House Of Commons
Wednesday 14 January 1981
The House met at half-past Two o'clock
Prayers
[MR. SPEAKER in the Chair]
Oral Answers To Questions
Scotland
European Community (Regional Development Fund)
1.
asked the Secretary of State for Scotland what is the total value of grants made towards projects in Scotland by the European regional development fund since its inception in 1975.
Scotland has received grants totalling £120·5 million from the European regional development fund since its inception in 1975.
Does my hon. Friend agree that these grants have brought considerable advantage to Scotland and provide a further example of the benefits that Scotland gains from our membership of the Community?
I very much agree with my hon. Friend. Scotland has received approximately 25 per cent. of total ERDF grants paid to the United Kingdom since the inception of the fund.
Do these figures include grants not only to projects but to individuals and individual enterprises? Secondly, can the Minister say something about the state of the comprehensive projects believed to be sponsored by the EEC and how far they may affect transport costs?
The ERDF figures are for industrial and mainly local government types of projects. But the total funds in grants and loans received from the Community during the period were in excess of £800 million. That, of course, includes the investment bank, the social fund and other things of that kind.
I welcome the moneys that we have received from Europe, but is this not simply United Kingdom cash being recycled after taxation and coming back to Scotland, is not this welcome recognition of Scotland's needs through the efforts of our Ministers?
I appreciate my hon. Friend's remarks. He rightly says, of course, that the funds that are sent back into this country from the European Community are essentially the contributions of the member States.
Is not the Minister aware of the great anxiety among local authorities about the principle of additionality in this regard? Does he realise that many local authorities regard this as the Government using these EEC grants to cut back the capital allocations that they should otherwise be making to local authorities?
These grants are extremely helpful to local authorities in that they reduce the loan burden with which they have to deal. They are, therefore, welcomed by local authorities in that respect.
Children's Panel System
2.
asked the Secretary of State for Scotland when he expects to complete his review of the powers and operation of the children's panel system; and if he will make a statement.
First, may I congratulate the hon. Member for Glasgow, Garscadden (Mr. Dewar) on his appointment to the Opposition Front Bench. In reply to his question, my right hon. Friend hopes to be able to make a statement on this subject within the next few weeks.
I thank the Minister for his kind remarks. The fact that a statement is imminent is welcome to the Opposition, as is the fact that the original consultation document emphasised the worth and the established place of the children's panel system. However, will the Minister also note in his final deliberations that any introduction, as a result of the review, of a wide range of punitive powers for the panels which would change their atmosphere and intent would he anything but welcome?
First, I am glad to reciprocate the hon. Gentleman's compliment in respect of our unique system of children's panels in Scotland. We had about 170 submissions on that paper. I can confirm that most responses were against any type of punitive measures.
Will my hon. Friend accept that there is an overwhelming need to restore a sense of parental and family responsibility for the anti-social actions of children? Will he ensure that any new powers brought forward will include powers to fine the parents of children found guilty of such anti-social activities?
No, I can give no such guarantee. I had meetings with the Scottish Association of Children's Panels, the Children's Panels Chairmen's Group, the Association of Reporters of Children's Panels, the Regional Reporters' Group, the Scottish branch of the British Association of Social Workers and the Association of Directors of Social Work. Although most people agreed that there was a case for some voluntary reparation, punitive fines on parents or children were largely not wanted by most people I saw.
Will the Minister confirm that, following three years of decline in the number of referrals to children's panels, the indications, certainly from my own constituency in Glasgow, are that, as a result of the Government's economic policies and the social deprivation that they are causing, a big increase in referrals to children's panels will be shown in the statistics for 1980?
That has not happened yet. In the lifetime of the children's panel system, including the present year, referrals have gone down, as have the number of children in list D schools.
Seed Potatoes
3.
asked the Secretary of State for Scotland what steps he is taking to encourage the promotion of Scottish seed potatoes at home and abroad.
I have been considering a number of different options to encourage marketing of Scottish seed potatoes both within the United Kingdom and abroad. I have received representations from various interested bodies and hope to make a statement before long.
Is my right hon. Friend aware that the £50,000 contribution to keep the ball in play has been widely welcomed in the industry, perhaps most particularly by Mr. John Hay the convenor of the potato committee of the Scottish NFU? Does he not accept that we need a major long-term initiative, not just a short-term palliative, if we are to have a seed potato industry that can compete effectively with our major competitors who work in a tightly operated industry based on levies on their own producers?
