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Control Of Inflation (Local Government) Bill

Volume 171: debated on Tuesday 1 May 1990

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5.10 pm

I beg to move, That leave be given to bring in a Bill to control the annual increases in expenditure of local authorities in England and Wales.

The purpose of the Bill is to seek to restrict local government spending to the rate of inflation for the next two years and to gear the measure of inflation to the local pay and prices index. Clearly, it must be recognised by the House that there are elements in the retail prices index that will not be in the pay and prices index, and vice versa. Therefore, it would be unfair to local authorities not to base the spending on the pay and prices index.

We must consider the principle behind the community charge and the way that it is worked out. The changeover from rates, paid by roughly a third of the population, to the community charge has resulted in large increases in local government expenditure. As a consequence, large amounts of extra local government taxation has been paid by the majority of people up and down the country.

I shall use my county of Lancashire as an example because I am most familiar with it. It has been pointed out by colleagues that many local authorities like Lancashire have—as when decimal coinage was introduced—under the umbrella of the change in policy, brought in extra expenditure that they would not otherwise have done. Lancashire is typical of many authorities up and down the country——

Yes, Labour authorities, as my hon. Friend rightly says, are the worst offenders in this regard. Lancashire is a typical example. It has increased its expenditure by 17·5 per cent. If rates had now been in operation in Lancashire, that would have resulted in an increase of 32 per cent. for every household. Clearly, that problem must be dealt with, and the Bill will do so.

The Bill will also deal with inflation. When inflation is the major enemy of the country and needs to be controlled, local government cannot be immune from its consequences. Labour local authorities are making vast increases and, consequently, increasing pressure on inflation, which damages everyone in our community. Central Government must control expenditure in order to control inflation, and the same discipline must be placed on local government. Hon. Members have to take difficult decisions when they see that there is merit in increasing expenditure, but feel that it would have long-term economic effects on the value of the pound, confidence in the world, the stock exchange, and the overall running of the country. In those circumstances, we say that we refuse to increase expenditure, and will perhaps reconsider the position in the future.

The increases in spending in local government will, in May, probably add at least 1 per cent. to the inflation rate. That will affect the possibility of reductions in mortgage interest rates, business interest rates and the Government's economic strategy. The Bill will ensure that local authorities cannot be immune from their responsibility to the community for downward pressure on inflation.

Labour councils' increased expenditure is everyone else's higher mortgage repayments, and the public must realise that.

Local councils have overspent their budgets for many years. There have been continual over-spenders, and Lancashire has been typical. Many Labour councils have shown themselves totally unable to control expenditure. Therefore, a cap must be placed on them to oblige them to make more sensible use of the resources available and to control what they do.

Until I discussed the matter with people I do not think that many of them realised that county councils, of which Lancashire is typical, levy seven eighths of the charge. They also do not realise that those councillors who are increasing the charge will not come up for re-election until 1993. That means that three further community charges will be set without any accountability to the electorate. If the Bill goes through the House, the electorate will feel that their interests will be protected until they can get to the ballot box to deal with the problem.

We must also recognise that those same county councils were elected in 1989, before the community charge came into operation. They have never had to say, "This is the amount that we will charge", and describe the services that they will provide. In 1993 they will have to face, and deal with, that problem.

The public must realise that county councils finance on a four-year cycle, which the Bill will break. In the first three of its last four years in power, the Labour group on Lancashire council increased rates above the inflation level and stacked away reserves. In the fourth year, election year, the Labour councillors spent those reserves to get themselves elected. Consequently, in the year after the election, they had to recharge the reserves which were as low as £1·7 million. The result is that the community charge in Lancashire consists of £13 per head to restock the reserves, plus an extra £11 to cover the overspend of the previous year when they had not levied sufficient funds from the electorate by way of rates—that makes a total of almost £25. In effect, the public were being bribed with their own money to elect a Labour council in the fourth year of the cycle. The Bill will stop that. I have no doubt that Lancashire is typical of Labour councils throughout the country.

Such a cap will oblige councillors to budget more prudently. Over-spenders like Lancashire will have to look for more efficient ways to provide services. Hampshire county council makes a good comparison. It has 125,000 more people, the age profile of its population is older and it provides the same services—on Government measure, at better quality—with 11,000 fewer employees than are being paid for by the Lancashire electors.

P and A reports are available in Lancashire that show that residential homes are in an appalling state and that social services, such as meals on wheels, are far too expensive and provide poor service, not reaching the people who desperately need them. To date, the council has not taken the advice of its own consultants, but prefers to levy large amounts from the population of Lancashire.

The Bill will also protect people on low income, whom all hon. Members have met, and whose pleas have been ignored by Lancashire county councillors. My district council, West Lancashire, asked for the county council to reduce its expenditure, but it refused. Increases in expenditure hit the population hard. The majority, whether on pensions, benefits or salaries, receive between 6·5 and 9 per cent. in increases. Lancashire constituents will have to meet 17·5 per cent. increases in expenditure, which erodes their standard of living and reduces their disposable income.

