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Orders Of The Day

Volume 115: debated on Tuesday 5 May 1987

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Chevening Estate Bill Lords

Considered in Committee.

[MR. ERNEST ARMSTRONG in the Chair]

Clauses 1 to 4 ordered to stand part of the Bill.

Clause 5

Short Title, Citation And Commencement

4.30 pm

I beg to move amendment No. 1, in page 2, leave out lines 43 to 46.

It might be helpful to the House if I explain the background to the amendment.

It is the privilege of the House of Commons to control charges on public funds. To avoid infringing this privilege, the Lords formally negative any provisions of a Bill starting in their House which involve such a charge. The so-called privilege amendment is printed in the Bill with a black line in the margin, and the leaving out of the relevant subsection must be moved as an amendment during Committee stage in the Commons. In accordance with recent practice, notice has been given of this amendment which, having been moved formally, should be agreed.

The amendment is designed purely to delete the privilege amendment made in another place.

I thank the Leader of the House for that explanation, which it is advantageous to have on record. As this is clearly the latest in a long list of blatant vote-grabbing measures that the Government are bringing forward, the Opposition do not see it as in their interests to prolong the proceedings. I hope that those will be my final words on the Bill.

Amendment agreed to.

Clause 5, as amended, ordered to stand part of the Bill.

Schedules 1 and 2 agreed to.

Bill reported, with an amendment.

Bill read the Third time, and passed, with an amendment.

Landlord And Tenant (No 2) Bill

As amended (in the Standing Committee), considered.

[MR. ERNEST ARMSTRONG in the Chair.]

New Clause 7

Service Charge Contribution To Be Held In Trust

`(1) This section applies where the tenants of two or more dwellings may be required under the terms of their leases to contribute to the same costs by the payment of service charges; and in this section—

"the contributing tenants" means those tenants;
"the payee" means the landlord or other person to whom any such charges are payable by those tenants under the terms of their leases;
"relevant service charges" means any such charges;
"service charge" has the meaning given by section 18(1) of the 1985 Act, except that it does not include a service charge payable by the tenant of a dwelling the rent of which is registered under Part IV of the Rent Act 1977, unless the amount registered is, in pursuance of section 7(4) of that Act, entered as a variable amount;
"tenant" does not include a tenant of an exempt landlord; and
"trust fund" means the fund, or (as the case may be) any of the funds, mentioned in subsection (2) below.

(2) Any sums paid to the payee by the contribution tenants by way of relevant service charges, and any investments representing those sums, shall (together with any income accruing thereon) be held by the payee either as a single fund or, if he thinks fit, in two or more separate funds.

(3) The payee shall hold any trust fund—

  • (a) on trust to defray costs incurred in connection with the matters for which the relevant service charges were payable (whether incurred by himself or by any other person), and
  • (b) subject to that, on trust for the persons who are the contributing tenants for the time being.
  • (4) Subject to subsections (6) to (8), the contributing tenants shall be treated as entitled by virtue of subsection (3) (b) to such shares in the residue of any such fund as are proportionate to their respective liabilities to pay relevant service charges.

    (5) If the Secretary of State by order so provides, any sums standing to the credit of any trust fund may, instead of being invested in any other manner authorised by law, be invested in such manner as may be specified in the order; and any such order may contain such incidental, supplemental or transitional provisions as the Secretary of State considers appropriate in connection with the order.

    (6) On the termination of the lease of a contributing tenant the tenant shall not be entitled to any part of any trust fund, and (except where subsection (7) applies) any part of any such fund which is attributable to relevant service charges paid under the lease shall accordingly continue to be held on the trusts referred to in subsection (3).

    (7) If after the termination of any such lease there are no longer any contributing tenants, any trust fund shall be dissolved as at the date of the termination of the lease, and any assets comprised in the fund immediately before its dissolution shall—

  • (a) if the payee is the landlord, be retained by him for his own use and benefit, and
  • (b) in any other case, be transferred to the landlord by the payee.
  • (8) Subsections (4), (6) and (7) shall have effect in relation to a contributing tenant subject to any express terms of his lease which relate to the distribution, either before or (as the case may be) at the termination of the lease, of amounts attributable to relevant service charges paid under its terms (whether the lease was granted before or after the commencement of this section).

    (9) Subject to subsection (8), the provisions of this section shall prevail over the terms of any express or implied trust created by a lease so far as inconsistent with those provisions, other than an express trust so created before the commencement of this section.'.— [Mr. John Patten.]

    Brought up, and read the First time.

    4.32 pm

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

    With this it will he convenient to take Government amendments Nos. 13 and 14.

    This new clause is a matter of great concern to the hon. Member for Norwood (Mr. Fraser) and fulfils an undertaking that I gave to my hon. Friend the Member for Kensington (Sir B. Rhys Williams), who is not in his place this afternoon, to deal with the way in which service charges and sinking funds are managed while they remain in the hands of a landlord. It provides for the creation of a trust fund and it should ensure that the tax treatment of such funds is more equitable and less capricious than appears to be the case at present. It implements important recommendations in the Nugee report and applies also to leasehold dwellings other than flats where variable service charges are paid.

    It is important that I explain exactly what the new clause is about in a little detail, because important taxation issues are involved, which are of great interest for up to 1·5 million people in Britain who will be affected.

    The clause provides that any contributions to service charges as defined in section 8 of the Landlord and Tenant Act 1985 are to be held in a trust fund. This will include sinking or reserve funds. The establishment of a trust in this way guards against appropriation or the landlord's insolvency.

    The trustee is to be the person to whom the contributions are to be paid under the terms of the tenancy agreement. In most cases, the landlord will be the trustee, but not always. For example, there may be cases where a tenant's management company undertakes the repairs and provides services but does not have an interest in the reversion. The beneficiaries are to be the tenants for the time being under the tenancy agreements. They will have a remedy under trust law against the trustee for breach of trust and would be able to trace the funds under the existing arrangements for trust funds.

    Subsection (5) enables the Secretary of State to provide by order the investment of funds held in such a trust. This is to give flexibility to the arrangements, to ensure, for example, that if the contributions are only to be held for a short period it will be possible to provide for them to be placed on deposit at a bank.

    The clause also deals with what is to happen to the funds if a particular fund is no longer needed or if a leaseholder surrenders his or her lease or at the end of the leases. It does not override—I stress this—any express terms in the leases dealing with these matters. With that exception, the clause is simply intended to override any express terms unless those were entered into before the commencement of this provision. That is the important point.

    We have been careful to draft the provisions as well as we can with an eye to the tax consequences. Putting the contribution into a trust fund, provided that it is drawn or in accordance with our requirements will avoid the situation which can happen at present, where the tenant's contribution can be taxed again as the landlord's income —which can, of course, produce a wide variety of tax consequences, not likely to be helpful to the tenants. Our proposals simply make the tax treatment of service charge money much less variable than has been the case up to now.

    Question put and agreed to.

    Clause read a Second time, and added to the Bill.

    New Clause 1

    50 Year Extension Of Leases

    `(1) In this Clause—

  • (a) a qualifying tenant is the lessee of a flat which if it were a house would otherwise qualify the tenant to obtain an extended lease under the Leasehold Enfranchisement Act 1967 (the 1967 Act);
  • (b) a qualifying landlord is a landlord who if the premises to which this section applies were a house would be bound to grant an extended lease under the 1967 Act.
  • (2) A qualifying tenant may apply to the Court to vary his lease by extending its term for a period of not longer than 50 years at any time when the lease has less than 50 years unexpired and the Court shall be bound to grant the application upon such terms as it shall think fit as to the terms of the lease other than a revised rent and premium for the extension.

    (3) In the absence of agreement the Court shall incorporate in its order for extension such terms for rent and premium as may be determined by a rent assessment committee which shall have jurisdiction in that regard.

    (4) The Secretary of State may by statutory instrument make provision for the procedure to be followed by the parties to an application made under this section.'.— [Mr. John Fraser.]

    Brought up, and read the First time.

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

    The purpose of the new clause is to give to tenants of leasehold flats the same rights of extension as are at present exercisable by tenants of leasehold houses; that is, assuming that the tenant is a person who lives in the property and has had a lease for more than 21 years.

    I do not know whether you, Mr. Deputy Speaker, had the chance yesterday to see "Spartacus" on television. I saw a little of it and it reminded me of two things—first, that when I was a schoolboy I used to deliver groceries to Peter Ustinov, and, having seen Spartacus yesterday, I am glad that I did not do it in Roman times; secondly, of the custom in the Roman empire of dying Romans emancipating their slaves.

    That is appropriate, because here is a chance for a dying Parliament to emancipate about 1,000 leaseholders of flats who have leases which have less than, or are approaching less than, 50 or so years to run. The amendment would give such lessees the opportunity to extend their leases by up to 50 years, the right which is presently exercisable by the tenant of a leasehold house.

    There are two outstanding reasons for the House accepting the new clause. First, it is now almost exactly 20 years since the House of Commons passed, under a Labour Government, the Leasehold Reform Act 1967, which gave the tenants of leasehold houses two important rights. The first was the right to buy the freehold, which cannot be established in an exactly analogous way for the owner of a flat, because it is simply not possible or practicable for the owner of a flat to own the separate unapportioned freehold of his property. But it gave tenants of houses a second right which is analogous to rights which could be conferred upon the lessees of flats—the right to extend the lease by 50 years with rent revisions at the end of the first 25 years. It is that right which I now seek, 20 years later, to extend to the owners of leasehold flats.

    There are a number of other reasons why one should accept this proposition. First, the obvious reason is that it gives rights analogous to those possessed by people who own houses. Secondly, it would give the owners of leasehold flats the same kind of rights of extension and further security which are enjoyed by almost every other kind of lessee. Over the years, Parliament has given rights of extension to almost every kind of tenant. That right is enjoyed by short-term tenants of residential accommodation under the Rents Acts—indeed, they have a right to the almost perpetual extension of their lease, even unto their successors in title. The right has also been given to the owners of leasehold businesses.

    With a few exceptions, every business man who receives notice to quit from his landlord, or whose lease comes to an end, has a right to apply to the county court for an extension of his lease. Rights of extension and security for much longer than under the original terms of the lease are enjoyed by the tenants of agricultural land. Therefore, I urge that the right of extension should be given to the one class of people who have not enjoyed it in the past—the tenants of flats on long leases.

    Thirdly, and perhaps most important to the leaseholders of flats, if we enable them to extend their leases by up to 50 years, we shall also preserve the value of their homes. In most cases, someone's investment in his house or flat represents his life savings; his home is his principal, and sometimes his only, investment. Many people with leases that were first granted in the 1930s are now worried sick because their lease is becoming shorter and shorter and their property less and less likely to be saleable at its full value.

    The Minister said in Committee that there was no evidence from banks or building societies that shortening leases were unsaleable, and I accept that. In a period of great housing shortage, particularly in London, it is probably not difficult to sell the lease of a flat even if it has only one year unexpired. However, that does not remove the anxiety from those who have spent 30 years paying a mortgage on a flat, and who see the value of their investment diminishing, usually at the time when they are about to retire and would like to rest on the benefit of their savings over many years. We should remove the anxiety of diminishing investment and give people security towards the end of their mortgage repayments and in the latter part of the period of their lease.

    Fourthly, if we give tenants of leasehold flats the right to extend their leases, we shall provide them with an incentive to improve and invest in their home. One thing that this country needs more than anything else is better investment in housing. We invest rather less, both publicly and privately, in housing than almost any other country in the European Community. Somebody with a lease that is getting shorter has no incentive to invest money in central heating, double glazing or major refurbishment. If we allow the right of extension, we shall give people an incentive to continue to invest in bringing their homes up to date. Conversely, if people are not given the incentive to invest in their properties, a market develops in short leaseholds which do not have much value—"fag ends", as they are known in the trade. That can lead to a falling off in property standards and thus in living standards.

    As I said in Committee, we can trace the unhappy childhoods of some of those living in our inner cities to the time when they occupied short leasehold houses, in the days before the Leasehold Reform Act 1967. It would be wrong to create again a state of affairs where people had no future in their homes, and therefore no great interest in them. That led to a decline in housing standards. People had no incentive to invest in their homes, and that had adverse effects upon those who grew up in them.

    4.45 pm

    I know from the correspondence that I have received over the years while campaigning for leasehold reform that thousands of leaseholders are anxious. The two central features of my campaign for leasehold reform have been the right to extend a lease and the right collectively to buy the freehold. I have had more correspondence than I can remember—mainly from people living in London but from many other parts of the country too. The most touching letters have been from people who have retired to flats in seaside resorts, who are deeply concerned about the diminishing value of their assets because they cannot extend their lease.

    We must come to the time when Parliament grants tenants of leasehold flats the rights already enjoyed by tenants of leasehold houses. Although not many hon. Members are present today, I am sure that many, Labour and Conservative alike, will have been lobbied by their constituents and encouraged to vote for the new clause, which most people who comment on these matters believe to be right. The new clause is supported by the National Consumer Council and by many other consumer bodies as well as others who comment on these matters. This short debate will give hon. Members an opportunity to represent their constituents by voting for a right which we may already be 20 years late in establishing.

    Unlike the hon. Member for Norwood (Mr. Fraser), I did not have the opportunity of sitting on the Committee, although my hon. Friend the Member for Isle of Wight (Mr. Ross) attended one of the sittings and contributed to the debates. I am glad to have a chance briefly to intervene today, because I support the intention of the hon. Member.

    In Liverpool, I have seen many examples of people with shortening leases who are extremely worried about what will happen when those leases finally run out. Many such leases are like unexploded time bombs, ticking away in the hearts of our cities. It is therefore vital that we address ourselves to the consequences of doing nothing about leasehold reform. The prospect of speculators being able to buy up the leasehold of a property is anathema to many leaseholders, while others say that the property in which they live is being neglected because of the blighting effect of a shortening lease. The new clause is a practical and sensible measure to increase the period during which the leasehold can apply. It will give much security to many worried people, and that is why alliance Members will support it.

    I always find the remarks of the hon. Member for Norwood (Mr. Fraser) illuminating. At each sitting of the Committee, I picked up a new and colourful expression to describe some aspect of life. The hon. Gentleman taught me what was meant by the phrase "a nice little earner", and I now know what a "fag end" means in the context of housing law.

    I should be tempted to accept the new clause if the hon. Gentleman could demonstrate to me that the extension of leaseholds would lead to more private investment in the repair and renovation of housing. I would accept it for that reason alone. But, alas, I do not think that there is evidence that the Leasehold Reform Act necessarily had that effect. At present, investment in repair and renovation of public sector housing is running at about £3 billion from the capital and current account and is at a record level. Equally, in the private sector, to which the Bill addresses itself, about £13 billion a year is spent on home improvement and maintenance—a very substantial sum. However, sadly, much of that money does not go into the repair of blocks of flats — or houses, which just fall within the scope of the Bill.

    The money goes not into maintenance, damp-proof courses or re-roofing but into architecturally disagreeable neo-Georgian front doors and new kitchen units. A substantial sum is spent on the ephemera of housing maintenance and not enough on maintenance itself. Alas, there has been no evidence in the past 20 years that leasehold reform and the passing over into permanent ownership to people as freeholders that which they have previously held as leaseholders has made any difference to the amount invested in housing. That is one reason why I am not tempted by the new clause.

    For once, I have got the hon. Member for Norwood on a minor point of law. This gives me enormous pleasure because, speaking as a non-lawyer, it is extremely difficult for someone like me to he pitched against the hon. Gentleman, who is an expert on housing law. I suggested in Standing Committee that the hon. Gentleman should have some kind of handicap during the sittings — possibly a bad hangover, or something like that—which would allow me an easier run through some of the Bill's legal intricacies.

    I think that the hon. Gentleman was wrong when he said—I shall quote as well as I can, but I am sure that this is accurate—that the one class of tenants who do not have the right to an extension are the people whom we are considering. But that is not quite right. It is not right to say, as the hon. Gentleman appeared to do, that long leaseholders of flats have no rights when their leases come to an end. If they are living in the dwelling——

    Exactly; I have been trumped by the hon. Gentleman's legal expertise. He did not even have the decency to let me get to the end of what I thought was the one aspect on which I had got him on a point of law.

    If long leaseholders are living in the dwelling, they have the right under part I of the Landlord and Tenant Act 1954, as the hon. Gentleman just said, to continue to live there under a Rent Act-style tenancy. But, as I said in Committee, it is inescapable that the unexpired portion of leases granted for a fixed term reduces until the lease expires. That is the very nature of a leasehold agreement. A long leaseholder of a flat, whether in England or in Wales — I am delighted to see my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) in the Chamber — with a fixed-term lease does not have a perpetual interest in the dwelling. He or she is not a freeholder. That is the nature of a leasehold contract. Eventually, his or her interest will expire and the ownership will revert to the freeholder of the building.

    Anyone buying a lease should not be under any illusion about the nature of the interest which she or he is purchasing. Unfortunately too many leaseholders of flats do not come to terms with their status as leaseholders—hence the sorts of problems that exist in some inner cities in the provinces, to which the hon. Member for Liverpool, Mossley Hill (Mr. Alton) referred. Leaseholders of flats do not have the right to extend their leases, although they may well be able to negotiate an extension.

    I am not sure that we would be justified in giving such a right, which would override the terms of a contract that had been freely entered into between landlord and tenant. Throughout our consideration of the Bill, we have striven—the Opposition have generally concurred—to take an approach to the Bill which aimed to be even-handed between landlord and tenant. That has been the whole basis of the adoption of the recommendations in the excellent report by Mr. Edward Nugee's committee.

    The hon. Member for Norwood agued, rightly, that the Leasehold Reform Act has been on the statute book for 20 years. What an issue it was, I understand, 20 years ago in one part of my constituency in Oxford. That is certainly accepted by all political parties, but that is not in itself an argument of justification for leasehold enfranchisement of those living in flats.

    I think that the answer to the hon. Gentleman's rightful concern and that of the hon. Member for Mossley Hill will be the new commonhold system on which the Law Commission is working. It should enable people to own flats on a basis equivalent to the condominium or strata title system used in many other countries—for example, Australia — which gets around so, many of these problems. Meanwhile, I am concerned to ensure that lending institutions are as helpful as possible. I am glad that the researches of the hon. Member for Norwood into the attitudes of building societies show that they are trying to be helpful. My Department will continue to keep an eye on this issue.

    The new clause, as drafted, could create severe practical problems, apart from anything else, in blocks that have a life expectancy of less than 50 years. For that reason, if all the leases come to an end on different dates, which could well be the result, the landlord who wishes to develop the building and who may have a good case for doing so will be in considerable difficulty. I do not think that the new clause quite faces up to that. That is one reason why the Nugee committee rejected statutory rights to extend leases. To my mind, that was right.

    I have thought about the redevelopment argument and the question whether one should give the landlord the right to resist the leaseholders' right to have an extension of the lease where the block is due for redevelopment. On balance, I reject that argument. It does not apply to leasehold houses. If there is to be redevelopment, I see no reason why the lessees of the flats should not share in the redevelopment value of the property as much as the freeholder. Essentially, the leaseholders have bought their individual holding and, if' the premises are to be redeveloped, they ought to share any profit that arises by way of compensation for the loss of their homes.

    There is no consistent or logical attitude to this matter. If one assumes that a block of flats on which the local authority has the freehold is getting on in years and that the tenant exercises the right to buy, he would in any event be entitled to a 125-year lease under the 1985 Act. The Government have made no distinction between those blocks of flats that do not have a 125-year life and those that do. That disposes of that argument.

    The real case for the new clause is that, until now, we have not enjoyed a modern system of granting ownership of flats. We are dealing with a defect in the law. There was no other way of dealing with the sale of flats with leases from the 1930s because the law was inadequate. That is why the Law Commission is considering this matter. I hope that, eventually, we shall move to the practice in other countries—the United States, Australia, and so on — whereby individually a block of flats is owned by residential occupiers and collectively they have a share in an undivided freehold.

    That is all right for the future, but we are still left with the problem of the past. Even if there is commonhold for the future, it does not mean that there will be retrospective conversion for existing holdings. For that reason, in the meantime we need to allow people to have an extension of their leases. If we do not give that extension, the tenants of flats will be subject to exploitation by freeholders—sometimes by those who speculatively buy freeholds to make as much as they can from the exploitation of tenants — and people will ask for excessive premiums for the extension of leases. There will be no shortage of people offering extensions of leases, irrespective of the age of the flats. The problem will be how to achieve free bargaining between the landlord and the tenant.

    Perhaps we can agree to differ. I suppose that one ought to rename Georgian doors RTB doors, because they are the badge of those who have bought their premises from a local authority. It is my experience that, when people enlarge their interest, they usually spend rather more money on it. Often the enlargement of the interest takes place at the same time as the sale of the property. All the evidence in part 2 of the last house conditions survey shows that, when there is a change of ownership — whether by buying from a local authority or by any other means — a great deal of private investment then goes into housing. Above all, I am concerned about the anxiety of people who fear the loss of their investment—perhaps their only investment. For that reason, I propose to divide the House on the new clause.

    Question put, That the clause be read a second time.

    The House divided: Ayes 139, Noes 197.

    Division No. 152]

    [5.00 pm

    AYES

    Adams, Allen (Paisley N)Bray, Dr Jeremy
    Alton, DavidBrown, Hugh D. (Provan)
    Archer, Rt Hon PeterBrown, N. (N'c'tle-u-Tyne E)
    Ashdown, PaddyBuchan, Norman
    Atkinson, N. (Tottenham)Caborn, Richard
    Bagier, Gordon A. T.Callaghan, Rt Hon J.
    Banks, Tony (Newham NW)Callaghan, Jim (Heyw'd & M)
    Barnes, Mrs RosemaryCampbell-Savours, Dale
    Barron, KevinCanavan, Dennis
    Bennett, A. (Dent'n & Red'sh)Carter-Jones, Lewis
    Bidwell, SydneyClark, Dr David (S Shields)
    Blair, AnthonyClarke, Thomas
    Boyes, RolandClay, Robert

    Clelland, David GordonMcKelvey, William
    Clwyd, Mrs AnnMacKenzie, Rt Hon Gregor
    Cocks, Rt Hon M. (Bristol S)McTaggart, Robert
    Conlan, BernardMcWilliam, John
    Cook, Frank (Stockton North)Marek, Dr John
    Cook, Robin F. (Livingston)Marshall, David (Shettleston)
    Corbett, RobinMartin, Michael
    Corbyn, JeremyMason, Rt Hon Roy
    Craigen, J. M.Maxton, John
    Crowther, StanMaynard, Miss Joan
    Cunningham, Dr JohnMeacher, Michael
    Dalyell, TarnMikardo, Ian
    Davis, Terry (B'ham, H'ge H'l)Mitchell, Austin (G't Grimsby)
    Deakins, EricMorris, Rt Hon A. (W'shawe)
    Dixon, DonaldO'Brien, William
    Dobson, FrankO'Neill, Martin
    Dormand, JackOrme, Rt Hon Stanley
    Douglas, DickOwen, Rt Hon Dr David
    Dubs, AlfredPark, George
    Duffy, A. E. P.Patchett, Terry
    Eadie, AlexPendry, Tom
    Eastham, KenPike, Peter
    Evans, John (St. Helens N)Powell, Raymond (Ogmore)
    Fatchett, DerekPrescott, John
    Field, Frank (Birkenhead)Randall, Stuart
    Fisher, MarkRaynsford, Nick
    Flannery, MartinRedmond, Martin
    Foot, Rt Hon MichaelRees, Rt Hon M. (Leeds S)
    Foster, DerekRichardson, Ms Jo
    Foulkes, GeorgeRogers, Allan
    Fraser, J. (Norwood)Rooker, J. W.
    Freud, ClementRoss, Ernest (Dundee W)
    George, BruceSedgemore, Brian
    Golding, Mrs LlinSheldon, Rt Hon R.
    Gould, BryanShields, Mrs Elizabeth
    Hamilton, James (M'well N)Shore, Rt Hon Peter
    Hamilton, W. W. (Fife Central)Short, Mrs R.(W'hampt'n NE)
    Harrison, Rt Hon WalterSkinner, Dennis
    Hattersley, Rt Hon RoySmith, C.(Isl'ton S & F'bury)
    Haynes, FrankSnape, Peter
    Heffer, Eric S.Soley, Clive
    Hogg, N. (C'nauld & Kilsyth)Spearing, Nigel
    Home Robertson, JohnSteel, Rt Hon David
    Hoyle, DouglasStott, Roger
    Hughes, Dr Mark (Durham)Strang, Gavin
    Hughes, Robert (Aberdeen N)Taylor, Matthew
    Hughes, Roy (Newport East)Thompson, J. (Wansbeck)
    Hughes, Sean (Knowsley S)Wainwright, R.
    Janner, Hon GrevilleWardell, Gareth (Gower)
    Jenkins, Rt Hon Roy (Hillh'd)Wareing, Robert
    Kirkwood, ArchyWeetch, Ken
    Lamond, JamesWilliams, Rt Hon A.
    Lewis, Ron (Carlisle)Winnick, David
    Lewis, Terence (Worsley)Wrigglesworth, Ian
    Litherland, Robert
    McCartney, HughTellers for the Ayes:
    McDonald, Dr OonaghMr. Tony Lloyd and Mr. Ron Davies.
    McGuire, Michael
    McKay, Allen (Penistone)

    NOES

    Adley, RobertBoyson, Dr Rhodes
    Ancram, MichaelBraine, Rt Hon Sir Bernard
    Ashby, DavidBrandon-Bravo, Martin
    Aspinwall, JackBright, Graham
    Atkins, Rt Hon Sir H.Brinton, Tim
    Atkins, Robert (South Ribble)Brittan, Rt Hon Leon
    Atkinson, David (B'm'th E)Brooke, Hon Peter
    Baldry, TonyBrown, M. (Brigg & Cl'thpes)
    Bendall, VivianBrowne, John
    Benyon, WilliamBruinvels, Peter
    Biffen, Rt Hon JohnBuck, Sir Antony
    Biggs-Davison, Sir JohnBudgen, Nick
    Blackburn, JohnBulmer, Esmond
    Blaker, Rt Hon Sir PeterBurt, Alistair
    Body, Sir RichardButcher, John
    Boscawen, Hon RobertButterfill, John
    Bottomley, PeterCarlisle, Kenneth (Lincoln)
    Bottomley, Mrs VirginiaChannon, Rt Hon Paul
    Bowden, Gerald (Dulwich)Chapman, Sydney

    Chope, ChristopherLennox-Boyd, Hon Mark
    Churchill, W. S.Lester, Jim
    Clark, Dr Michael (Rochford)Lewis, Sir Kenneth (Stamf''d)
    Clark, Sir W. (Croydon S)Lightbown, David
    Clegg, Sir WalterLilley, Peter
    Colvin, MichaelLloyd, Sir Ian (Havant)
    Conway, DerekLloyd, Peter (Fareham)
    Coombs, SimonLord, Michael
    Cope, JohnLyell, Nicholas
    Cormack, PatrickMcCurley, Mrs Anna
    Couchman, JamesMacfarlane, Neil
    Dickens, GeoffreyMacGregor, Rt Hon John
    Douglas-Hamilton, Lord J.MacKay, Andrew (Berkshire)
    Durant, TonyMajor, John
    Edwards, Rt Hon N. (P'broke)Malone, Gerald
    Emery, Sir PeterMates, Michael
    Evennett, DavidMather, Sir Carol
    Eyre, Sir ReginaldMaude, Hon Francis
    Fallon, MichaelMaxwell-Hyslop, Robin
    Farr, Sir JohnMeyer, Sir Anthony
    Fenner, Dame PeggyMiller, Hal (B'grove)
    Fletcher, Sir AlexanderMills, lain (Meriden)
    Forman, NigelMills, Sir Peter (West Devon)
    Forsyth, Michael (Stirling)Mitchell, David (Hants NW)
    Forth, EricMontgomery, Sir Fergus
    Fox, Sir MarcusMoore, Rt Hon John
    Freeman, RogerMorrison, Hon C. (Devizes)
    Gale, RogerMorrison, Hon P. (Chester)
    Galley, RoyMoynihan, Hon C.
    Gardner, Sir Edward (Fylde)Mudd, David
    Garel-Jones, TristanNeale, Gerrard
    Gilmour, Rt Hon Sir IanNeubert, Michael
    Goodhart, Sir PhilipNicholls, Patrick
    Gow, IanOnslow, Cranley
    Gower, Sir RaymondOttaway, Richard
    Greenway, HarryPage, Richard (Herts SW)
    Gregory, ConalPatten, Christopher (Bath)
    Griffiths, Sir EldonPatten, J. (Oxf W & Abgdn)
    Griffiths, Peter (Portsm'th N)Pawsey, James
    Ground, PatrickPercival, Rt Hon Sir Ian
    Grylls, MichaelPollock, Alexander
    Hamilton, Hon A. (Epsom)Porter, Barry
    Hamilton, Neil (Tatton)Powell, William (Corby)
    Hanley, JeremyPrice, Sir David
    Hannam, JohnProctor, K. Harvey
    Hargreaves, KennethRaffan, Keith
    Harris, DavidRaison, Rt Hon Timothy
    Haselhurst, AlanRathbone, Tim
    Hayes, J.Rhodes James, Robert
    Hayhoe, Rt Hon Sir BarneyRhys Williams, Sir Brandon
    Heathcoat-Amory, DavidRoberts, Wyn (Conwy)
    Heddle, JohnRobinson, Mark (N'port W)
    Henderson, BarryRoe, Mrs Marion
    Hickmet, RichardRowe, Andrew
    Higgins, Rt Hon Terence L.Sainsbury, Hon Timothy
    Hind, KennethShersby, Michael
    Hirst, MichaelSims, Roger
    Hogg, Hon Douglas (Gr'th'm)Skeet, Sir Trevor
    Holland, Sir Philip (Gedling)Smith, Tim (Beaconsfield)
    Howard, MichaelSpeller, Tony
    Howell, Rt Hon D. (G'ldford)Spencer, Derek
    Hubbard-Miles, PeterSquire, Robin
    Hunt, John (Ravensbourne)Stern, Michael
    Hunter, AndrewStevens, Lewis (Nuneaton)
    Jackson, RobertSumberg, David
    Johnson Smith, Sir GeoffreyTapsell, Sir Peter
    Jones, Gwilym (Cardiff N)Temple-Morris, Peter
    Jones, Robert (Herts W)Thorne, Neil (Ilford S)
    Kellett-Bowman, Mrs ElaineThumham, Peter
    Kershaw, Sir AnthonyTownsend, Cyril D. (B'heath)
    Key, Robertvan Straubenzee, Sir W.
    King, Roger (B'ham N'field)Wakeham, Rt Hon John
    Knowles, MichaelWardle, C. (Bexhill)
    Knox, DavidWatts, John
    Lamont, Rt Hon NormanWells, Bowen (Hertford)
    Latham, MichaelWhitfield, John
    Lawrence, IvanWinterton, Nicholas
    Lee, John (Pendle)Wolfson, Mark
    Leigh, Edward (Gainsbor'gh)Wood, Timothy

    Young, Sir George (Acton)Mr. Michael Portillo and Mr. Richard Ryder.
    Tellers for the Noes:

    Question accordingly negatived.