I am grateful to my hon. Friend for what he said about the £50,000 aid that we have given to the association. I also agree with him that there is a generally agreed need for some action to be taken to give our seed potato industry some procedures equivalent to those that are available to its competitors. I hope to get an agreement on the type of organisation that will be acceptable to all concerned.
Is the right hon. Gentleman likely to give the Scottish Seed Potato Association development council status, as has been requested by the NFU?
That is one of the options that we are considering. It is not one that is universally agreed, but we are considering it.
Will my right hon. Friend confirm that the greatest number of representations that he has received on this issue are to the effect that the Scottish Seed Potato Association should be given development council status so that it can perform the job of marketing Scottish seed potatoes throughout the world?
I can confirm that the argument that has been put to me is that the Scottish seed potato industry is now in direct competition at home and abroad with French and Dutch producers who already have central organisations which collect compulsory levies for promotion and marketing. It is that proposal and others that we are at present considering.
Fishing Industry
4.
asked the Secretary of State for Scotland whether he is satisfied with the current state of the Scottish fishing industry.
The fishing industry, like most others in Europe and elsewhere, is having to adapt to changed economic circumstances and reduced fishing opportunities. To sustain it through these difficulties we have already provided substantial financial assistance. There are, however, grounds for cautious optimism for the future, once a common fisheries policy is agreed.
I thank my right hon. Friend for that reply. Will he confirm that in his further negotiations to achieve a common fisheries policy there will be no weakening of resolve on the part of the Government to ensure an adequate settlement which takes due note of the particular interests of the Scottish inshore fisherman, particularly in regard to quotas and access?
I can give my hon. Friend that assurance. We were as disappointed as anyone that it was not possible to reach agreement at the December meeting. But our negotiating objectives remain exactly the same as they always have been, and we intend to pursue them in close consultation with the industry itself.
Is the Secretary of State aware that his phrase "cautious optimism" will be met with amazement by fishermen in Scotland, who are suffering severely as a result of reduced fishing opportunities, low prices and cheap imports largely caused by the over-valued pound? Does he not accept that a CFP agreement is now less likely, partly as a result of the French situation and also because of the tragic death of Mr. Gundelach, and that, anyway, agreement on the CFP is no substitute for effective action to save our industry?
I do not quite agree with the last part of the hon. Gentleman's comment. I think that the whole industry is united in feeling that the best thing for its future is to get an agreed CFP which it can accept, so that it can then plan realistically for the future. The fact that we got so near to an agreement in December gives some grounds for hope that this will be available not too long hence. I agree with the hon. Gentleman's reference to the tragic death of Mr. Gundelach yesterday, which is a great blow to everyone concerned with Europe.
Does my right hon. Friend foresee that the tragic death of Mr. Finn Gundelach will further delay the completion of negotiations on the CFP? If so, will he take steps to discuss with the fishing industry the cash problems which would then arise in view of that further delay?
I am grateful to my hon. Friend, but I do not think the tragic death of Mr. Gundelach will by itself cause any delay in the negotiations on the CFP. That is more likely to arise from difficulties in the negotiations than from anything else. I can assure him that we shall keep in the closest touch with the industry through what may be a difficult period ahead, with the objective of getting an agreement as quickly as possible.
rose—
Order. This matter comes up again on question 8, but I shall call one more hon. Member for either side in order to ease the pressure on question 8.
Has the Secretary of State had any further thoughts on either a fuel subsidy or an abatement of tax on fuel, given that such methods are used by our competitors in other countries?
The Commission is already taking action against the French on account of the fuel subsidy, which they have been operating without agreement or permission. We have already provided about £17 million worth of aid this year for the industry, which is proving extremely helpful at a difficult time. However, a fuel subsidy as such is extremely difficult to justify, particularly as we should probably be taken to task by the Commission if we were to give one.
With regard to possible delays in reaching agreement on a common fisheries policy, is my right hon. Friend aware of the great difficulties faced by Scottish fishermen who in the past have had access to Norwegian waters? Will he undertake bilateral talks with Norway in order to regain that access urgently?
I sympathise about the difficulties that some sections of our fishing industry are facing as a result of the accident whereby Norwegian waters are denied to them because of the failure of the December meeting. However, it is not open to us to hold bilateral discussions on this matter. It must be pursued by the Commission. That will be done urgently and we hope to get some arrangement as quickly as possible so that our fishermen may resume fishing in Norwegian waters and the Norwegians in ours.
