England) 1986–87 (House of Commons Paper No. 258)., which was laid before this House on 20th March, be approved.

The House is aware that I was unable to lay those reports until the Local Government Finance Act 1987 had received the Royal Assent. In my statement of 13 January I announced my intentions for the 1987–88 rate support grant settlement. Those remain largely unchanged, apart from the modifications required as a result of the High Court judgment in the Greenwich case, which I announced to the House on 5 March, and which in the main affects authorities in London. I do not therefore propose to describe that report in detail. Despite all the difficulties that have arisen this year, I am glad that we have been able to lay the report, particularly the main report, before the new financial year starts, so that grant can be paid. I am extremely grateful to Opposition Members for their help and support in achieving this great success.

I must remind the House that we have provided a generous settlement for local authorities. The aggregate Exchequer grant of £12,842 million is an increase of over £1 billion—9 per cent. more than in the settlement for 1986–87. Provision for local authority current expenditure at £25,251 million is 13 per cent. more than last year. Those figures exclude the additional provision of £460 million, and the grant of £183 million which we have said will be made available for the teachers' pay settlement for 1987–88.

The settlement allows for non-rate-capped authorities to increase their current expenditure by 5·25 per cent. When teachers' pay is taken into account, that will allow education authorities to increase expenditure by 7·75 per cent. Those increases are more than the rate of inflation that we expect next year, which my right hon. Friend the Chancellor of the Exchequer forecast in the financial statement and Budget report last week to be 4·5 per cent. on the GDP deflator. Therefore, there is no reason why prudent and responsible authorities could not have chosen to set reasonable budgets and rates.

This year, we are in a position to know how much local authorities have, in practice, chosen to spend, and the consequent effect on their rates. In most years we do not know that when we debate the settlement, but most of them have now declared their budgets and rates. That makes this debate a little more interesting than normal, because we can read the book, instead of having to gaze into the crystal ball.

If authorities had budgeted to spend at the settlement assumption, plus the allowance for teachers' pay, the average increase in rates would have been about 2·9 per cent. In practice, we find that, in aggregate, authorities are budgeting for an increase in total expenditure of around 2 per cent. more than has been provided for. That higher spending means that rates will increase by around 6 per cent. on average. Although 6 per cent. is much lower than last year, it is still too high and higher than is necessary.

The figures—I stress that they are averages—disguise the wide variations between individual authorities. Many authorities have clearly sought to restrain expenditure and limit rate rises. Others have chosen to pursue profligate spending policies at the expense of the ratepayers.

Let me give the precept increase figures for the shire counties, for which we now have all the reports. In Conservative-controlled counties, precepts will increase, on average, by 6·5 per cent. In Labour-controlled counties, they will increase by an average of 8·7 per cent. In Lib-Lab pact counties, they will rise by 9·1 per cent., and in the one Liberal-controlled county—the hon. Member for Isle of Wight (Mr. Ross) is not in his place, but that is the one jewel in the Liberal crown—that figure is 10 per cent. It seems that one pays a 2 per cent. premium for living in a Socialist county, and an extra 0·5 per cent. on top of that for the price of alliance support.

I am grateful to the Secretary of State for his mathematics lesson. If what he has said is right, why does the Conservative leader of the Dorset county council, Councillor David Fox, when relating the Secretary of State's figures to his own county, say that the Government are not living in the real world'? If that is what a Conservative county council leader says, the figures are nonsense.

The hon. Gentleman is not living in the real world, and there is a message in this for the electorate. We all know that Tory councils keep rates down and that Labour councils are high spenders and do not care about ratepayers. The new factor is that Lib-Lab-controlled, hung councils are equally high spenders. It must be depressing for those who thought that voting alliance was an anti-Labour vote to see alliance councillors supporting the same old Socialist policies of high spending and giving the Labour tail a chance to wag the Liberal dog.

In the metropolitan areas, the average increase in the local rate of non-rate-capped Labour authorities is about 11 per cent. Compare that with Solihull—the only Tory-controlled metropolitan council—which has managed to reduce its rate by 1 per cent. [Laughter.] That is the difference. If all the others were controlled by the Tories, they might have done equally well.

I am grateful to the Secretary of State for giving way, especially since he has just given the "average" of the single Tory authority in the metropolitan districts under Conservative control. Is not the real message of what he has said that overwhelmingly in the metropolitan districts in England the Tories have been kicked from office because people do not like their policies?

If the hon. Gentleman wishes to make a point of the fact that there is only one Conservative-controlled metropolitan council, let me, too, point out that there is only one Liberal county council. The hon. Gentleman was happy to accept my figure of a 10 per cent. rise in the rate of the Isle of Wight council as being the highest of all the party averages. Similarly, I am happy to accept that the sample is small for the metropolitan counties.

But it is when we look at London that we see the biggest differences in rate increases. In inner London, as a result of our successful rate-limiting policies, rates bills will be lower than last year for many ratepayers. Also, prudent authorities have budgeted sensibly, so have no rate increases—for example Westminster and Kensington and Chelsea. However, the ratepayers of Hammersmith and Fulham are not so fortunate because their council has increased its local rate by a staggering 127 per cent. Happily, our precept limits, particularly on the Inner London education authority, mean that rate bills in the borough will increase by rather less—by 50 per cent., which is still too high. Ratepayers in Wandsworth will still enjoy the lowest rate bills in London. Wandsworth's general rate will rise by 2 per cent. and it has just announced a record capital programme.

In outer London, Ealing has increased its local rate by 72 per cent. and Waltham Forest has increased the local rate by 67 per cent. Hon. Members are already aware of some of the ridiculous ways in which Ealing proposes to spend all that money. Council workers have celebrated the council's largesse by going on strike. One local resident, the right hon. Member for Islwyn (Mr. Kinnock), the Leader of the Opposition, is reported to be happy to pay more in rates. But ratepayers in Ealing have a double bonus: they will apparently have to pay an extra 72 per cent. more for no services because the service workers are all on strike.

Ratepayers in the alliance-Labour controlled borough of Kingston fare no better than their counterparts in the counties. In Kingston, the alliance councillors wanted to put up the domestic rates by 20·6 per cent. and Tory councillors by 5·9 per cent. The four Labour councillors got the alliance to compromise at their figure of 16 per cent. So much for the middle way.

Is my right hon. Friend aware that services in Ealing are at a complete standstill, that people cannot be admitted to hospital for essential operations because nobody can be discharged as there are no home services and that people in sheltered accommodation are having horrendous difficulties in getting hold of their milk, laundry and mail? Those are merely a few of the terrible effects of the horrendous rate increase and the strike.

In addition, 30 or 40 schools, including special schools, are closed and children are being sent home. That is what Socialism is about in practice. Will my right hon. Friend compare that with the 4 per cent. rate reduction last year in Ealing under the Conservatives?

The tragedy is that, until this year, Ealing managed to hold its real spending almost level for the eight years from 1979. For all that time, it managed to provide better services at the same real cost to its ratepayers. All that achievement has been thrown away in one year. I have every sympathy for my hon. Friend's ratepayers.

Next year there will be no grant recycling. The House has passed legislation to bring that to an end. Opposition Members have tried in the past to scare us with stories about the consequences. The hon. Member for Norwood (Mr. Fraser), for example, told the House on 4 February:
"On one low estimate, the loss will he £⅔ billion. On a higher estimate it will mean a loss…of £1,000 million." —[Official Report, 4 February 1987; Vol. 109, c. 1315.]
That would be lost through the abolition of recycling.

The local authorities maintained that at least £400 million would he lost. I can now tell the House and Opposition Members that on the basis of the current information on spending plans available to my Department—a high proportion of all returns are now in—the grant underclaim will be around £200 million, after taking account of the changes for teachers' pay. It need not even be that high. Local authorities have only themselves to blame if they forgo grant.

Authorities have plenty of scope for improving their efficiency and reaping the benefits in reduced costs. The benefits to be gained by putting services out to competitive tendering have been well established. The Audit Commission has done much valuable work on the scope for savings from improved efficiency. In particular, the commission's report on eight deprived London boroughs pointed out that there were specific opportunities in those boroughs for improvements of about £100 million a year —£100 million currently wasted on gross inefficiency. Its recent report into competitiveness and contracting out generally suggested that nationally some £500 million could be saved.