Voters must be aware that many Labour councils will succumb to the temptation to help Labour win the next election by continuing to increase the community charge. That is another factor that the electorate must bear in mind. If Opposition Members divide the House on what we believe to be a sensible measure, it will be only to enable their colleagues to continue to undermine the Government.

5.20 pm

I do not oppose the Bill in the spirit of trying to undermine the Government. Without yah-boo, I wish to put a contrary and, I hope, courteous case. If there are to be ten-minute Bills—there are some who think they should be abolished—we should take them seriously and not just let them go through because of parliamentary convenience, lethargy or whatever. I believe that this Bill should be opposed.

During the 1987 general election, I spoke in the hon. Gentleman's town hall in Accrington in support of the Labour candidate Keva Coombes. As a Scot, I spent 10 of the 20 minutes available speaking about the poll tax. When I left the platform, I was asked rather sharply why I had spent so long on that matter. It is only when we experience the poll tax that we realise the full enormity of what is happening.

I say gently to Conservative Members that if they think that year two will be any easier than year one, they are mistaken. It will make parliamentary life a misery. If we could start all over again, for the sake of personal convenience rather than political advantage I would never want to embark on such a road again. There is a geological flaw in the system. The hon. Member for Accrington—[Interruption.] The hon. Member for Hyndburn—[HON. MEMBERS: "Wrong Member."] The hon. Gentleman is tinkering with the tax in the hope of making some improvement. There is no raft; no safety net. The hon. Member for Hyndburn——

I am sorry. The hon. Member for Accrington—[HON. MEMBERS: "Wrong."] There is no safety net to rescue people. There is no safety vehicle. The poll tax is bound by geological flaws and there is no way that it can succeed.

I wish to cite just a few figures. There are now 400,000 people in the Strathclyde region alone who have either not paid or have been unable to pay in full. For most of them, it is not a political protest——

I can tell the hon. Gentleman that people at the lower end of the income scale have other bills to pay, such as electricity——

I am not putting my case in a yah-boo way. I am trying to explain why there are fundamental difficulties. People put poll tax at the bottom of the list, debts mount up and, even more serious, actual physical illness is caused by worry. We have constituency experience of that.

When any scheme is introduced, sooner or later there must be sanctions. In Scotland, it is the sheriff officers and the warrant sales. There must be some legal sanctions. That is exceedingly unpleasant and creates resentment. It is causing constituency agony. Some 23 per cent. of people do not pay the poll tax. In Lothian region, which is smaller than Strathclyde, 70,000 people have not paid the poll tax. That did not happen under the rating system.

The hon. Gentleman's proposal is merely alleviative—it is an attempt to alleviate a difficult position. There is no way that it can be alleviated. The system is geologically flawed and fundamentally impossible because property is static and people are mobile. It is more difficult in the second year to trace people. Many thousands of people have not had a poll tax demand. The officials in my local authority are very efficient, but because of the constant changes of address the task is very difficult. Rather than trying to introduce an alleviative measure, the House of Commons should face the problem and admit that the poll tax cannot be amended. The system should be changed and we should go no further down the poll tax road.

On a point of order. Mr. Deputy Speaker. I am the hon. Member for Lancashire, West, not for Accrington or Hyndburn. The hon. Member for Linlithgow (Mr. Dalyell) did not speak in my constituency.

Question put:

The House divided: Ayes 88, Noes 143.

Division No. 188]

[5.26 pm


Aitken, JonathanHamilton, Neil (Tatton)
Alexander, RichardHargreaves, Ken (Hyndburn)
Allason, RupertHill, James
Amos, AlanHind, Kenneth
Arnold, Jacques (Gravesham)Holt, Richard
Aspinwall, JackHowell, Ralph (North Norfolk)
Banks, Robert (Harrogate)Hughes, Robert G. (Harrow W)
Bellingham, HenryIrvine, Michael
Bevan, David GilroyIrving, Sir Charles
Body, Sir RichardJanman, Tim
Bonsor, Sir NicholasJessel, Toby
Bowden, Gerald (Dulwich)Johnson Smith, Sir Geoffrey
Brazier, JulianJones, Gwilym (Cardiff N)
Bruce, Ian (Dorset South)Jones, Robert B (Herts W)
Buck, Sir AntonyKellett-Bowman, Dame Elaine
Butler, ChrisKilfedder, James
Carlisle, John, (Luton N)King, Roger (B'ham N'thfield)
Carrington, MatthewKnight, Dame Jill (Edgbaston)
Conway, DerekLatham, Michael
Coombs, Simon (Swindon)Lloyd, Sir Ian (Havant)
Cran, JamesMcNair-Wilson, Sir Michael
Dickens, GeoffreyMiller, Sir Hal
Dunn, BobMitchell, Andrew (Gedling)
Evans, David (Welwyn Hatf'd)Monro, Sir Hector
Fenner, Dame PeggyMorris, M (N'hampton S)
Field, Barry (Isle of Wight)Mudd, David
Fookes, Dame JanetNicholson, David (Taunton)
Gale, RogerPorter, David (Waveney)
Gill, ChristopherPrice, Sir David
Gorman, Mrs TeresaRiddick, Graham
Gorst, JohnRost, Peter
Gow, IanSayeed, Jonathan
Greenway, Harry (Ealing N)Shelton, Sir William
Gregory, ConalSkeet, Sir Trevor
Griffiths, Peter (Portsmouth N)Speller, Tony
Hague, WilliamSpicer, Sir Jim (Dorset W)