Scottish Assembly
5.
asked the Secretary of State for Scotland if he will give an assurance that the Scottish Assembly building will not be used for any purpose which would restrict its ultimate availability for a future Assembly.
The Government have decided that the buildings of the former Royal High School shall be used primarily to house the Crown Office, with provisions being made also for some ancillary court accommodation. The debating chamber, a lobby and associated rooms will be available for parliamentary use when required. As all buildings will remain in Government ownership, any future change of use will be within the control of the Government.
Does the Secretary of State realise that that is a deeply disappointing answer for the majority of people in Scotland, who voted in favour of a Scottish Assembly? It is the final betrayal in a series of betrayals which started with Lord Home's double-cross. Will the right hon. Gentleman bear in mind that when the Labour Party takes power after the next general election, it is committed to introducing a Scottish Assembly and, therefore, all the buildings should be kept available for that purpose?
I am sorry to say that I fear that the hon. Gentleman is remarkably out of touch with opinion in Scotland. The vast majority of people in Scotland will be extremely glad to hear that this large and expensive building, which has remained unused since the debacle under the previous Administration, will now have a purpose which will involve public money being put to use. I would have thought that most Scots would regard that as an extremely good piece of news.
Will the Secretary of State confirm that his answer means that the building is at the disposal of a future Government for use by a future Assembly if that Government so decide? He said that the building would be available for parliamentary purposes. Will he consider transferring Scottish Grand Committee debates, such as the one we had recently on teacher-training colleges, to that chamber for the greater convenience of the public and the greater depth of our debates?
The buildings will be available to any 'future Government for any use which they decide to put them to. The right hon. Gentleman's second point is tied up with the all-party talks and the motions that will have to be discussed by this House before any change is made. No doubt my right hon. Friend the Leader of the House will take note of what the right hon. Gentleman has said.
Will my right hon. Friend agree that there might have been something to be said for leaving the building standing empty as a monument to the folly, arrogance, extravagance and disregard for the will of Parliament shown over the matter by the Labour Government?
I agree with my hon. Friend that the use of that large sum of money, without any assurance that Parliament or the Scottish people wished it to be spent in that way, was a deplorable performance.
rose—
Order. I shall call the Front Bench after one more hon. Member from the Back Benches.
Will the Secretary of State accept that the real scandal is not the changed use of the building but the failure of the Government to come forward with the revised constitutional proposals promised by his right hon. Friend Lord Home of the Hirsel? Will he say when the Government propose to take such steps, or will it be only on the brink of an election that another series of promises is put up as a sop to the Scottish people?
As I understand the point of view expressed by that person, he is resolutely opposed to any form of devolution. As he took no part in the all-party talks, I do not think that he has much status in this matter.
Why does not the Secretary of State use as part of his defence on the question of devolution the fact that five of the six present occupants of the Government Front Bench, including himself, were in favour of devolution at one time? Is the Secretary of State now saying—against the background of what he has said to the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel)—that the building will be available for use by a future Government and that in future he will be in favour of or against devolution? What work is going on in the Scottish Office in relation to devolution?
That is entirely dependent on the circumstances at the time. The hon. Gentleman knows perfectly well that the issue here is what these buildings are to be used for, and at long last the Government have found a use for something that was left as an expensive white elephant by the Labour Government.
Offshore Platforms (Training Schemes)
6.
asked the Secretary of State for Scotland what opportunities exist in Scotland for those in the 16 to 18 year age group to participate in training schemes promoted by the Manpower Services Commission relating to work on offshore platforms.
Under the youth opportunities programme, the Manpower Services Commission provides short introductory courses in a range of basic skills for unemployed young people aged 16 to 18 years. A number of these are relevant to offshore work. Young people completing such courses can progress to shore-based work experience projects with oil companies, which can lead to offshore employment once they have reached the age of 18, the minimum age at which offshore employment is legally permitted.
My hon. Friend has often made the point that great employment opportunities exist in the North Sea. Against that background, will he agree that what is provided at present by the MSC is, frankly, insufficient? Will he, as a matter of urgency, ask the MSC to examine this matter and to look into it with the oil companies, to see whether there can be directly related training courses through the youth opportunities programme for young people of 16 to 18 in Scotland?
I agree with my hon. Friend, and the MSC would also agree with him, because it is most anxious to increase the number of training opportunities available so that young people can learn as quickly as possible to take advantage of the job opportunities that are directly related to the expansion of North Sea activity.