I am glad to see that at last I have the support of the Labour party and that of the hon. Member for Copeland (Dr. Cunningham) in demanding more efficiency from local government. I have a copy of the new Labour party publication entitled "Best Practice News" and I am sure that Opposition Members will be very familiar with that. Its aims are
"To show how Labour control not only means better levels of service but also better management of services".
and to
"Give value for people as well as value for money."
It is that aim for value for money that I also welcome from the Opposition.

However, when we look inside that document, it is not quite so rosy. The report of the Leeds conference contained in the document on improving services gives the game away a little:
"Planning improvements to services and opposing compulsory competitive tendering legislation go hand in hand."
I am not sure that they do go hand in hand in my book.

The deputy general secretary of the National Union of Public Employees also gave the game away when he said:
"There will be times when the interests of the consumer won't match exactly what suits the work force."
There is no mention of value for money when we get down to the fine print.

The truth is:
"The services which local councils provide make all the difference to the quality of life for working people…But Labour councils are generally bad at providing them. The trouble is that municipal Socialists—most Socialists really—aren't that interested in how to run things. Lately, too, Labour councils have given too much power to the local trade unions and they have been able to stop or slow down important changes…the result is a welfare state at a local level which is generally wasteful and oppressive to work for and unresponsive, unaccountable and unpopular".
Would any Opposition Member care to disagree with that?

Does the Secretary of State understand that report after report from every independent voice of which one can think, ranging from the Church to health authorities reporting today, show enormous inequalities of wealth and advantage between the haves and the have-nots? Will he for once show some awareness of those problems and act like a Secretary of State responsible for the inequalities that face our people and not give a speech reminiscent of a third-rate local leader of the Conservative party, blind with prejudice and ignorance?

The last six sentences which I quoted were not from a third-rate, blinded-with-prejudice leader of a Conservative council. They were a direct quotation from an article by a certain Mr. Hoggett from Bristol university in this month's edition of the official Labour party publication New Socialist. That is what the hon. Gentleman's friends think about Socialism in municipalities in action. I would never dare use words like that. [Interruption.] Now that my cover is blown, we shall not get the hon. Gentleman on his feet so quickly again.

Since pay accounts for 70 per cent. of local authority costs, they should seek to reduce the impact of pay increases by seeking savings. In particular, local authorities should look to their manpower requirements. The Civil Service has reduced its total manpower by 18 per cent. since 1979. Compare this with a 3·25 per cent. reduction in local authority manpower. I was most concerned to learn that figures issued by the Joint Manpower Watch yesterday show that, for the sixth successive quarter, local authority manpower is increasing, despite the savings from abolition.

I stress again that we have provided a generous settlement for authorities which should seek to take full advantage of it. One would hardly believe, with all the complaints that we hear, including those by the hon. Member for Copeland, about the need for Labour authorities to spend more, that local authorities as a whole are already spending 13 per cent. more this year in real terms than they were in 1978–79 and have budgeted to spend even more next year. One wonders how local government survived in the austere days of the Labour Government.

I remind the House of the two supplementary reports for which I am also seeking approval. The third supplementary report for 1985–86 will provide a further £385 million grant previously withheld, as authorities have brought their spending closer to target. It will also adjust grant to take account of provisional outturn expenditure and certain changes in education pool contributions.

I have been obliged to make certain changes to the supplementary report for 1986–87 as a result of the judgment in the Greenwich court case, as I explained on 5 March. That report will, however, still distribute the block grant underclaim of some £618 million consequent on estimates of total expenditure received from authorities on or before 19 December. My predecessor guaranteed that £500 million of grant would be recycled in the first supplementary report for 1986–87. This report will honour that guarantee.

Will my right hon. Friend please help those of us in Essex who have noticed that Essex and Hampshire have almost identical grant-related expenditure and almost identical populations but that Essex has a rateable value only 10 per cent. more than Hampshire, yet Hampshire has a 40 per cent. greater grant for 1987–88? There seem to be some inconsistencies between the two counties.

It is very difficult to give specific answers to problems raised in interventions. Since 1979, Essex has increased its real terms spending by 8·5 per cent. whereas Hampshire has increased it by only 1·1 per cent. That might well be the territory in which my hon. Friend's question lies, but I should like to supplement it by giving him a more detailed response when I have had time to look more carefully at the figures.

The House will wish to know that, when I laid the reports on 20 March, the Department notified the 20 high-spending authorities of their rate limit, which flows from the formula in the Local Government Finance Act 1987. The responsible Departments have also notified the 20 joint authorities automatically selected for precept limitation of their precept limits produced by the formulae in the Bill. I ask the House to approve these three reports.

4.5 pm

We have just heard a speech of the most sickening irrelevance to the problems of our people and the country, a speech devoid of any scintilla of understanding of the nature of the problems that people face or of the urgent need to change direction to bring new policy initiatives to our inner cities, to education, to housing and to the creation of jobs. It was at least mercifully brief by the right hon. Gentleman's standards. It was difficult to discern from what he was saying that we are debating very important issues which contain many decisions of considerable social and economic importance, and the very language of the report, the speech and the title of the debate do not convey any sense of the wide-ranging implications for essential local services, education, housing, social services and environmental health of what the Secretary of State had to say and what the Government are doing. The technical jargon often employed seems calculated to obscure those real issues, perhaps for the satisfaction of the Government, who take every opportunity to disguise the real intentions of Conservative policies.

The debate is about why the Conservative Government refuse properly to finance services which are essential to the social and economic well being of people, young and old, employed and unemployed alike. The debate is about the Conservative Government's refusal to accept the validity of local democracy.

I am surprised that the hon. Gentleman is persisting with his prepared text. Did he not hear me say that since 1979 the total spending of local authorities has gone up by 13 per cent. in real terms? How can he claim that authorities are deprived now, whereas presumably they were not deprived when he left office in 1978–79, although they are spending 13 per cent. more in real terms? I cannot understand the logic of that.

We are well aware that the Secretary of State does not understand the issues, nor does he seem to care about them. He does not need to tell us what we know only too well. The Government have done everything to stop local authorities from investing in services. That is what the Rates Act 1984 is all about. That is what the total of £18 billion-worth of accumulated cuts in rate support grant has been all about. That is what the right hon. Gentleman was referring to in his speech when he accused authorities that spend more than he deems necessary of being "profligate". All those Government attempts have been to reduce local government's facility to support decent levels of service and provision. After all, that has been the hallmark of eight years of this Government. Is the right hon. Gentleman suddenly denying that?

The hon. Gentleman cannot get away with that argument. It is true that the percentage of rate support grant has been cut and that authoriries have been involved in creative accounting, but the point that I am trying to get home to him is that the net result of everything that has happened in the eight years is that local authorities are spending 13 per cent. more. The point that he cannot substantiate is that they are short of resources. If they are short of resources now, how short of resources were they in 1978?

We are beginning to see the Jekyll and Hyde nature of the right hon. Gentleman's political character. Now he is apparently, on behalf of the Government taking credit for the increase in expenditure which for eight years they have been denouncing. He had better make up his mind on which side of the argument he really is. We know which side we are on. We are in favour of more investment in people, and in the services that are so essential to their economic and social well-being.

The Secretary of State mentioned Ealing. I am sorry that his hon. Friend the Member for Ealing, North (Mr. Greenway) has disappeared. Does the right hon. Gentleman support the expenditure decisions of the now Labour-controlled Ealing council, which he was denigrating a few moments ago—the reintroduction of places for rising-fives in primary schools, the deals to acquire 600 new homes in the face of the housing crisis and the employment of extra home helps and extra staff to deal with the under-fives? The council is taking on much-needed local housing repair teams and recruiting 150 extra teachers. Does the right hon. Gentleman support those decisions? Does he support the extra expenditure about which he has been boasting in that context? What is the answer? It is that the right hon. Gentleman has not the guts to say that he does not support it. That is the reality of the Government's pathetic position.

The proximity of this debate to the Budget reminds us of the Government's continuing policy of switching the burdens of such services from the taxpayer to the ratepayer—a policy pursued relentlessly for eight years and accompanied all the time by the crocodile tears of Tory Members about the inevitable rates increases that have resulted. Today's debate is about the Government's determination to enforce more and more central control—more powers for Ministers who abuse them all too frequently, using them to prevent and to crush sensible and sensitive public investment in people, their families and community services wherever they can.

Yesterday's announcement about the widening health gap in our country should shame Conservative Members, especially those Ministers who have deliberately and massively reduced investment in housing and employment. It should especially shame those Ministers who have planned and organised a systematic withdrawal of cash from the inner cities, where some of the worst problems in Europe persist. The reality is that the cuts in rate support grant are more than 10 times the additional support under special measures given to the inner-city authorities that are most in need. That is the damage that the Government have done to the most deprived communities in our country.