    Clause 12

    Right Of Qualifying Tenants To Compel Sale Etc By New Landlord

    I beg to move amendment No. 1, in page 14, line 29, leave out 'one month' and insert 'three months'.

    With this it will be convenient to take Government amendment No. 2.

    Throughout the Standing Committee proceedings, hon. Members of all parties tried to improve the Bill, and I think that we have done so. This amendment extends to three months the period for tenants to serve a purchase notice if they want to exercise their right to buy the property from the new landlord in a situation where a former landlord failed to comply with the right of first refusal.

    In Committee I undertook to reconsider extending the minimum period following the amendments put down by the hon. Member for Norwood (Mr. Fraser), and the hon. Member for Fulham (Mr. Raynsford), whom I do not see in his accustomed place in the Chamber. On reflection, I accept that one month is too tight if residents have not known before then exactly what the terms of the sale to the new landlord were or the price paid. Even two months in a case where they already know the terms and the price and have not had to ask the new landlord may not be long enough. So I believe that it would be better to allow three months in each case. I think that this strikes a fairer balance without unduly prolonging the uncertainty for the new landlord, because that would be unfair.

    I reiterate that on these Benches we have tried throughout to strike a fair balance between the good and responsible landlord and the good and responsible tenant. I think that these amendments meet the points raised in Committee and I commend them to the House.

    I am grateful to the Minister for having considered the points made in Committee.

    Amendment agreed to.

    Amendment made, No. 2, in page 14, line 31, leave out `specified' and insert 'of three months beginning with the date mentioned'.— [Mr. John Patten.]

    Clause 12, as amended, added to the Bill.

    Clause 13

    Determination By Rent Assessment Committees Of Questions Relating To Purchase Notices

    Amendments made: No. 3, in page 15, line 46, after second 'the' insert 'estate or'.

    No. 4, in page 15, line 47, after 'or', insert 'relating'.— [Mr. John Patten.]

    Clause 13, as amended, added to the Bill.

    Clause 15

    Right Of Qualifying Tenants To Compel Grant Of New Tenancy By Superior Landlord

    Amendments made: No. 5, in page 17, line 13, leave out `of that tenancy' and insert 'referred to in subsection (1A) below'

    No. 6, in page 17, line 16, at end insert—

    '(1A) Those terms are—

    (a) the terms of the relevant-tenancy; and
    (b) if the new landlord paid any amount to the landlord as consideration for the surrender by him of that tenancy, that any such amount is paid to the new landlord by the person or persons so nominated.'.

    No. 7, in page 17, line 24, leave out '(1)' and insert'(1A)'.— [Mr. John Patten.]

    Clause 15, as amended, added to the Bill.

    Clause 20

    Construction Of Part I And Power Of Secretary Of State To Prescribe Modifications

    I beg to move amendment No. 8, in page 22, line 26, leave out '5' and insert '1'.

    With this it will be convenient to take the following amendments: No. 9, in page 22, line 26, at end insert

    `including adaptation to apply the right of first refusal to other leasehold residential property.'.

    No. 16, in the title, line 1, after 'flats', insert
    `and other leasehold residential property'.

    5.15 pm

    This amendment would give the right of first refusal which is granted to the leaseholders of flats in this Bill to the owners of leasehold houses as well.

    On the last set of amendments to which I spoke, I argued that those who own flats should have the same rights as those who own houses. In this case, the argument is reversed, that those who own houses ought to have the same rights as those who own flats. This is not an idiosyncratic amendment but one that has been urged upon me by the South Wales Leaseholders Association and other groups of owners of leasehold houses, because they have suffered from exploitation by speculators buying up large freeholds on which the value of the reversion is not very great, where it is worth so little that it is hardly worth the leaseholder exercising rights of enfranchisement, since the cost of buying the freehold where there is a 999-year lease may be greater than the price of the land itself.

    What has happened is that freeholders have bought reversions to houses and have then gone to the tenants and sought officiously to enforce insurance covenants. They have caused fear to tenants. They have insisted upon consent being given to improvements and certain major alterations to the property. They have acted in a way that is generally calculated to exploit the tenants and cause them fear and put money into the pockets of the reversion owner.

    It is for those reasons that the tenants of leasehold houses have suggested to me that they ought to have the same rights of refusal as those who own leasehold flats. It would not be a great obligation upon the landlord. He would simply have to notify the tenant before, say, the property was put up for auction or sold by private treaty, to give the tenant first right to buy that reversion. If this could be done collectively, it would remove many of the causes of the grievance which has been expressed by those in south Wales. My hon. Friends have brought forward a number of examples of exploitation taking place in the north-west of England as well.

    For reasons that were well rehearsed in Committee, therefore, I am adopting the suggestions that have been put to me and urging the Government to recognise that the right of first refusal should apply to all freehold reversions to residential property, not just to flats.

    The Opposition are indeed rehearsing some of the arguments that we heard in Committee. I reiterate that there is no place in our book for unscrupulous activities on the part of such landlords whether by deliberate act of by sheer incompetence.

    I do not think, however, that we would want to widen the powers to modify the procedures in clause 20 to cover clauses 1 to 4, because those first four clauses set out the basic framework within which the right of first refusal procedures operate. They set out who is entitled to the right and which property, which landlords and what types of disposal it applies to.

    Nor do I think that it would be sensible to extend the provisions in part 1 to leasehold houses. These would be mainly occupied by persons who are eligible to enfranchise under the Leasehold Reform Act 1967. As I pointed out in Committee, such a person can already buy the freeholder's interest on the basis of the terms set out in that Act irrespective of whether the freeholder wishes to sell. So if such a person is worried, for example, about the possibility of the landlord's interest changing hands at auction, he can resolve the problem by exercising his rights under the 1967 Act, provided he fulfils the requirements set out therein. This proposal gives them nothing that they do not have already.

    The right of first refusal recognises the interests of people living in flats in the sale of the ownership of their block. Flat dwellers, however, do not have the rights of leaseholders of houses to enfranchise under the 1967 Act because of all the difficulties of which we are well aware, about the enforcement of obligations on successors in title and about the repair and maintenance of the block as a whole.

    The Minister said that this was a rerun of arguments which we had in Committee. Our proceedings have been followed by the South Wales Leaseholders Association. Perhaps I could read out its comments on what the Minister has just said, as made in a letter which one of its officials sent to the Western Mail, described in the cutting as "The quality voice of Wales". It was not convinced by the arguments in Committee, any more than it will be convinced by the arguments now. It said:

    "It is not a party political issue. All parties have expressed support for the principle of further reform for the property laws.
    Our proposed amendments to the Landlord and Tenant Bill to allow the house leaseholder 'Right of first Refusal' when the landlord wants to sell, would provide a clear indication that the Government wishes to help the leaseholder."

    The association states:
    "In the absence of such a demonstration of intent, the leaseholder, who packs substantial political clout with 3 million votes in the UK, may decide to look to others for help."
    The association is not convinced that existing arrangements to buy at auction or negotiate are adequate. It has complained long and loud about the abuses and it believes that the amendment would suit its needs.

    To follow up on the last point made by the hon. Member for Norwood (Mr. Fraser), I want to make it absolutely clear that we give major protection to tenants in the Bill through the extension of the clauses on insurance. I also want to reiterate the point made in Committee, that the framework of the amendments under discussion and the suggestions contained in them, are way beyond the scope of the Nugee report. They can be considered within the context of discussions on wider leasehold reform. In those circumstances, I am sure that we will return to this matter in another form.

    Amendment negatived.

    Clause 29

    Conditions For Making Acquisition Orders

    I beg to move amendment No. 10, in page 29, line 26, leave out 'may' and insert 'shall'.

    With this it will be convenient to take amendment No. 11, in page 29, line 35, leave out from beginning to end of line 16 on page 30 and insert—

    '(b) the conditions in section 28 are complied with'.

    Amendment No. 10 would give leaseholders of flats the absolute right to purchase the freehold irrespective of whether the landlord had fallen down on his obligations. The way in which the Bill is structured at present means that tenants have the right in some circumstances to apply to the courts to appoint a manager. If a manager has been appointed, or if there are other reasons to show that the landlord has failed in his obligations, tenants have the right to go to court to ask for a compulsory purchase order to collectively acquire the freehold. That is a discretionary remedy in the hands of the tenants and that remedy turns upon the landlord neglecting his responsibilities.

    There is a widespread view that the tenants should have the right to buy the freehold irrespective of the nature of the landlord's performance. If a landlord has behaved badly, the tenants would want to exercise that right. There is a general opinion that tenants should have the right to enfranchise collectively, whatever the circumstances. That point was beyond the remit of the Nugee report. However, that right is partly supported in the Minister's comments about the Law Commission and the need for a new system of common law. That suggested that there should be a collective right to the reversion of ownership of flats.

    I have received a letter from the Consumers Association which supports that proposition.
    "We especially welcome the recognition of the leaseholders' right to buy, but think that the Government should take this principle further still. We would like to see more comprehenive rights for leasehold flat owners to buy their freehold if a clear majority wish to. We will be looking more closely at the right to buy provisions in the Bill when it reaches Committee."
    The Bill has now left Committee and I want to assert the suggestion made by the Consumers Association. That suggestion is not novel and I have proposed it frequently. It should be recognised, and it would shorten many of the procedures if tenants had an unfettered right to buy the freehold at a market value. Because there is a wide consensus on this matter among reputable bodies, I want to press the amendment.

    The hon. Member for Norwood (Mr. Fraser) has touched on the politics of this legislation, which involves how far the Government want to go beyond striking a balance between landlord and tenant and really extending the opportunities for people to become owner-occupiers. I would have thought that the amendment might commend itself to the Government as the Conservative party claims to believe in the principle of a property-owning democracy. People living in properties should have the maximum number of opportunities to purchase the property by themselves or as a co-operative. I know that the Minister for Housing, Urban Affairs and Construction has great sympathy for the housing cooperative movement. When people live in groups of flats, there are particular opportunities for properties to be assigned to housing co-operatives.

    Although the Minister will not be able to accept the amendment today, I hope that he will assure the House that the Government will return to these matters of extending the rights of people living in private property and allow them the same rights as those given to people living in council property in their opportunities to become owner-occupiers. Property should not simply involve the profit motive or speculation. If someone lives in a property—whether that person is a private or a public tenant—he should have the right to move into personal or co-operative ownership.

    I thank the hon. Member for Liverpool, Mossley Hill (Mr. Alton) for his kind words about my interest in housing co-operatives. I shall continue to do all that I possibly can to promote the interests of the co-operative movement in its rapidly developing and varied forms. I can say that I have put my money — or rather the taxpayers' money — where my mouth is with regard to one or two developments in Liverpool to help people who wanted to run their own lives. I wish those people well in their arrangements.

    We are in danger of widening the debate. It is not for me to judge whether it should be widened too far; that is a matter for you, Mr. Deputy Speaker. However, so far on Second Reading and in Committee we have kept out eyes very much on the issue that led the Government to set up the Nugee committee in the first place. We set up the committee to tackle the problems of people faced with bad management by a minority of bad landlords. The committee was not concerned with wider issues of owner-occupation, leasehold reform — which we have already discussed earlier—or many other issues.

    We must be very cautious before we attempt, as I hope we will not do in the declining moments of this important legislation, to bolt on ill-thought-out bits and pieces—ill thought out by both sides of the House, including by me, through lack of time—to bring about leasehold reform and extensions of leasehold. That would be a serious mistake. We must remember that the Bill was brought into existence following the Nugee committee report. My right hon. Friend the then Secretary of State for the Environment announced his approval for the measure in April 1986. We have moved with the speed of light when compared with the standards of previous Governments in introducing this Bill and reaching this stage. We have achieved that thanks to the co-operation of Her Majesty's official Opposition and the Liberal party spokesman in Standing Committee.

    Having said that, I want to allow myself one sentence which may stray into the wider issues raised by the hon. Member for Mossley Hill. I may include a semi-colon or two in this sentence if you allow me, Mr. Deputy Speaker, and if Hansard allows semi-colons. I can never remember whether Hansard allows them. However, the Government believe that the right to buy and home ownership are very important; we have come to believe more and more that the right to rent is equally important and we wish to provide a greater variety of rented housing just as we wish to provide greater opportunities for people to own their own homes. I leave the hon. Member for Liverpool, Mossley Hill with that thought.

    My hon. Friend the Under-Secretary of State for Wales and I made it clear that we regard the provisions of part III dealing with the grant of an acquisition order as a matter of last resort. We believed it would occur only when every other attempt to install a manager to run a block of flats had failed. Then, only as a very unusual circumstance would an acquisition order go to court.

    We want to encourage and reassure good landlords. We want more good landlords — private landlords, institutional landlords and those landlords from building societies and pension funds working with housing associations and the housing co-operative movement acting as good landlords. I am certainly not seeking to facilitate the wholesale transfer of blocks of flats out of the hands of responsible owners by the provisions contained in the Bill.

    The Bill makes careful provision for the circumstances in which an acquisition offer can be made. It leaves the matter essentially to the discretion of the courts, and quite right too. I do not want to do anything in the Bill to undermine the relationship between landlord and tenant or to discourage freeholders from the proper management of blocks in which they have the reversionary interest. Many freeholders, in London and in provincial cities, carry out their duties well.

    Therefore, I cannot accept the amendment and I hope that the hon. Gentleman will wish to withdraw it.

    5.30 pm

    I do not intend to withdraw it.

    I must quarrel with the Minister for a moment about the phrase "the right to rent", which he introduces from time to time. I described it the other day as a fantasy in his mind, and a phrase which was stolen from the Labour housing group. I do not know where the right to rent exists. However, I can think of two examples of it. First, there was the right to rent that the Opposition tried to give prospective council tenants, so that if a property had been empty for more than six months, prospective tenants would have the right to rent that accommodation by giving notice in writing to the landlord. That amendment was voted down by the Government.

    Secondly, another successful example of the right to rent, which I strongly supported, was called "do-it-yourself shared ownership". It was so successful as a right to rent that the Government had to abort it. Apart from those two occasions, I do not know of any circumstances in which the Government have done anything, realistically, to establish such a right to rent. I wish that the Minister would stop using that phrase unless he intends to do something about it.

    All of that, Mr. Deputy Speaker, was out of order. However, it would be in order for me to press this matter to a Division.

    The hon. Gentleman need not be too impatient for too long about more substance for the fine phrase that I have used. Whatever else the Government want to do, we want to see variety in relation to this pair of amendments and a variety of provision for rented homes. There is still a place for the traditional relationship of lessor and lessees in blocks of flats. We want that relationship to continue and to do what we can to promote good landlords, of whom there are many.

    Question put, That the amendment be made:—

    The House divided: Ayes 141, Noes 192.

    Division No. 153]

    [5.35 pm

    AYES

    Abse, LeoField, Frank (Birkenhead)
    Adams, Allen (Paisley N)Fisher, Mark
    Alton, DavidFlannery, Martin
    Archer, Rt Hon PeterFoot, Rt Hon Michael
    Ashdown, PaddyFoster, Derek
    Atkinson, N. (Tottenham)Foulkes, George
    Bagier, Gordon A. T.Fraser, J. (Norwood)
    Barnes, Mrs RosemaryGeorge, Bruce
    Barron, KevinGolding, Mrs Llin
    Beith, A. J.Gould, Bryan
    Bennett, A. (Dent'n & Red'sh)Hamilton, James (M'well N)
    Bidwell, SydneyHamilton, W. W. (Fife Central)
    Blair, AnthonyHarrison, Rt Hon Walter
    Boyes, RolandHattersley, Rt Hon Roy
    Bray, Dr JeremyHaynes, Frank
    Brown, Gordon (D'f''mline E)Heffer, Eric S.
    Brown, Hugh D. (Provan)Hogg, N. (C'nauld & Kilsyth)
    Brown, N. (N'c'tle-u-Tyne E)Home Robertson, John
    Brown, Ron (E'burgh, Leith)Hoyle, Douglas
    Caborn, RichardHughes, Dr Mark (Durham)
    Callaghan, Rt Hon J.Hughes, Roy (Newport East)
    Callaghan, Jim (Heyw'd & M)Janner, Hon Greville
    Campbell-Savours, DaleJenkins, Rt Hon Roy (Hillh'd)
    Canavan, DennisJohn, Brynmor
    Carter-Jones, LewisKirkwood, Archy
    Cartwright, JohnLamond, James
    Clark, Dr David (S Shields)Lewis, Ron (Carlisle)
    Clarke, ThomasLewis, Terence (Worsley)
    Clay, RobertLitherland, Robert
    Clelland, David GordonLloyd, Tony (Stretford)
    Clwyd, Mrs AnnMcCartney, Hugh
    Cocks, Rt Hon M. (Bristol S)McDonald, Dr Oonagh
    Conlan, BernardMcGuire, Michael
    Cook, Frank (Stockton North)McKay, Allen (Penistone)
    Cook, Robin F. (Livingston)McKelvey, William
    Corbyn, JeremyMacKenzie, Rt Hon Gregor
    Craigen, J. M.McTaggart, Robert
    Crowther, StanMcWilliam, John
    Cunningham, Dr JohnMarek, Dr John
    Dalyell, TarnMarshall, David (Shettleston)
    Davies, Rt Hon Denzil (L'lli)Martin, Michael
    Davis, Terry (B'ham, H'ge H'l)Mason, Rt Hon Roy
    Deakins, EricMaxton, John
    Dixon, DonaldMaynard, Miss Joan
    Dobson, FrankMeacher, Michael
    Dormand, JackMikardo, Ian
    Douglas, DickMitchell, Austin (G't Grimsby)
    Dubs, AlfredMorris, Rt Hon A. (W'shawe)
    Duffy, A. E. P.O'Brien, William
    Eastham, KenO'Neill, Martin
    Evans, John (St. Helens N)Orme, Rt Hon Stanley
    Fatchett, DerekPark, George

    Patchett, TerrySoley, Clive
    Pendry, TomSpearing, Nigel
    Pike, PeterSteel, Rt Hon David
    Powell, Raymond (Ogmore)Stott, Roger
    Prescott, JohnStrang, Gavin
    Radice, GilesStraw, Jack
    Randall, StuartTaylor, Matthew
    Redmond, MartinThompson, J. (Wansbeck)
    Rees, Rt Hon M. (Leeds S)Tinn, James
    Richardson, Ms JoWainwright, R.
    Rogers, AllanWarden, Gareth (Gower)
    Rooker, J. W.Wareing, Robert
    Ross, Ernest (Dundee W)Weetch, Ken
    Sedgemore, BrianWelsh, Michael
    Sheldon, Rt Hon R.Williams, Rt Hon A.
    Shields, Mrs ElizabethWinnick, David
    Shore, Rt Hon PeterWrigglesworth, Ian
    Short, Mrs R.(W'hampt'n NE)
    Skinner, DennisTellers for the Ayes:
    Smith, C.(Isl'ton S & F'bury)Mr. Ron Davies and Mr. Sean Hughes.
    Snape, Peter

    NOES

    Adley, RobertForsyth, Michael (Stirling)
    Alexander, RichardForth, Eric
    Ashby, DavidFox, Sir Marcus
    Aspinwall, JackGale, Roger
    Atkins, Rt Hon Sir H.Galley, Roy
    Atkins, Robert (South Ribble)Gardner, Sir Edward (Fylde)
    Atkinson, David (B'm'th E)Garel-Jones, Tristan
    Baldry, TonyGilmour, Rt Hon Sir Ian
    Bendall, VivianGoodhart, Sir Philip
    Benyon, WilliamGow, Ian
    Biggs-Davison, Sir JohnGower, Sir Raymond
    Blackburn, JohnGreenway, Harry
    Blaker, Rt Hon Sir PeterGregory, Conal
    Body, Sir RichardGriffiths, Sir Eldon
    Boscawen, Hon RobertGriffiths, Peter (Portsm'th N)
    Bottomley, Mrs VirginiaGround, Patrick
    Bowden, Gerald (Dulwich)Grylls, Michael
    Boyson, Dr RhodesHamilton, Hon A. (Epsom)
    Braine, Rt Hon Sir BernardHamilton, Neil (Tatton)
    Brandon-Bravo, MartinHampson, Dr Keith
    Bright, GrahamHanley, Jeremy
    Brinton, TimHannam, John
    Brittan, Rt Hon LeonHarris, David
    Brooke, Hon PeterHaselhurst, Alan
    Brown, M. (Brigg & Cl'thpes)Hayes, J.
    Bruinvels, PeterHayhoe, Rt Hon Sir Barney
    Buchanan-Smith, Rt Hon A.Hayward, Robert
    Buck, Sir AntonyHeathcoat-Amory, David
    Budgen, NickHeddle, John
    Bulmer, EsmondHenderson, Barry
    Burt, AlistairHickmet, Richard
    Butcher, JohnHiggins, Rt Hon Terence L.
    Butterfill, JohnHind, Kenneth
    Carlisle, Kenneth (Lincoln)Hirst, Michael
    Carlisle, Rt Hon M. (W'ton S)Holland, Sir Philip (Gedling)
    Channon, Rt Hon PaulHoward, Michael
    Chapman, SydneyHowell, Rt Hon D. (G'ldford)
    Chope, ChristopherHubbard-Miles, Peter
    Churchill, W. S.Hunt, John (Ravensbourne)
    Clark, Dr Michael (Rochford)Hunter, Andrew
    Clark, Sir W. (Croydon S)Irving, Charles
    Clegg, Sir WalterJackson, Robert
    Colvin, MichaelJohnson Smith, Sir Geoffrey
    Conway, DerekJones, Gwilym (Cardiff N)
    Coombs, SimonJones, Robert (Herts W)
    Cope, JohnKellett-Bowman, Mrs Elaine
    Couchman, JamesKershaw, Sir Anthony
    Dorrell, StephenKey, Robert
    Douglas-Hamilton, Lord J.King, Roger (B'ham N'field)
    Durant, TonyKnowles, Michael
    Evennett, DavidKnox, David
    Eyre, Sir ReginaldLamont, Rt Hon Norman
    Fallon, MichaelLatham, Michael
    Farr, Sir JohnLawrence, Ivan
    Fenner, Dame PeggyLee, John (Pendle)
    Fletcher, Sir AlexanderLeigh, Edward (Gainsbor'gh)
    Forman, NigelLester, Jim

    Lewis, Sir Kenneth (Stamf''d)Rhys Williams, Sir Brandon
    Lightbown, DavidRoberts, Wyn (Conwy)
    Lilley, PeterRobinson, Mark (N'port W)
    Lloyd, Sir Ian (Havant)Roe, Mrs Marion
    Lloyd, Peter (Fareham)Rossi, Sir Hugh
    Lord, MichaelRowe, Andrew
    Lyell, NicholasRyder, Richard
    McCurley, Mrs AnnaSainsbury, Hon Timothy
    Macfarlane, NeilShersby, Michael
    MacKay, Andrew (Berkshire)Sims, Roger
    Maclean, David JohnSkeet, Sir Trevor
    Major, JohnSmith, Tim (Beaconsfield)
    Malone, GeraldSpeed, Keith
    Mates, MichaelSpencer, Derek
    Mather, Sir CarolSquire, Robin
    Maude, Hon FrancisStanbrook, Ivor
    Maxwell-Hyslop, RobinStern, Michael
    Meyer, Sir AnthonyStevens, Lewis (Nuneaton)
    Mills, lain (Meriden)Sumberg, David
    Mills, Sir Peter (West Devon)Tapsell, Sir Peter
    Montgomery, Sir FergusTemple-Morris, Peter
    Morrison, Hon C. (Devizes)Thompson, Patrick (N'ich N)
    Moynihan, Hon C.Thorne, Neil (Ilford S)
    Mudd, DavidThurnham, Peter
    Neubert, MichaelTownsend, Cyril D. (B'heath)
    Nicholls, Patrickvan Straubenzee, Sir W.
    Ottaway, RichardWakeham, Rt Hon John
    Page, Richard (Herts SW)Wardle, C. (Bexhill)
    Patten, Christopher (Bath)Warren, Kenneth
    Patten, J. (Oxf W & Abgdn)Watts, John
    Pawsey, JamesWells, Bowen (Hertford)
    Percival, Rt Hon Sir IanWells, Sir John (Maidstone)
    Pollock, AlexanderWhitfield, John
    Porter, BarryWinterton, Nicholas
    Powell, William (Corby)Wolfson, Mark
    Price, Sir DavidWood, Timothy
    Proctor, K. HarveyYoung, Sir George (Acton)
    Raffan, Keith
    Raison, Rt Hon TimothyTellers for the Noes:
    Rathbone, TimMr. Michael Portillo and Mr. Mark Lennox-Boyd.
    Rhodes James, Robert

    Question accordingly negatived.