Will the Minister comment on the finances available to the petroleum industry training board for this purpose, although I recognise that that is a direct responsibility of the Department of Employment? Will he pay a visit to the establishment at Montrose?
I would be happy to consider visiting Montrose. The petroleum industry training board is encouraging oil companies to take a greater part in the youth opportunities programme so that the board can also expand its activities.
I accept and appreciate what the Minister has said about the youth opportunities programme. Will he give us an assurance that there will be no question of lowering the age from 18 to 16 for youths employed offshore, in view of the very dangerous duties involved in work on offshore platforms?
Yes, I can, and I know that a survey done by the board has shown that people who are between the ages of 18 and 24 or 25 are unlikely to stay long in North Sea activities. The age at which people retain such employment there is between 25 and 30.
Will the Minister agree that there would be better opportunities on offshore platforms if the Portavadie scheme had materialised? Will the Secretary of State order a full public inquiry into this sordid affair, in view of the grave public concern that a mysterious business man such as Mr. Oliver Iny can make a profit of over 150 per cent. in a few days out of an asset that was built with over £3 million of public money?
With respect, Mr. Speaker, I do not think that that matter arises from the question.
Railway Preservation
7.
asked the Secretary of State for Scotland when he intends next to visit one of the preserved railways in Scotland which have been assisted by the Scottish Tourist Board; and what steps he intends to take further to promote Scottish railway preservation.
I have no immediate plans to visit any preserved railway. If, in the opinion of the Scottish Tourist Board, any proposed railway preservation scheme will provide or improve tourist amenities or facilities and will be commercially viable, financial assistance can be offered under section 4 of the Development of Tourism Act 1969.
I thank my right hon. Friend for that answer. Is he aware that the Department of Employment has stated that the youth opportunities programme could be usefully combined with the activities of many railway preservation companies, to their mutual beneft? Will he, therefore, in functions both within and outwith his Department, do everything he can to see that as much use as possible is made of the tremendous voluntary effort that is available within the railway preservation movement for the benefit of the economy generally?
I am very grateful to my hon. Friend for his suggestion and I shall draw it to the attention of the Scottish Tourist Board and the Highlands and Islands Development Board, both of which have some interest in these matters.
Although the Secretary of State has no plans to visit a preserved railway, would he care to visit the railway station at Cumbernauld and travel with me to Glasgow, as that rail link is in very poor condition and would be best served by electrification? Will he press for that improvement with the British Railways Board?
I am very grateful to the hon. Gentleman for his kind invitation to me. I am always anxious to make a journey on the railways whenever I can. As he knows, decisions on electrification have to be taken by the British Railways Board, and in some cases by Strathclyde region and the passenger transport executive. No doubt they will note the hon. Gentleman's remarks.
Fishing Industry
8.
asked the Secretary of State for Scotland if he will make a statement on the latest discussions he has had with representatives of the fishing industry.
My right hon. Friend the Minister of Agriculture, Fisheries and Food and I met representatives of the fishing industry on 11 December and again during the Council of Fisheries Ministers on 16–17 December. They indicated their continued support for and encouragement of the Government's approach to the common fisheries policy negotiations.
Does my right hon. Friend accept that there will be great dangers to very large parts of the fishing industry—not just confined to Aberdeen—if the Aberdeen fishmeal factory is allowed to close? Has he been following the sad saga of burdens and impediments imposed on the new consortium by Aberdeen district council? In particular, will he tell the House whether Aberdeen district council is within its rights in demanding a surety of £200,000?
I understand that Aberdeen district council, in asking for this surety, is acting in its capacity as the owner or landlord of the site and not as a local authority as such. I understand, however, that a useful meeting was held yesterday between representatives of the present owners of the factory and representatives of the consortium which hopes to be able to take it over.
An application for 'financial assistance under the Industry Act 1972 was received by the Scottish economic planning department on 12 January, and I have asked that this be given urgent consideration, although I cannot, of course, anticipate the decision. I share my hon. Friend's views about the importance of this plant to the fishing industry and very much hope that a solution can be found.Will the Secretary of State accept that the very sad and sorry saga of the fishmeal plant is that from the very beginning it has polluted the atmosphere, to the great detriment of those who live and work in the constituency of Aberdeen, South in particular, and that the Aberdeen district council, in its efforts to get a surety from the consortium, is concerned to make certain that there is money available to provide equipment to deal with pollution? Will he, therefore, look very carefully at ways and means whereby the difference between the consortium and the town council can be resolved in a constructive way, and not follow the path taken by his hon. Friend the Member for Aberdeen, South (Mr. Sproat), who has let his insatiable demand for political headlines overcome his good sense and judgment in taking care of his own constituency?