Yesterday's attempt to suppress the report of the Health Education Council is typical of this shameless Government, who also tried to suppress the earlier report of Sir Douglas Black. The latest attempt to stifle debate contrasts embarrassingly with the weekend leaks of the Prime Minister's alleged concern for the plight of neglected inner-city areas, which is so much a legacy of eight years of Thatcherism. Those very conditions of bad housing, poor environment, inadequate social services and health care, poverty and unemployment, which has trebled under this Government, led to the widening health gap that is so damaging to individuals, families and the national wellbeing. It is the Government's failure adequately and responsibly to deal with those problems that we are debating today.

Even worse, those Conservative failures result from the deliberate intention of policy. They are no accident. In addition, we have seen how the volume of complicated, contradictory and inconsistent local government law—the force-feeding of the Tory right with statute after statute—has reduced any attempt at sensible planning of local government finance to a shambles. We are told that the Secretary of State has been reduced to impotent rage by the stupidities of the system which his colleagues have created and which he has inherited and supported consistently over the past eight years.

The journal Public Finance and Accountancy states:
"Local government is suffering from a surfeit of new legislation. Each successive piece of legislation seems to increase rather than reduce uncertainty".
But still the Government plough on into the mire. Today, Parliament is asked to accept a report first announced by the right hon. Gentleman in 1986, when he published a consultation paper and wrote to all the Conservative councillors in the country recommending his proposals.

The Secretary of State published his first set of detailed proposals on block grant distribution on 3 October 1986. A further set of detailed proposals were published on 3 December, and another set on 13 January 1987. Following the decision on the Greenwich borough case, yet another set was published on 5 March. We understand that if the Secretary of State is successful in his appeal against the Greenwich decision a further set of proposals may be put forward for the coming financial year.

What, we wonder, is the purpose of the right hon. Gentleman's appeal? What is he hoping to achieve by trying to obtain a decision that will yet again cause confusion and uncertainty in local government finance, when budgets will already be fixed and rates will already have been set?

The changes in provisional block grant entitlements for some authorities alter substantially from one consultation paper to another. As the hon. Member for Ravensbourne (Mr. Hunt) and his colleagues in Bromley know only too well to their cost, and as is known in the city of Birmingham and in other towns and cities up and down the country, fluctuations running into millions of pounds occur almost weekly—certainly monthly—as a result of the incompetence of the right hon. Gentleman and his policies.

Despite the uncertainty about block grant entitlements, county councils and other precepting authorities are required by law to make their precepts for 1987–88 not later than 10 March, before the report has even been approved by the House, and rating authorities are required to make their rates not later than 1 April. Local authorities no longer have any right to make a supplementary rate or precept if their income from grant or other sources falls short of that taken into account when those rates or precepts were set. That, ' again, is the fault of the Government. The combination of lateness and uncertainty about grant entitlements for the coming financial year makes it harder for local authorities to plan sensibly, and inadequate planning leads almost inevitably to poor financial administration.

Since July, the right hon. Gentleman has made five announcements affecting grants to councils, and during that time there have been four Acts affecting local government finance. And Ministers have the gall to criticise councils for inefficiency! The Government have demonstrated an unprecedented level of bungling incompetence, and they cannot escape responsibility for the mess.

In a damning editorial, Local Government Chronicle, under the heading
"Ridley in a Central Mess",
says the position
"typifies the woeful mess the Environment Secretary has allowed and encouraged his senior civil servants to get him into".
In addition to the legal shambles of the Government's own creation, there has been the political fiddling of the system to buy off the much-leaked Tory revolt. How ironic it is to see Tory Members who demanded those policies being attacked by their own colleagues in local government, and by their own local Tory associations, for the capricious failures of those same policies—failures described by the editor of Local Government Chronicle as
"mere financial gerrymandering without accuracy,"
and, in a classic line, as the "height of loony government". How right the editor is.

All that was too much for the staunchest of Conservatives in the borough of Bromley, who watched in bemused disbelief as their grant went up and up, only to plunge down again by £3 million this year following the Secretary of State's failure to deliver his promise to make good their loss of £3 million last year—that is £6 million in two years from the staunchest of true blue supporters. How angry they must all feel.

Does the hon. Gentleman accept the logic of Bromley's case and recognise the injustice of the court result, which has meant that Bromley is deprived of that money? Will he go on record as saying that he recognises that the court got it wrong?

I recognise that the London borough of Greenwich did not act on some piece of arcane local government law dug up from the middle ages. It acted on an Act of Parliament of 1986, introduced by the Government. The hon. Gentleman voted for it. Greenwich took advantage of that Act of last year, which the hon. Gentleman and his colleagues from the London borough of Bromley supported. So we are not talking about some little error. We are not talking about some computer miscalculation. We are talking about Conservative Government law. That is what has caused the problem in the borough of Bromley. That is what Greenwich acted upon, and that is what it won the court case on. That is an accurate record of what happened.

I shall give way in a moment. I have not finished with the hon. Member for Ravensbourne.

I say to the hon. Member for Ravensbourne and his hon. Friends from Chislehurst, Orpington and Beckenham: in view of what has happened to the Conservative borough of Bromley, will they go into the Lobby and vote for the report? Will they support the taking away of that money from their borough? Will they support the incompetence of their own Government and, even worse, the failure of their own Secretary of State to honour his promises? Will they vote for that? We shall watch with interest, and so will the voters in the borough of Bromley.

The final irony is that the hon. Member for Ravensbourne's own friends and colleagues in the local Tory association—in Tory Bromley—are now taking this Government to court to sue them because of what has happened. I can well understand the Secretary of State reaching for yet another Silk Cut and nipping out of the Cabinet Room for a quick fag, in the face of that irony and the disbelief of his colleagues around the Cabinet table.

The question asked by my hon. Friend the Member for Ravensbourne (Mr. Hunt) was not answered by the hon. Gentleman. I leave aside the point of law that is the subject of a legal action and will be decided on appeal. I have made it clear that I believe that the rate support grant distribution resulting from that decision is inequitable to the boroughs concerned. I ask the hon. Gentleman a straight question: does he think that it is equitable? Would he be in favour of the distribution being put back to what everybody thought it was, or would he not?

The right hon. Gentleman must think that all of us in the Opposition are daft. He made an allocation of resources. He then decided to change the allocation. He was challenged by several authorities. One went to court and won. The right hon. Gentleman asks us to justify those actions. Of course we would not justify them for a moment. The right hon. Gentleman has been caught fiddling the books and now even his own side, the Conservatives, are complaining about it. It is totally unjustifiable behaviour and we would not support it for a moment. We have considerable sympathy—

The Parliamentary Under-Secretary of State for the Environment
(Mr. Christopher Chope)

Does the hon. Gentleman support Greenwich?

The hon. Gentleman had better keep quiet, or we shall come to him and some of his decisions and speeches.

We have considerable sympathy with what has happened to the people of Bromley and of the borough of Greenwich. The reality is that this shambles will not be ended until the Government are out of office and new policies for local government finance are introduced. That is how I respond to the right hon. Gentleman.

Order. If the hon. Member for Copeland (Dr. Cunningham) is not giving way, the Minister cannot intervene.

I shall give way in a moment.

The Secretary of State is asking the House of Commons to approve the report, but he is appealing against it in the House of Lords at the same time. This is absolutely unparalleled. On the one hand the House is recommended by the right hon. Gentleman to say yes to the report, and at the same time he is taking a case through the courts to have it set aside. It is cloud-cuckoo-land in the form of benighted Tory bungling. That is the reality that the right hon. Gentleman has got himself into. If he is successful in the court case, further changes will be necessary. They will affect 13 London boroughs in a major and serious way, and many other authorities in less serious ways.

I should simply like to ask the right hon. Gentleman, when he has stopped waffling, whether he realises that Greenwich has benefited from an error to the tune of 3 million quid at the expense of Bromley, and whether he would be in favour of having a grant that is paid to the roads paid to the borough in which the roads are situated. That is the question which, three times, the hon. Gentleman has refused to answer—because, of course, he does not have the guts to say what is right.