    Clause 35

    Application By Party To Lease For Variation Of Lease

    I beg to move amendment No. 12, in page 35, line 27, at end insert——

  • `(aa) existence of rising ground rents that take the sum above the premium threshold for the purpose of the Rent Act 1977,
  • (bb) existence of a provision allowing the landlord to take 100 per cent. of repair costs money in advance,
  • (cc) existence of a covenant that prevents a leaseholder from objecting to planning consent to the landlord's application for development within the curtilage,
  • (dd) No provision for reasonable licence fee for use of car parking facilities,
  • (ee) no provision for the creation of reserve funds,
  • (ff) no provision for the interest earned on the reserve funds to insure for the block,
  • (gg) no provision for the reserve funds to be held in an account immune from the landlord's creditors and
  • (hh) no provision to deal with the presence of dissimilar leases.'.
  • The amendment was suggested by some leaseholders' associations. Part of it has already been dealt wth, for example the interest on reserve funds and making a reserve fund immune from a landlord's creditors.

    A couple of points have caused anxiety. The first relates to the right to make a variation in a lease where rising ground rents may take the sum above the premium threshold for the purpose of the Rent Act 1977. If the rent under a long lease rises above two thirds of the rateable value, in some circumstances the tenant is unable to recover a premium on the sale of the lease which is greater than the premium paid when it was lawful to do so. That catch has upset some leaseholders where rent revision clauses in leases have sometimes made the lease virtually unsaleable. Leaseholders are asking that the parties have the right to apply to a court to vary a lease where a lease has become unexpectedly unsaleable as a result of a rise in ground rents.

    Other matters were rehearsed in Committee, such as a covenant which would prevent a leaseholder from rejecting a planning consent on the landlord's application to develop within the curtilage. In some circumstances a landlord may wish to build on an open space which has been enjoyed as a facility by the tenant, or to add two storeys to a block to the discomfort of the tenants. Tenants feel that if the lease does not provide for the right of objection under those circumstances, it certainly should do.

    Similarly, provision should be made for correcting leases which do not provide for a licence fee for car parking facilities. The other matters were intended to draw the attention of Government officials and I shall not deal with them again. The problem of rising ground rent is particularly important and perhaps the Minister can say whether the Government will consider further powers to vary leases if this continues to be a problem.

    5.45 pm

    I take seriously the points made by the hon. Member for Norwood (Mr. Fraser) and I hope that he and those who have written to him, my officials and me will not consider it tiresome or niggardly if I say again that the Bill is not the right vehicle to deal with these problems. The Bill deals with tenants who live in badly managed blocks of flats and that is the issue that we have kept our eye on throughout.

    The amendment seeks to add several extra items to the list of topics on which an application for a variation in a lease can be made and, as the hon. Gentleman was good enough to say, it has to some extent been overtaken by events.

    It seems odd to have a discussion on this without the hon. Member for Fulham (Mr. Raynsford) present. He has been with us throughout all our proceedings and it is strange not having him here to talk on these issues. If he were present I hope that he, too, would be satisfied that our new clause, dealing with service charge contributions to be held in trust and covering sinking or reserve funds set up for similar purposes to service charge funds, takes care of the sixth and seventh items on the list of items, for which we are indebted to the Federation of Private Residents' Associations. The sixth and seventh items deal with safeguarding the interest earned on reserve funds and safeguarding the fund from a landlord's creditors. I hope that tenants regard those as major steps forward in consumer protection, and that the Consumers Association and others will recognise the major strides forward that the Government have made.

    I cannot see anything in the remainder of the list which constitutes such a major, potential defect in a lease as to warrant an individual leaseholder going to court to seek a variation order, which is a serious business. The fifth item, for example — provision for the creation of a reserve fund — seems eminently suitable for an application under clause 37 where there is a sufficient majority. This is not something which only one or two leaseholders or, indeed, the landlord should seek to impose on the leases of a large block of flats without substantial support from the other parties concerned.

    Of the other items, one attempts to deal with escalating ground rents which, if they rise to two thirds of the rateable value, will come within the ambit of the Rent Acts, so that a premium cannot be charged for the lease. Section 78 of the Housing Act 1980 set out certain tightly defined circumstances in which this rule did not apply. I am aware that there may still be some problems with the operation of section 127 of the Rent Act 1977 which was amended by section 78 of the 1980 Act. I am still considering this complicated issue.

    I have received some very interesting correspondence. A firm of solicitors, Bischoff and Company, wrote to me with some interesting ideas how to deal with this point. However, it is a quite complex area and I think that it is best left to a subsequent piece of legislation that looks at rented housing overall. I do not think that it can be dealt with satisfactorily in this manner because, in effect, it would ask the court to say to which leases the Rent Act limitation on premiums should apply, and I am not sure that that is right.

    I do not think that it would be right to remove the landlord's ability to claim advance payments to cover the estimated cost of works or repairs where the costs can be recovered from the tenant, since it could affect the way in which the works were financed and would possibly involve borrowing. I must stress the fact that the tenants are protected against unreasonable charges by the provisions of the Landlord and Tenant Act 1985.

    Although the other items touch on points with which I have much sympathy and about which I shall think with regard to future legislation—for example, applications to carry out works which affect the interests of the leaseholders, such as car-parking charges and the effects of dissimilar leases—these are matters which, once they have been agreed, are difficult to justify intervening in simply at the behest of one of the parties to the lease. That seems to break the balance between good landlord and good tenant, which we seek to promote and preserve and hope in the future to enhance.

    None of these items are such that they fundamentally affect the management of the block and/or the standard of the accommodation and the residents in the same way as the matters that we have listed in clause 35.

    I hope that what I have said — I have chosen my words carefully—will show enough good will towards the general drift of the points put forward to persuade the hon. Gentleman to withdraw his amendment.

    On this occasion I shall respond. I do not intend to press these matters further. The purpose of the amendment is to draw attention to a number of problems that have arisen over defective leases which, as the Minister said, do not relate to management.

    I shall mention one more point — for the sake of neatly wrapping up the matter — which is called the "royal lives clause" in leases. The leaseholder format excludes from enfranchisement those leases which are terminable, "after a death or marriage". The exclusion was clearly intended to refer to the death or marriage of the tenant, but due to a drafting error it was not expressed so precisely. As a result, certain landlords have insisted on a clause in their leases which allows the lease to be terminated,
    "after the death or marriage of the last survivor of King George V."
    This artificial device has become known as the "royal lives clause".

    The Housing Act 1980 outlawed the royal lives clause in all leases granted after the 18 April 1980, but nothing was done about the leases which were granted before that. Clearly, they were granted in such terms to deprive tenants of their rights of security.

    I have a letter which was written to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) on that matter. The author of the letter is a lessee under a royal lives lease. He has written to his own Member of Parliament and the Department of the Environment about what he calls "the royal lives loophole". I know that the Bill is not the vehicle for dealing with this, but I raised the matter to draw the Minister's attention to what is a cause of concern for a small number of tenants who have been subject to abuse by this kind of lease, particularly where it was granted before 1980.

    I merely want to draw attention to that matter and perhaps we can come back to it at a later stage.

    I do not want the hon. Member for Norwood (Mr. Fraser), the House or those who read our proceedings in Hansard to think for one moment that I am not wholly and utterly familiar with the royal lives issue. It is a matter in which I have become expert in almost two years as Minister for Housing Urban Affairs and Construction, with the mastery and interest for detail for which I am known and admired by my civil servants.

    I was pointing in a general sense, not at any unmentionable or invisible person.

    This is an important issue which affects a small number of people. The hon. Member for Norwood is quite right to say that we must look at the question of leases of houses or flats which provide that the lease expires on the death of a named person. The named person is usually a member of the royal family, frequently "the heirs of George V". That is not always the case. Ingenious persons who are seeking to get round the provisions of the Leasehold Reform Act 1967 have often sought to use other names to attempt to spin out the leases.

    We deliberately closed that loophole in the Housing Act 1980. The hon. Member for Norwood will recall that paragraph 3 of schedule 21 was the exact entry in the Housing Act. We did that deliberately only in respect of leases granted after 18 April 1980. We did not do that because it was some due date in the passage of the Bill's proceedings; we did it knowing that some leaseholders of houses with leases granted before that date still cannot enfranchise under the 1967 Act. The reason for that is the same reason why I do not seek to change it now — unless we have more persuasive argument—and that is that it is the Government's wish not to override the terms of contract which had already been freely entered into by landlord and tenant. We wish, quite properly, to provide a fair and critical balance between landlord and tenant. That remains my view.

    I am delighted that the hon. Member for Norwood should have raised this burning issue, which affects a small number of people who, doubtless, continue to feel aggrieved, even though they freely entered into a bargain with their prospective landlord. I do not wish to dismiss their concerns lightly. I am not moved by the arguments put forward by the hon. Gentleman this afternoon, and he has said that he does not regard the Bill as the proper vehicle to attempt to deal with this issue but is simply flagging it up and bringing it to the attention of the House.

    I shall undertake in consideration of future legislation to look at this issue to see whether anything can be done, although I would have to be moved a long way to be persuaded that we should break the principle of the reasonable agreement reached freely, with no coercion, between a good landlord and a good tenant.

    The Government have not been slow to revise the terms of leases and adjust the balance of rights and liabilities between the tenants of long leases that have been granted under the right to buy. I was merely flagging up the matter at this point and I therefore beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 51

    Jurisdiction Of County Courts

    Amendment made: No. 13, in page 46, line 39, leave out `and' insert—

    '(aa) any provision of section (Service charge contributions to be held in trust); and '.—[Mr. John Patten.]

    Clause 52

    Regulations And Orders

    Amendment made: No. 14, in page 47, line 18, after `25(6)', insert

    `, (Service charge contributions to be held in trust) (5)'.—[Mr. Mr. John Patten.]

    Clause 61

    Short Title, Commencement And Extent

    Amendment made: No. 15, in page 51, line 8, leave out from 'transitional' to end of line 9 and insert

    ', incidental, supplemental or consequential provision or saving as the Secretary of State considers necessary or expedient in connection with the coming into force or any provision of this Act or the operation of any enactment which is repealed or amended by a provision of this Act during any period when the repeal of amendment is not wholly in force.'.

    5.58 pm

    I beg to move, That the Bill be now read the Third time.

    The principles underlying the Bill, happily, have commanded all-party support, which we value. There is general recognition throughout the House of the need to strengthen the rights of those who are living in privately owned blocks of flats, and of the relevance of the Nugee committee and its excellent findings in that context.

    The Nugee committee struck the right balance between measures to improve the tenants' position and the need to safeguard the interests of landlords and their agents. We wish to encourage good landlords; we want to see more of them, not fewer. That balance has been maintained in Standing Committee and on Report and I should like to thank hon. Members who have made some weighty contributions during the passage of the Bill, which is of such importance for those who are living in privately owned blocks of flats, which have led to the improvement of the Bill.

    5.59 pm

    I promised not this year but last that when the Bill came forward the Opposition would facilitate its passage even though we wanted it to go further in two respects. The Minister will agree that I have kept my promise. I am glad to see the Bill speeding on its way. I think it is the right point at which to congratulate further the Nugee committee on the excellent work which it did.

    The Bill affects private rights between landlord and tenant. It is extremely important that, once the Bill leaves this House with all-party support, it is dispatched to another place as quickly as possible. Since rumour has it that we are likely to have a general election soon, I hope that the Bill will become law before a general election takes place.

    5.59 pm

    This is one of those rare but pleasant occasions on which there is all-party support in the House for a piece of legislation. Like the hon. Member for Norwood (Mr. Fraser), I hope that not only will the Bill receive its Third Reading today and rapidly go through its stages in another place but that, if there is to be a general election, it will not be one of the Bills which is lost in indecent haste after the local elections on Thursday.

    When my hon. Friend the Member for Isle of Wight (Mr. Ross) welcomed the Bill on Second Reading, he said that it could have a civilising influence in the jungle of property speculation. Since then many useful amendments have been made in Committee, especially that service charge contributions should be held in trust. However, we still need to be vigilant about ensuring that loopholes are not exploited by landlords and that the rights of private tenants to high standards of repair and maintenance are maintained.

    The Minister has talked much this afternoon about achieving the right balance between the rights of tenants and the rights of landlords. Surely all of us recognise that there has been an unfortunate growth in the exploitation of tenants in the last few years. Shelter estimates that there are some 80,000 homeless people, many of them sleeping rough on park benches or in cardboard city. It is important that we provide them with places to live. If private landlords are to play a part in that process, it must be with adequate safeguards.

    Homelessness has become a growth industry and frequently we have seen how housing benefits can be abused and misused by private landlords as a licence to print money. On a previous occasion I put before the House the example of one landlord who is taking £140,000 a year from the collection of private rents for one property in my constituency through abuse of the housing benefit system. Clearly that is an example of the balance between the rights of tenants and the rights of the landlord getting out of skew and of the landlord using the system purely to create profit and not to provide for a need.

    We will have to return to such issues and to the role of the rent officer in safeguarding the rights of private tenants. We will have to consider further leasehold reform. We will have to examine again the right to buy for private tenants and, indeed, the right to co-operate. Most important, it is vital that, whenever loopholes are seen to be exploited by bad landlords, this House must act vigorously in protecting those tenants who can often be so badly used.

    With those caveats and conditions, I very much welcome the Bill and hope that we shall swiftly give it a Third Reading.

    6.2 pm

    By leave of the House, if I may, I should like to thank the hon. Members for Norwood (Mr. Fraser) and for Liverpool, Mossley Hill (Mr. Alton) for their warm welcome for the Bill. I agree with the hon. Member for Norwood that he has more than fully carried out his undertaking, given on behalf of the official Opposition some time ago, to facilitate the passage of the Bill through the House.

    The Bill is much improved and is now ready to go to another place. I share entirely the hope of both hon. Gentlemen that it will speedily be passed through another place. May I suggest to them that they speak to their noble Friends to make sure that the Bill is welcomed warmly in the interests of getting it into law purely to help those whom we all in this House decided needed help, namely the tenants of badly managed blocks of flats?

    This is an important piece of consumer legislation aimed at helping those who have a minority of bad landlords. I commend it to the House.

    Question put and agreed to.

    Bill accordingly read the Third time, and passed.

    Rate Support Grant (England)

    6.3 pm

    I beg to move,

    That the Rate Support Grant Supplementary Report (England) 1987–88 (House of Commons Paper No. 330), a copy of which was laid before this House on 30th April, be approved.
    It was the writer of Ecclesiastes who said:
    "of making many hooks there is no end; and much study is a weariness of the flesh."
    Misquoting him a little, I might say that of the making of many rate support grant reports, there is no end. Here we have to consider the fourth RSG report within six weeks. This must be a record. No doubt the people from the "Guinness Book of Records", who avidly observe these things, will be watching events closely.

    This is the rate support grant supplementary report which my right hon. Friend the Secretary of State laid before the House on 30 April. The debate is taking place an unusually short time after the laying before the House of the report because we have been urged by local authorities and all their associations to bring it forward and to pay the extra grant which it gives as soon as we could.

    The report is concerned principally with school-teachers' pay. My right hon. Friend the Secretary of State for Education and Science announced to the House on 2 March his proposals for teachers' pay under the Teachers' Pay and Conditions Act 1987. We promised that the national taxpayer would make a significant contribution towards the extra cost that would result in 1986–87 and 1987–88. This would he in the form of block grant over and above that already provided for in the relevant RSG settlements. Most teachers will get their increased pay at the end of May and, if the House approves this supplementary report tonight, education authorities will have before then the block grant that it makes available.

    The Minister said a moment ago that the Government had decided that the taxpayer should make a significant contribution to the cost of the teachers' pay settlement. If that is so, can he explain why the Inner London education authority is to get nothing from central Government to help pay the £20 million cost of the award and why in the borough of Richmond the additional cost of nearly £1 million will mean a loss of grant of £81,000? How does that square with the statement which he has just made?

    I am grateful to the hon. Gentleman for raising that matter. I intended to deal with it later but it is always more interesting to do so in answer to a question because it gets me away from my brief, to the enjoyment of myself and other hon. Members.

    The basis on which the allocation is made is the presumption that, in addition to the 3·75 per cent. in the original RSG settlement, local authorities would have to have a 4p poundage to meet the increased cost of teachers' pay. Local authorities which can pay for the increase with a 4p poundage will get nothing or practically nothing. If they need more than a 4p poundage, they will get an additional grant. The hon. Member for Blackburn (Mr. Straw), for whom I have great regard, has a sense of equity and justice and he will realise that the money is going to those who need it. I am sure that there will be approval, even from the hon. Member who used to represent Stockport.

    Yes, Denton and Reddish. The change of name of his constituency is longer and no doubt slows him down. No doubt he will also 'welcome the fact that this is being done in equity.

    Where is the equity in the London borough of Richmond facing an increase of nearly £1 million and losing £81,000 in grant?

    Like the Inner London education authority, the borough of Richmond has large resources. The payment is being made through the normal system of block grant; that is why ILEA and Richmond are being treated in that way.

    The report we are now considering deals with 1987–88. We aim to deal with 1986–87 as soon as we can and we expect to be laying a supplementary report for that year in early June. The House will recall that the 1987–88 settlement provided for a general increase in local authority costs, including teachers' pay, of 3·75 per cent. above local authorities' own budgeted expenditure in 1986–87. On top of that, the Government agreed to increase provision by £460 million in England, the estimated extra cost of the teachers' pay rise.

    This is reflected in an increase of £460 million to education grant-related expenditure assessments. I should explain that the supplementary report does not change the way in which education GREAs are calculated, as I mentioned earlier. It increases the schools' grant-related expenditure control totals by the £460 million that we promised. That extra grant-related expenditure is then allocated to individual education authorities by the methodology adopted in the main report. Thus, each education authority obtains its share of the extra GREA according to the same method of measuring educational needs as was used before.

    At the same time, the Government promised to make a significant contribution to the extra costs. We said that we would ask the taxpayer to pay £183 million to increase block grants to English education authorities in 1987–88. For that purpose we assumed that all authorities in England would spend at the levels that are assumed in the main report, increased for education authorities by the estimated extra cost of the teachers' pay rise above the 3·75 per cent. already allowed for in the RSG settlement. We have made good that promise in this supplementary report by increasing aggregate Exchequer grant — the total of Exchequer grant made available by the Government in support of local authorities spending—by £183 million, bringing the total up to £13,025 million. Estimates of specific and supplementary grants are unchanged since the settlement, so RSG increases to £9,732 million. As domestic rate relief grant is also unchanged at £717 million, the amount of block grant available for distribution is increased in the report from £8,832 million to £9,015 million.

    We have, of course, consulted local authority associations about our proposals for the supplementary report, and have taken account of the views that they expressed, as well as those that were expressed by individual authorities. All authorities were concerned to obtain the money quickly. That is why the supplementary report is being debated at such speed. At £13,025 million, aggregate Exchequer grant is 9·2 per cent., or £1·1 billion, more than last year's total. That illustrates again how good this year's RSG settlement is. I expected to hear sounds of approval at that point in my speech. We should have practised earlier. I note the cheerfulness of certain Opposition hon. Members, but the "Hear, hears" were slow in coming. Perhaps the House should have a break at some stage so that we all come back refreshed and reinvigorated, if not always with the same cast.

    I wish to tell the House and ratepayers that an extra £1·1 billion is available this year. More than £250 million of that is not being claimed by authorities. For example, the London borough of Ealing has claimed only £51·6 million grant, whereas £72·7 million is available under the settlement, so it is losing £21·1 million in grant. Again, the London borough of Waltham Forest is claiming only £65·2 million whereas £75·5 million is available and thus is losing £10·3 million. Outside London, Cleveland is claiming only £90·4 million whereas £102 million is available.

    Is the Minister implying that all that the boroughs need to do is to send a postcard to the Minister to have the money? Is he not being uncharacteristically disingenuous? Those boroughs cannot have the money because of the level at which their budgets have been set. If they reduced their budgets to the point at which they could have the money, they would have to sack many teachers.

    The hon. Gentleman has suggested that the boroughs send a postcard—we shall await the arrival of that postcard. It all depends what is said on the back of it. That is the magic method. The card does not need invisible ink, or even my quotation from Ecclesiastes. It should say merely, "We have seen the truth; we are now spending at settlement; we are reformed characters, and we shall be counting the money in the cellars and dungeons of the Department of the Environment."

    The aggregate of grant not claimed by Cleveland is £11·6 million. Overall, whereas £12,775 million is being claimed now, local authorities could have had £13,025 million if they had filled up their postcards at the right time and in the right way.

    I do not think so. It is a pleasure to have the hon. Gentleman here. He and I have served many times on Committees considering education Bills and other Bills. The reports of the Audit Commission make many suggestions on how to save money without sacking anyone. If the boroughs sent a postcard asking for extra copies of the Audit Commission's suggestions, we would send them some.

    Why are ratepayers in some areas losing the benefit of Government grant? The answer is that those authorities, and many others that are controlled by the Opposition or which are under no overall control—and others under the control of other Opposition parties, such as that of which the hon. Member for Truro (Mr. Taylor) is the only representative present—have put up their spending well above the rate of inflation. Ealing, for example, has done so by 14·6 per cent., Waltham Forest by 12·3 per cent. and Cleveland by 10 per cent. The settlement provided for a 5·25 per cent. increase in current expenditure, which is well above the likely level of inflation of 4·5 per cent. Local authorities as a whole have planned to spend 7·3 per cent. more than last year, and are consequently losing their grant. The cost to the ratepayers in Ealing is a local rate rise of 71·8 per cent. instead of 12 per cent. Ratepayers in Waltham Forest face a local rate increase of 67·2 per cent. instead of 11 per cent., and those in Cleveland one of 7·2 per cent. instead on 2·1 per cent.

    The full £9,015 million block grant that is made available by the supplementary report is not being claimed because of the high spending policies of authorities controlled by the Labour party, the alliance or those without overall control. I urge such councils to think again, to make savings and to reap the rewards of the grant that is available.

    Some authorities seem to do less well than others in grant terms out of the mechanism that we have adopted for injecting the Exchequer's contribution to the extra cost of schoolteachers' pay, about which the hon. Member for Blackburn asked me a question. This point is an important one. The principle underlying the rate support grant system is the equalisation of needs and resources. It aims, subject to certain constraints, to enable authorities to provide services at a standard level at equal poundage cost to their ratepayers. Our aim in increasing provision and block grant in the supplementary report is to enable all education authorities to finance the extra cost of teachers' pay at a broadly equal poundage cost to their ratepayers. That cost is about 4p.

    Those education authorities with high pupil numbers in schools, and hence high education GREAs, or with low resources, can raise only a small proportion of the extra cost of teachers' pay by levying 4p. Such authorities get larger amounts of extra grant. Others, which have smaller numbers of pupils in schools, and hence smaller education GREAs, or higher rateable resources, can raise a much larger proportion of what they need to finance the extra cost of teachers' pay by levying 4p. They receive smaller amounts of extra grant. The result is equitable at the ratepayer level.

    The report makes two other changes, both small by comparison with teachers' pay. It revises GREAs to take account of later information on capital allowances for personal social services and waste disposal that was not available in December, when the first report was made. It also takes account of boundary changes that took place on 1 April 1986 and 1 April 1987.

    As I have said, the report is largely concerned with providing the extra money for the increase in teachers' pay, and I commend it to the House.

    6.20 pm

    The Minister began by quoting Ecclesiastes and said that this was the fourth rate support grant report that had been debated in as many weeks. Two weeks have elapsed during which we have not met across the Chamber or across the Committee Table. However, we meet with increasing frequency elsewhere because both of us are rising in the ratings put out by the television companies. We have had two weeks during which there has not been a debate across the Table and I was beginning to suffer withdrawal symptoms for want of such a report.

    A revealing statement is contained in paragraph 18 on page 3 of the report:
    "This Report is laid before the House of Commons by the Secretary of State for the Environment in accordance with Part VI of the Local Government, Planning and Land Act 1980, as amended by Part II of the Local Government Finance Act 1982, the Local Government Act 1985, the Education Act 1986, the Rate Support Grants Act 1986, the Local Government Finance Act 1987 and the Rate Support Grants Act 1987."
    That apparently innocent paragraph tells its own story about the chaos into which the Government have plunged the present system of rate support grant. I gather that the Minister does not have a copy of the report. If he wishes to borrow mine, I shall happily lend it to him.

    Forty-three Bills have been brought forward in the two Parliaments of this Conservative Administration, and far from each Bill clarifying the law, each one has made the present system less workable and less fair. As the Minister has said, the principal purpose of this supplementary report is to finance the teachers' pay settlement. If it financed that settlement fairly between all authorities, we would have no hesitation in supporting it, just as we supported the previous Bill. However, the report works very unfairly for some authorities. I know the technical reasons why it works unfairly, but that does not alter the fact that four authorities are faced with the same percentage increase in the pay bill for teachers as that faced by every other education authority.

    Those four authorities receive nothing like justice or equity in terms of the contribution from central Government. Hounslow faces an increased pay bill of £2,044,000 towards which it gets the paltry sum of £53,000 by way of additional grant. Newcastle has an additional pay bill of £2,383,000, towards which it gets the trivial sum of £189,000. The Inner London education authority faces an increased pay bill of £20·5 million. It receives not a penny piece extra towards what is, on any calculation, a major additional item.

    We debated this matter in considerable detail in Committee on the Local Government Bill, which I gather will not now receive Royal Assent this side of the election. [Interruption.] The Secretary of State says he has information that we will have an October election. If he were as keen on the Bill as we were led to believe, he would have laid it before the House last week or a week or two before that, and he and I would not have withdrawal symptoms about the absence of a debate. [Interruption.] I am told that it is scheduled for the week after next. We look forward to that debate with great interest.

    The Minister may say that I am being partisan in supporting ILEA, Hounslow and Newcastle because, as I recall, they are all Labour authorities. However, Richmond is controlled by the Liberal party.

    Richmond has never been on any of our target lists and we do not believe that the advent of the next Labour Government will depend on success in Richmond.

    The hon. Gentleman will have a long time to wait.

    We would have a long time to wait if we depended on Richmond. I do not think that we won Richmond even in 1945. Richmond is in a worse position than any of the three Labour authorities that I mentioned. As I told the Minister, Richmond has an additional pay bill for teachers of £971,000. It will lose grant to the tune of £81,000. There is no equity whatever in that. I am grateful, as I am sure Richmond and the other three authorities are, to the Association of Metropolitan Authorities for preparing these calculations arid for drawing them to our attention.

    When the Under-Secretary winds up, he will have to explain to ratepayers in Richmond why an increase in the pay bill that is apparently to he financed partly through the generosity of Government will lead to a decrease in rate support grant and therefore to an overall net cost of £81,000. I know that the system is supposed to be mad, but it should not be that mad and the Minister should have used one of his multipliers to adjust the position for Richmond and the other authorities.

    We heard a good deal from the Minister when he went into the part of his speech prepared by Conservative Central Office rather than by his officials. We had the bit prepared by Church house at the beginning of his speech — the prayer. He finished up with the hit from Conservative Central Office about so-called profligate authorities. The Minister ought to be clear about which tune he is playing, because Conservative Members usually play two tunes at the same time about education spending, and they jar.