I very much disagree with what the hon. Gentleman says about my hon. Friend, who is quite rightly championing a very important unit in his constituency which provides jobs and which is also an important support for the fishing industry. But I share the hon. Gentleman's hope that all concerned will look at the problem constructively and bear in mind that it is not only a question of pollution, important though that is, but that there are also jobs involved.
Has my hon. Friend recently had discussions about local fishing plans such as the one suggested for the Clyde estuary? Does he agree that such plans are essential if a secure future is to be given to those fishermen who fish in their local waters, who have largely conserved fish in those waters, and who have not fished in other people's waters to the detriment of such people?
I agree that fishing plans can be extremely important, and we have frequently dealt with the matter in discussions with the fishing industry and in the negotiations. Fishing plans are an accepted part of the Community's attitude to the common fisheries policy, and we shall make sure that they are not forgotten in the ultimate solution.
If representatives of the fishing industry were to ask the Government for fuel subsidies similar to those given to their competitors across the Channel by mainland European Governments, what would be the Secretary of State's response?
I am not sure whether the hon. Gentleman was present, but I said a few minutes ago that the Commission has already taken action against the French for introducing such a subsidy. There is, therefore, not much future in our getting into the same position.
De-Industrialisation
9.
asked the Secretary of State for Scotland what steps he intends to take to reverse the rapidly accelerating de-industrialisation of Scotland.
The Government are taking numerous steps to help industries which are adversely affected by the recession and to help those who are affected by unemployment. We are also assisting new investment in many areas, including some notable developments in the hon. Gentleman's constituency.
Is the hon. Gentleman aware that tens of thousands of jobs in manufacturing industry have been lost and are increasingly being lost as a direct consequence of the Government's policies? When will the process end? Is he aware that the CBI, the trade unions and everyone else in Scotland, except apparently Ministers, are desperately concerned? What action will he take?
The situation will improve when wage awards match the economic situation of the country. As the rate of inflation continues to come down, so will interest rates. That is the best thing that can happen for jobs and investment in Scotland.
With regard to industry in the West of Scotland, has my hon. Friend seen the press stories concerning the Talbot car factory at Linwood? What is the up-to-date position?
The Government stand ready to assist with any investment that the parent company, PSA, wishes to make at Linwood. We shall be only too pleased to discuss that with the company. My right hon. Friend is meeting the chief executive of Talbot later this week. Recent reports in the press that my right hon. Friend has been discussing the future of Talbot with Japanese or any other foreign car companies are quite untrue.
Does not the hon. Gentleman realise that we are sick, sore and tired of listening to him blaming the wage earners for the de-industrialisation of Scotland? Is he aware that small businesses, which were the prime supporters of this Government during and after the election, have been sadly let down? Is he further aware that we have a record number of liquidations in Scotland? Is he therefore prepared to take some action, and perhaps even do what I have asked him to do on several occasions —resign and let someone in who will do something for the country?
I am not surprised that the hon. Gentleman is sick, sore and tired. However, I hope that by now he realises that the people who are destroying jobs in this country are those who incite wage demands that employers cannot afford.
Does my hon. Friend agree that the antics and actions of Opposition Members over defence spending have much to do with uncertainty in Scotland, where we depend so much on avionics, aviation, shipyards and manufacturing industry, which are directly linked to such expenditure and where 50 per cent. of the output is exported?
My hon. Friend is absolutely correct. The United Kingdom defence budget is extremely important to jobs and investment in Scotland.
Going back to the answer given to my hon. Friend the Member for Bothwell (Mr. Hamilton), is the Minister aware that in Cunninghame we have lost 6,000 jobs in the past two years and that more than a quarter of all manufacturing industry has disappeared in the same period? When will the hon. Gentleman and his right hon. Friend, who represents an Ayrshire constituency, do something to stop all industry in Ayrshire from disappearing?
As the hon. Gentleman will be aware, within the past few weeks I have had meetings with Cunninghame district council and other representatives in the area. We are planning a new initiative that will help to attract jobs to Cunninghame.
Will my hon. Friend assure the House that his Department is working actively with other economic Ministries to tackle the vexed question of energy pricing that is troubling many firms in my constituency? Will he accept an invitation from me to visit companies, particularly small companies, in East Fife that have excellent products, first-class industrial relations and are improving their trade, particularly in the export market, and increasing their work forces, even in the present difficult circumstances?