The right hon. Gentleman is now being less than candid with the House. He is falling back on the myth that somehow there was an error. There was no error. There was a change in the basis on which the grant was allocated. There was no error. It is a Government excuse for the cock-up that they have engineered. When the right hon. Gentleman lost in the courts, he announced his intention last year to change the law, and in doing so—[Interruption.] It is no good the right hon. Gentleman waving for his hon. Friends to intervene. They will not take any notice. It is no good sending for the Tory party equivalent of the fifth cavalry, because most of them are laughing their heads off at the predicament that the right hon. Gentleman has got himself into. I expect that some of them are even gritting their teeth at the prospect of having to walk through the Lobby to vote for this nonsense.

The reality is that no reasonable purpose can be served by the Secretary of State trying yet again to change all the figures. Rate-limited authorities in particular will lose cash and be unable to change their rates to make up the shortfall. Authorities could be forced into deficit as a result of the combined incompetence and gerrymandering of the right hon. Gentleman. When the Association of London Authorities asked the Department of the Environment about the matter, it was told:
"Ministers have not yet considered the matter".
Apparently Ministers have not even considered the implications of the changes that may result from the appeal.

The Government have made much of an alleged increase of £1 billion in aggregate Exchequer grant. It masks an increase of 15 per cent. in specific and supplementary grants and an increase of only 6 per cent. in block grant itself. That increase in specific and supplementary grants carries with it yet more central control over local government services. Much of the remaining increase in block grant—£530 million—may not materialise because of the end to grant recycling. The right hon. Gentleman suggested that the figure might be only about £200 million. I ask the obvious question: why is his right hon. Friend the Chancellor of the Exchequer planning, in the Budget Red Book, to recoup at least £400 million? That is what the Budget document says. The right hon. Gentleman must be aware of it. Is he trying to mislead the House in what he has been saying today? Is he trying to disguise the nature of the clawback?

The Rate Support Grants Act 1987 abolishes grant recycling, the process by which initial claims on the block grant pool are rescheduled so that all available grant is distributed. The distribution of the total block grant pool is crucially dependent upon the expenditure assumption that the Secretary of State adopts. He assumes in the report that authorities will increase their expenditure by only 2·8 per cent. in the coming financial year. This is an unrealistically low estimate. If authorities spend more than the right hon. Gentleman deems necessary, they will lose grant.

Only last week the Chancellor of the Exchequer said that general inflation would rise to 4·5 per cent.—at least the Secretary of State got that figure right. Grant-related expenditure assessments, on which grant entitlements are based, have been set at £1 billion lower than total expenditure provision. That unallocated sum will have a serious effect on grant distribution, disbenefiting high-need authorities, many of which are metropolitan authorities. It is merely a means of reintroducing expenditure targets in another guise. Severe block grant mechanisms are designed to force expenditure restraint. This is contrary to what the Secretary of State tried to say earlier about increasing expenditure. The implication of what he said was that the Government thought that that was good and wanted it, but the mechanisms is the report deliberately act against it.

The grant proposals include a continuation of severe financial penalties, which are made worse by the abolition of recycling. Many authorities lose £1 of grant or more for every additional £1 of spending, making a cost to the ratepayer of £2 or more. That penal regime is made worse by the loss of grant that is recycled to the pool. Instead, it will go direct to the Chancellor of the Exchequer, who calculated in the Budget statement documents that he would recoup £400 million in that way. That is not the much smaller sum to which the Secretary of State referred.

This rate support grant report does nothing to address the criticisms of Government policy failures made by the Audit Commission in its report on the management of London authorities. The authorities concerned have made positive responses to the recommendations in that report and are acting on them. Some boroughs have already established teams to work with the Audit Commission to deal with those issues. That is a much more positive response to the report that anything that has come out of the Department of the Environment to date.

In addition to the plan to recover that £400 million from the total available to councils as set out in the Budget documents, the Chancellor and the Secretary of State outline plans in those same documents for an increased rates take of £1·5 billion. That is what the Chancellor's Red Book says. Thus, the Government are assuming that rates will rise as a result of their policies by an average of 9 per cent. The Secretary of State was trying to convey the impression that the Government were assuming that the rates increase would be 6 per cent. or less, but the Reel Book directly contradicted that. Who is telling the truth —the Chancellor, or the Secretary of State? So much for the Secretary of State's claims in the House in July, in January and again today that no rate increases—or only low ones—would be necessary.

In the context of ministerial pronouncements anticipating lower rate rises, it is significant that the Treasury is forecasting a substantial rise in rates income for the coming financial year. Table 1·2 of the Financial Statement and Budget Report for 1987–88 shows that rate receipts are forecast to increase by 9 per cent.—that is the Chancellor's figure—compared with a 4·2 per cent. increase in income tax receipts and a 6 per cent. increase in general Government receipts.

Why does the Secretary of State repeat his claims, knowing that his colleague in the Cabinet, the Chancellor of the Exchequer, who is in charge of running the economy, does not agree and is quoting a higher figure? Is the right hon. Gentleman trying to mislead the House?

A key component in the mechanism to distribute grants to local authorities is the grant-related expenditure assessment that is assigned to every local authority, which provides a measurement of what the Government consider that each authority should spend to provide a similar level of services. For the coming financial year the GRE total will be £23,742 million, which is £961 million less than the total expenditure that local authorities anticipate.

The gap between the two totals—total expenditure and GRE—is important, because spending more than the Government's assessment — particularly above threshold—leads to a high rate of grant loss for each additional pound of expenditure. Therefore, the failure to increase the total of GRE in line with total expenditure will result in many authorities running into a higher rate of grant loss for increased spending.

Following the intense Tory lobbying from shire counties, in southern England in particular, the settlement includes a limit of 7p at ratepayer level on grant losses arising from changes in the block grant mechanism, and a limit of 12p on grant gains. The major beneficiaries of the Secretary of State's fiddling in the current financial year—compared with the Government's previous plans, as set out in October—are authorities such as Surrey, which will receive £7·7 million extra, Hertfordshire, £6·4 million, and Hampshire, £3·9 million. Here again the Government are redirecting cash to areas that are least in need of it and away from many other areas that need it more.

Is it not true that Hertfordshire and Surrey will receive less grant than this year? Does the change not mean that the reduction in grant has been alleviated, not that there is a new bonanza for the home counties?

That is true. In general, those authorities have lost grant every year under this Government. I hope that the hon. Gentleman will ponder that before voting for the motion tonight and that he will make it clear to his electors that every year people in Surrey, Hertfordshire and elsewhere have lost support for essential services such as education and social services as a direct result of Government policy. That is what the policy is about.

Have not the shire counties, such as Essex, lost grant because the Government are directing more funds to the urban and metropolitan counties? That shows that they are being immensely fair in helping counties that are Labour-controlled and, unfortunately, penalising Conservative-controlled counties.

I am sorry to disagree with the hon. Gentleman, because he and I are the only two hon. Members with a PhD in chemistry, but if he believes that, he will believe anything.

The reality is that every year the Government have cut what they pay to local authorities as a percentage of their expenditure. Grant has decreased from 62 per cent. in 1979–80 to less than 46 per cent. now. Each year the amount has been lower, and all authorities have suffered. The inner cities have suffered grievously as a result of Government policies. It is not a matter of taking money from the shires and giving it to the inner cities. There may have been some adjustments within the smaller total, but all authorities have lost heavily, and I am sure that in his heart of hearts the hon. Gentleman knows that, too.

The Government cheat local councils in another way. The assumption that total expenditure will increase by only 2·8 per cent. in the coming financial year is contradicted by the Financial Statement and Budget Report, which forecasts a rise in the gross domestic product deflator—the Government's own measure of the probably rise in costs across the economy—of 4·5 per cent.—a significantly higher figure. If the Government had been more honest, if that figure had been used, a higher total for local authority costs would have resulted. The Government, then, have deliberately planned a shortfall in what they are prepared to make available.

We are told that the answer to all this is a new system, a medieval solution, a poll tax with a uniform business rate attached to it—proposals already widely condemned by business, commerce, local government and political parties.

The Secretary of State says, "Rubbish." I can tell him that at a very recent meeting with the London chamber of commerce, even it condemned the proposals, and it wrote to the Chancellor of the Exchequer saying so. I do not know where the right hon. Gentleman is looking for friends in support of a poll tax with a uniform business rate, but they are not too thick on the ground. The proposals have indeed been condemned not only by Opposition parties, but by the Tory Reform Group, in a massive, damning report, in page after page of it. The Tory Reform Group has such patrons as the right hon. Member for Mole Valley (Mr. Baker), the cpresent Secretary of State for Education, the right hon. and learned Member for Rushcliffe (Mr. Clarke), another current Cabinet Minister, and the right hon. Gentleman the Home Secretary.