    On the one hand, as the Prime Minister has done, Conservative Members complain that Labour authorities are large spenders. On the other hand, they go around the country praising their record on education spending. I should like to quote from the Prime Minister's unsuccessful letter to Mr. Neil Balfour, the Conservative candidate in Ryedale dated 3 April 1986:
    "In education too this Government has a better record than any other. More money is being spent per pupil than ever before."
    Why is more money being spent? More money per pupil is being spent than ever before because Labour authorities, and authorities in which there is no overall control, have had to ignore Government instructions to cut spending and, in order to meet the needs in their areas, they have increased spending. The record shows that to be the case.

    In successive public expenditure White Papers, the Government planned to cut spending per pupil in real terms from £706 in 1980–81 to £674 in 1985–86. These are in constant 1979–80 prices. However, expenditure has gone up from £687 to £741. The Government planned to cut expenditure by 3·8 per cent. in real terms, but expenditure has risen by 8 per cent. in real terms. What is the Minister saying? Is he saying that this increase in spending which the Prime Minister now praises should not have occurred? If he is not saying that, he has to accept that that spending had to be financed. It has had to be financed by way of rate increases, because the Government have refused adequately to increase rate support grant to pay for those authorities' spending plans. We heard from the Minister about the increase in spending by some authorities.

    The Minister complained that in Ealing the increase in expenditure was 14·3 per cent., in Cleveland the increase was 10 per cent. and in another authority it was 7·3 per cent. He and his colleague, the Under-Secretary, know that they answered a parliamentary question only last weekend in which I asked Ministers to rank the increase in spending of authorities this year compared with last financial year. It is a very revealing table because, of the 17 local councils that have increased their spending by 50 per cent. or more in 1987–88 over 1986–87, 14 are Conservative-controlled and not one is Labour-controlled.

    So which authorities are profligate and which provide value for money? When will we hear the Minister complain that Conservative-held Brentwood has increased its spending by 655 per cent.—certainly a world record—in a single year? When will one word of criticism about that pass the Minister's lips?

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

    Will the hon. Gentleman make it clear whether by spending he is referring to total expenditure or to current expenditure? Most hon. Members would assume that he is referring to current expenditure, which is the normally accepted increase in spending. Will he confirm that he is referring to total expenditure, which is often notional expenditure for grant purposes and which is subject to wide variations depending on the use of special accounts?

    The Under-Secretary sensibly knows the answer, or he wisely would not have asked the question. The table that I think he, rather than his colleague, the Minister, provided for me was ranked for certain increases in total expenditure for 1986–7 to 1987–88. He provided those figures. If he felt that they gave a wholly inaccurate account of the authorities, he could have provided another set of tables. The Minister ought to look at alternative figures and, if he prepares further tables, I will be happy to receive them.

    Of the 17 authorities that increased their spending by over 50 per cent., if 14 of those had been Labour authorities and if one of those had increased its expenditure by 655 per cent., we would never have heard the last of it. I daresay that we also would not have heard the last of it from The Sun. It would have been blazoned across the top of the newspaper.

    As they are all Conservative-controlled authorities, everybody is quiet about it. Rutland increased its spending by 173 per cent., Melton increased its spending by 153 per cent., and so it goes on—in places such as Windsor and Maidenhead, which increased its spending by 77 per cent. and St. Albans, which is now alliance-controlled since the Chancellor of the Exchequer's private secretary got to work in the area. Bath increased its spending by 64 per cent.; Oadby and Wigston increased its expenditure by 60 per cent.; Chelmsford—alliance-controlled—increased its spending by 58 per cent.; Charnwood increased its spending by 61 per cent.; Wansdyke increased its spending by 51 per cent.; and Castle Point down in Essex, another good Conservative area, increased its spending by 50 per cent.

    As the Minister and the Under-Secretary will recognise, these figures provide some relevant indication of increases in spending. The much maligned Waltham Forest, for example, on total expenditure, not on relevant expenditure, which the Minister was quoting, is proposing to increase its spending by 19·2 per cent., compared with 19·9 per cent. by adjoining Conservative Epping. One could go on and on. If one went on far enough, one would find that the efficient Labour-controlled borough of Blackburn has an increase in total expenditure of only 2·2 per cent. The borough of Copeland is planning a reduction in total expenditure of 1·8 per cent.

    Over the last eight years, the Government have plunged the system of rate support grant into chaos. They have also cut the grant that goes from the taxpayer to the ratepayer by £18,000 million, which is £1,300 for every family in the land. It is because of the cuts in rate support grant by this Conservative Administration that rates have risen twice as fast as inflation. The spending record of local authorities, Labour, Liberal and Conservative, is better than that of central Government. Local authorities as a whole have increased their spending by less than that of central Government, but rates have gone up because of the Government's cuts in the support which they have given to the ratepayer.

    To twist the knife further, should Ministers be reelected, they are planning to compound the chaos and inequity of the last eight years by introducing a poll tax. I am glad that at least the Prime Minister, in answering questions today, referred to this by its proper name, the poll tax, and not by the euphemism "community charge" dreamed up in the Department of the Environment.

    The poll tax will lead to swingeing increases in what families pay. It will lead to major increases in local tax bills for average families in all the metropolitan areas—in urban Lancashire, in Cumbria, in Durham and in inner London. The Prime Minister today suggested that the poll tax would be the greatest in areas which had Labour-controlled councils. That is simply untrue. As the Government's figures suggest, there is no area where there will be a greater increase in bills paid by average families than in the London borough of Wandsworth. The average rate bill at present is £185 per adult and that will increase by no less than 115 per cent. to £397 per adult.

    The Under-Secretary says from a sedentary position that that is ILEA. ILEA exists at the moment. The ILEA rate is levied across London at the moment, as he knows very well. ILEA has not been invented simply to increase the burden on ratepayers in Wandsworth. It is a constant; it is there now and it will be there after the general election. The reason why the local tax bill will double in Wandsworth is because of the crazy position of the poll tax that Ministers have proposed and with which the Under-Secretary is saddled.

    I know that he had nothing to do with the original decision to introduce it and I daresay that he would like the whole system torn up. He would be mad if he does not think that. If he wants to rise and tell me that he thinks it is a wonderful system in Wandsworth, where it will be doubled, I will give way.

    Will the hon. Gentleman tell us what the effect in Blackburn would be of his party's proposals for capital value taxation and some magic regional formula?

    I will not, except to say that any change in capital valuations would take place over a long period and would have only a marginal impact upon ratepayers. As the Under-Secretary would know if he studied the matter, a move to capital values need not necessarily lead to any change in relative rate bills provided that proper adjustments are made in the transfer to capital values.

    The idea that a move to capital values will lead to the sort of swingeing disruption in the bills that people pay at present is quite untrue, as the hon. Gentleman's own internal exemplifications ought to show. They take place over a long period. The idea of capital values is simply that present domestic rate bills are based upon rental values which are now of only notional worth.

    In the days that the Minister remembers, in Lancashire at least, the objective was to live in one house and own two others, as he told us in Committee. In those days, 90 per cent. of people lived in houses that they did not own and there was an active market in private rented housing that was not controlled. Therefore, the rental values set by rating officers had a direct relationship to the natural rental values that people had to pay and, through those, there was a direct relationship with the capital value, just as with business rates. Business rates are based upon rental values, but they could easily be based upon capital values, because the two are directly connected.

    We know that, for all sorts of reasons, a free rental market for private housing does not and cannot exist because it is the aspiration of most people in the country and of all parties that people should live in homes that they own. Therefore, it is sensible to move to the value of the houses as properly reflected in capital values. As I said—the Minister will know this, since he has studied the matter — a change to capital values, while a sensible technical change, would not lead to any disruption or significant changes in the amount that individual families were paying.

    I noticed that the Minister did not say that the poll tax was a wonderful idea. He will know from Mr. Chris Mockler, an adviser to the previous Secretary of State, that the poll tax was dreamed up by Ministers in a panic just before a Conservative party conference to get themselves out of a hole. As Mr. Mockler has told an interested British public, that was one of the rare occasions when a Conservative party conference actually influenced Conservative Government policy. It shows how sensible Ministers have been in the past to ensure that Conservative party conferences do not influence Conservative policy, because it leads the party into cul de sacs and unpopular policies such as this.

    Even in the areas where the poll tax will not lead to an increase in average local tax bills, it will hit a great number of families very hard. It will certainly hit the poor. The poor widow who at the moment gets a 100 per cent. rebate on her rates will he paying a poll tax, albeit at 20 or 25 per cent. of the total. Ministers will rue the day that they were ever committed to the poll tax.

    The report is principally about the teachers' pay settlement. It is also about other matters. We oppose it because, once again, it highlights the unfairness of the present system of block grant. Although we want the Government to be paying their fair contribution to the teachers' pay settlement, we do not think that it is fair that in many areas the Government are not paying a reasonable contribution and in some areas are paying nothing.

    6.42 pm

    As on previous occasions, when Opposition Front Bench spokesmen speak on rate support grant and the present system with its complications, one would think that there had been a wonderful golden day in rate support grant when everyone understood the system and it was straightforward and uncomplicated. I have to admit that I cannot recall such a day. When I was the leader of a council we had regression analysis and that left everybody totally dumbfounded. Everybody felt that that was so unfair and it was from that that all the changes have stemmed. There never was a golden day. I believe that it is beyond the wit of man to devise a system in which one can give central Government aid to 450 local authorities with so many multipliers and factors built in that take account of all the individual circumstances that would please all the people all of the time. It is not possible. Therefore, whatever system is devised, it will be subject to objections.

    If we are to have local government, a substantial part of the spending by local authorities has to be raised by whatever form of local taxation is available. If one is to fund more and more from central Government, one has to ask the basic question; why have local government at all? If it is not responsible for raising the money but only for spending it, we would be better with a prefectorial system such as that in France. If one does not require local government to raise the greater part of its money and be responsible to the people for the spending of that money, one would inevitably end up with the situation in which central Government would dictate more and more of the policies. That would follow as night follows day.

    Under the Conservative control of Nottingham city council back in 1976–79 — those were the days of Labour's high inflation when it was rocketing away to 25 per cent. — the rates in Nottingham were held steady. Since the Labour party took control in Nottingham, we have not stopped watching the rates spiral and increase. Indeed, from 1979 to the present they have risen virtually fourfold. I am talking about the city and council rate combined. There is a cause and effect between one's policies and what one spends money on and the effect upon the ratepayer.

    The subject of community charges has been mentioned. In Nottinghamshire that will mean that the business community rate will be cut by 17 per cent. That will be good for jobs in Nottinghamshire. Homes in which there are two adults will be better off and some homes in which there are three adults will be better off and some will he worse off. It is only when one gets to four people in a house that people start to be demonstrably worse off. I still think that the change is defensible in terms of sheer justice. We have reached the point where rates are totally indefensible as a system. Opinions may differ as to what should be substituted but I have not noticed anyone willing to stand in the last ditch and defend the present rating system. [Interruption.]

    The Labour party wants to switch to capital values. No one is willing to defend the rates, for a very good reason: they are totally indefensible on any basis whatsoever.

    The point has been made about the unfairness of judgments during the course of the year. Supplementary grants sometimes work unfairly and to the disbenefit of one council. In Nottinghamshire last year the county council did not use any of the extra money for the relief of the ratepayers. It was stashed away in the bank to be used to lower rates in this election year. I do not complain about that; all is fair in politics and war. However, one cannot take a moral position and say that that is all terribly unfair when the boot is on the other foot.

    In Nottingham city this year the rate was decreased by a vote at the final council rate budget meeting. It was decreased because the Conservatives, and one Labour councillor who had the courage to vote with them, voted to stop the insanity of some of the policies into which the money was being poured. They really were loony left policies, as they have been called, in the worst sense. In the Nottingham city council elections the Conservatives have pledged to get rid of the worst of those policies. They have to go. Even some members of the Labour party in Nottingham believe that.

    The problems of the Labour party in Nottingham, indeed in my own constituency, have been the subject of some newspaper articles recently and I am not surprised. That is the latest stage of what seems to be a lemming-like rush to destruction by the Labour party in various parts of the country where it has become disassociated, not only from the electorate but from large parts of its own party. One stands in bemused amazement at the antics that take place occasionally. I suspect that in Nottinghamshire on Thursday we shall start to see the chickens come home to roost in a big way.

    Spending per se—one has to get this message across—is not necessarily good. Compassion is not necessarily measured in spending terms. One has to ask, is the spending really necessary and if it is, are we getting value for money? The complaint about Labour councils and some of the things they have done, even where they are defensible as being nice ideas if not really necessary, is that they have spiralled out of control. That happens all too often.

    I had 10 years as leader of the local council, as did my hon. Friend the Member for Southampton, Itchen (Mr. Chope). We were in neighbouring boroughs and learnt certain basic lessons about political and management control from that experience. One of those lessons was to sometimes be doubtful about the advice one receives from officers, because they will always be interested in building their own empires. The complaint of officers to local government members, all too often, is that members are not interested in the locality; they are interested in their political dogma. The politician's reply must be that that is just as true of the officers. The peer group they look to is not the good of the borough they are serving but their own professional interest groups. Those professional interest groups measure an officer's effectiveness by how much money he gets to spend. They are all in competition to outbid each other. If local politicians are not bright enough to stop them, they will build empires endlessly. They have done it in boroughs up and down the country.

    I mentioned that at the rates meeting one Labour councillor had the courage to vote against some of the more lunatic policies. Another Labour councillor the other day discovered a racial questionnaire in the housing department in Nottingham and the chief executive is holding an inquiry into that. Unfortunately, this is the pattern more and more with Labour-controlled councils up and down the country.

    A point was made in the Nottingham Evening Post the other day that lack of success for the alliance in Nottinghamshire was easily explained; both the Conservative and the Labour parties were moderate and there was nowhere for the Alliance to make a stand, but that is becoming less true with the turn the Labour party has made. I suspect that that is absolutely right. We shall see on Thursday what the result is and I suspect that we shall see it in another election shortly.

    Any fool can spend money; the trick is getting value for money and questioning everything behind the spending. That is much more difficult. The charge against Labour councils concerns not just their policies but their management control. They suspect that good management is some kind of Tory conspiracy, so they throw out all controls and the spending runs out of control.

    It was said 11 years ago by a Labour Secretay of State that the party was over. That is all too true, but many in authority in Labour councils do not accept that. Sooner or later either they will have to accept it or they will be swept from power. It will be one or the other; it is their judgment. I think I know what will happen on Thursday, certainly in my locality.

    6.53 pm

    I was interested to note in the introduction to the supplementary report that, before making this report and determining the amount available for grants, the Secretary of State consulted with associations of local authorities that "appeared to him" to be concerned and any local authority with which consultation "appeared to him" to be desirable. For the alliance this spells out exactly the problem—that, in the last analysis, everything is left to the Secretary of State. Each twist and turn in the Government's long and tortuous attempt to sort out the rate support grant simply emphasises the inadequacy of central control over local decision-making.

    The Government have long since dropped the principle of local people deciding what to spend. Now the Secretary of State is grabbing all power over teachers' pay, but leaving local authorities with most of the burden and with the consequences of a demoralised teaching profession; a teaching profession with a new resentment for government; local authorities having to cut back to foot the Government's bill.

    The alliance welcomes the pay award for teachers as a good step in the right direction, but we would still like to see more money provided for school resources, books, classrooms and so on, many of which are in poor condition. We would also like teachers to have full negotiating rights for teachers' pay awards. If these priorities are accepted, along with the many other priorities of local government, we must tackle local needs by moving back to a system that allows people to decide their own priorities locally.

    The greatest problem with this proposal is that the centrally agreed pay settlement for teachers is not backed up by central finance to local authorities. Whilst the supplement previously given by the Government amounted to only 46 per cent. of expected expenditure, after this report the supplement will be equivalent to only 41 per cent. That is because the Government do not cover the pay settlement in real terms, so 5 per cent. will have to come out of local budgets from elsewhere. That will mean a reduction in services to the already over-burdened ratepayers, equivalent to the cost to county councils of, on average, £500,000 each. For example, the Government are now providing in Cheshire only 40 per cent. of the extra cost, instead of the 46·3 per cent. which was the original rate support grant for 1987–88, so the council has to cover the cost of that average figure of £500,000. There are far worse examples than that, because the burden is not being spread evenly.

    No matter what the Minister says, it would be hard for anybody who looks at this to say that there has been an equitable distribution. How can it be equitable to burden the Inner London education authority with an extra £20 million or more of expenditure, yet provide nothing at all to meet that? How can it be equitable to cut support for the Richmond authority, which is faced with increased wage costs? This has occurred at a time when councils have set their budgets and cannot easily revise their budgets or increase the rates, so they are likely to be further penalised for increased over-spending.

    The conclusion we draw from that is that local people must have the right to make their own decisions. Most local authorities have people who suffer from the plight of homelessness and the authorities would, if given the option, increase spending on this but the grant-related expenditure has gone down from £262 million in 1986–87 to £187 million in 1987–88. That will further restrict councils in providing the adequate housing their ratepayers are demanding, yet the Government lay the blame not at their own doorstep but at the doorstep of those local authorities.

    It is even more ludicrous that while we are now settling the accounts for 1987–88, the Government have not yet settled 1986–87. If we have a general election soon—it seems, by the absence of Members from the Benches that something is in the offing—clearly it will be the summer before councils receive the supplement for the teachers' pay settlement for 1986–87. The Minister has talked in general terms about bringing forward proposals in June. Why are they not here already? The answer is that, once again, this ludicrous and over-complicated system means that councils cannot clear up their finances for a period that has already passed. How are those authorities meant to run efficiently when £50 million is missing indefinitely?

    At the start of the debate a generalised attack was made on some local authorities. All that that attack did was to take the figures without any insight, knowledge or attention to the difficulties that local authorities face on the ground. That highlights the problem of the way we have divorced local expenditure in local government from local control. We must look at local government block grants and the way the rating system works. Above all, the Government should stand condemned as a cause of confusion and obstruction to local government and local democracy.

    For example, a paper drawn up by Cornwall county council last month said:
    "The grant system must now be seen as beyond the comprehension of many people dealing with it and the past year has seen a string of errors and confusions."
    The system has become so complicated that the very basis of local government, whereby local people bring local knowledge to decision-making at a local level, is undermined because they can no longer even understand the system within which they are trying to work, or the budget system which they are asked to operate. That undermines the principle of local control by elected councillors, representative of local people in Government. It allows the Government to confuse the issues by blaming the cuts and the rate increases, not on themselves but on the local authorities that are merely subject to the Government's whims.

    A mainframe computer is needed to begin to understand how relevant are issues such as roads, population and unemployment to the determination of support, particularly in an area such as Cornwall. We heard earlier of "notional expenditure for grant purposes" having no real relevance to the grant itself. What a ludicrous system which leads us to come up with such phrases. I am sure that the Prime Minister would not attempt to run a grocer's shop in that way.

    The principle of rate support grant reports means that the Secretary. of State may ignore information about expenditure and make different assumptions for different authorities, or even do so just on descriptions and hearsay. If there is any epitaph for the Government, it is centralisation of power and the removal of all but the last vestiges of local government control. That is the case either because local power has been removed in its entirety or because it is simply impossible any longer to exercise. That is compounded by the frequent changes, which cause constant problems for those councils.

    Cornwall county council fixed the rate for 1987–88 on the basis of the Government's firm intentions for the rate support grant settlement for 1987–88. The rate support grant order was finally published and approved in late March, more than two months later than the usual timetable. At one stage during that process Cornwall was informed by the regional office of the Department of the Environment in Bristol that it would lose £1 million of the grant in 1986–87 only to have that statement withdrawn within the hour and the loss to become a gain of £94,000.

    The system is so haphazard that no commercial concern would be run in such a manner. If it were, it would probably be liquidated. Certainly the audit would be refused. Therefore, we need to introduce comprehensive and fundamental reforms. We hear nothing of that from the Labour Benches. The Labour party sticks with the rates system, fiddles with the figures a little, tries to alter things once again and only increases our confusion and doubts about the system.

    All we get from the Government is a proposal for a poll tax. Last time that was suggested it caused a peasants' revolt and it will cause a revolt again among ratepayers. It is inequitable and unfair and will be rejected. That is why the alliance alone is coming up with radical alternative proposals for basing local expenditure on people's ability to pay. We shall introduce a local income tax that directly relates people's ability to pay to the amount that they are asked to pay. Moreover, we shall move beyond that to create genuine local democracy and the genuine local control of authorities by changing the absurd electoral system to genuine community representation through local proportional representation.

    If the Government or the Labour party were serious about controlling the abuses of local authorities or controlling the militants within their own parties, they would accept that the best way in which to make local government representative of the people would he to introduce proportional representation.

    At what average rate would such a local income tax be set? Does the hon. Gentleman accept that the income which domestic rates produce nationally means that the average local income tax would have to be set at about 8p in the pound?

    We would set a local income tax locally on the basis of what needs to be spent. Surely the hon. Gentleman would accept that it is far better for people to pay according to their means than according to some rough and ready estimate through rates or a poll tax. I believe that such a system has the support of the British people.

    We are proposing to return local democracy to the hands of the local people. The best way to tackle local problems is to let local people tackle them and to give them the resources to do so. Of course funds will be needed to help those areas that are so starved of income that they are unable to meet their needs. That is why we would have an equalisation fund. But that would be to help local democracy, not hinder it; to make it clear how local democracy can operate, not obscure it.

    Our proposals are about giving local control back to local people. I draw Conservative Members' attention to the thoughts of Disraeli who said that centralisation is the death blow of democracy. That is our belief and that is why we would return control to people in their own community.

    7.6 pm

    It is easy to say what one would do without saying how one would do it. The local tax, described by the hon. Member for Truro (Mr. Taylor), has been considered. The hon. Gentleman talked about people who could pay more paying more, and those who could not paying less, but it is usually those in the areas of greatest need who are not capable of paying. Therefore, Government funding is needed to overcome the imbalance in the needs of various local authorities.

    We have talked about the north-south divide. Portsmouth, an area at which I look frequently because my son lives there, has high wages and a large number of people who are earning. Their ability to pay far exceeds their needs. In my area, with low wages and high unemployment, the needs are greater, yet there is no way in which, on the Liberals' policy, we could raise that money. It would be impossible.

    We accept the need for an equalisation fund based precisely on the criteria outlined by the hon. Gentleman. Not everywhere has the same income levels to generate the support that would be needed. What we must get away from is the ludicrous and complicated system that the Government are offering us.

    If we talk about an equalisation fund, we must ask where the money for it will come from. People will not look favourably at a system which takes a little extra from them in order to pay for what somebody else needs without their having some say in it. I understand the ideas, but putting them into effect needs a lot more thought.

    Rates are a local tax. If they are looked at as an income tax rather than as a tax people would probably understand them more. The problem is to find the right formula. You will know, Mr. Deputy Speaker, that many people have spent many years looking for the right formula. Finding a suitable rating system is like finding the Holy Grail—we have looked for it but we have not found it. Unfortunately, the Government's approach will make things very much worse. Under the Government's proposed poll tax, my constituents would pay 65 per cent. more in rates than at present, which would place many households in great difficulty.

    There is something wrong with the system and with the formula and I would be failing in my duty to my constituents if I did not speak today. The present formula does not overcome the problems in my area, where it is four or five years out of date. It makes Barnsley look like a shire county, which it most certainly is not. There has to be something wrong with a system that works like that. It works against the area. We are having difficulty in trying to promote a new image now that heavy industries such as coal and steel have disappeared because of the Government's policies. While the wealth-making capacity of heavy industry has gone, the legacy remains, but we have nothing to make up for that lost spending power and to overcome our difficulties. That is why we need to examine the system again. However, a poll tax would not solve the problem.

    I ask the Minister a straight question: if he brings in a poll tax, how will the water rate be calculated? At present, it is calculated on the valuation of a property. If we do not calculate the rates on the valuation of a property, how are we to calculate the water rates? How will the water authorities get their money—or have the Government decided to introduce compulsory water metering——

    As my hon. Friend says, and sewage meters.

    There is also a line in the report that refers to payments for the environment. How are those payments to be calculated? People could not afford the standing charge for water meters. If water were metered, the largest families, who are usually the poorest, would be penalised, unless, that is, there was a water rebate. But the Government do not like rebates, so that is not likely to happen.

    It seems ironic that we should be debating a Bill which, the Minister says, will give teachers more pay when we have not yet debated the teachers' pay and conditions order. If we passed a Bill that gave teachers more pay and yet turned down the teachers' pay and conditions order, local authorities would get a windfall. But there is no fear of that happening, because of the Government's majority.

    Barnsley education authority has produced a very good report which says that, as has been widely reported in the newspapers, Barnsley has the highest proportion of children who do not stay at school after the age of 16. That creates a problem in trying to introduce new industries. The report also says that the area has the worst results. That is not because of the teachers, or the way in which the schools are run or the curriculum; it is because of our area and our environment and because people used to be encouraged to leave school as early as they could—at 14 — so that they could contribute financially to the household. That attitude seems to have nearly disappeared, but we must overcome the problem.

    Barnsley education authority has the best record for people entering adult education. People leave school at 16 but then take up adult education. It appears that people want to get away from the school atmosphere but come back to education later. That is why we need to look closely at tertiary education. I have changed my attitude on that. I believed that sixth forms should be attached to schools. That is evidently no longer feasible, so we need money to finance alternatives. The only way to get that money is through the rates, yet if we try to increase the rates, we are rate-capped. It is a never-ending process. Local councillors are battling against the problem and I admire them for the hours that they put in and the work that they do. However, they need help to get on with the job.

    As the Minister knows, because I have talked to him about it, the South Yorkshire fire service has spent all its contingency fund and is now broke. We asked whether the Government would consider that in next year's allocation. Perhaps a Labour Minister will take up the matter where the Government have left off. I therefore ask the Minister to put it on record that the South Yorkshire service will need more money next year so that the matter is passed on quickly and is not lost in the machinery.

    7.16 pm

    I was glad that my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) ended his remarks in the spirit of optimism shared by all Labour Members — [Interruption.] Conservative Members may regret their laughter in the next few weeks. We are not fooled by the opinion polls, and I am surprised that intelligent young men such as the hon. Member for Mid-Norfolk (Mr. Ryder) are fooled.

    I share my hon. Friend's concern about the taxation of water and the methods that will be used to calculate it. The Secretary of State gave what appears to have been an off-the-record briefing, in which he said that, in the event of a Conservative victory in the general election, water metering and privatisation would go ahead. The Government have spent nearly £1·5 million during the past year trying to sort out the morass of legal and financial problems involved in privatising the water industry. I suspect that if the Conservatives came back to power, privatisation would be on the agenda again but that it would be resisted as strongly as it has been resisted in the past. I am confident that those in Britain who rose against the proposals last time would do so again.

    As the Minister and my hon. Friend the Member for Blackburn (Mr. Straw) said, the first supplementary report for 1987–88 distributes the additional rates support grant of £183 million in respect of teachers' pay restructuring. My hon. Friend mentioned the effect on Newcastle. It is worth underlining the fact that for Newcastle, in the north-east—the area in which I live, and an area of massive deprivation as a result of unemployment and other factors imposed on it by the Government—the estimated cost of the pay award will be £2·383 million, while the additional grant will he only £189,000. I hope that the Minister will realise the inequity of that. I hope that he will consider, too, the other authorities listed by my hon. Friend the Member for Blackburn. The Minister should examine the situation and ensure that the authorities that have been caught in that trap are adequately compensated.