I look forward to visiting my hon. Friend's constituency within the next few months. My right hon. Friend is closely involved with the Secretary of State for Energy and other Cabinet colleagues over the subject of energy pricing.
Is the hon. Gentleman aware that it is extremely silly and offensive to blame wage demands for the deteriorating industrial situation in Scotland, which has arisen directly as a result of Government economic and industrial policies? Will he note that the French company gave the most specific and categoric assurances about maintaining manufacturing capacity at Linwood and that we expect to see them fulfilled? Does he accept that it would be catastrophic for the West of Scotland, not least the steel industry, if Linwood were in danger of closing, and that everything must be done to maintain capacity at an assured level?
I accept entirely the right hon. Gentleman's concern about Linwood, which we share. I am fully aware of the assurances to which he refers. However, when he challenges our view on the reason for the economic recession, I cannot believe that he does not appreciate that inflation has destroyed jobs and that inflation has been caused by undue wage demands.
Rate Support Grant Settlement
10.
asked the Secretary of State for Scotland if he will estimate the effect of the rate support grant settlement on the level of rates in Scotland.
If local authorities respond reasonably in their expenditure to what the Government have provided, there is no reason why rate increases next year should not be substantially less than in the current year.
Since the Minister realises that, given the savage cutback in the rate settlement this year, the only way that councils can prevent rate increases from spiralling is by sacking more people, is he not ashamed to encourage the disgraceful campaign to abolish more jobs, with 250,000 Scots already out of work?
If local authorities wish to reduce their rate burden, they must reduce their expenditure. Manpower, unfortunately accounts for 70 per cent. of the expenditure of most local authorities.
Has my hon. Friend had a chance to study reports of the forecast of the convenor of Grampian regional council of future rate levels? If he has, does he agree that it is an object lesson to other more prodigal and less conscientious authorities?
Yes, indeed. I am delighted that already two regional councils, including Grampian, and one major city have indicated that they expect their rate increases to be significantly under 20 per cent. in the forthcoming year.
Does the Minister recollect that a year ago he was assuring us that rate increases in the coming year would be very modest, although the actual increases averaged 32 per cent. in Scotland? Why should we therefore listen to him now, when it is already clear from the evidence coming from the authorities in Scotland that we shall be faced next year with substantial and savage rate increases similar to those that we have already suffered in the current year of 32 per cent?
If, for the current year, local authorities had not budgeted £83 million in excess of the Government's guidelines, rate increases would have been nothing near what they were.
Energy Provision
11.
asked the Secretary of State for Scotland when next he plans to meet the chairman of the South of Scotland Electricity Board to discuss the provision of energy in the South of Scotland.
My right hon. Friend and I are to meet the chairman of the South of Scotland Electricity Board later this month.
Is not my hon. Friend concerned that the vast over-capacity of around 60 per cent. in the generating capacity of the South of Scotland Electricity Board area over the next six years will create a very large wastage of public money? What action does he intend to take to mitigate or reduce that glaring example of wastage of public funds?
Over-capacity is difficult to judge at this stage. However, on straight capacity grounds, although Torness is not expected to be required until 1993, the planned commissioning of the first unit in 1987 is justified by the overall fuel balance in the Scottish generating system that Torness should achieve. My hon. Friend will know that the SSEB has estimated that that will produce savings of up to £400 million.
How on earth can the Minister justify the SSEB spending money on mothballing a conventional power station at the same time as it is building a new one?
That is a strong argument in favour of Torness. The fuel costs of the oil-fired station at Inverkip are such that, unfortunately, its use must be kept to a minimum. Torness on stream will be much more economical.
Will the Minister confirm that it is the intention of the SSEB, and possibly also of the hydro-electric board, to close power stations? Will he give the cost of Inverkip and say how much public money has been thrown away on that project, in the same way as public money will be wasted on Torness?
The purpose of the board is to produce electricity at the lowest possible cost for domestic and industrial consumers in Scotland. It is easy for the hon. Gentleman to be wise after the event on Inverkip, but when that station was planned and commissioned, no one expected the quadrupling of oil prices in 1973 and further, subsequent, rises.
When Ministers meet the chairman of the board, will they seek an assurance that Barony power station, which is in an area of already high unemployment and is efficient and produces electricity cheaply from coal slurry, will remain open? Can he assure me that he will seek that assurance from Mr. Berridge?
If the hon. Gentleman tables a question or writes to me on that matter I shall be happy to answer him.