Will the hon. Gentleman read out the disclaimer on the second page of that report, which dissociates those patrons of the Tory reform Group from the content of that report?

Is that not typical of the Tories? All their names are on the front page to give the thing credibility and standing, but in the small print they say that they want nothing to do with it. That is typical of the Tory party's approach to these matters. No doubt the Tory manifesto will say the same. If it does not, it should, because that is what it will be like.

In addition to giving the Government effective control over almost 80 per cent. of local council finance, the social, economic and administrative implications of a poll tax are horrendous and grotesquely unfair. The veil of secrecy over the impact of a poll tax was lifted a little by the Minister of State, tantalisingly, on Monday, when apparently he embarked upon a major press briefing session about the consequencies. I am quoting the hon. Gentleman's words exactly from his Department of the Environment hand out. I have picked the one concerning Lancashire, but there are several others. This is what the Minister of State had to say about the consequences of the poll tax in Lancashire:
"for the average two-adult household in north east Lancashire, the community charge"—
that is, the poll tax—
"is likely to produce a substantial increase in the amount to be paid. This is because domestic rateable values in the area at the moment are among the lowest in the country. This means that the people in north east Lancashire are getting local authority services far more cheaply than those elsewhere. Although. when community charge is fully introduced, bills will rise, the community charge will still (on the basis of 1986–87 spending) be in the range £180 to £215…
The Government is still considering what transitional arrangement might be introduced to help those in areas where bills would rise substantially as a result of the introduction of the new system."
This is the wonderful alternative to the rates, to help people. The answer is that they pay more, and we have that on the hon. Gentleman's own admission. The news will really buck up the Tories canvassing for local government elections throughout the country. We are grateful to the Minister of State for his candour, because in Blackburn, Darwen and Rossendale, Pendle, Hyndburn and elsewhere we intend to help him get his message across to people. We intend to ensure that in the local elections, and especially in those parliamentary constituencies that are marginal in the general election, the people know exactly what the Minister of State wants them to know about the consequences of a poll tax.

Would my hon. Friend care to inform the Minister of the hostility that is building up in west Cumberland, in my hon. Friend's constituency and in my constituency, to the news already circulating about the level of new rates that would be paid by our constituents if this Government were to be allowed to win? Would my hon. Friend care to comment on the document which we have produced and which sets out in great detail the effects that this will have and shows that for the great majority of people in west Cumberland the new rates will mean a massive increase in what they pay? The only people who benefit from this new system are people who live in expensive property. They are the only beneficiaries. Is that not quite disgraceful?

I am grateful to my hon. Friend the Member for Workington (Mr. Campbell-Savours), not only for his intervention, but for all the work that he has done on the details of the local consequences of the introduction of a poll tax, not only in his constituency in the borough of Allerdale, but in my constituency in the borough of Copeland, because the same fate awaits thousands of families in west Cumbria, as he has rightly made clear.

The irony is that in my own constituency of Copeland, with an excellent Labour council, there has not been a single increase in rates for six years. Indeed, this year the Labour council of Copeland is reducing the rate, but it is to have this poll tax imposed upon it, which will force it to charge people more as a result of this Government's policies. It is exactly the same in my hon. Friend's constituency in the borough of Allerdale. People will be appalled to learn that a Tory Government will ensure that they pay more in local taxes, regardless of their income, the size of their property or anything else.

At least in my hon. Friend's part of the world this is still a hypothetical question. Would he spare a thought for the predicament of the people in Scotland, for whom the Government have already got legislation, not only through this House, but on its way through the House of Lords? The people of Scotland are to be used as guinea pigs for this appalling new taxation.

I agree with my hon. Friend and I think that the people of Scotland agree with him. The way things are going, the Tory party will be lucky if it is not completely wiped out in Scotland when the general election takes place. The same is likely to happen in the north of England, too.

It is also very significant that the Government are being evasive about rebates and reductions for those families and individuals facing financial difficulties. Everyone will have to pay at least 20 per cent. of the tax, regardless of income. Even rebates may apply only to a fixed amount, less than the total tax charged, according to a recent article in New Society.

While Ministers announce a speeding up of these unfair proposals, they operate a go-slow on the highly sensitive issue of rebates. It took the Prime Minister more than two months to reply to a letter from Councillor Jack Loyden, the leader of the Association of Metropolitan Authorities, on this issue and then her reply was completely vacuous, giving no answer at all. As I have said, even the Tory Reform Group, with several existing and many former Tory Cabinet members as patrons, has rubbished the Government's own proposals.

The country is facing a mounting crisis in housing in parts of our major cities, in education and training and., not least, in research establishments and the consequent brain drain. Local government has a crucial responsibility in many of these policy areas. Undermining local government, demeaning it, as the right hon. Gentleman does every time he speaks in the House and elsewhere, serves the nation ill. Undermining local government finance, taking more central powers, and preventing better and more effective investment in people is guaranteed to make those problems worse. As the new director-general of the Confederation of British Industries has said, city technology colleges are an irrelevance in the face of these problems, for without decent homes, good schools and better training and skills our country is doomed. No amount of manipulation of trade figures and unemployment statistics, in a post-Budget, pre-election Tory propaganda effort can solve those critical problems.

Labour party policy on new skills, jobs and industrial strategy offers effective solutions and a clear choice to the people. A clear majority of the British people prefer investment in jobs and services to tax cuts. The majority support investment in people—in ourselves and in our communities, schools and hospitals. That cannot be achieved without effective, improved and strengthened local government, which is an urgent national requirement. Those objectives cannot be achieved by this Government, by their policies or by reports such as this. That is why we oppose it.

Royal Assent

Order. I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Act:

Consolidated Fund Act 1987.

Rate Support Grant

Question again proposed.

4.50 pm

I do not mean to be unkind to the hon. Member for Copeland (Dr. Cunningham), but frankly I was unimpressed by his argument. He was eloquently unconvincing. The fact remains that, under the present Government—leaving aside what I am about to say about them—spending on local government services has increased substantially in real terms and they are not to be castigated for trying to impose financial restraint and introducing discipline in what is after all a massive sector of public expenditure.

We are light years away from a Labour Chancellor going cap in hand and in frantic haste to the International Monetary Fund to beg for financial support, at a time when the average rate of inflation was 15 per cent. peaking to well over 25 per cent. at the end. That is long past and best fogotten. Methinks the hon. Gentleman was protesting too much.

Having said that, I feel that I must intervene, albeit briefly, to protest against the unfair distribution of grant as it affects my own county. For years, Essex has been prudently administered. It was prudently administered under the last Labour Government and it has been prudently administered under the present Government. Throughout, it has been among the lower-spending local authorities.

Indeed, I recall a previous Secretary of State for the Environment suggesting that the county council should call in consultants to find out whether further savings could be made. The county council took that advice, and the consultants reported that everything possible was being done. Indeed, my right hon. Friend's predecessor praised Essex here in the Chamber for its prudent administration. Yet, year after year, Essex has been penalised under the grant support system and year after year the pleas of my hon. Friends who represent consituencies in the county have been ignored.

This year's settlement is palpably unfair and unacceptable to us. As my right hon. Friend knows—it is best to be honest and straight about these matters—no Essex Back-Bench Members will go into the Division Lobby tonight in his support.

Nor is that all. A further blow has been delivered as a result of the administrative muddle to which reference has already been made. I accept the explanation of my right hon. Friend the Secretary of State. I do not think that he personally is to blame in any way, but nevertheless the blow has fallen. As a result, Essex will lose a further £2 million on top of what it has lost in this year's distribution of grant. I find it unbelievable that we should have been penalised in favour of high-spending local authorities elsewhere. That does not make any sense. It goes against the letter and the spirit of what the Government have been seeking to do. It adds insult to injury, and we cannot accept it.

Will my hon. Friend assure us when he answers the debate that if the court decides—as I hope it will—that the Government were right all along, then the £2 million will be repaid to Essex automatically and without further argument? If, on the other hand, the court decides otherwise—it would be quite improper for me to say whether such a decision would be right or wrong—a situation will have arisen for which Essex county council can in no way be blamed. If that should happen, will the Government make up the shortfall of £2 million in some other way? That, in my submission, is the least that should be done. The treatment of Essex is completely unacceptable to its Members of Parliament. I ask, therefore, whether the Government are now prepared to do justice to our county.