    It is unfair that a local authority such as Newcastle has to deal with something that has been deliberately stirred up by the Government—an unwarranted attack on the teaching profession, an honourable group of professionals dedicated to educating our young people, often in the most difficult of circumstances, with poor facilities and a lack of materials. They are educating students who are facing hopelessness in areas of deprivation and high unemployment.

    The Government deliberately chose confrontation rather than conciliation with the teaching unions. They chose to remove negotiating rights on salaries and conditions. They used their hefty majority to drive the legislation through Parliament. If the news items today to which I have been listening are correct, later this evening the Secretary of State for Education and Science will announce a change. If he does and if he restores the democratic rights of teachers and their unions, I shall welcome it 100 per cent. But some important questions must be asked.

    If the right hon. Gentleman is to restore those rights so quickly after taking them away, why did he take them away in the first place? Is not this change a simple bit of cynical electioneering to attract the votes of school teachers? It is clear that a general election is sharpening the minds of a number of Secretaries of State. Last week, the Secretary of State for the Environment stopped the exploratory drilling in the constituencies of four Conservative Members. Many of my hon. Friends and I suspect that that had something to do with an event that could take place within the next month or so.

    The Minister says that that is impossible, but he is wrong. If I were advising the Government, I should say that they should wait a little longer. But it is not for me to advise the Government. If they want to stick their neck out and get it chopped off in the next few weeks, so be it.

    I believe that the teachers will see through this cynical electionering and will neither forget nor forgive easily. They will well understand that the Government who are prepared on one occasion to take away their rights will just as easily take them away again if they are returned with a large majority. Teachers should take the Government's action as a warning that the powers that the Secretary of State can take in a Government with a huge majority are enormous. The right hon. Gentleman has demonstrated that he is prepared to use those powers in a negative way, affecting the education of our youngsters. Teachers realise that. The Secretary of State has betrayed the trust of the teachers. The Government do not deserve any votes from teachers the length and breadth of this country.

    Despite the present imposed pay award, the teachers are still badly underpaid in view of the importance of the tasks that they carry out. Many other workers in the public sector will note carefully the way in which the Secretary of State took away the teacher unions' negotiating rights, the way in which, for cynical electioneering, he will make his statement later, and, above all, the fact that, if he can do it to the teachers, he or other Secretaries of State, or whoever heads the Departments, can do it to other public sector workers. Negotiating rights between employers and trade unions are the essential rights of a democratic system. All public sector workers are being warned: if the Government are returned with a working majority, wages and conditions could easily be settled by legislation in Parliament and not by negotiations outside Parliament.

    We are concerned with not only the Government's attitudes towards teachers but the entire role of local authorities. The one thing that we can say about the Government's attitude to local government is that it has increased uncertainty. More than 40 pieces of legislation directly affecting local government have been introduced by the Government since they took office in 1979. That has greatly affected the officers and members of councils and the people whom they represent. Some of the legislation, in the morass that the Secretary of State has introduced, was aimed retrospectively to correct legislation that had been demonstrated to be at fault in the courts in actions taken by local authorities to test its legality. The present Secretary of State must have had more legislation taken to court, and findings against him, than any other Secretary of State in modern times.

    On 25 March 1987, in the debate on the rate support grant reports for England, my hon. Friend the Member for Copeland (Dr. Cunningham) said:
    "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." — [Official Report, 25 March 1987; Vol. 113, c. 448.]
    However, by using Parliament to introduce retrospective legislation, the right hon. Gentleman has made planning in local authorities almost impossible. Of course local authorities prefer to plan, as do businesses, for periods of five, 10 or even 20 years. If the Government stay in power, local authorities will be reduced to the absurdity of planning week by week. Then the use of the word "planning" will become meaningless. It is more a case of muddling through as best they can, as one chief executive said recently.

    It is downright criminal that local authorities are in this position. Their services are essential to the vast majority of people. Local authority services have acted as an essential shield against the deprivation and poverty of high unemployment in areas such as the one that I represent in north-east England. No wonder the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said on 18 December 1984 to the then Secretary of State for the Environment:
    "Does he further understand, or has anyone advised him, about the housing decay and the infrastructure that decays by the day in our cities? … Does he not understand that, if we go on as we are now, with these voodoo economics where we stick pins in all those people who carried out the policies that most of us believed in, we shall have no freedoms left, we shall have no homes left, and we shall have no sound and sane cities left?" — [Official Report, 18 December 1984; Vol. 70, c. 170.]
    Responsible elected councillors have attempted to provide essential services efficiently and effectively. They are trying to cut through the mass of confusion heaped upon them over the past eight years. The attack on local authorities in an attack on our democratic processes. We have witnessed the extremes to which the Government will go with their decision to abolish a whole tier of local government without consulting the people represented by it—the GLC and the metropolitan councils. Yes, there was an opportunity to test public opinion by holding elections, but the Government abandoned elections. The abolition Bill was the first Bill on which I served, and there was no better experience for a new Member to learn about the Government's attitudes to local authorities. The 200 hours of hard debate in Committee exposed the Government's detestation of, and determination to neuter, the local government system.

    Since the abolition of the GLC and the six metropolitan counties, the Government's vitriolic attacks have continued. However, as the Government's economic policies have bitten more deeply into the living standards of the people whom the Labour party represents, the greater has been the need for good local government. The harder the attacks, the more we need sound local government. The more difficult the situation, the greater the need for bodies able to make decisions at a strategic level.

    It is a disgrace that London is the only capital in western Europe without its own strategic, directly elected authority. My European experience demonstrates that the United Kingdom is travelling in exactly the opposite direction to that of other European Governments in terms of the size of local authorities. That is why I so strongly support my party's proposal to introduce a regional tier of government. This innovative and exciting proposal will be welcomed by the people, who are aware that central Government are continually increasing power at the centre and yet have demonstrated time and again that they are incapable of managing the power that they are grasping into their hands.

    One of the ways that the Government will attempt to reduce local government to a petty irrelevance is by abolishing the present system of rates and introducing a poll tax. The present system of local authority financing needs reform, but a poll tax is far from what is needed. The Sunday Times is not one of the favourite newspapers on the Opposition Benches because of the very strong support that newspaper has overtly given to the Government recently. However, on 12 April, 1987 The Sunday Times said in an editorial:
    "Nothing became modern Toryism less than the idiocies of local grant penalties, targets and rate-capping, interspersed with half-baked ideas of referendums, rates abolition and community charges."
    Was it not the Tory Reform Group that said, in a report that it produced in September 1986:
    "A poll tax is fair only in the sense that the Black Death was fair. It is indiscriminate, striking young and old, rich and poor, employed and unemployed alike."?
    A poll tax will benefit the wealthy on their large properties and will penalise the poor. Figures that have been produced by my hon. Friend the Member for Blackburn—and we are grateful for the work that he did on the poll tax analyses—demonstrate this fact most vigorously. It is another element in the Tory philosophy of the rich getting richer and the poor getting poorer.

    The north-south gap, which has been analysed so much in the last few months as more people have become conscious of the difference, will become even wider. A caring Government will introduce measures to reduce the gap and the inequalities, and to help those in areas of high unemployment, bad housing and environmental decay, instead of doing just the opposite.

    How anyone can make sense out of a proposal that leads to a couple, living in a small rundown property in a squalid area, paying the same as someone living in a large grand property in a nice area in the same town is beyond comprehension. How can anyone justify highly paid Cabinet Ministers paying less on their property in the south than low-paid workers in say, Rochdale? How can the Secretary of State for the Environment introduce a half-baked new system — as The Sunday Times said—that will reduce his rate bill by about £30 a week when others will be paying more?

    It is another example of the Tory rule that it is important to line the pockets of the rich at the expense of others in our society. The Oppositon want to see a more equitable society, not a divided society in which some people live in decay in the cities while others live in style and pay less.

    The gap between the regions must be reduced. Proposals for a poll tax will not help in any way. Our proposal, which is eminently more attractive and constructive, is to retain the existing rating system based on property but to base the payment on the capital value of homes. This will lead to those living in large executive houses in the exclusive south-east paying more. It would take a few pounds out of the pockets of the Thatcher family, when it settles in Dulwich, rather than putting a few pounds into the pockets of the Thatcher family—a pocket that is well filled already and from which it is well able to pay more.

    We believe that local government should be protected from the Tory onslaught. We should provide housing, education, social, recreation and other services at local level. Local people know best and they should be elected to run local authorities and provide services for the people who need them, as they need them. We shall bring forward new policy initiatives, be innovative, tackle deprivation and provide resources to local authorities to carry out these tasks.

    We believe in a fundamental democratic process whereby the people have the right to choose which political party has control over their affairs, and the equal right to remove from office any councils that do not provide services at an adequate level and cost. We in the Labour party are the true protectors of local services. We are the true democrats. That is why on Thursday—and in the general election—those who desire to maintain an open democratic society, free from centuries' constraints, will know where to put the crosses on the ballot paper, and that will be at the side of Labour councillors and Members of Parliament.

    7.35 pm

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

    I am sure that we will not agree with the wishful thinking of the hon. Member for Houghton and Washington (Mr. Boyes), but we all sympathise with him on the debilitating illness from which he is suffering following his recent return from Nicaragua.

    We have had an interesting debate. The more interesting parts of the debate have been where we have ranged further away from the rate support grant supplementary reports and into discussion of proposals being by the different political parties for reforming the rating and grants systems.

    Nobody in Southampton would describe the average resident in ltchen as being well-heeled and rich. The average resident in Southampton lives in a house that may cost between £25,000 and £35,000. Those houses are not increasing in value as a result of the decisions of the occupiers, but they are increasing in value far faster than the rate of inflation.

    The promises of the hon. Member for Houghton and Washington seem to be to introduce a rating system based upon capital value, which would impinge severely on my constituents. Our proposals for a community charge—not a poll tax, because it will be payable by people beyond those who are registered on the electoral register—in my constituency would result in the burden on a pensioner or a single parent being reduced substantially; the average community charge projected is about £144.

    As I explained to the Minister in detail, the proposals to move to capital valuations will result in no significant change for the vast majority of ratepayers across the country. The values of houses, whether fixed on a capital basis or any other, would not change week by week or year by year. There would have to be regular revaluations every five years, but it would be nothing like what the Minister has suggested. I should be happy to give him an asssurance, since he has expressed such anxiety about the change to capital valuations, that it will make, and need make, virtually no difference at all to his constituents who are living in houses of the kind that he described.

    The Minister cannot be allowed to get away with the suggestion that the poll tax will benefit single pensioners. If a single pensioner is on a low income and receiving a supplementary allowance, as a great many are in his area, that single pensioner will pay no rates at all. Under the Minister's system, that single pensioner will pay at least 20 per cent. and probably a great deal more.

    I notice that the hon. Member for Blackburn (Mr. Straw) has not put any figures on his proposal. The hon. Gentleman is referring to generalisations, saying that he will switch to a system that is based on rating capital values, when we know that capital values of houses are increasing in different proportions in different areas, wholly unrelated to the income of the occupiers of those houses.

    The consequence would be, would it not, if the hon. Gentleman were able to implement his proposals. that those who are struggling to pay for the repairs and maintenance on their houses would have an even greater burden than at present?

    Has it not occurred to the Minister that by proper adjustment of the rate in the pound and the equalisation grant system there need to be no change in the rate bills that the vast majority of families would pay under the system of capital valuation? It is a technical change, not a change of dramatic social proportions such as the poll tax.

    We have moved a long way from radical reform if we are now talking about technical change which is not really going to make any difference. We accept the fundamental unfairness of the existing rating system. That is why we are pledged to reform it root and branch

    The Minister has just accepted the fundamental unfairness, but he has also criticised the Labour party proposals as having no relation at all to the income of the occupier. Surely that is fundamentally the problem with his own proposals.

    No. We have already said quite clearly that there will be a generous rebate system for those who are least able to pay. At the moment, many people on high earnings are paying absolutely nothing towards the cost of local services, and we think that that is unfair.

    Would the Minister spell out how those rebates would affect the pensioner who currently pays no rates at all, because they are rebated, and what the position would be after the introduction of poll tax?

    I am quite prepared to make a very long speech about the details of our proposals, but before I do so I want to answer the questions raised by the hon. Member for Truro (Mr. Taylor) and to refer to the proposal for local income tax that he put forward on behalf of the Liberal party.

    As I understand it, the hon. Gentleman is suggesting that income tax be determined locally at a level that he is not prepared to disclose, although he did not dispute the suggestion by the hon. Member for Blackburn that it might be 8p in the pound. I have heard suggestions that in some areas it would have to be as high as 13p in the pound, if not higher. That means that, instead of income tax being 27p in the pound, it would shoot up to 40p in some areas. The hon. Member for Truro says in response to that that there would be some sort of equalisation scheme. Surely that is not very different from the scheme that operates at the moment, where income tax and national taxation are contributing something over 50 per cent. towards the cost of local services.

    The hon. Member for Truro has been complaining that the way of distributing that money is not as good as it should be, and certainly we are committed to fundamental reform of the grant system and the means by which the grant is distributed. But the Liberal party's policy on local income tax would have a devastating effect upon individuals. Here again, the Liberals are not prepared to spell out the details and expose to public debate the true implications of their policies.

    The hon. Member for Truro asked a number of technical questions and referred to the same points as were mentioned by the hon. Member for Blackburn — why Richmond does less well out of this settlement than he would consider equitable and why the Inner London education authority gets no benefit from this supplementary report. I am bound to say that the situation is equitable, and I will seek to explain why.

    Richmond is a relatively high-resource authority with relatively low education needs — in other words, its education grant-related expenditure assessment. It can finance the whole of the extra cost of the teachers' pay award at less than the standard increase in poundage. The national standard increase in poundage is about 4p, which ratepayers are expected to provide. The situation, therefore, must be equitable. Indeed, ILEA is better off than many authorities because it can meet the full cost of the settlement at far less than 4p—at 2·3p. That is why it does not get a block grant from this supplementary report.

    Hon. Gentlemen who seek to suggest that this supplementary report is distributing grant unfairly are confusing the present system and do not understand it properly. The present system is designed to equalise rate poundages across the country, and that is exactly the effect of this supplementary report.

    My hon. Friend the Member for Nottingham, East (Mr. Knowles) made an excellent contribution to this debate. I noticed that he was not the only hon. Member representing a Nottingham constituency here. My hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) is also taking a keen interest in this matter. They quite rightly drew the attention of the House to what has been happening in Nottingham and the spending record in that area, contrasting the performance of the Labour council there with that of Conservative-controlled authorities.

    My hon. Friend the Member for Nottingham, East may recall that, when he was leader of Kingston council, in the years 1978–79 to 1985–86, he was able to reduce current expenditure per head in Kingston by 5·8 per cent. in real terms. Closer to his present constituency in Nottingham, we see that Broxtowe council, under Conservative control, has been able to reduce its current expenditure in real terms betwen 1978–79 and 1985–86 by some 16·3 per cent. In Gedling there was a modest increase of 2·8 per cent. and in Rushcliffe a significant reduction of 20·4 per cent., while in Nottingham itself, under the control of the Labour party, there was an increase in current expenditure of 12·5 per cent.—far ahead of anything that can be reasonably justified. My hon. Friend was able to expand further upon the wasteful spending policies of the Labour council there. I look forward with interest to hearing the results after the local elections in Nottingham this coming Thursday.

    I would not say that the hon. Member for Blackburn sought to confuse the House, because in response to my intervention he came clean and said that he was talking about total expenditure rather than current expenditure. I am glad that he made that clarification because he knows that total expenditure includes use of special funds. He drew attention to, and sought almost to ridicule, what had been happening in Brentwood. I have to tell him that in Brentwood, in 1985–86, some £2·2 million was taken out of special funds; in 1986–87 some £2·3 million was taken out of special funds; and in the budget for the current year, 1987–88, some £5 million has been added back into the special funds. If the hon. Gentleman looks at the details he will find that the use being made of special funds in that authority is a very large contributory factor to the high increase in total expenditure this year.

    On the hon. Gentleman's figures, the expenditure has gone up from £1·5 million last year to £11·82 million this year. The Minister has accounted for about half that increase. What has happened to the other half? Is this not exactly the kind of creative accountancy to which he has taken such objection in connection with Labour authorities?

    We have made no bones about the fact that we feel that the use made by some local authorities of special funds in order to attract more grant has in certain circumstances had a detrimental effect upon other local authorities. That was one reason why we abolished grant recycling, which certainly has prevented the consequences of that having an impact upon other local authorities.

    We deprecate the use of special funds where this is effectively an abuse of the conventions of local government, but we are working with a definition of total expenditure that was supported by all the local authority associations and about which the hon. Member for Blackburn and the Opposition in general have not been prepared to make any complaints. Indeed, when at one stage there was a suggestion that we might change the system back, I felt that the hon. Member for Blackburn would have been the first to argue the other way.

    The hon. Member for Barnsley, West and Penistone (Mr. McKay) suggested that we were putting the cart before the horse because my right hon. Friend the Secretary of State for Education is not going to open the debate on the Education (School Teachers' Pay and Conditions of Employment) Order until later this evening. The fact is that that order was laid before Parliament on 9 April and came into force on 30 April, and the rate support grant supplementary report which we are debating now was laid only on 30 April. The education order is already in force. It is likely that the attempt that may be made later this evening to annul the order will not succeed. With the greatest respect to the hon. Member for Barnsley, West and Penistone, I do not believe that his point carries any weight.

    The hon. Member for Barnsley, West and Penistone also mentioned water rates. As he will probably realise, that issue is under discussion at the moment.

    I do not have a brief this evening to make a definitive statement about what will happen to the water rates. However, I am certain that the hon. Member for Barnsley, West and Penistone shares my experience and has many constituents who feel that the present system of water rates is inequitable. An old lady living on her own may pay the same water rates as someone in the house next door where four people may be using a lot more water than the old lady. That complaint has been made frequently. Perhaps the hon. Member for Barnsley, West and Penistone will not be against reform in that area.

    Will there be a flat-rate charge for water or will there be metering? While I am on my feet, will the Minister consider another matter regarding water? I wrote to him in November last year asking whether water authorities would be competent authorities under EEC legislation. I have not yet received a reply to my letter. As this will be a very important issue during the general election, will the Minister ask his hon. Friend the Under-Secretary of State to hire a typist to type out a reply to a very simple question that I asked last November?

    I will pass that request on to my hon. Friend. I am sure that there is a good explanation why the answer has not been forthcoming in the way in which the hon. Gentleman expected.

    If people want to open a book on this matter, that is all very well, hut I cannot entertain a debate about that this evening.

    I want to summarise briefly the main points of this report. It makes good the Government's undertaking to find a contribution towards the cost of the teachers' pay award in 1987–88. Provision is increased by £460 million, all of which goes to education authorities' GREs. The aggregate Exchequer grant is increased by £183 million; that means that the total of block grant now available is more than £9,000 million. The report also incorporates later information on capital allocations in GREs and reflects boundary changes that took place at the beginning of 1986 and 1987.

    The present system is complicated. The Government are pledged to changing that system radically. In the meantime, I commend the report to the House.

    Question put: —

    The House divided: Ayes 188, Noes 135.

    Division No. 154]

    [7.55 pm

    AYES

    Aitken, JonathanAncram, Michael
    Alexander, RichardAshby, David
    Amess, DavidAspinwall, Jack

    Atkins, Robert (South Ribble)Henderson, Barry
    Atkinson, David (B'm'th E)Hickmet, Richard
    Baker, Rt Hon K. (Mole Vall'y)Higgins, Rt Hon Terence L.
    Baker, Nicholas (Dorset N)Hind, Kenneth
    Beaumont-Dark, AnthonyHirst, Michael
    Bendall, VivianHogg, Hon Douglas (Gr'th'm)
    Biffen, Rt Hon JohnHolland, Sir Philip (Gedling)
    Biggs-Davison, Sir JohnHoward, Michael
    Blackburn, JohnHowarth, Gerald (Cannock)
    Body, Sir RichardHubbard-Miles, Peter
    Boscawen, Hon RobertHunt, John (Ravensbourne)
    Bottomley, PeterHunter, Andrew
    Boyson, Dr RhodesIrving, Charles
    Brandon-Bravo, MartinJohnson Smith, Sir Geoffrey
    Bright, GrahamJones, Gwilym (Cardiff N)
    Brinton, TimJones, Robert (Herts W)
    Brittan, Rt Hon LeonKellett-Bowman, Mrs Elaine
    Brooke, Hon PeterKershaw, Sir Anthony
    Brown, M. (Brigg & Cl'thpes)Key, Robert
    Browne, JohnKing, Roger (B'ham N'field)
    Bruinvels, PeterKnowles, Michael
    Buchanan-Smith, Rt Hon A.Knox, David
    Buck, Sir AntonyLamont, Rt Hon Norman
    Budgen, NickLatham, Michael
    Bulmer, EsmondLawler, Geoffrey
    Burt, AlistairLawrence, Ivan
    Butterfill, JohnLee, John (Pendle)
    Chapman, SydneyLeigh, Edward (Gainsbor'gh)
    Chope, ChristopherLennox-Boyd, Hon Mark
    Churchill, W. S.Lewis, Sir Kenneth (Stamf''d)
    Clark, Sir W. (Croydon S)Lilley, Peter
    Clegg, Sir WalterLloyd, Sir Ian (Havant)
    Colvin, MichaelLloyd, Peter (Fareham)
    Conway, DerekLord, Michael
    Coombs, SimonMcCurley, Mrs Anna
    Cope, JohnMacfarlane, Neil
    Cormack, PatrickMacGregor, Rt Hon John
    Couchman, JamesMacKay, Andrew (Berkshire)
    Currie, Mrs EdwinaMaclean, David John
    Dorrell, StephenMcQuarrie, Albert
    Douglas-Hamilton, Lord J.Madel, David
    Dunn, RobertMajor, John
    Durant, TonyMalone, Gerald
    Edwards, Rt Hon N. (P'broke)Maples, John
    Emery, Sir PeterMarland, Paul
    Evennett, DavidMarlow, Antony
    Eyre, Sir ReginaldMarshall, Michael (Arundel)
    Fallon, MichaelMather, Sir Carol
    Farr, Sir JohnMaxwell-Hyslop, Robin
    Favell, AnthonyMeyer, Sir Anthony
    Fenner, Dame PeggyMiller, Hal (B'grove)
    Fletcher, Sir AlexanderMills, lain (Meriden)
    Fookes, Miss JanetMills, Sir Peter (West Devon)
    Forman, NigelMoore, Rt Hon John
    Forsyth, Michael (Stirling)Morrison, Hon P. (Chester)
    Forth, EricMoynihan, Hon C.
    Fox, Sir MarcusNeubert, Michael
    Fraser, Peter (Angus East)Newton, Tony
    Freeman, RogerNicholls, Patrick
    Fry, PeterOnslow, Cranley
    Gale, RogerOppenheim, Rt Hon Mrs S.
    Galley, RoyOttaway, Richard
    Gardner, Sir Edward (Fylde)Page, Richard (Herts SW)
    Garel-Jones, TristanPatten, Christopher (Bath)
    Goodhart, Sir PhilipPawsey, James
    Gower, Sir RaymondPollock, Alexander
    Gregory, ConalPorter, Barry
    Griffiths, Peter (Portsm'th N)Portillo, Michael
    Ground, PatrickPowell, William (Corby)
    Hamilton, Hon A. (Epsom)Powley, John
    Hampson, Dr KeithPrice, Sir David
    Hanley, JeremyProctor, K. Harvey
    Hargreaves, KennethRaffan, Keith
    Harris, DavidRaison, Rt Hon Timothy
    Haselhurst, AlanRathbone, Tim
    Hawksley, WarrenRhys Williams, Sir Brandon
    Hayes, J.Roberts, Wyn (Conwy)
    Hayward, RobertRobinson, Mark (N'port W)
    Heathcoat-Amory, DavidRoe, Mrs Marion
    Heddle, JohnRowe, Andrew

    Rumbold, Mrs AngelaThurnham, Peter
    Ryder, RichardTownsend, Cyril D. (B'heath)
    Sainsbury, Hon Timothyvan Straubenzee, Sir W.
    Sims, RogerWatts, John
    Skeet, Sir TrevorWells, Bowen (Hertford)
    Speed, KeithWhitfield, John
    Spencer, DerekWinterton, Nicholas
    Steen, AnthonyWolfson, Mark
    Stern, MichaelYoung, Sir George (Acton)
    Sumberg, David
    Temple-Morris, PeterTellers for the Ayes:
    Thompson, Donald (Calder V)Mr. Francis Maude and Mr. David Lightbown.
    Thorne, Neil (Ilford S)

    NOES

    Adams, Allen (Paisley N)Cook, Robin F. (Livingston)
    Alton, DavidCorbett, Robin
    Anderson, DonaldCorbyn, Jeremy
    Archer, Rt Hon PeterCraigen, J. M.
    Ashdown, PaddyCrowther, Stan
    Atkinson, N. (Tottenham)Cunningham, Dr John
    Banks, Tony (Newham NW)Dalyell, Tarn
    Barnes, Mrs RosemaryDavies, Ronald (Caerphilly)
    Barron, KevinDavis, Terry (B'ham, H'ge H'l)
    Beith, A. J.Dewar, Donald
    Bell, StuartDobson, Frank
    Bennett, A. (Dent'n & Red'sh)Dormand, Jack
    Bidwell, SydneyDouglas, Dick
    Blair, AnthonyDubs, Alfred
    Boyes, RolandDuffy, A. E. P.
    Bray, Dr JeremyEadie, Alex
    Brown, Gordon (D'f''mline E)Eastham, Ken
    Brown, Hugh D. (Provan)Evans, John (St. Helens N)
    Brown, Ron (E'burgh, Leith)Fatchett, Derek
    Buchan, NormanFlannery, Martin
    Caborn, RichardFoot, Rt Hon Michael
    Callaghan, Jim (Heyw'd & M)Foster, Derek
    Canavan, DennisFoulkes, George
    Carter-Jones, LewisFraser, J. (Norwood)
    Cartwright, JohnFreud, Clement
    Clay, RobertGeorge, Bruce
    Clelland, David GordonGilbert, Rt Hon Dr John
    Clwyd, Mrs AnnGolding, Mrs Llin
    Cocks, Rt Hon M. (Bristol S)Hamilton, James (M'well N)
    Cohen, HarryHamilton, W. W. (Fife Central)
    Conlan, BernardHarrison, Rt Hon Walter
    Cook, Frank (Stockton North)Haynes, Frank

    Hogg, N. (C'nauld & Kilsyth)Powell, Raymond (Ogmore)
    Home Robertson, JohnPrescott, John
    Hoyle, DouglasRadice, Giles
    Hughes, Roy (Newport East)Randall, Stuart
    Janner, Hon GrevilleRedmond, Martin
    Jenkins, Rt Hon Roy (Hillh'd)Rees, Rt Hon M. (Leeds S)
    John, BrynmorRichardson, Ms Jo
    Jones, Barry (Alyn & Deeside)Roberts, Allan (Bootle)
    Kaufman, Rt Hon GeraldRobinson, G. (Coventry NW)
    Kennedy, CharlesRogers, Allan
    Kirkwood, ArchyRooker, J. W.
    Lamond, JamesRoss, Ernest (Dundee W)
    Leighton, RonaldSedgemore, Brian
    Lewis, Ron (Carlisle)Sheerman, Barry
    Lewis, Terence (Worsley)Shields, Mrs Elizabeth
    Litherland, RobertShore, Rt Hon Peter
    Livsey, RichardShort, Mrs R.(W'hampt'n NE)
    Lloyd, Tony (Stretford)Skinner, Dennis
    McCartney, HughSoley, Clive
    McGuire, MichaelSpearing, Nigel
    McKay, Allen (Penistone)Steel, Rt Hon David
    McKelvey, WilliamStott, Roger
    McWilliam, JohnStrang, Gavin
    Marek, Dr JohnStraw, Jack
    Marshall, David (Shettleston)Taylor, Matthew
    Martin, MichaelThompson, J. (Wansbeck)
    Mason, Rt Hon RoyTinn, James
    Maxton, JohnWainwright, R.
    Maynard, Miss JoanWardell, Gareth (Gower;
    Morris, Rt Hon A. (W'shawe)Wareing, Robert
    Morris, Rt Hon J. (Aberavon)Welsh, Michael
    O'Brien, WilliamWilkinson, John
    O'Neill, MartinWilson, Gordon
    Orme, Rt Hon Stanley
    Park, GeorgeTellers for the Noes:
    Patchett, TerryMr. Don Dixon and Mr. Sean Hughes.
    Pendry, Tom
    Pike, Peter

    Question accordingly agreed to.