Local Authority Manpower
12
asked the Secretary of State for Scotland what is the latest information available to him on manning levels in Scottish local authorities.
The latest joint manpower watch report shows that in September last year Scottish local authorities were employing 2,000 more staff than in September 1979 and 15,000 more than in December 1977. My right hon. Friend and I have made it abundantly clear since May 1979, and I reiterate this in the strongest possible terms, that the national and local interest requires an absolute reduction in the manpower and financial resources devoted to the public sector, and therefore that this upward trend must be reversed.
I am grateful to my hon. Friend. Given that many local authorities are acting responsibly, does he agree that the overall figures are absolutely appalling? Are they not a further justification for the Government to take powers under the Local Government (Miscellaneous Provisions) (Scotland) Bill to curb the continuing extravagance of a minority of mindless bureaucrats who pay no attention to the needs of ratepayers or taxpayers?
My hon. Friend is correct in saying that the major increases are concentrated in a number of authorities. I am pleased to be able to tell the House that I have been informed today that the joint manpower committee of COSLA has agreed to the voluntary release and publication of local manpower figures. From now on it will be possible to identify where staff increases are taking place.
Manning levels are dependent on rates income and the Minister has already referred to COSLA. What is his response to COSLA's view that, in order to prevent the breakdown of local authority finance, it is faced with having to make a much higher provision for inflation or meet a large deficit in 1981–82?
I have no doubt that if local authorities reduce expenditure, as a number of regions and districts have indicated they intend to do, rates increases can be at a moderate level. The previous Government showed that there can be substantial reductions in local authority manpower without redundancies if local authorities respond constructively.
Does my hon. Friend agree that the increase of 15,000 to which he referred is mainly in administrative grades and not among working operatives? Is it not the case that the 15,000 would have been better employed in the small businesses that are being continually penalised by the Government? Those 15,000 people could easily have been found jobs in small businesses.
My hon. Friend and the House will be interested to know that since September 1979 the largest increases in manpower have been in the categories of social services, and recreation, leisure and tourism.
If it is the Minister's thesis that local authorities that are responsible in terms of manpower planning will have low rate burdens, will he direct his attention to the Strathclyde authority, which has certainly co-operated in that way but which is also facing massive rate increases? Can he explain that?
Certainly. I am pleased that Strathclyde began last year to reduce its manpower, but even that authority shows a net increase compared with the time when the Government first called on local authorities to reduce manpower. I have no doubt that if Strathclyde continues the trend that it began last year, the prospect for its ratepayers in future years will be that much brighter.
Unemployment
13.
asked the Secretary of State for Scotland when he expects unemployment to fall in Scotland.
It has not been the practice of this or previous Administrations to forecast unemployment. The best means of ensuring a fall in unemployment is to reduce inflation and restore competitiveness. That remains the objective of our policies.
In the light of the 80,000 increase in Scottish unemployment last year to 260,000 would the Minister care to tell us why the figure of 350,000 will not be reached by December this year?
I have already answered that question by making clear that it has not been the practice of this or previous Governments to forecast levels of unemployment.
Does not my hon. Friend agree that it would be far easier to attract new industries and jobs to Scotland if Labour Members stopped describing Scotland as a sort of industrial disaster area and used their undoubted talents to sell Scotland at home and abroad as a sound base for industrial development?
I entirely agree with my hon. Friend. There is no question but that the more we emphasise industrial deprivation and hardship in the economy, the less attractive we make Scotland to investment from other parts of the country and overseas.
May I assist the Minister by giving him an example of how unemployment could increase? Is he aware that motorists who use the National Car Parks facilities at Edinburgh airport are given a glossy brochure telling them that Fiat cars are the best buy since sliced bread? Is not that a betrayal of our car industry? What will he do about it?
It is not a betrayal of our car industry, but a challenge to it, and we should accept the challenge.
Is my hon. Friend aware that perhaps the most important step towards reducing inflation is to get rid of inflation-proofing of Civil Service and our own pensions?
That is a matter for my right hon. Friend the Prime Minister, my right hon. and learned Friend the Chancellor of the Exchequer and my right hon. Friend the Secretary of State, among others.
Is the Minister aware that the hardship caused by unemployment is likely to increase when redundancy payments are expended and when oil construction projects begin to run down in a year or two? What steps are the Government taking to have plans ready for those eventualities?