4.58 pm

First, I shall deal with matters arising from two earlier rate support grant settlement reports. We are again dealing with retrospection and changes of the rules, although control of some councils has changed since 1985–86. That is bizarre. We are having to go back to 1985–86 to deal with matters that were fully dealt with by the councils at that time.

There are now one or two gains for administration for that year, in that authorities could set aside money spent on disaster funds and regional crime drug squads. One question that has been raised with me is the loss of interest on money wrongly withheld during the miners' strike, which affects Derbyshire and Cheshire in particular. Perhaps the Minister will address that point in his reply.

In the 1986–87 settlement, the increase in the rate of the police-specific grant to 51 per cent. appears to be a gain to local authorities, but in fact it is a reduction of 1 per cent. in the block grant and an example of further centralisation.

As the right hon. Member for Castle Point (Sir B. Braine) said, the Government determine central expenditure on local authorities in ways which bear capriciously on those authorities. It is strange that the Government determine centrally what is to be spent and then decide which councils have been sinners rather than saints in the administration of those resources. Whose money is it? It is certainly not the local authorities' money, but it is not the Government's either. It is public money, of which elected representatives are simply the trustees. We must consider who should be the real trustees and determine what expenditure is realistic, and where the blame lies if blame it be, or where the commendation lies if people in local government have behaved with due circumspection and attention to the balance between services and economy.

The Government's cynicism and arrogance are reaching staggering proportions. They fix the rules centrally, they determine appropriate levels of expenditure centrally, and then they fix the penalties centrally. Finally, they castigate the councils against which they are determined to discriminate. It is reprehensible that the Government should cynically take that attitude, giving no recognition to the fact that they have caused the local authorities' problems.

I compare that action with the attitude of the Minister of State. I disagree with him, just as Labour Members disagree with his policy, but at least we get the feeling that he understands what he is doing. The Secretary of State never gives the impression that he has a clue what he is doing. That is a great problem. His short speech today failed entirely to address the reports that he was introducing. He used his entire speech to castigate and blame the Opposition for what is his responsibility.

In Committee on the Local Government Bill, the Minister and other Members have been grappling with the analogy of whistle blowing, as if we were discussing some kind of football match. We have enjoyed the analogy, but to fix the rules and penalties centrally is rather like the Secretary of State saying that the home team will always have 13 players and then blaming the away team for losing. Those who have lost have done so because of the Government's policies, not because of decisions taken locally in the county councils.

Let me take some examples. In three neighbouring councils in Sussex, arbitrary assumptions about spending have meant that the Conservative-controlled council of Hove will receive from the Government £67·30 per resident, the Conservative-controlled district council of Worthing will receive £36·66 per resident, but the alliance-controlled council of Adur will receive precisely £11·86 per resident, yet the councillors in Adur are castigated for putting up the rates. If the Government determine what revenue will accrue to the district councils, it is monstrous for them to accuse councillors of being responsible for a high rate rise.

Again, the Secretary of State made great play of the results of rate fixing in the counties for 1987–88, but he failed to relate the variations that have occurred within the different bands of local authorities under different party control. For example, he made the point that the Conservative-administered county councils had a low average rate rise, but that hides the fact that the rate rises have varied from 2 per cent. at the lowest to 17·5 per cent. in Northamptonshire at the highest. That range is mainly caused by the different limitations imposed by the Government and the Secretary of State.

The hon. Gentleman said that Northamptonshire had the highest rate rise. In fact, Bedfordshire had the highest, at 21·3 per cent. He must get his facts right first.

If the hon. Gentleman had listened carefully, he would have realised that I was talking about the Conservative-administered county councils. I will come to Bedfordshire later. The hon. Gentleman need not worry about that. I was referring to the different categories mentioned by the Secretary of State.

The Labour-controlled county councils have a rate rise which varies from as low as 7 per cent. to as high as 12·5 per cent. Therefore, the average may be higher than those in the Conservative-controlled authorities. But then the Secretary of State said that the one jewel in the alliance crown, the Isle of Wight, had a rate rise of 10 per cent. But that is the only authority with an overall alliance majority. Therefore, there is no way in which to balance one council against averages for the others. Again, that is because the Government fixed the limitation centrally. They fix the grant-related expenditure centrally and then castigate us.

When we come to those authorities with minority administrations, we find a very different state of affairs. The county councils with a Labour minority administration have a 6·5 per cent. average rate rise, those led by the alliance a 7·75 per cent. and those led by the Conservatives a 9·5 per cent. increase. It is ludicrous, therefore, to relate those figures to one another in the way that the Secretary of State did.

The Secretary of State was also selective. If one party opts out of its share of the administration and there is no overall majority on a council, it is ridiculous then to complain about the rate-fixing thereafter. The interesting fact about Bedfordshire is that the Conservatives opted out of any responsibility for controlling the county. If they are not prepared to negotiate and make their case for the rate levels that need to be fixed, it is wrong for the hon. Member for Bedfordshire, North (Sir T. Skeet) to complain.

The Labour party wanted a 25 per cent. increase in rates, the Liberals wanted a 19 per cent. increase and the Conservatives wanted only a 10 per cent. increase. The alliance ganged up with the Labour party to increase the figure. That increase is due to excessive expenditure in that area, and the hon. Gentleman should know that. When the alliance has any control in an area, the situation is made much worse.

The hon. Gentleman rests his case purely on what happened at a council meeting. He should know that for years the Conservative party has opted out of any decision-making. That is the problem. If the hon. Gentleman wants to see the difference in areas where his party has not opted out, he should look at Avon county council. That is one case where we can hand out some credit. There the rate increase is 1·7 per cent., with alliance support. The hon. Gentleman cannot castigate one party alone. If the Secretary of State wants to deal with the mathematics of this and throw figures around the House, he should not be selective; Ile should look at all the different figures in the different councils.

Let me take one more example to illustrate how ludicrous such central control is. When the Budget debate approached, Somerset county council agreed its expenditure and the amount to be taken from reserve. But then the Conservative party on the council proposed a precept. lower than that then being discussed, of 198p in the pound. That would have meant a revenue deficit of £1 million. In other words, it was proposing precisely what those in Liverpool were surcharged for—planning a deficit on the revenue account. It was not by any means on the same scale, but nevertheless the principle is the same. Such matters cannot be determined centrally in that way.

Taking flowback out of the consideration has clobbered my city council of Leeds almost as much as any other district council. Of course, I and my colleagues have criticised spending priorities within the limitations in Leeds, but the Labour-controlled Leeds city council, with the agreement of the leader of the Liberal group, has, over the years, set increases at less than the level of inflation.

If the Government wish to play fair by my city council, as the right hon. Member for Castle Point was saying about Essex, there should be art extra £3 million from the Government just to keep pace with inflation. It is nonsense to castigate councils for increasing rates when the amount coming from the Exchequer has declined, thus forcing up rates.

The policy proposed by the Government is wrong both in conception and justice. Its key factor is that it separates the power to tax from the power to spend, and artificially translates those decisions from the place where they should be taken. That is not particularly new. Way back in the Municipal Review of May 1974, the city treasurer and director of finance, Mr. Fred Tolson, of my city council wrote:
"unless some workable RSG system is evolved after due research, giving Exchequer aid related to spending needs and taxable (not just rateable) capacity, local government will decline into mere agency for whatever Government happens to be in office … there is nothing to choose between the two major parties when it comes to imposing a political solution on the complex grant issues of the day, issues that have been chewed over for weary months by officials on both sides of the negotiating table, who are more hampered by lack of hard facts about current levels of expenditure and inflation than by their affiliations."
That is precisely what has happened. Local government is declining into a mere agency for whatever Government happen to be in office.

I reiterate what I said earlier. If the Government are right, why on earth cannot they carry the support of their own colleagues within local government? Why has the Conservative leader of the Dorset county council had to tell the Government that they are not living in the real world?

What has happened to the men of stature in the Conservative party in local government? Where have they gone? What has happened to the Sir Maxwell Entwistles in Liverpool? The Tory party controlled Liverpool city council for 17 years after the war, yet now it is reduced to a tiny group of seven. When I became a member of Leeds city council in 1968, it had 101 Conservative members out of 120, and that was before reorganisation, when it took in more of the leafy suburbs. In the past 20 years, the Conservatives have controlled Islington and Sheffield, albeit briefly. But no one can conceive of them doing so today. The Tory party's men of stature have disappeared from local government.