    Resolved,

    That the Rate Support Grant Supplementary Report (England) 1987–88 (House of Commons Paper No. 330), a copy of which was laid before this House on 30th April, be approved.

    Rate Support Grant (Wales)

    8.4 pm

    I beg to move,

    That the Welsh Rate Support Grant Supplementary Report 1987–88 (House of Commons Paper No. 325), a copy of which was laid before this House on 30th April, be approved.

    The main purpose of the supplementary report is to ensure that additional provision and grant in respect of the teachers' pay settlement is incorporated at the earliest possible opportunity within the RSG settlement for 1987–88. I do not intend to refer back to the details of the settlement. The House debated and approved the Welsh rate support grant report for the year as recently as 25 March.

    The supplementary report increases provision for relevant expenditure by £30 million in respect of teachers' pay. It also increases block grant by £17 million on that account. That additional provision reflects the Government's view of the share of the increased expenditure incurred by county councils which should be borne by taxpayers and ratepayers. The Government consider it important that there should be a significant increase in teachers' pay, but hope that in return the teachers will accept that they have a commitment to play their part in restoring normality to the education service and putting the care and education of children first.

    The pay increases will give teachers on average a 16·4 per cent. increase in pay, in two stages. That amounts to a 25 per cent. increase between March 1986 and October 1987, an increase that most other groups would be only too delighted to receive. The new pay arrangements will be attractive to young people seeking a rewarding and satisfying career. After two years' experience, the pay of a good honours graduate is £10,000. Without any promotion, that teacher's salary would increase to a maximum of £13,300. That is an improvement of nearly £3,000 on the present scale 1 maximum of £10,500. There are also significant rewards and incentives for the better teacher and for those taking on extra responsibilities. Those allowances range from £500 to £4,200. A teacher receiving the maximum allowance would have a salary of £17,500. I am talking not of head teachers or deputy heads, but of teachers doing a very good job in the classroom or as heads of department.

    For the most outstanding entrants to the profession, the goal could be the headship of a large comprehensive school with a salary of £30,500 from 1 October. That is an increase of over £4,000. We believe that the management of our schools is a responsible job which requires skills of a high order. It is important that those responsible posts should carry the kind of salary which reflects this. Naturally, only a minority of teachers will become heads or deputy heads; but under the new pay arrangements some 85 per cent. of entrants to teaching could expect at least one promotion during their career. The teachers have received a fair and generous settlement, and I hope that we shall now see an end to disruption in our schools.

    I have also taken the opportunity in this report to correct an over-estimate of £2·2 million in the specific grant allocated in the main report for housing benefit administration costs. The effect of that over-estimate was to reduce the level of block grant in the main report and I have, therefore, made a compensating increase in block grant of £2·2 million. I have also revised the estimates for a number of specific grants in the light of information now available from local authorities. As a result of all those decisions, including the teachers' settlement, this supplementary report increases aggregate Exchequer grant by £18·1 million to £1,175·1 million, and increases the amount available for rate support grant and block grant by £19·2 million, to £947·1 million and £920.9 million respectively.

    I have made it clear on previous occasions that councils' grant entitlement now depends upon their own spending decisions, and that additional grant is available for those that reduce their spending. The latest available information is that the aggregate of local authorities' budgeted total expenditure exceeds provision in this supplementary report by £23·2 million. That means that £10 million grant remains unclaimed.

    That £10 million remains available to Welsh local authorities. I have deliberately chosen not to reduce the level of aggregate Exchequer grant in this report to reflect that underclaim. I urge local authorities in Wales to examine the scope which undoubtedly exists — as successive reports from the Audit Commission have quite clearly indicated—to achieve savings and to bring their spending back into line with the realistic assumptions underlying the settlement. It is perfectly possible for them to do so. Some Welsh district councils have demonstrated this by restraining their spending and, consequently. they will receive additional block grant. Districts as a whole have budgeted to spend less than the level allowed for in the settlement and have therefore increased their grant entitlement by £0·7 million. Extra block grant awaits all councils which reduce their spending and this can only be to the benefit of local authorities and, most important, their ratepayers.

    In recent years we have seen that with good will and good sense many Welsh local authorities of differing political complexions can work effectively with the Government and make good use of the instruments that we have given them and the initiatives that we have taken. Places as varied as Rhondda, Wrexham, Newport and Swansea have undertaken urban renewal and housing renovation programmes on a major scale. A number have shown that it is possible to provide first-class services and to hold down rates.

    No authority has done this better than the city of Cardiff. The Conservative council in Cardiff has served its citizens well, undertaking not just the usual tasks of a district authority, but the special responsibilities called for in a capital city, undertaking major tasks of urban renewal and support for the arts, and yet it has kept its rates down. The Conservative-controlled Cardiff council is charging the same rate, 19·9p, as it did in its first year of office. With that splendid record, I am confident that it will be reelected, as it deserves, on Thursday to continue that task.

    Before the Secretary of State carries on in this vein, will he tell the House and, presumably, people outside how many council houses have been built in the city of Cardiff since the Conservative party took control of the council and how many more people are on the waiting list there? May we have the figures?

    It will be for the electors of Cardiff to decide on Thursday. Cardiff city council, working with the Government, have launched the most major programme of urban renewal to be undertaken anywhere in the country, which will include major housing programmes, both for those in the cheapest form of housing and for all other citizens. I can think of no more considerable contribution to the future housing needs of the people of Cardiff than the projects that Cardiff city council has set in hand with the Government for the redevelopment of that city.

    I am interested that an hon. Member representing a Swansea constituency wishes to intervene and I am happy to give way to him, although I do not think that he will vote in the Cardiff elections.

    In what may be his swansong in Welsh debates, I am sure that the Secretary of State would like to end on a note of his usual objectivity and fairness. Therefore, having paid tribute to Cardiff, will he pay tribute to the enormous co-operation of Swansea city council with the Welsh Office in the marina project and the enterprise zone, and generally, for the benefit of all citizens of Swansea?

    If the hon. Gentleman had not been talking to his neighbour and had been listening to me, he would have heard me do just that. I said that several local authorities, including Swansea, had undertaken urban renewal and housing renovation programmes on a major scale. If he listens to me carefully for the rest of the debate, he will not have to intervene so frequently.

    At St. Mellons, the local authority and private sector, with the Government's support, have launched one of the most major innovative schemes for the provision of low-cost housing for the citizens of Cardiff which has yet been introduced. I dare say it will be a pioneer for housing development in the rest of the country.

    Will the Secretary of State give the simple figures showing the number of people on the housing list?

    Order. We cannot have two hon. Members on their feet at the same time.

    The hon. Member for Rhondda (Mr. Rogers) will have plenty of opportunity to make his speech.

    If the hon. Gentleman will restrain his verbal diarrhoea for a second, he will have a chance to speak later in the debate.

    All ratepayers are entitled to expect their local authority to provide effective and efficient services to the community. They are entitled to see services maintained and rate bills kept down through the pursuit of efficiency and value for money. That is exactly what Cardiff has done and what other authorities can do.

    Earlier I referred to the Audit Commission. I commend its reports which have examined key areas of council expenditure and pointed to ways of using resources more economically. The increase of £47 million in capital allocations in 1987–88 should allow prudent councils to achieve revenue savings through capital schemes. I urge councils on behalf of their ratepayers to consider carefully all the options for reducing their spending and thereby increasing their grant entitlement.

    I commend my proposals for the supplementary report to the House.

    8.15 pm

    My hon. Friend the Member for Swansea, East (Mr. Anderson) suggested that this may be the Secretary of State's swansong and some of my colleagues, particularly my hon. Friend the Member for Rhondda (Mr. Rogers) seemed to think that his comments were a dying swansong. Nevertheless, we wish him good health and a long, happy retirement in the City or wherever he chooses to spend his retirement years.

    As I understand it, the main effect of the report is to adjust grant-related expenditure to take account of the teachers' pay settlement and in that sense it provides Welsh counties with an extra £30 million. The county councils would have liked, and certainly believed that they are entitled to, £35 million, mainly to keep pace with labour costs. Presumably their calculation is based on the settlement figure of 8·2 per cent. backdated to 1 January and a further 8·2 per cent. from 1 October.

    It certainly makes good sense to pay decent salaries to attract and retain good teachers. Likewise, peace and calm must replace disruption and demoralisation in our classrooms. There is a need to make better provision for textbooks and even Her Majesty's inspectorate of schools has pronounced unfavourably on that matter.

    The deterioration in the supply of books is a reason why parental contributions are on the increase and that in turn widens the differences between individual schools and pupils. The cuts in teaching staff are resulting in subjects being dropped from the curriculum and in those circumstances it makes no sense to pay teachers not to work. I shall be told that investing in education is a costly business, but failure to do so will be ruinous for Wales and, indeed, for the whole of the United Kingdom. The report stripped of its technical intricacies and jargon, is essentially about providing Government financial assistance to local government to administer the services which Parliament has authorised it to do.

    This supplementary report, in the dying embers of this Parliament, cannot in any way be said to come to grips with the problems of Wales, which our local authorities are most anxious to tackle.

    I note that a Welsh district council spokesman refers to the report as "low key", whereas our problems are enormous.

    I have already referred to the problems in education, but the Secretary of State also touched on housing. The scale of the problem in this sector in Wales is outrageous and oozes of neglect, despite what the Secretary of State has said in order to try to keep Cardiff Conservative on Thursday. The White Paper on public expenditure demonstrates that, in reality, there is to be no increase in spending, despite the fact that there is a much higher proportion of older housing in Wales than in any other part of Great Britain. Over 40 per cent. of the housing stock, almost 450,000 houses, is more than 65 years old, compared with the figure of 30 per cent. in Britain as a whole. Many of those old properties lack basic amenities, so a considerable proportion of our people live in unsatisfactory housing conditions. I suppose that we have grown accustomed to the fact that the Government do not care.

    Homelessness is on the increase. In 1985 the number of households that were accepted as homeless was 9,200 in Wales. That is 7·4 per cent. higher than in 1984. Newport is a black spot, with a rate of 10 households in 1.000 becoming homeless.

    We need to improve existing homes and build new ones. Poor housing is a false economy. It merely stores up problems for the future; yet house building creates more jobs for every pound spent than any other form of Government spending. We have thousands of construction workers on the dole in Wales and a massive shortage of decent homes. The arithmetic is simple. Housing investment makes economic as well as social sense.

    I now turn to the vexed question of mass unemployment. It has plagued Wales throughout the eight years that the Government have been in office. With proper Government backing our local authorities could do much about this matter. The Government are now claiming that unemployment in Wales is falling. The Labour party welcomes any improvement in the situation. The CBI says that there is buoyancy in the economy. It is worth reminding the House that it said the same thing before the last election in 1983 but the subsequent three years saw further massive job losses and economic decline. The utterances of the Government and the CBI on unemployment and the state of the economy contain as much truth and authenticity as those wartime broadcasts of Lord Haw Haw from Germany.

    Has the hon. Gentleman noted that the Wales CBI, which often has been cautious in its statements and frequently critical of the Government, has seldom been as optimistic as it has recently? That is the Wales CBI, as opposed to the CBI for the United Kingdom.

    The answer is simple. The last time that it was optimistic was on the eve of the 1983 general election. It is merely a case of history repeating itself.

    The recent report of the Wales TUC is far more realistic when it points out that there are more people without what it calls "regular work" than there were a year ago. It says that there is an increase of 6,933, or 3·8 per cent. There is some difference between the two versions.

    The difference in the two points of view is that so many thousands of people have been recruited on Government schemes of one sort of another. Mike Smith, the industrial editor of the Western Mail, clearly sets this out in an article on 4 May. It says:
    "The latest figures for such schemes in Wales show that there are more than 21,000 people taking part in the Youth Training Scheme; 22,727 in the Community Programme; 5,000 taking advantage of the Enterprise Allowance Scheme and more than 4,000 in other employment schemes. This makes a total of more than 53,000 people.
    In addition there has been a major attempt to encourage and help other unemployed people into regular jobs, training or special employment schemes under the Restart programme. So far more than 57,000 have been interviewed in Wales under Restart."
    It does not say how many people have been put into employment as a result of those measures, but I understand that it is a tiny percentage.

    Mike Smith goes on to say:
    "In relation to the size of its population Wales would expect to have around 35,000 — not 53,000 — on these schemes.
    This imbalance reflects the high unemployment levels in Wales, the concentration of such schemes in areas of most need and the consequent falls in unemployment rates."

    I remind my hon. Friend of the many times, when the Conservative party was in opposition, that the Secretary of State for Wales criticised us for what he called "phoney jobs", saying that the Conservatives would create real jobs.

    That is true. Those of us who were in the House during that period will remember the words of the Secretary of State very well.

    I agree that some of these schemes may have limited value, but the vast bulk of them are not real jobs at all.

    Another vital sector in which our local authorities have a major part to play is that of law and order. I have visited numerous housing estates in my constituency with Labour candidates in the local elections. On the Old Barn estate in St Julians, residents pleaded for more policemen on the beat. The same sentiments were expressed in the Broadmead and Moreland Park estates in Liswerry. One elderly couple in St Julians had their home burned to a cinder after petrol had been poured through the letter box. I remind the House that this was in Newport, Gwent, and not the riot-stricken areas of Liverpool, Birmingham and London. Yet when the police committee of Gwent put forward proposals to Gwent county council for 50 extra police constables they were attacked by the hon. for Newport, West (Mr. Robinson), the Under-Secretary of State, for putting up the rates to pay for such expenditure. None of us likes paying rates, but such attacks reek of opportunism.

    The report could have been the springboard for the Government to make a fresh start and a real onslaught to tackle deep-rooted problems, with the help and active co-operation of local authorities throughout Wales. In the event the Government have opted for the status quo. Unemployment and decay will continue so long as this Government remain in office. They must be thrown out, and the quicker the better.

    8.31 pm

    The hon. Member for Newport, East (Mr. Hughes) is ever a pessimist. He tends to use terminology redolent of political disputes of many years ago. The circumstances which he has mentioned obtain in some matters and I should like to comment on some of them.

    As my right hon. Friend the Secretary of State pointed out, the supplementary grant is dominated by the provision for the increase in teachers' salaries. All parties agree that this is a desirable allocation. The Government have been right in giving priority to increases in teachers' and nurses' pay. Those were the two outstanding salary needs and I am glad that both have been honoured. The hon. Member for Newport, East said that major provision should have been made, but I think he will agree that the increase in pay is large proportionately. A correct decision has been made and it is not for us to understate such a significant increase in expenditure.

    I hope that the teachers' dispute will now die away. Many teachers say that they feel almost as strongly, and some of them perhaps more strongly, about negotiation machinery. It would be out of order for me to elaborate on that but, as my right hon. Friend the Secretary of State for Education and Science has pointed out, he wishes the former Burnham machinery to be replaced by adequate machinery as quickly as possible and as soon as there is general agreement throughout the profession. I subscribe to that view. The main provision in regard to teachers' salaries is all to the good.

    The hon. Member for Newport, East also referred to housing needs. We have housing needs which have been aggravated by unusual circumstances. Many of the worst cases with which I have to deal result from broken marriages. That is a real problem, which one cannot under-estimate. I hope that in the months and years ahead, the incoming Government will permit special attention to be given to the problems of one-parent families. The problems of one-parent families and broken marriages may be a sign of a social breakdown for which there are various reasons, but certainly they are serious in many parts of the country.

    On housing in general, the hon. Member for Newport, East did not pay sufficient heed to the published statements of the leaders of housebuilders in Wales about their great contribution to the provision of jobs over the last few years. There has been a decided upturn in output by members of the House-Builders Federation and the Federation of Master Builders.

    I am not entirely happy about the money which local authorities could use for repairs and renewals from the amounts that they have obtained from the sale of houses. I hope that this can be considered again and that the release of the money can be accelerated, particularly in parts of the country where people are unemployed in the industry.

    The hon. Member for Newport, East also referred to unemployment; although it is not covered in the supplementary grant, part of the expenditure could be interpreted as being related to it. I do not quarrel with his reference to unemployment, but, when referring to provision for training, he said that these were not real jobs. Of course the training itself is not a real job, but the hon. Gentleman must appreciate the need to extend training in all parts of the United Kingdom, and not least in Wales where our traditional industries have been in decline and newer industries are taking the place of iron, steel and coal. Therefore, the need for the various training measures introduced by the Department of Employment is very real. We should not refer to these as being undesirable; they are very desirable.

    As the CBI in Wales has pointed out, there are grounds for cautious optimism in the Welsh economy. Not for many years has there been such a long period when successive reductions in unemployment have been announced month after month. We can be encouraged by that. I should not like to overstate the case, but each time new figures are published there is cause for optimism. Even more impressive has been the increase in notified vacancies. Opposition Members often refer to the figures having been massaged. They may use that terminology but there cannot be massaging of notified vacancies.

    The hon. Gentleman may think that, but the published figures of notified vacancies are increasing steadily. [AN HON. MEMBER: "Part-time jobs for women."] They are not all part-time jobs. In any case, the new industries that are coming into Wales will require new skills and different kinds of labour. To that extent, any increase in the number of vacancies is desirable. I hope that the hon. Gentleman does not think that we should be unhappy that vacancies are increasing. That is an encouraging factor. The provision that we have made is encouraging and, without being foolishly optimistic, we can take some consolation from the fact that the worst times of unemployment seem to be past, and that the decline in our major industries is probably now behind us. There are definite prospects of improvement in the months and years ahead.

    8.41 pm

    While we must welcome the additional money for Welsh local authorities in the supplementary report, I do not think that there is anything in it to make us sing for joy. All that I can see are adjustments in the main report to cope with matters such as teachers' remuneration, and so on. The local authorities are in the same situation as before—having to scrape around for enough money to fulfil their obligations, and getting into trouble if they overstep an impossible financial limit that has been imposed by central Government.

    Nothing that we have heard from the Secretary of State tonight has persuaded me that the Government have any sympathy with local government problems. As with everything else, they see such problems as matters of profit and loss, and the element of service and care for the community is entirely missing from their calculations. Their whole attitude is one of criticism of local authorities and a desire to take away any powers that they have, so as to increase power at the centre. Local democracy means nothing to the Government and the whole operation seems geared to stifling local initiative. It does not seem to matter that a generous proportion of local people want improved services, better school buildings, more home help for the elderly and better facilities for the young and the old. We should not allow such services to run down by penalising councils, which are, after all, doing their best under difficult conditions.

    The teachers' pay settlement is obviously to be welcomed, but I have no doubt that later in the debate we shall hear about the vexed problem of negotiating rights. The position in the education sector is a grievous one. Capitation allowances are often too low; books are in a tatty condition — I know that from my own children's experience; books are shared, and there is a lack of choice in school curriculums. That is a serious matter. We won the battle in Powys recently over the closures of small schools, and the county council voted in favour of keeping them open. It is noticeable that the Secretary of State for Education is now falling into line with the views of Powys on such matters. There is a huge sparsity factor in our rural communities, and I hope that the Secretary of State will take that seriously, as he is well aware of it.

    We also have immense problems of infrastructure—roads, bridges and schools — and we need some recognition of the sparsity problems in these matters too. Housing has already been mentioned, and I wish to make one point about it. Councils and districts have had to sell council houses, and we are in favour of that. However, it is seriously wrong that they have not been allowed to build enough houses in the rented sector, or spend the amount of money that they have gained from selling council houses to invest in new housing stock. Of course, they have been allowed some of the money that they have received from council house sales, but only a small proportion of it.

    The Government are imposing ever more centralised control. That can be seen clearly in their proposals for a poll tax, which they undoubtedly want to impose on us if they can. There are great problems in the present rating system but the poll tax will produce even greater inequalities and injustices, and further reduce local control over the revenue for local government. That is a serious undermining of local democracy. Much more feasible would be the replacement of domestic rates, a local income tax, with the rates determined locally, thus ensuring a great deal more accountability.

    Will the hon. Gentleman inform the House what the rate of local income tax is likely to be in Powys and the rest of Wales? We have heard figures ranging from 8p to 13p. The Government have published detailed figures on the likely consequences of our proposals. I have no doubt that the hon. Gentleman will enter the election with a clear statement of the figures and the additional burden of income tax that he intends to impose on the electors.

    The right hon. Gentleman will read our election manifesto with interest and see our proposals laid out in it. They have been fully costed and responsibly audited by a national firm of accountants. I am sure that he will see that they are serious and responsible proposals.

    Grants from central Government would then be based on an assessment of local needs.

    I deprecate what the hon. Member for Rhondda (Mr. Rogers) has said. We are not little Tories: We believe in investing in infrastructure and local government.

    Local government would at least and at last be able to provide for its own communities with the full co-operation and consent of that community, which is our view of true local democracy.

    8.48 pm

    It is evident that the policies that we have heard expressed by Liberal hon. Members on local government will be as ruinous for ratepayers as those of the Labour party.

    I shall be brief. I must register relief that the ending of the interminable teachers' dispute appears to be in sight. I shall be glad if my right hon. Friend the Secretary of State for Education can knock away the one remaining and rather shaky leg in the teachers' argument—their preposterous claim to have been deprived of their negotiating rights. They have deprived themselves of those rights by their total inability to agree about anything.

    This debate marks one of a series of farewell performances by my right hon. Friend the Secretary of State for Wales. They are becoming as numerous as those of Dame Nellie Melba, and as melodious and agreeable to hear. We were probably also listening to the swansong of the hon. Member for Newport, East (Mr. Hughes) tonight. I am sure that some of us, at least, will miss his contributions to our debates immensely, but I shall not.

    If the teachers' dispute has not hit my constituency as badly as it might have done, that is because local leaders of the teachers' unions and in particular of the National Union of Teachers have shown a commendable restraint that was in no way encouraged by the attitude of Opposition Members, who seemed to go out of their way to encourage the teachers' organisations to be as obdurate as possible. I wish to pay brief tribute to the president of the NUT in my area who died yesterday—Mr. Aelwyn Morgan, the headmaster of Ysgol y Castell. He led the National Union of Teachers in my area with immense restraint and responsibility, and he will be sorely missed.

    The dispute is a shameful story and I hope that when the teachers' strike has been settled and they resume normal working, more and more of them will decide that they wish to be represented by a union such as the Professional Association of Teachers, which has consistently put the interests of pupils first.

    Even those of us who have mixed feelings about welcoming the increase in teachers' salaries will have no such feelings about the corresponding increase in nurses' pay. It was won without any threat of industrial action arid seems to be a model of how these affairs should be conducted. On that note and with an affectionate farewell to my right hon. Friend the Secretary of State for Wales, I shall resume my seat.

    8.50 pm

    As one of the few Members present this evening who have had experience of sitting and standing in front of a class, I join hon. Members who have thanked the Government for this pay award. The teachers certainly deserve it. The role of the teacher in our schools has changed enormously in the 'a it few years. The mantel that they wear and the burden that has been imposed upon them are enormous. That burden was imposed not necessarily by the Government, but by the changes that have taken place in our society.

    I shall mention a few of the things that any Government expects from the teaching profession. It is to teachers that Government seem to delegate an important role in health education. It is teachers who tell children about the dangers of cigarette smoking, of excessive alcohol consumption and of solvent abuse. The teacher is expected to inform his or her pupils about all kinds of problems affecting the health of our nation.

    The Home Office provides an excellent pack about fire hazards in the home, and teachers are supposed to use it to explain to children the fire risks in the home to which they may be subjected. It is on the teacher that the Government put the important burden to explain to children the importance of road safety and the problem of deaths on our roads. When the Government decided to introduce the new general certificate of secondary education, they faced the teacher with the fundamental problem about the resources that are needed for the enormous amount of project work that the GCSE system will involve. Of course this is an excellent burden to put on the teacher, but will the teaching profession be able to respond to the challenge, especially in mathematics and physics where there is such a desperate shortage of secondary school teachers?

    When did hon. Members last sit at the back of a classroom and observe the conditions in our schools? I am sure that some hon. Members have done that. By doing that and seeing what goes on, we see that the teaching profession is doing its utmost to get its message over. I am glad that money has been made available for this pay settlement, but there is a sting in the tail. It is that this settlement has been imposed on the teaching profession and the Government are unwilling to put a maximum size on the class that the teacher will have. The imposition of that settlement, the lack of future negotiating rights and the amount to be paid to teachers in a few years are at the heart of the concern in the teaching profession.

    There is another fundamental point. A teacher finds it extremely difficult to stand in front of his class and transmit the cultural values that are expected of him. That is because he has to ask what those children can look forward to. What kind of society are the Government producing? The difficult question for our teachers to answer is, can the children who are now in our schools look forward to a life of individualism or will they face life in a society in which competition has reached such a level that conscience in terms of the community will almost have disappeared?

    Will the Government look back on their term of office and say that they have succeeded in making the market and market values and materialism the prime focuses and determining driving forces of life in Britain? The values that are now being taught do not teach that there are things other than material benefit — much as that is important—that are fundamental to our society. I am extremely perturbed that the sense of community and neighbour helping neighbour and friend helping friend is extremely difficult to engender in our schools, given the values that the Government are building in.

    The Secretary of State for Education has gone back on what he said about village schools. I am delighted that he has done so, and in the run-up to the election the more of his colleagues who go back on all kinds of things that they have said the better. I hope that the Secretary of State for Wales has exactly the same formula as the Secretary of State for Education and Science so that no longer will the numbers of children be a determining factor in deciding whether village schools will be closed. I hope he will ensure that resources are made available to local authorities in Wales to ensure that the same facility will apply in Wales as applies in England. He should not do what he did with executive houses and impose on the planning structure in Wales a settlement that the people of England would never put up with.

    8.56 pm

    For reasons that I think we all know well, this is not the best attended of Welsh debates on this important subject of the rate support grant settlement. I notice that at least 65 per cent. of the Welsh Conservative Members are present. The Welsh Labour party has managed 50 per cent., and for most of the evening even the Liberal party has had the same proportion present as the Welsh Conservative party. As the hon. Member for Gower (Mr. Wardell) might well appreciate, I notice that the Welsh Nationalist party is conspicuous by its 100 per cent. absence from the debate. I especially remember the hon Member for Caernarfon (Mr. Wigley) lecturing me last Wednesday morning about how important it was that the House continue this week. We will see what happens.

    As did the hon. Member for Gower, I want to comment on the pay settlement. It seems that there is now not so much talk about teachers' pay, although I could well appreciate any teacher saying to me that, even after the effect of the three pay increases by the autumn of this year which will achieve a cumulative total of about 25 or 26 per cent., he still wanted more. Instead, the argument now is about negotiating procedures or negotiating rights, call them what one may. With rights inevitably go responsibilities. All of us would say that usually there is no more responsible group than teachers. However, I feel that now teachers are doing themselves no service by dwelling on this point.