Stern, MichaelViggers, Peter
Stokes, Sir JohnWaller, Gary
Tapsell, Sir PeterWard, John
Thompson, D. (Calder Valley)Wheeler, Sir John
Thorne, NeilWiddecombe, Ann
Thurnham, PeterWood, Timothy
Townend, John (Bridlington)
Tredinnick, DavidTellers for the Ayes:
Trotter, NevilleMr. Nicholas Bennett and Mr. David Ashby.
Vaughan, Sir Gerard


Abbott, Ms DianeHood, Jimmy
Allen, GrahamHowells, Geraint
Anderson, DonaldHowells, Dr. Kim (Pontypridd)
Armstrong, HilaryHughes, Roy (Newport E)
Ashley, Rt Hon JackIngram, Adam
Barron, KevinJones, Ieuan (Ynys Môn)
Battle, JohnJones, Martyn (Clwyd S W)
Beckett, MargaretKaufman, Rt Hon Gerald
Beith, A. J.Kinnock, Rt Hon Neil
Bell, StuartKirkwood, Archy
Bennett, A. F. (D'nt'n & R'dish)Leadbitter, Ted
Blunkett, DavidLeighton, Ron
Boyes, RolandLestor, Joan (Eccles)
Bradley, KeithLloyd, Tony (Stretford)
Brown, Nicholas (Newcastle E)Lofthouse, Geoffrey
Buchan, NormanMcAllion, John
Buckley, George J.McCartney, Ian
Caborn, RichardMcKay, Allen (Barnsley West)
Callaghan, JimMcNamara, Kevin
Campbell, Ron (Blyth Valley)McWilliam, John
Campbell-Savours, D. N.Madden, Max
Canavan, DennisMahon, Mrs Alice
Cartwright, JohnMarek, Dr John
Clark, Dr David (S Shields)Marshall, Jim (Leicester S)
Clarke, Tom (Monklands W)Martin, Michael J. (Springburn)
Clay, BobMartlew, Eric
Clelland, DavidMaxton, John
Clwyd, Mrs AnnMeacher, Michael
Cohen, HarryMichael, Alun
Cook, Frank (Stockton N)Michie, Bill (Sheffield Heeley)
Cousins, JimMorgan, Rhodri
Cox, TomMorley, Elliot
Crowther, StanMorris, Rt Hon A. (W'shawe)
Cryer, BobMorris, Rt Hon J. (Aberavon)
Cummings, JohnMullin, Chris
Cunliffe, LawrenceMurphy, Paul
Cunningham, Dr JohnNellist, Dave
Dalyell, TarnOakes, Rt Hon Gordon
Darling, AlistairO'Brien, William
Davies, Ron (Caerphilly)O'Neill, Martin
Davis, Terry (B'ham Hodge H'l)Owen, Rt Hon Dr David
Dixon, DonPatchett, Terry
Dunnachie, JimmyPike, Peter L.
Eadie, AlexanderPowell, Ray (Ogmore)
Eastham, KenPrimarolo, Dawn
Ewing, Harry (Falkirk E)Quin, Ms Joyce
Ewing, Mrs Margaret (Moray)Radice, Giles
Fatchett, DerekRedmond, Martin
Field, Frank (Birkenhead)Richardson, Jo
Fisher, MarkRobertson, George
Flannery, MartinRogers, Allan
Flynn, PaulRowlands, Ted
Foot, Rt Hon MichaelRuddock, Joan
Foster, DerekSalmond, Alex
Foulkes, GeorgeSheldon, Rt Hon Robert
Fyfe, MariaShort, Clare
Galloway, GeorgeSillars, Jim
Garrett, John (Norwich South)Skinner, Dennis
Garrett, Ted (Wallsend)Smith, Andrew (Oxford E)
Gould, BryanSmith, C. (Isl'ton & F'bury)
Graham, ThomasSmith, Rt Hon J. (Monk'ds E)
Griffiths, Win (Bridgend)Spearing, Nigel
Hardy, PeterSteel, Rt Hon Sir David
Haynes, FrankSteinberg, Gerry
Heal, Mrs SylviaStott, Roger
Hinchliffe, DavidStraw, Jack
Hogg, N. (C'nauld & Kilsyth)Taylor, Mrs Ann (Dewsbury)
Home Robertson, JohnThompson, Jack (Wansbeck)

Walley, JoanYoung, David (Bolton SE)
Wardell, Gareth (Gower)
Watson, Mike (Glasgow, C)Tellers for the Noes:
Welsh, Michael (Doncaster N)Mr. Harry Barnes and
Williams, Alan W. (Carm'then) Mr. Terry Lewis
Wray, Jimmy

Question accordingly negatived.