Where have the Lord Marshalls or Lord Bellwins of Leeds gone? Today, such men are nowhere to be found. The Tory party hardly exists in the urban areas. It is totally demoralised and one can see its centralising tendency not just in this House, but in local government as well. Now it is Conservatives such as the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) who carry on the battle here for those people from the districts and the older cities.

Every time the Government introduce measures for local government, they represent a huge vote of no confidence in Conservative councils, candidates and Conservative campaigning. If Labour-controlled local government is so bad, why is it that the Government cannot defeat Labour at local level? If alliance-controlled local government is so bad, why is it that the Government cannot defeat the alliance at local level? The Government set up political targets in local government as a diversion from their lack of policy and lack of understanding—a diversion from the true argument.

The Government's anger and rage is synthetic. It is about time that they gave up their attempts to control local government—they will never succeed. They can only continue this campaign until the general election and not a day after.

5.10 pm

I am glad to have the opportunity to participate in this debate. The House will appreciate that it has particular significance for my constituency and the London borough of Bromley. Therefore, I propose to confine my remarks to what has become known as the "Bromley error".

Let me say at once that my borough takes no pleasure in having become part of parliamentary vocabulary. The revised rate support grant figures now before the House follow inexorably from the bombshell that my right hon. Friend the Secretary of State dropped upon Bromley on the afternoon of 5 March. I must tell him that his statement to the House was greeted with horror and disbelief throughout my borough.

My right hon. Friend will be aware that that statement came just four days before Bromley council's rate-fixing meeting. It meant that, at a stroke, and on the eve of the rate decision, Bromley was deprived of about 6·5 million, which until that moment it had confidently expected to receive.

Anyone who has anything to do with local government finance will be aware of the protracted and painstaking way in which a borough's estimates are prepared and discussed for many months. They will realise the traumatic impact of a sudden last-minute decision of this nature. The leader of Bromley council, Councillor Dennis Barkway, has rightly referred to it as a
"crippling additional financial burden"
As a direct result, Bromley's rate has had to be increased by about 4 per cent. to meet the new circumstances.

I am sure that my right hon. Friend will readily concede that, over the years, the London borough of Bromley has established an outstanding reputation for prudent spending and sound administration. I believe that it is one of the best-run councils not only within greater London, but in the country. Therefore, it is especially galling that, through no fault of its own, Bromley must now impose a much heavier burden upon its ratepayers than was forecast. That burden cannot be justified by any test of logic or fairness. It has been a grave blow to Bromley and its citizens.

I readily concede that my right hon. Friend has no personal responsibility for the situation that has arisen. The House will be aware that the original error, from which all the consequent problems have flowed, was made back in 1985, long before my right hon. Friend came to the Department.

The hon. Gentleman keeps on describing this matter as an error, as though some administrative mistake had been made with pencil and paper or the wrong figures fed into the computer. That is not the case. The Government decided on one set of decisions, but they then faced objections from Bromley and others. As a result, the Government decided to do something else. They made a conscious decision to make the change. The Greenwich result in the court forced the Government to return to their initial decision. There was no error—nothing happened by accident; it was the result of deliberate acts by the Government and Ministers.

I am not sure that I can agree with the hon. Gentleman. In the autumn of 1985, Bromley carried out an analysis of the rate support allocation—of which it had been notified—for 1986–87. At that time, Bromley discovered that, far from taking account of its obligation to maintain 60 miles of metropolitan road that it had inherited from the GLC, the grant had been reduced. I maintain that that was an error rather than a policy decision. The commendable efforts that have been made by the Government to put that glaring error right have led to the further complications.

With all the sophisticated computerised equipment available to the Department, one wonders how an obvious mistake of this magnitude could possibly have been made and, once made, have gone undetected. We can only hope that the official responsible is no longer in his post. If there was ever a case for dismissal or demotion, surely this is it. One can only devoutly pray that the official in question will never be allowed within a thousand miles of the draft legislation for the abolition of domestic rates.

The hon. Gentleman is known to be a reasonable man. I put to him that it is an important constitutional convention that Ministers, not officials, are responsible and answerable for decisions. Does the hon. Gentleman deny that it was Ministers who agreed the original approach to the allocation of grant-related expenditure previously held by the GLC?

I am merely saying that the calculations were presumably made by an official and that a mistake was made in those calculations that was not brought to the notice of the Ministers until a late stage. Once Ministers were aware of what happened, they took immediate steps to put the matter right. Those actions have since been challenged in the courts; hence the impasse that we have reached today.

My right hon. Friend will recall that, in the exchanges that followed his statement to the House on 5 March, I referred to the "clearest commitments" that had been given to me by Ministers. On 6 March last year, hon. Members may recall that I tabled a written question asking the Secretary of State for the Environment whether
"he can now say how he proposes to deal with the issue raised by the London borough of Bromley regarding the level of grant payment for the upkeep of the highways to be transferred from the Greater London council to Bromley after abolition."
My hon. Friend the Minister for Environment, Countryside and Planning outlined the way in which he intended to deal with the matter and categorically stated:
"These changes will mean that Bromley will receive the proper amount of grant for taking over responsibility for highway maintenance in Bromley from the GLC."—[Official Report, 6 March 1986; Vol. 93, c. 280]
Nothing could be clearer. That is why Bromley council is now so bitter about what has happened. The leader of Bromley council takes the view that, in the light of the Greenwich judgment, Ministers should simply have increased the size of the rate support grant pool and made a compensatory payment to Bromley. However, I recognise that that would have been extremely difficult and might have created further problems with the courts. On balance, therefore, I consider that it is preferable to await the result of the appeal.

My right hon. Friend the Secretary of State is firmly on the record as saying—he said it again in the House today—that he regards the result of the High Court decision as inequitable. I certainly hope that the somewhat eccentric judgment will be set aside in due course. I wish my right hon. Friend and his lawyers every success in that endeavour. Perhaps my hon. Friend the Minister will give some sign of the likely time scale in the matter. The ratepayers of Bromley and Bromley council are anxious to have the matter resolved at the earliest possible opportunity. I hope that my hon. Friend will do whatever he can to speed up the legal process. We do not want the matter to drag on for months.

Perhaps my hon. Friend will also confirm the anticipation that was expressed in a letter that I received yesterday from the Chartered Institute of Public Finance and Accountancy, to which the hon. Member for Copeland (Dr. Cunningham) also referred. In part, the letter states:
"if the Secretary of State is successful in his appeal against the Greenwich decision, a further set of proposals may be put forward for 1987–88."
Naturally, in spite of the sneering remarks made by the hon. Member for Copeland earlier in the debate, such an outcome would indeed be satisfactory from Bromley's point of view. It again underlines the immense difficulty that such continual shifts and changes in grant allocation create for local authorities. As the hon. Member for Copeland pointed out, no fewer than four consultative papers in respect of the 1987–88 settlement have been produced. An allocation on 3 October 1986 provided Bromley with £51.91 million. The allocation on 3 December 1986 gave it £53.96 million. Another allocation on 13 January pushed it up marginally to £54.1 million. On 5 March, the body blow came when the allocation was cut to £50.87 million.

The letter from CIPFA states:
"Central government often stresses the need for better administration. Local government is entitled to expect central government to help rather than hinder the achievement of that objective."
I hope that message will be learned and digested by the Department of the Environment, so that we shall never again have to go through the agony and uncertainty of the past few months that have created much heartache for my right hon. Friend.

I pay tribute to the most courteous way in which my right hon. Friend has received representations from the four hon. Members whose constituencies are in the Bromley area. It has been a trying time for ratepayers and for the London borough of Bromley. I share my right hon. Friend's hope that the matter will soon be satisfactorily resolved, to the benefit of my borough.

5.23 pm

One thing about which I am pleased is that I have not been a member of a council for the past few years. Because of the incompetence of the Government and the Secretary of State for the Environment, problems have consistently arisen at local level which could and should have been avoided.

I have a great deal of sympathy for the chairman of the Bromley council finance committee, as I do for all people on finance committees of various councils who have faced problems arising out of the Government's attitude. Local authorities have been thrown into total uncertainty. For example, there were six separate announcements on the 1987–88 rate support grant and five sets of grant entitlements were issued.