    As with many people from Wales, I come from a family of teachers. There is a natural sympathy towards the position of teachers, but I have observed a widespread criticism of teachers, not least from schoolchildren. Parents have often said to me that children are losing, or have lost, respect for their teachers. As my right hon. Friend the Secretary of State said, above all the dreadful discription in our schools must now come to an end. It has done nothing to help the teachers' case and, above all, it has threatened the whole end product about which teachers and everybody else must be concerned — the quality of the education of pupils when they leave school.

    The cost of the teachers' pay settlement is the main part of the report, but it is not the only part. We all know that a council's grant entitlement is now dependent upon its own decisions on spending. As a result of the decision of Welsh local councils, there is now £10 million unallocated, about which I understand my right hon. Friend to have said that he is waiting to see what savings can be achieved by local councils which would entitle them to this unallocated £10 million. I suggest to my right hon. Friend that he should not wait too long before these savings become apparent, as it may be possible to recognise those who already play the role of the wise councils in Wales.

    The most obvious example is Cardiff city council. Cardiff is a city that is moving forward. For years we have had a civic centre that rivals any in Europe. Rather more recently we achieved a glorious shopping centre in St. David's centre and, as the jewel in its crown, the new St. David's hall. When we have had an early night here, I have often gone back to the flat and put on BBC2 to find that I was reminded of Cardiff because I heard concerts from St. David's hall. St. David's hall has been far more successful than I think anyone anticipated.

    In addition to the St. David's centre and St. David's hall is a very active plan for a world trade centre which is being considered with great enthusiasm. Next week, the centre point of the Cardiff chamber of commerce annual general meeting is to be a presentation by the developers of the new world trade centre.

    Top of the list in Cardiff must be the south Cardiff redevelopment, a grand plan to transform 3,000 acres of largely derelict docklands. There is tremendous interest in this scheme across the world. Cardiff is truly an international city that is moving forward into the 21st century. I am confident that Cardiff will make other cities in the United Kingdom sit up and take notice—places like Bristol, which all too often has been patronising about the M4 and the Severn Bridge. Bristol regards the M4 west of it as merely a back road. Places such as Bristol will find Cardiff becoming the international centre for the south-western quarter of the United Kingdom, eclipsing many other places. This all comes about because of Conservative drive and enthusiasm.

    The hon. Member for Caernarfon has at last arrived and made one of his more intelligent contributions.

    It is vital that the drive and enthusiasm be maintained. I am glad that my right hon. Friend has set up a development corporation to ensure that the south Cardiff redevelopment goes through. The drive from the Conservative-controlled city council in Cardiff in recent years has been complemented by Conservative drive from the Welsh Office, which has brought about the south Cardiff redevelopment.

    In the tributes that have already been paid to my right hon. Friend, I fancy that perhaps he would be happiest with the tribute that the redevelopment of south Cardiff will come about in the years to come. That will he a permanent monument to what he has achieved in his time as Secretary of State for Wales. I can assure the House that there is a great head of steam to see that redevelopment come about. It is true that we have a large measure of support from the other political parties, but I should be apprehensive if the Conservative drive and determination were to be lost. The redevelopment might still go ahead, but I fear that it would not go ahead as well or as quickly.

    I shall return to the unallocated figure of £10 million that my right hon. Friend still has in rate support grant settlement. I can assure him that Cardiff would spend it, and spend it well. We have a tremendous record on housing. The Conservative-controlled Cardiff city council has spent three times as much as the previous Labour administration — £90 million since 1983, compared to £30 million in the four years before. Last year alone there were more houses built in Cardiff than had been built in any other year. As my right hon. Friend said, there is an innovation in housing development, with 600 new houses for rent being built in St. Mellons, that everybody else in the country ought to watch closely. Please let us not wait too long for the savings to come about. Cardiff could spend it, and we could make the House proud in the spending of it.

    9.5 pm

    One advantage of speaking a little later in the debate is that one can hear some of the attitudes of Conservative Members. What has appalled me is the pomposity of Conservative Members in congratulating the Welsh Office on the settlement. We see no value from the settlement in the valleys of south Wales.

    As has been rightly said, the major part of the report is to do with the teachers' settlement. However, if one goes into the schools of Wales one will find a profession that has been demoralised by the Secretary of State for Education and Science. One will find that class numbers are on the increase, problems of discipline exist and that teachers are finding it difficult to cope.

    The ultimate hypocrisy of the Secretary of State for Education and Science and Conservative Members is that they are prescribing for a system to which they do not send their children. They stand at the Dispatch Box and lay down a programme for our education system when they have no confidence in it at all. They send their children to public schools and tell us how our state schools have to be run. What utter and complete hypocrisy. That extends beyond the education system into the Health Service. They prescribe what health system we should have but at tilt same time they opt out and go for private medicine. They prescribe for others but they do not have the courage to participate themselves. Now they are sitting there squirming and ashamed of themselves because it is being pointed out to them.

    Where did the hon. Member for Durham, North (Mr. Radice) go to school?

    I have been told that my time is nearly up and that we are allowed only two minutes.

    Indeed, not by you, Mr. Speaker.

    I simply wanted to make the point that the pathetic posturing of the Conservative party will stand it in bad stead, not only in the local elections on Thursday, where it will get a drubbing even in the city of Cardiff, irrespective of the oily, treacly words of the hon. Member for Cardiff, North (Mr. Jones) and it will get a drubbing in Wales in the general election.

    9.9 pm

    I want to make one of my characteristically brief, succinct and low-key contributions to this debate, so I will not pass much comment on the speech by the hon. Member for Rhondda (Mr. Rogers). It is interesting, as my hon. Friend the Member for Newport, West (Mr. Robinson) said, that the Opposition education spokesman, in whom they take such great pride, is a Wykehamist. He had an independent education. It was interesting also to hear the hon. Member for Rhondda whistling to keep up his courage. Conservative Members know how depressed the members of the Labour party are. Whatever they may say in this Chamber, we know that they are calculating on a very heavy defeat, not just on Thursday but in a few weeks' time nationally.

    The supplementary report is largely concerned with the pay of schoolteachers, enabling the Government to pay local authorities an extra grant towards their pay increases. The Government's pay proposals for teachers are extremely generous. They will give teachers a 16·4 per cent. pay rise which, added to the existing increases, will mean that teachers will receive an average 25 per cent. pay increase between March 1986 and October this year. That pay award is unique in its generosity. What other profession has received a pay rise of this dimension?

    The Government have genuinely attempted to find a long-term solution which will be fair to all, especially to pupils. The Government had no alternative, after two years of ineffectual free collective bargaining, when the teachers could not agree on anything among themselves—as my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) said — but to dispense with the existing negotiating machinery.

    The Teachers' Pay and Conditions Act sets up an interim committee to advise the Secretary of State on these matters. I have been assured by my hon. Friend, the Under-Secretary of State, the hon. Member for Conwy (Mr. Roberts), that teachers' unions will continue to be involved in discussions about pay and conditions of service. The interim committee will take evidence and receive representations from teachers' unions as well as from local authorities. My right hon. Friend the Secretary of State must consult both sides before issuing orders, which in turn will be subject to parliamentary approval.

    As my hon. Friend the Under-Secretary of State has said, the arrangements under the Act are interim, until 30 March 1990, by which time permanent arrangements should be in existence. There is absolutely no justification for renewed disruption. I, no doubt like other hon. Members, have received heartfelt letters from schoolchildren in my constituency who are extremely worried about the effects of renewed disruption on their examinations. I will quote from one letter, but I will not disclose which school it comes from as that might disclose the identity of the young boy. I will read it because I believe it is important. It states:
    "I am a fifth year pupil …I am taking my O level and CSE examinations in June/July of this year. I have been informed …that I am to be the victim of yet another afternoon off school due to the selfish action of the NUT and the NAS/UWT. I am very worried that this could seriously damage my examination chances as I will not have the full assistance of my tutors.
    I would be very grateful if you could do anything to prevent me losing too much schooling. I have spoken with my headmaster … who has said there is little he can do."
    This is a genuine letter. [Interruption.] I am quite happy to show the letter to any hon. Member after the debate. I am as anxious as the pupils who have written the letters.

    I, no doubt like many colleagues, spend at least one Friday in four visiting schools in my constituency. The hon. Member for Gower (Mr. Wardell) said that he did not know the last time that any of us had been at the back of a classroom. In my case it was last Friday morning in three of my junior schools. I always come away impressed by the commitment, the dedication, of the teachers I have met. I have the highest respect for them as a profession. I know that the vast majority of them put pupils first and would do nothing to harm their examination —and so their future—prospects.

    No, I will not, because I am making only a few brief points.

    I am dismayed that any teacher would take out his or her discontent on children, especially at this highly pressurised time when they are about to sit exams. I have tried to reassure those schoolchildren who have written to me and I am grateful to my hon. Friend the Member for Conwy for telling me that the Welsh Joint Education Committee's monitoring of last year's exam results reveals that industrial action had no significant effect. I am also grateful to him for informing me that if a school considers that its pupils have been seriously affected by industrial action, that school can apply to the WJEC for consideration as a special case, for that action to be taken into consideration in the marking of its pupils' exams.

    However, that should not be necessary. There should not be disruption. Schoolteachers have been given the best pay deal that they have ever had. I hope that those teachers who are considering disruption will think of their pupils and their profession. I hope that they will not continue their campaign so that they do not lose the further respect of parents and pupils.

    My right hon. Friend the Secretary of State referred in his opening remarks to the Audit Commission's reports on how resources could be spent more economically by local authorities. I come back to the question of surplus places. How can it be sensible for a local education authority to spend £3·5 million a year to keep 22,300 school places empty? It is mad. Yet that is exactly what is happening in Clwyd with, I am sad to say, the strong support of both the real Labour party and its faded photostat, the Liberals.

    The Government do not want to remove all those places because they know, as I and my hon. Friends know, that many rural schools are thriving, playing a vital part in the life of the community that they serve. But the Government know, as do my hon. Friends, that when a school becomes too small, with the few remaining pupils in single figures and different age groups, that is not in the interests of a child's educational or social development, nor is it the way to realise the full potential contribution of a teacher to his or her community.

    Just think what could be done if the Government's target of removing two fifths of those places was to be reached in Clwyd. Just think what we could do with the £1·4 million that is currently wasted, and how that money could be redeployed with great advantage to the education of children in the county. I hope that all Opposition parties, including that represented by the hon. Member for Caernarfon (Mr. Wigley) whom I now see in his place, will think seriously about that point. It is not just a financial point; it is an educational and social point. Just think what could be done with that money in our hard-pressed urban primary schools. As I said, I visited three last Friday morning. Some of them have classes of between 35 and 41. I am so sad that the Opposition parties, particularly the Labour and Liberal parties, forget about those hard-pressed urban primary schools. We must also think about them, their need for resources — and the need for a balance of resources between rural and urban schools.

    Just think, too, what could be done with some of that £1·4 million for Clwyd's school library stock, which was slashed in 1985 from £75,000 to £15,000, where it has remained ever since. Just think too, what could be done with some of that money for the county's school maintenance budget which was cut, wrongly in my view, by £11,000 last year.

    I am happy that Clwyd county council is looking at each school within the county on its merits, not just on its financial merits but on its educational and social merits. Every aspect should be taken into consideration.

    With this supplementary report the Government have shown their generosity and the fact that they are determined to improve education and education standards—the quality of the teaching of our pupils. I hope that in return our local authorities, particularly my own in Clwyd, will respond by spending their resources more efficiently, and thus more effectively, to ensure that all the children in my constituency and the other constituencies within Clwyd have the best possible education and the best possible start in life.

    9.18 pm

    The hon. Members on the Conservative Benches form the opposition party in Wales. They will form the opposition after the local elections and after the next general election.

    They had two themes this evening. First, there was a general attack on the National Union of Teachers, and, from one Conservative member, a plug for the Professional Association of Teachers. Do they not consider that the current troubles in our schools are due, at least in part, to the way in which the teaching profession has been used and abused by the Government over the years? Was there not something just a little Janus-faced in the comments of the hon. Member for Delyn (Mr. Raffan)? He talked about saving the money that goes on empty places in schools, yet praised the Government's new pre-election initiative on rural schools. We cannot have both.

    Another theme from Conservative Members was a plug for the beleaguered Cardiff city council as it approaches the local elections. The hon. Member for Cardiff, North (Mr. Jones) told us of an array of achievements by the city council, but he did not respond to Labour Members' simple questions: how many houses have been built in the public sector in Cardiff in the past year, and by how much has homelessness increased? Surely those matters are of considerable interest to Cardiff ratepayers.

    The Secretary of State's approach throughout his speech was that of a complacent accountant an — approach clearly ill suited to the many needs of Wales. That approach is reflected, too, in the attitude of the Chancellor of the Exchequer to our national problems. He claims that we have the most successful economy in Europe, and that is true if our economy is looked at purely through the eyes of a City analyst. It is not so if we examine the economy in broader terms, taking into account social questions, unemployment and related problems. I do not define the performance of the economy in terms of what is good for the City.

    In much the same way, the Secretary of State stressed that local authorities in Wales can do a good job by reducing their spending and increasing their grant aid from central Government, to the benefit, as he said, of ratepayers. I remind the Secretary of State that ratepayers do not have as their sole and narrow concern the level of rates. Of course they are anxious for their money to be spent efficiently, and that is a proper consideration. However, ratepayers have parents who want to find places in residential homes and who need home helps. They also have children who may not be able to afford their own homes and face the consequences of the slump in house building.

    Ratepayers realise that, in spite of our aged and declining housing stock in Wales, we still spend less proportionately on housing than other regions of the United Kingdom. Ratepayers have children who are looking for jobs. The hon. Member for Vale of Glamorgan (Sir R. Gower) talked about the increasing number of job vacancies, and we certainly welcome that. However, if we analyse the figures, we find that many of them are part-time jobs, relevant for women. They are frequently low-paid jobs. I invite the Secretary of State to provide an analysis of the new jobs. He will find that they are frequently low-wage jobs that do not add substantially to the economy of our communities.

    Ratepayers are concerned not only with their rate bills but with the security of their homes and their estates and with the quality of their environment. Goldsmith—and not Sir James or Sir Walter Goldsmith—talked about a society where wealth accumulates and men decay. That process characterises much of Government policy today. Wealth is certainly accumulating—we can see that from escalating house prices in London and the profits and salaries in the City—but, but, in terms of their quality of public provision, the lives of our men and women are decaying.

    I am confident that that strain of Government policy which is content to allow the City to flourish and to look narrowly at the bill for the ratepayer will be rejected by ratepayers in the local government elections.

    It will be rejected in Swansea. Even in spite of what the Secretary of State and the hon. Member for Cardiff, North have said, I am confident that that basic strain in Conservative thinking will also be decisively rejected in Cardiff.

    9.25 pm

    With the leave of the House, I should like to reply briefly. I should like to ask the Secretary of State a question on which I stand to be corrected. Why are our county councils losing £12 million by the non-recycling of grant this year? They can do with that money.

    I very much admired the noble sentiments expressed by my hon. Friend the Member for Gower (Mr. Wardell) in his defence of teachers and the important role that they play in society. By contrast, we heard the reactionary, scab-ridden remarks of the hon. Member for Clwyd, North-West (Sir A. Meyer), who seemed to justify taking away the teachers' negotiating rights. I thought for a moment that we were back a century and a half with the disputes over the Combination Acts. Negotiating rights for our trade unions are basic to a free society. The sooner those rights are restored, the better it will be for all concerned.

    I appreciate that there are nine district councils for whom the change in grant-related expenditure is equivalent to a rate increase of 1p or more. Then there are the seven district councils for which the change is equivalent to a rate reduction of 1p or more. We have noted that one of the authorities to benefit is South Pembroke—quite a coincidence, I am sure. Even with small changes, the difference in grant distribution shows that the Government's method of calculating payments to local authorities is inadequate. It certainly prevents our local authorities from engaging in long-term planning with any confidence. The report, even in a narrow context, does nothing to alter the essentially unsatisfactory nature of the 1987–88 settlement.

    The fact remains that Wales has lost more than £650 million in rate support grant since the Conservative party came to power. I feel sure that the vast bulk of our local authorities are glad to get away from the diktat of the present Secretary of State and the ruthless, uncaring policies of the Thatcher Government whom he has supported.

    9.28 pm

    Presumably, the hon. Member for Newport, East (Mr. Hughes) opened and closed this debate because he suddenly realised that he has a marginal seat. The other day, the South Wales Argus proclaimed:

    "Roy Hughes to lose after 21 years."

    The hon. Gentleman opened the debate by questioning the £30 million increase and saying that the county councils would have liked £35 million. The allowance for expenditure was based on careful calculations using the best available figures for teachers' pay. I do not believe that the hon. Gentleman has any substance for his figure. The report only adjusts the 1987–88 settlement. A later supplementary report will cover the period from 1 January to the start of the new financial year.

    The hon. Member for Newport, East referred to cuts in teaching staff. Pupil-teacher ratios have improved under the Government. I am glad that the hon. Gentleman, like so many others in this debate, called for a return to peace in our schools. He and others spoke of housing needs. He said that we did not care. He talked about housing investment making economic and social sense. The last Labour Government decreased growth capital expenditure by just over 50 per cent. We increased growth capital expenditure by 14 per cent. between 1985–86 and 1986–87, and there will be a £47 million increase in the allocation for 1987–88, with housing provision up by 19 per cent.

    There was a lot of talk about the condition of the housing stock. The last Labour Government spent £143 million on improving the housing stock, whereas we have spent £615 million on improving the housing stock. The Opposition talk about it but have done nothing about it; we have.

    Unemployment in Wales has been falling for 10 consecutive months, and in 11 of the last 12 months it has been falling faster than in any other region of the United Kingdom. The hon. Gentleman quoted Mike Smith, of the Western Mail, on the scale of schemes to train people and help the unemployed. He commented that those schemes were being concentrated on areas where help is most needed. I cannot think of a greater compliment. I am surprised that the hon. Gentleman should criticise. Can I assume that it is the policy of the Labour party to cut such excellent programmes, or to target them less effectively?

    The hon. Member for Brecon and Radnor (Mr. Livsey) welcomed, as did many other hon. Members, the additional resources to cover the teachers' pay increase, but he did not seem to understand that better care for the community also means making more effective use of resources. He spelt out the Liberal party policy for an additional tax on income, but he was characteristically unwilling to give any figures, although figures of between 8 and 13 per cent. have been frequently quoted and not denied by the Liberal party. That is interesting, if they are really proposing that income tax should go from 27p to 40p in the pound, but no doubt when their manifesto is published all things will be made clear.

    We have been given that promise by the hon. Member for Brecon and Radnor. We will examine that manifesto with great care and I will have more to say about his pronouncement in due course. He had better wait and see whether I have the opportunity to play any part during an election campaign in relation to the manifesto. I think I may find some time to devote attention at least to seeing that he does not continue to be my own Member of Parliament in Brecon and Radnor.

    My hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) made a plea for putting pupils first. Surely every hon. Member endorses that plea. The hon. Member for Gower (Mr. Wardell) welcomed the extra provision for teachers' pay, but I understand that he intends later tonight to vote against the order making the necessary resources available to local government. The hon. Gentleman spoke about a desperate shortage of teachers of maths and physics. I can tell him that, as one result of the settlement, there has been an increase in recruitment for teacher training, particularly for maths, up 42 per cent., and physics, up 80 per cent. That suggests that our policies are moving in the right direction.

    The hon. Gentleman talked about neighbour helping neighbour and friend helping friend. That is very difficult to achieve at a time when he and his collegues have been encouraging a dispute to rumble on in the schools and the teachers have been disrupting the education service. My hon. Friend the Member for Delyn (Mr. Raffan) was right about rural schools and about getting better use of resources. He produced the balance to be found absolutely correctly: the need to cut the number of empty places in the schools but at the same time to take proper account of the needs of rural communities.

    I believe that my hon. Friend was also right when he said that there was absolutely no excuse at all for renewed disruption in the schools. Surely on that point at least, there must be total agreement throughout the House.

    Question put: —

    The House divided: Ayes 186, Noes 134.

    Division No. 155]

    [9.35 pm

    AYES

    Aitken, JonathanForth, Eric
    Alexander, RichardFraser, Peter (Angus East)
    Ancram, MichaelFreeman, Roger
    Ashby, DavidFry, Peter
    Atkins, Robert (South Ribble)Gale, Roger
    Atkinson, David (B'm'th E)Galley, Roy
    Baker, Rt Hon K. (Mole Vall'y)Gardner, Sir Edward (Fylde)
    Baker, Nicholas (Dorset N)Garel-Jones, Tristan
    Beaumont-Dark, AnthonyGoodhart, Sir Philip
    Bendall, VivianGower, Sir Raymond
    Biffen, Rt Hon JohnGreenway, Harry
    Biggs-Davison, Sir JohnGregory, Conal
    Blackburn, JohnGriffiths, Peter (Portsm'th N)
    Boscawen, Hon RobertGround, Patrick
    Bottomley, PeterGrylls, Michael
    Bowden, Gerald (Dulwich)Hamilton, Hon A. (Epsom)
    Boyson, Dr RhodesHampson, Dr Keith
    Brandon-Bravo, MartinHanley, Jeremy
    Bright, GrahamHargreaves, Kenneth
    Brinton, TimHarris, David
    Brooke, Hon PeterHawksley, Warren
    Brown, M. (Brigg & Cl'thpes)Hayes, J.
    Browne, JohnHayward, Robert
    Bruinvels, PeterHeddle, John
    Buchanan-Smith, Rt Hon A.Henderson, Barry
    Budgen, NickHeseltine, Rt Hon Michael
    Bulmer, EsmondHickmet, Richard
    Burt, AlistairHiggins, Rt Hon Terence L.
    Butterfill, JohnHind, Kenneth
    Chapman, SydneyHogg, Hon Douglas (Gr'th'm)
    Chope, ChristopherHolland, Sir Philip (Gedling)
    Churchill, W. S.Howard, Michael
    Clark, Sir W. (Croydon S)Howarth, Gerald (Cannock)
    Clegg, Sir WalterHubbard-Miles, Peter
    Conway, DerekHunt, John (Ravensbourne)
    Coombs, SimonIrving, Charles
    Cormack, PatrickJackson, Robert
    Couchman, JamesJohnson Smith, Sir Geoffrey
    Currie, Mrs EdwinaJones, Gwilym (Cardiff N)
    Douglas-Hamilton, Lord J.Jones, Robert (Herts W)
    Dunn, RobertKellett-Bowman, Mrs Elaine
    Edwards, Rt Hon N. (P'broke)Key, Robert
    Evennett, DavidKing, Roger (B'ham N'field)
    Eyre, Sir ReginaldKnowles, Michael
    Fallon, MichaelKnox, David
    Farr, Sir JohnLamont, Rt Hon Norman
    Favell, AnthonyLatham, Michael
    Fenner, Dame PeggyLawler, Geoffrey
    Fookes, Miss JanetLawrence, Ivan
    Forman, NigelLee, John (Pendle)
    Forsyth, Michael (Stirling)Leigh, Edward (Gainsbor'gh)

    Lennox-Boyd, Hon MarkPollock, Alexander
    Lewis, Sir Kenneth (Stamf''d)Porter, Barry
    Lightbown, DavidPortillo, Michael
    Lilley, PeterPowell, William (Corby)
    Lloyd, Sir Ian (Havant)Powley, John
    Lloyd, Peter (Fareham)Price, Sir David
    Lord, MichaelProctor, K. Harvey
    McCurley, Mrs AnnaPym, Rt Hon Francis
    Macfarlane, NeilRaffan, Keith
    MacGregor, Rt Hon JohnRaison, Rt Hon Timothy
    MacKay, Andrew (Berkshire)Rathbone, Tim
    Maclean, David JohnRhys Williams, Sir Brandon
    McQuarrie, AlbertRoberts, Wyn (Conwy)
    Madel, DavidRobinson, Mark (N'port W)
    Major, JohnRoe, Mrs Marion
    Malins, HumfreyRossi, Sir Hugh
    Maples, JohnRowe, Andrew
    Marland, PaulRumbold, Mrs Angela
    Marlow, AntonyRyder, Richard
    Marshall, Michael (Arundel)Sainsbury, Hon Timothy
    Mather, Sir CarolSt. John-Stevas, Rt Hon N.
    Maude, Hon FrancisSims, Roger
    Maxwell-Hyslop, RobinSkeet, Sir Trevor
    Meyer, Sir AnthonySoames, Hon Nicholas
    Miller, Hal (B'grove)Stern, Michael
    Mills, Sir Peter (West Devon)Stevens, Lewis (Nuneaton)
    Mitchell, David (Hants NW)Sumberg, David
    Moate, RogerTemple-Morris, Peter
    Moore, Rt Hon JohnThompson, Donald (Calder V)
    Moynihan, Hon C.Thorne, Neil (Ilford S)
    Neale, GerrardThurnham, Peter
    Nelson, AnthonyTownsend, Cyril D. (B'heath)
    Neubert, Michaelvan Straubenzee, Sir W.
    Newton, TonyWaller, Gary
    Nicholls, PatrickWatts, John
    Norris, StevenWells, Bowen (Hertford)
    Onslow, CranleyWhitfield, John
    Oppenheim, Rt Hon Mrs S.Winterton, Nicholas
    Ottaway, RichardWolfson, Mark
    Page, Richard (Herts SW)Young, Sir George (Acton)
    Parkinson, Rt Hon Cecil
    Patten, Christopher (Bath)Tellers for the Ayes:
    Pawsey, JamesMr. Tony Durant and Mr. Gerald Malone.
    Percival. Rt Hon Sir Ian

    NOES

    Adams, Allen (Paisley N)Brown, Ron (E'burgh, Leith)
    Alton, DavidBuchan, Norman
    Anderson, DonaldCaborn, Richard
    Archer, Rt Hon PeterCallaghan, Jim (Heyw'd & M)
    Ashdown, PaddyCampbell-Savours, Dale
    Atkinson, N. (Tottenham)Canavan, Dennis
    Barnes, Mrs RosemaryCarter-Jones, Lewis
    Barron, KevinCartwright, John
    Beith, A. J.Clay, Robert
    Bell, StuartClelland, David Gordon
    Bennett, A. (Dent'n & Red'sh)Clwyd, Mrs Ann
    Bidwell, SydneyCocks, Rt Hon M. (Bristol S)
    Blair, AnthonyCohen, Harry
    Boyes, RolandConlan, Bernard
    Bray, Dr JeremyCook, Frank (Stockton North)
    Brown, Hugh D. (Provan)Cook, Robin F. (Livingston)

    Corbett, RobinMcTaggart, Robert
    Craigen, J. M.McWilliam, John
    Crowther, StanMarek, Dr John
    Cunliffe, LawrenceMarshall, David (Shettleston)
    Cunningham, Dr JohnMartin, Michael
    Dalyell, TarnMason, Rt Hon Roy
    Davies, Ronald (Caerphilly)Maxton, John
    Davis, Terry (B'ham, H'ge H'l)Maynard, Miss Joan
    Dewar, DonaldMichie, William
    Dixon, DonaldMorris, Rt Hon A. (W'shawe)
    Dobson, FrankMorris, Rt Hon J. (Aberavon)
    Dormand, JackO'Brien, William
    Douglas, DickO'Neill, Martin
    Dubs, AlfredOrme, Rt Hon Stanley
    Duffy, A. E. P.Park, George
    Eadie, AlexPatchett, Terry
    Eastham, KenPendry, Tom
    Evans, John (St. Helens N)Pike, Peter
    Fatchett, DerekPrescott, John
    Flannery, MartinRadice, Giles
    Foot, Rt Hon MichaelRandall, Stuart
    Foster, DerekRedmond, Martin
    Foulkes, GeorgeRees, Rt Hon M. (Leeds S)
    Fraser, J. (Norwood)Richardson, Ms Jo
    George, BruceRoberts, Allan (Bootle)
    Gilbert, Rt Hon Dr JohnRobinson, G. (Coventry NW)
    Golding, Mrs LlinRogers, Allan
    Gould, BryanRooker, J. W.
    Hamilton, James (M'well N)Ross, Ernest (Dundee W)
    Hamilton, W. W. (Fife Central)Sheerman, Barry
    Hancock, MichaelShields, Mrs Elizabeth
    Harrison, Rt Hon WalterShore, Rt Hon Peter
    Haynes, FrankShort, Mrs R.(W'hampt'n NE)
    Hogg, N. (C'nauld & Kilsyth)Skinner, Dennis
    Home Robertson, JohnSoley, Clive
    Howells, GeraintStott, Roger
    Hoyle, DouglasStrang, Gavin
    Hughes, Roy (Newport East)Straw, Jack
    Hughes, Sean (Knowsley S)Taylor, Matthew
    Jenkins, Rt Hon Roy (Hillh'd)Thomas, Dr R. (Carmarthen)
    John, BrynmorThompson, J. (Wansbeck)
    Jones, Barry (Alyn & Deeside)Tinn, James
    Kennedy, CharlesWardell, Gareth (Gower)
    Lamond, JamesWareing, Robert
    Leadbitter, TedWelsh, Michael
    Leighton, RonaldWigley, Dafydd
    Lewis, Ron (Carlisle)Williams, Rt Hon A.
    Lewis, Terence (Worsley)Winnick, David
    Litherland, RobertWrigglesworth, Ian
    Livsey, Richard
    McCartney, HughTellers for the Noes:
    McGuire, MichaelMr. Ray Powell and Mr. Tony Lloyd.
    McKay, Allen (Penistone)

    Question accordingly agreed to.

    Resolved,

    That the Welsh Rate Support Grant Supplementary report 1987–88 (House of Commons Paper No. 325), a copy of which was laid before this House on 30th April, be approved.

    Teachers' Pay And Conditions

    9.46 pm

    I beg to move,

    That an humble Address be presented to Her Majesty, praying that the Education (School Teachers' Pay and Conditions of Employment) Order 1987 (S.I., 1987, No. 650), dated 6th April 1987, a copy of which was laid before this House on 9th April, be annulled.

    Normally an order that involves increases in pay does not lead to political controversy. However, this order is an exception to that rule, first, because the provisions on pay are introduced in conjunction with provisions covering the conditions of employment. For the first time, conditions of employment for teachers are being laid down by statutory instrument. It is certainly the case that the ACAS agreement covered conditions of service, as well as pay. Indeed, that was one of its main strengths. However, the key difference between that agreement and the order that we are debating is that whereas the ACAS agreement was freely agreed between the local authority employers and the majority of teachers, this order is being imposed on the local authorities and teachers.

    Under the Teachers' Pay and Conditions Act 1987, that highly controversial piece of legislation that we debated for 23 hours continuously last December, the Secretary of State has the power to make provision on pay and conditions by order. During those debates we predicted that the Secretary of State would use the power contained in that legislation to impose his own will on the teachers and employers, and that is precisely what he has done. Therefore, as the Opposition, we are using the power that we have under that Act to protest against the Secretary of State's diktat by praying against the order tonight.

    Our argument against the Secretary of State's diktat is twofold. First, it is wrong in principle to set aside an agreement that has been freely negotiated between the employers and the majority of their employees and to impose a ministerial solution by statutory instrument. Secondly, as I have frequently warned the Secretary of State, a settlement that has been freely negotiated is always more likely to stick than one that has been imposed from the top.

    The conditions of service laid down in the order are complex and wide-ranging. Even if the main teachers' organisations were not so hostile to what the Secretary of State is doing, it would need give and take on both sides for the conditions to work successfully in practice. The problem for the Secretary of State and the tragedy for pupils and parents is that new conditions will be introduced at a time when relations between the Government and teachers are even worse than they were when the right hon. Member for Leeds, North-East (Sir K. Joseph) was Secretary of State, and that, indeed, is saying something.

    Instead of accepting the new conditions of service as a necessary part of a new deal, teachers are bitterly resentful of what they see as yet another act of provocation by a hostile Government. After all, this Government have taken away their bargaining rights and replaced them with ministerial diktat — a position which, according to the Teachers' Pay and Conditions Act 1987 will last until at least 31 March 1990.

    Until at least 31 March 1990. If the hon. Lady doubts me, she should read the Act, which I suspect she has not done.

    We all know that the Secretary of State, in one of those manipulative press leaks which have become his trade mark, told The Daily Telegraph that tonight he would tell us that there may be—just may be—some permanent body set up to decide pay and conditions before 1990. Apparently the interim advisory Committee — the Secretary of State's tame poodle — will advise the Secretary of State on what sort of body that will be. Obviously, the Secretary of State knows perfectly well that proposals along those lines are unlikely to satisfy the teachers. They rightly want the restoration of their negotiating rights.

    Before the Secretary of State says that that means the restoration of Burnham, I shall remind him, as I have done on many occasions, that both local authority employers and teachers now accept that pay and conditions should be discussed together and that the Secretary of State's position on the negotiaing body should be fully protected. Even the Secretary of State must admit that that is a considerably different proposal from that of the old Burnham committee.

    I have been watching the Secretary of State for many months—and the truth is that he is not in the business of settling the teachers' dispute. That is presumably why the so-called
    "sources close to the Education Secretary"
    stressed to The Daily Telegraph yesterday that his proposals were not to be seen as an "olive branch" but were instead a "step along the road," whatever that may mean.

    The Secretary of State is not interested in solving the teachers' dispute, at least before the general election. That is presumably why he is not prepared for the future of pay determination to be discussed until the summer. Incidentally, when will he announce the names of those on the interim committee?

    Typically, what the Secretary of State wanted is what he got — a friendly headline in a friendly newspaper. [Interruption.] As is so often the case, what the Secretary of State wants is to give the illusion of compromise without in reality giving anything away and to give the illusion of action without doing anything positive or constructive. The tragedy is that the Secretary of State could speedily bring peace to our schools if he was prepared to accept a new negotiating body for teachers' pay and conditions which would discuss pay and conditions together, and on which the Secretary of State would be properly represented.

    When the hon. Gentleman refers to illusions, does he look on the 16·4 per cent. increase as an illusion?

    I have often said to the Secretary of State that if only that offer had been made two years ago we would not have the current problem.

    The Tories have been in government for quite a long time and they have made a terrible hash of the education service. It is because the Secretary of State still insists of depriving teachers of their bargaining rights and because he seeks instead to impose his will that I shall be asking my colleagues to vote for our prayer tonight.

    9.55 pm

    I am pleased to have the opportunity to speak on this prayer and put right a catalogue of union-inspired confusion and fallacies.

    I am grateful to Her Majesty's Opposition for giving me this opportunity by praying against the first order under the Teachers' Pay and Conditions Act. That decision is confusing, and the hon. Member for Durham, North (Mr Radice) referred to it at the beginning of his speech.

    The Opposition are praying against the first stage of a 16·4 per cent. pay increase. The order—which the Opposition will be voting against—will enable teachers to get substantial back pay, ranging from some £300 for a teacher on the top of scale 1 to £600 for some deputy heads, in their pay packets within weeks. There is no other way of getting this money into teachers' pockets. I want the many teachers I meet to get this substantial increase as the just reward for the enthusiasm and conscientiousness with which they do their jobs.

    The ordinary teachers' first concern remains to give their pupils a good education and a good start in life. That is why the Government have moved to give teachers such a big increase—16·4 per cent. this year with an overall 25 per cent. average increase in the 18 months between March 1986 and October 1987. From October a good honours graduate will start on £175 a week and after two years will receive nearly £200 a week. The many teachers now stuck at the top of scale 1 on £9,800 will be able to progress up a scale running to £13,300.

    Opportunities for allowances above that will be expanded. Today, 30 per cent. of primary school teachers and 45 per cent. of secondary school teachers are on scale 3 or above, or are heads and deputies. Under our plans these figures will go up to 50 and 60 per cent. by September 1990. The first 25,000 new allowances of £500 will come on stream this October. They are part of a reform that is designed to make teaching a more dynamic, rewarding and attractive career.

    The appeal is working. Good news gets through, despite the propaganda of the unions, I am talking about the recruitment figures for teacher training. Applications for this September are up by 14 per cent. Even better news: applications for maths teachers are up by 42 per cent.; for physics teachers 80 per cent.; for CDT a staggering 92 per cent. —and this while the unions are peddling stories of gloom and doom.

    How interesting it is that poor pay no longer features in the unions' campaigns. They know that it is not on to tell the British public how hard done by one is when one has received a 25 per cent. rise in 18 months. If they had any illusions on that score, they will have been shattered by the recent MORI poll, which showed that parents do not think that teachers are underpaid. As I have always said, I want teachers to be well paid. If the pay is OK, the unions have to look elsewhere for a campaigning issue. They have been developing a string of fallacious arguments with which I shall deal tonight. Four of the seven fallacies were repeated by the hon. Member for Durham, North.

    Fallacy number one is that disruption is Baker's fault. The unions really must think that parents have very short memories. When was it that one of the two militant unions was not disrupting our schools? They have been at it on and off for years. Do they really think that we have forgotten their endless campaigns—the half-day strikes, the disgraceful ten-minute withdrawals of labour, the refusals to cover, the refusals to attend parents' meetings and so on?

    It being Ten o'clock, the debate stood adjourned.

    Business Of The House

    Ordered,

    That, at this day's sitting, the Ways and Means motion may be proceeded with, though opposed, until any hour.—[Mr. Lennox-Boyd.]

    Teachers' Pay And Conditions

    Question again proposed.

    As I was saying, I do not cause teachers to disrupt; the union leaders issue the orders. It is tortuous logic to pretend that one does not cause what one commands. The half-day strikes taking place in 10 local education authorities this week are the direct consequence of actions taken by the National Union of Teachers and the National Association of Schoolmasters/Union of Women Teachers. The strikes are totally unjustified.

    The second fallacy is that Baker's contract will choke off good will. The order clarifies the range of duties teachers can be called upon to carry out. It is based closely on the proposals developed in the ACAS talks. For the great majority of conscientious teachers these duties will mean little, if any, change from what they have been doing for years. In an ideal world, there would be no need to spell out a profession's duties in this way. We had to go down this path because of the way in which the unions repeatedly exploited the lack of clarity in teachers' contracts. It is a travesty that the unions should suddenly forget the disruptive use they have been making for years of so-called "withdrawals of good will". The order is a major step forward in protecting parents and pupils from these abuses. Certainly parents will not understand or forgive teachers for clock-watching when they know that the required hours are far from onerous. Teachers will work under the direction of the head for 1,265 hours over 39 weeks of the year.

    Does my right hon. Friend agree that the teachers' strike has resulted in a considerable waste of resources which would otherwise have been devoted to the benefit of pupils? Will he make it his business to estimate the cost of the wasted resources to the nearest thousand million?

    I agree with my hon. Friend that the strikes have wasted resources. But they have wasted something more precious — the opportunities for children. It is always difficult to recapture those opportunities. I repeat that the strikes are unjustified.

    Can my right hon. Friend tell the House how he will ensure that the Inner London Education Authority applies these conditions to the Inner London Teachers Association?

    I have just been talking about how endemic disruption has become in certain areas. In many parts of inner London disruption has become a way of life for many teachers. Many children are sent home day in, day out, week in, week out because in parts of London the ILTA has taken over the running of the education service. That is totally and utterly unacceptable.

    The third fallacy, repeated by the hon. Member for Durham, North, is that I overturned a freely negotiated agreement. What agreement? The so-called ACAS agreement contained a little mentioned clause. Roughly translated, it said "We"—that is two of the six unions, not the other four, and the Labour and alliance employers, not the Conservatives—"agree subject to Mr. Baker providing the money". I had already put up £608 million of taxpayers' and ratepayers' money. But Burnham negotiators have Burnham ways. "More," they said—£85 million more for pay and over £100 million more for changes in working conditions. They knew it was not on, but Burnham cultivated gestures rather than realistic negotiations. So they got up an agreement — a conditional pay deal. It was bizarre then. It is even more bizarre now when one of the non-signatory unions—the NAS-UWT — proclaims the virtues of this so-called negotiated agreement. It was not a party to it. It sat on the sidelines prepared to take any advantage that came out of the talks without participating in the negotiations.

    The fourth fallacy — also mentioned by the hon. Member for Durham, North—is that all would be well if Baker gave the unions their negotiating rights back. It is typical that there should be a move to fundamental rights. What about practical reality? The reality was Burnham, which was utterly discredited as a negotiating body. In the years 1974 to 1986 Burnham delivered only four negotiated settlements. In other years there were special awards, so in the last 12 years there were only——

    On a point of order, Mr. Deputy Speaker. We are used to hearing a smear a day from the Labour party, but, so that we can hear the rest of the debate, would you be kind enough, in the immortal words of the Leader of the Opposition, to tell the hon. Member for Huddersfield (Mr. Sheerman) to shut up?

    The Chair deprecates sedentary comments and interventions.

    I was on the point of saying that in the 12 years from 1974 to 1986 only four settlements were negotiated by Burnham. In the other eight years there were either special awards, arbitrations or pay policy prescriptions. In its final months, Burnham needed the prop of ACAS to stagger from endless meeting to meeting. Always the inter-union rivalry and the battle for members took precedence over the search for a sensible negotiated agreement. As one union leader admitted, commenting on the Burnham machinery, some unions used Burnham as a recruiting tent rather than as a negotiating body. Let there be no mistake: Burnham had become the misuse rather than the exercise of negotiating rights.

    The fifth fallacy, repeated by the hon. Member of Durham, North tonight, is that I have excluded the unions. The teachers' unions have a real, important part in the new, strictly temporary arrangements set up by the Act. The Act was the product of 50 hours of debate. There was no guillotine, and we accepted 13 amendments——

    —here, and in the other House. We are a bicameral legislature.

    One of the amendments that we accepted includes "interim" in the title of the body. The Act requires me to set up an interim advisory committee to consider teachers' pay and conditions. The committee will be appointed in the summer and will be made up of indpendent people. It will be responsible for advising on the April 1988 pay settlement. Given the divisions between the various parties on what should be the long-term replacement of Burnham, I do not see any way in which we can get an agreement with legislation enacted in time for April 1988. That is not realistic.

    What is realistic is for the unions to take part in the interim arrangements. They have an important part in the process. I wish to remind the House of the involvement of the unions in the process. They will give evidence to the committee in the full glare of publicity, and they will be consulted on the committee's recommendations. Those are the union's statutory rights. They would serve their members better by preparing to use them effectively instead of by pretending that they have been completely cut out of the action.

    Another of the accusations made by the hon. Member for Durham, North constituted the sixth fallacy—that Baker's interim means for ever. Interim means what it says. The Act set up temporary arrangements, and it expires in 1990. When procedures produce chaos and breakdown, one replaces them. If there is no agreement on what to replace them with, one goes for a short-term solution that will give everyone time in which to work together on the long-term solution. That is what we have done, and that is the purpose of the interim advisory committee. So far, the two big unions have merely repeated that they know the solution: to set up a joint negotiating council. That, however, amounts to Burnham revisited, and I am not prepared to go back to that. We need some real thought, real reflection and real analysis to find a long-term solution that is fair not only to teachers, but to parents, taxpayers, ratepayers and, above all, children. It is not simply a question of one group's rights. It is a question of finding machinery which fairly reflects the genuine interests of all these groups.

    The interim advisory committee will provide us with a breathing space to work out effective permanent machinery. I have made it clear that I do not want to be the determiner of teachers' pay. I and my colleagues intend to enter into detailed discussions later in the year with all those with an interest, including the teacher unions, the local authority associations and the churches. I also want to find a way of bringing in the views of parents. This consultation will get under way early in the autumn.

    The hon. Member for Durham, North says that I am putting it off. I remind him that I invited all the unions to come and see me to discuss the details of the order that is now before the House. Two of the unions that now recommend disruption refused to come and talk, but the other four unions did come.

    To assist in this important process of consultation, the Government will publish a Green Paper surveying the issues and setting out a variety of alternative possible solutions. This document will carefully examine all the options and consider their relative merits. It will look at statutory and non-statutory negotiations. It will look at possible developments from the interim advisory committee machinery. It will also examine suggestions for separate arrangements for heads and deputy heads.

    Will the Minister please tell the House whether he has a target date by which he wishes to see the replacement full-scale mechanism in place? Secondly, will he assure the House that he expects that within that mechanism the teachers' right to negotiate their own pay and conditions will be restored?

    I can answer that point specifically. I have already said that I do not believe that it will be possible to find an agreement between the various interests for the April 1988 settlement. As I have said, that is because there are very deep differences of opinion. I am aware of the alliance proposals. They are for a form of independent review body coupled with a form of negotiations — a mixture of both systems, as I understand it. We must try to be fair to the alliance. Its proposals have been developed since they were debated in the Lords. That proposal needs the most careful consideration and will be considered in our Green Paper.

    I do not think that it will be possible to get an agreed new permanent machinery by April 1988. However, that does not mean that we will not be able to get it in place by April 1989—that is, before 1990—and we must strive to do that.

    Will my right hon. Friend say whether he envisages a final end to majority voting in the successor to the Burnham committee as a means of achieving agreement more simply? Does he envisage separate negotiations for heads and deputy heads?

    The Green Paper will set out the points for and against separate negotiations for heads and deputy heads. The largest head teachers' union, the National Association of Head Teachers, has put to me strongly the view that it would like heads to have a separate negotiating arrangement. That view is not shared by the smaller heads' union or, I believe, by the two other larger unions, although they have not been to see me about it.

    The case for separating the determination of an ordinary teacher's pay from a head teacher's pay needs the most careful consideration. 'There is a strong case for it, but it has to be set out. If I were to announce that that is what I favour, I can assure my hon. Friend that several of the unions would say that they would not accept it because it had been put forward by the Government. We have to go through a process of consultation with interests wider than just the unions. There will have to be consultations with the local education authorities, with teachers and with parents.

    Does my right hon. Friend accept that, as I was told only on Saturday morning by a teacher, it is not just the long-haired, bearded, corduroy brigade that represents the teachers of this country? Many people are tired of teachers thinking that their job is to represent activist teachers and not to attend to the problems of students? Does my right hon. Friend accept that, if we are to get teaching right in this country, it has to be on the basis of what is good for children, not what is good for teachers who want to be political activists more than they want to be teachers?

    That is absolutely right. The difference between the union militants and activists and the bulk of the profession is vast. It is a huge gulf and we all know from our own experiences that the sorts of teachers we meet in schools we visit are very different from those we see on the television screen during union conferences. The prime consideration in all of this must be the welfare of the children. I do not believe that parents, or the country, accept that teachers are justified in walking out on their obligations and disrupting schools.

    I was dealing with the various issues that could be covered in the Green Paper. The National Confederation of Parent Teacher Associations has suggested a review body. The alliance has suggested the variation of a review body with some sort of negotiation or pendulurn arbitration. The Association of Municipal Authorities wrote to me last week suggesting a national joint council, recognising that it would have to take account of my statutory duties and powers in respect of school teachers.

    That takes me back to the point that my hon. Friend the Member for Ealing, North (Mr. Greenway) made about majority voting, that with a national joint council one has to face head on the relative voting strengths of the various unions, their respective influence and authority, and their changing memberships. The membership of the two most militant unions is declining and the membership of the less militant unions is now rising. One also has to examine and determine the exact role of the Government because they still provide about 46 per cent. of the money.

    The list I have just set out gives some idea of the wide range of possibilities and it shows the need to balance carefully the different interests of six unions, the local authority associations, the voluntary schools and parents, and the taxpayers, who must not be forgotten.

    Because of the firmly entrenched and conflicting views about the best course of action for the future, general agreement involving the whole of the education service and the Government will not be easy to achieve. However, let my commitment to this consultation exercise put to rest the claim of the unions that the temporary machinery will be there fore ever.

    I again make clear that the holder of my office would not want to be the determiner of teachers' pay and conditions. I am simply not prepared to lurch back into a form of Burnham. We have an opportunity now to find a long-term permanent arrangement that will be more effective than Burnham.

    The last fallacy again was not touched upon by the hon. Member for Durham, North, because I do not believe that he favours disruption in our schools. The fallacy of the two union leaders is that they must disrupt because they have no choice. That is utter nonsense. It completely ignores the constructive path to be followed. We should use the breathing space granted by the interim advisory committee to work out a new, effective, long-term way of settling teachers' pay and conditions. Certainly more than half of the parents polled by MORI thought that teachers should not disrupt. Unions should abandon this negative, harmful course. The public relations officer of the NCPTA is now telling teachers that sympathy with them is not widespread among parents.

    The public relations officer said:
    "Threats of further disruption shock parents to the core."
    The suggestion that parents would support strikes against their own children is a delusion.

    I believe that most ordinary teachers consider that they have now been fairly treated as regards pay and conditions of employment. I understand their concern about permanent machinery. However, I ask the individual teacher to accept the necessity of the interim advisory committee as a temporary arrangement. We cannot just go back to the chaos of Burnham. We must be open-minded about devising effective long-term machinery. It is very important that all teachers should fully understand the present positon and the Government's intentions. I shall write to all head teachers during the next few days setting out the key points I have put to the House today.

    I hope that over the months ahead agreement can be reached by all parties. But I must ask union and local authority leaders to be open-minded and not hidebound by past arrangements. They must realise that if there is a lesson to be learned from recent years it is that we cannot go back to a revamped Burnham.

    In the meantime, I urge all teachers to put once again the care and education of children first. Their passage through the education system is a once-only lifetime chance. Their performances in the examinations many of them are shortly to take will have crucial effects on their future. I have pledged to resolve the question of future pay determination for teachers. I ask teachers to pledge the restoration of uninterrupted education for our nation's children.

    10.21 pm

    The atmosphere in the House is somewhat excitable tonight—[Interruption.] The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) is clearly as excited as all his colleagues. Whether that is boyish enthusiasm for the forthcoming general election or the result of an over-generous dinner I shall leave future Hansard readers to decide for themselves.

    On a point of order, Mr. Deputy Speaker. I do not mind the boyish enthusiasm, but the inference that I have had over too good a dinner when I have only ate here in my view is outrageous.

    I hope that Hansard will carry my report in full and leave future readers to draw their own conclusions. I hope also that it will carry the hon. Gentleman's precise words because his grammar left as much to be desired as his sense.

    On a point of order, Mr. Deputy Speaker. I did not think that it was allowable for another hon. Member to impute the honour or grammar of any other Member. I find it extremely offensive that the hon. Gentleman has said that my grammar is not as good as what his is. I take great offence at that.

    The hon. Gentleman does far too good a job imputing his own grammar to leave it to me.

    I listened with great care to the speech of the Secretary of State. I remark merely that the national press has widely leaked the prospect of some great concession, some new initiative, that the Secretary of State is about to launch that would assist in the solution of the trench warfare that is now continuing in our schools—for which, let me be clear, the unions have a responsibility to bear. I believe that it was a silly and stupid action. It is my message—I believe that it is widely felt outside the House—that the Secretary of State has to bear some of the blame for the present situation because of the way in which he has managed the affair.

    We sat on the edge of our chairs waiting for the great initiative to arrive—I wonder whether that is the right way to run such affairs—but, of course, nothing at all happened. There was some slight moderation in the tone, to which I shall refer later, but no prospect of any initiative to break the log-jam and deadlock that is now inflicting disruption upon our schools.

    From the earliest days we said that the real issue in this dispute would never be pay: it was the removal from teachers of the right to negotiate pay and conditions. When that was said, it was greeted with some derision by the Minister and other Government Members, but so it has proved and so it remains today.

    This order will put into effect legislation which has passed this House for the teachers' pay rise. For that reason, I agree with the Minister that it would be difficult to oppose the order and therefore to deny teachers the pay rise which has been granted, rather than negotiated. I am glad of this debate, because it enables us to make some broader comments about the handling of this sorry affair.

    I do not seek, nor have I ever sought, to deny the Minister the right to impose a solution if the situation had come to pass that schools and the education system, therefore our children, were being damaged. We do not deny him that right, but whether or not this is the moment to do it is a matter of judgment. Any Secretary of State who had a proper regard for the democratic process and fundamental civil liberties, particularly of those 400,000 teachers who have held that right since 1919, would, at the moment he took that power to impose, have sought also to put in place some solid mechanism to replace those rights. If, when the Minister had taken that power, he had said, "I only want to have it and this is the time when it will come to an end," and had given some idea of how the negotiating right would be replaced, he would not have had this dispute on his hands or, if he had a dispute, the Left-wing extremist teachers—we saw many of them on the rostrums at the teachers' conference—would have been isolated and standing alone.

    The Minister has created an issue about civil liberties—it has always been about that—which has unified the teachers across their unions and has driven the moderates into the hands of the extremists, instead of isolating the latter to bring peace to our schools. I have come to the conclusion that the extremists and the Secretary of State need each other. He needs the extremists to give him the votes at the ballot box, which he has been seeking in the way he has pursued this dispute; and they need him to give them a cause to unify the teachers' unions and put the moderates behind the extremists. They need and deserve each other.

    Will the hon. Gentleman explain, when he talks of moderate teachers being driven into the hands of the extremists, why the Professional Association of Teachers and AMMA have grown at the rate they have in such a short time?

    I draw the hon. Member's attention to the fact that when the members of AM MA came to discuss this action in the lobby in the House of Commons, they were united with the NUT and the NAS-UWT. It may be that they did not decide to strike, but they voted with them in their opposition to the withdrawal of their rights to negotiate pay and conditions.

    The hon. Gentleman will also know as well as I do—at least, he should, given his background—that there are many moderate members of the NUT and the NAS-UWT. Their instinct is not to strike but they have been driven to support those Left-wing extremist calls that we heard so clearly at the teachers' conferences only a matter of weeks ago.

    The hon. Gentleman must have received the same sort of letters that I have received from moderate teachers in the NUT and the NAS-UWT who are desperate about taking this action but who feel that they have no other way in which to defend their civil liberties. He will know the heart-searching that is going on. Conservative Members are shaking their heads, but all hon. Members who are interested and involved in education will have received such letters from moderate teachers belonging to those two unions, expressing their deep concern about taking the only action that they feel is open to them to preserve their civil liberties. Those are the people whom the Secretary of State has driven into the arms of the extremists. He has provided the one unifying call which was possible under the circumstances.

    I pleaded with the Secretary of State in a letter of 5 April, as did my right hon. Friend the leader of the Liberal party, to make some move. We gave him a number of options. He could have published a programme of how he saw matters developing in the restoration of those rights. He could even have published his own proposals. He could have taken any action to make sure that the teachers understood that he was committed to the restoration of their rights in the end.

    It is simply not the case that the unions are united against the Government's proposals. Four of the unions have come out clearly against disruption. They are consulting and discussing with me. They have come in to discuss the order. I have just issued a further draft order and invited all the unions to discuss that with me. I have already received representations from two of the unions. I very much hope that the other two large unions will do so. Nor must the hon. Gentleman exaggerate the extent of disruption in our schools. Well under 1 per cent. of our schools have been disrupted.

    I certainly do not want more, and I trust that no one in the House wants more. What I have suggested tonight is a path of discussion instead of disruption.

    The Secretary of State should not misunderstand coming in to talk to him as support for his actions. There is a fundamental difference between the two. I very much hope that other unions will also come in to have discussions with him. But let us not misinterpret such actions as supporting his action in withdrawing their civil liberties. That is a misjudgment of the events, and the right hon. Gentleman knows it.

    I make the point that I