The Association of Metropolitan Authorities has given me a good briefing and perhaps the facts should go on the record. On 22 July 1986 a Department of the Environment consultation paper was produced on the 1987–88 rate support grant. In October 1986 a further Department of the Environment consultation paper with provisional grant entitlements for 1987–88 was issued. On 3 December 1986 a third consultation paper, showing revised grant figures as a result of better information being available, was released. On 13 January 1987 the Secretary of State announced his firm intentions and the grant figures were again revised. On 23 February 1987 the Department of the Environment advised authorities that the grant figures issued on 13 January were incorrect because of an error in calculating the grant-related expenditure for housing revenue account, and revised figures were issued. On 5 March 1987 the Secretary of State announced that he was changing grant entitlements vet again because of the implications of the Greenwich court case.

Over the same period there have been major legislative changes in the operation of local government finance. I refer to the Rate Support Grants Act 1986 and the Rate Support Grants Act 1987. The calculations were made illegally and legislation was required to make them legal.

Just over a week ago 47 Liverpool Labour councillors were disqualified from holding office and are now being surcharged. Their crime was that they were late in setting a rate. They were faced with the terrible problem of interest charges that amounted to £106,000. Now they are faced with an additional bill of about £500,000. Of course, a certain number of legal people will do rather well out of it, but the fact is that the councillors are disqualified.

The Secretary of State presented hon. Members with three documents on local government in England. He is not criticised. Nobody is surcharging him. The hon. Member for Ravensbourne (Mr. Hunt) mentioned millions of pounds, the location of which Bromley council did not know. Will the Secretary of State be surcharged for the millions of pounds involved? Will he be disqualified from holding a place in the House of Commons? As a matter of fact, he is one of the Prime Minister's favourite Ministers. I am not surprised. He has done more damage to local govenment and to bus operations than any other Minister. He is an absolute disgrace. I would not only disqualify him; I would kick him out of the House of Commons right now. He should be kicked out. Those who support him should also be thrown out of the House of Commons.

The terrible crime of the people of Liverpool is that they did what they said they would do. They said that they would build houses for the people. They have done so. They said that they would keep down the rents of those who live in local authority houses, and they have done so. They said that they would build nice sports centres to take the youngsters off the streets. They have done so. Of course they got into financial difficulties, but the reason was that since this Government have been in office the rate support grant has been reduced by over £350 million. I agree with my hon. friend the Member for Copeland (Dr. Cunningham) that the cuts apply to every local authority, but I am dealing with Liverpool and the problems that it faces.

I am not surprised that the Secretary of State for the Environment is leaving the Chamber. He never likes to listen to the truth. He is one of the most abusive Ministers. Whenever hon. Members want to tackle him about anything, his answer is to get up and walk out of the Chamber. I am not surprised. I wish that he would walk out for good. It would be very good for this country.

The Liverpool councillors have their counterparts in Lambeth. Lambeth councillors also fought for the people of Lambeth, yet one of the biggest disasters that this country has ever known, the Secretary of State for the Environment, is allowed to go scot-free. This is an absolute disgrace. With his free market philosophy and his narrow sectarian outlook, it is no wonder that he is one of the Prime Minister's favourites. I say again that he ought to go.

Since 1979, the rate support grant has been reduced throughout the country, but particularly in the large cities. Those who live in the inner cities, particularly where there are high levels of unemployment, as in the north, have suffered considerable hardship. Although the services in those areas are stretched to the limit, the needs of the people who live there are being disregarded. Their needs are great. People require houses but there are long waiting lists. The result is overcrowding. Areas such as mine need additional support, but they are not getting it.

When Liverpool went to the Government, all that it asked for was the £30 million that represented part of what it had lost because of the cut in rate support grant, but it did not get it. Why was it that the first thing that the temporary minority administration in Liverpool did was to ask the Government for £30 million? It did it because Liverpool requires that money. Additional grant aid is needed by areas with high levels of unemployment and with the problems that are caused today by life in the inner cities.

The rate support grant settlement ought to be based on an analysis of social and economic needs. This settlement does not even begin to do that. It is neither effective nor fair. The Government constantly tell us that local authorities are high spenders. The same record about profligate local authorities was played today, but local authority expenditure has not .been as great as Government expenditure since 1979.

Local authorities are entitled to money for their housing investment programmes. Liverpool's housing investment programme for 1985–86, 1986–87 and 1987–88 has been cut by 9·8 per cent., but housing is required on a greater scale than ever before. In 1985–86 the HIP allocation was £31 million and in 1986–87 it was £27·5 million. For 1987–88 it is £24·8 million. That demonstrates this Government's attitude towards areas where there is high unemployment and where there are problems of the kind that are faced by Liverpool. The local authorities have not been irresponsible. It is the Government who have been completely irresponsible.

Even if the next election is not in June or September, this Parliament will not last for very much longer. We are at the fag end of it. After the next general election, Conservative Members, in diminished numbers, will be sitting on this side of the House. [Interruption.] Many people do not believe that; they believe what they read in the newspapers. I do not believe what I read in the newspapers. I believe what I hear when I talk to my constituents and to other people.

The days of this Government are numbered. When they have been removed from office, a Labour Government will have to introduce a completely different rate support grant system. We shall have to get rid of what I can only describe as the abortion that has been introduced by this Government. We shall have to abolish the terrible system that has been forced upon us by them. Large-scale investment in housing will be needed. Housing construction will be the way to get our people back to work, particularly in the areas of greatest need.

After the local government elections in May, local authorities should be asked to draw up their plans for housing and other needs so that the new Labour Government will know what local authorities require and what money will he needed so that they can get on with the job. I should like a conference to be held in my area at which the local authority, Government Departments and the trade unions could discuss what is needed. When a Labour Government are returned to power, the rate support grant system will he scrapped and we shall assess the social and economic needs of each area.

In my opinion, the Secretary of State for the Environment should go. He has the anti-Midas touch. Everything that he touches does not turn to gold; it turns to ashes.

5.39 pm

The hon. Members for Copeland (Dr. Cunningham) and for Liverpool, Walton (Mr. Heffer) seem to have forgotten that it was a Labour Secretary of State who first expressed major concern that local government expenditure had risen to unacceptable levels. It is fascinating how these matters are forgotten when a party is in opposition. The hon. Member for Copeland seemed anxious to defend the wholly irresponsible expenditure of some authorities. One of the problems in terms of local authority finance is that a significant number of Left-wing Labour authorities have spent, spent and spent. Their failure to control expenditure has created problems for the mass of local government.

I hold no torch for the policies of the councils to which the hon. Gentleman is referring, but why, if they are so bad, are he and his colleagues unable to defeat them locally? Why is it that in Manchester, for instance, the proportion of the Conservative vote has declined to about 20 per cent.? If Conservatives are failing locally, why should they expect help from big brother in Westminster?

I intend to come to that point later in my speech. However, let us be quite clear why that is so. It is because only a small minority of the electorate in that area are cost losers as a result of the way in which they vote. If many people are employed by a local authority, if many people are not paying rates for one reason or another and if large amounts of money are coming from business, commerce or rate support grant, it is hardly surprising that the electorate is biased in its judgment.

If that were true, why is the alliance in Liverpool able to outvote Labour by policies put forward in contradistinction to the spending policies of the Labour council?

I am interested to know that the alliance has, in general, been outvoting Labour. My understanding is that the arrangement in Liverpool at the moment—in some ways, sadly—may not be permanent.

Many of the problems which have beset local authorities over the past 10 years or more were perceived not just by the Conservative party but by the Labour Government when they were in power. That Labour Government did not succeed too well in controlling some of the madcap spending of local authorities, and it must be said that this Government have also had difficulty.

Did that Labour Government spend money on building council houses?

That Labour Government did build council houses. Indeed, they reduced the number of council houses being built each year.

I shall discuss some of the aspects which are peculiar to the rate support grant in terms of Hertfordshire. I am particularly grateful for the careful hearing that the Minister of State gave to hon. Members and county councillors from Hertfordshire. He agreed to look at the particular problems of the county. He did more than provide tea and sympathy; he did something about those problems and improved the rate support grant.

My hon. Friend is carrying the Hertfordshire banner in the debate, but is it not true that that was the first time that any Minister had listened to any of the Hertfordshire pleas for help over the last five or six years? We are exceedingly grateful to my hon. Friend the Member for Brent, North (Dr. Boyson) for his kind consideration and his realisation of the problems of reducing the rate support grant in Hertfordshire.

I am grateful to the Minister of State. My attitude to making representations to Ministers is that if at first one does not succeed, one should try, try and try again.

Will the hon. Gentleman confirm that, for every one of the previous five years, Hertfordshire Conservative Members have been shown the door and told no by Conservative Ministers?