Neither the right hon. Gentleman nor any other hon. Member need worry about the running down of oil supplies, which have a future of at least 20 or 30 years. In the past few days, there has been a massive increase in BP's finds in the North Sea. Of course, redundancy payments have a short life and we hope that they will help people to manage until the economy starts to improve.
Microelectronics Research Centre
14.
asked the Secretary of State for Scotland if he will make a statement on the proposed microelectronics research centre for Scotland.
As my right hon. Friend indicated in a written answer on 16 December, the Government have decided that the combined resources of the Wolfson Microelectronics Institute at Edinburgh university and Computer Application Services at Heriot-Watt university provide a strong base for developing the wider application of microelectronics technology throughout industry. Public financial assistance for this important new project is under active consideration.
In some ways, that is a welcome answer, but will the Minister say why he has rejected the general tenor of the report given to the SDA on going downstream to condition the market for the use of microelectronic appliances in Scotland? What steps will he take, together with the SDA and other organisations, to continue the downstream activity in that respect?
The downstream activity is the prime Government interest. We envisage it starting on the good foundations of Wolfson and CAS. That does not exclude Strathclyde and Glasgow universities and other organisations, including the SDA. We thought it better to add the marketing and awareness programme to an existing technological base, and we are doing that.
Bearing in mind that Central Scotland has a greater concentration of electronics activity than anywhere outside the state of California, and the importance of the microelectronics centre that my hon. Friend the Under-Secretary is supporting, will my hon. Friend ensure that funding of that important British national centre will not have to rely only on funding from Scottish budgets? It is a centre of major national significance on which we should build in a national way.
The bulk of the funding will come from private sources. Government funding will be United Kingdom Government funding, as my hon. Friend requests, and will not come only from the Scottish Office budget.
Fatal Accident Inquiries
26.
asked the Solicitor-General for Scotland what are the principles on which he decides to hold a fatal accident inquiry.
Section 1 of the Fatal Accidents and Sudden Deaths Inquiry (Scotland) Act 1976 provides that inquiries must be held into deaths occurring during employment or while in legal custody, unless criminal proceedings have been brought in relation to the incident. The section also gives the Lord Advocate power to direct the appropriate procurator fiscal to apply for the holding of an inquiry into a death where it appears to the Lord Advocate to be expedient in the public interest to have one.
Does my hon. and learned Friend realise the importance of the latter part of his answer, in that fatal accident inquiries are of great advantage in allaying public misgivings in cases of accidental death, such as those due to the wooden road barriers in Argyll which have now been removed as a result of the inquiries? Will he continue to make wide use of the power to order a fatal accident inquiry in similar circumstances?
I confirm that I shall do that. The inquiries have proved to be extremely useful. The fact that, in the main, the barriers in Argyll have been removed as a result of the comparatively cheap inquiries shows that this is a major way to assure public safety.
Criminal Appeals
27.
asked the Solicitor-General for Scotland what consultations he has had recently with the Lord President of the Court of Session about machinery for criminal appeals.
The machinery for criminal appeals is one of a number of topics which have been discussed at meetings which take place on a regular basis between the Lord Justice General and my noble and learned Friend the Lord Advocate.
Does the Solicitor-General accept that one cause of appeals is the lengthy prison sentences imposed in the High Court? Has he studied the admirable speech made by the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) to the Scottish Association for the Study of Deliquency at Peebles, when he questioned the present lengthy sentences being imposed and suggested that courts should consider carefully whether three years would be sufficient rather than five years? Does he share the scepticism about the present lengthy sentences being dealt out by the courts?
The question of sentence—which is not for me—is nevertheless one which has two sides, namely, public reassurance and appropriate penalty. If the hon. Gentleman cares to study the figures relating to what he calls "lengthy sentences" that were decreased by the Appeal Court, he will find that they were very few indeed. The judiciary, on the whole, got it right.
High Court, Glasgow
28.
asked the Solicitor-General for Scotland how many sittings of the High Court in Glasgow will be required for the first quarter of 1981.
There will be three sittings of the High Court in Glasgow in the first quarter of 1981 in January, February and March. There are no plans at the present time for any additional sittings.
Does my hon. and learned Friend accept that the number of cases that will be heard at those sittings will represent a massive increase compared with the number of cases heard in the immediate post-war years? Does he agree that that emphasises the importance of bringing into effect the provisions of the Criminal Justice (Scotland) Act 1980 at the earliest possible moment?
With regret, I confirm my hon. Friend's remarks. Whereas the average number of cases in the Glasgow High Court in the 1960s was 112 per year, in 1980 it was 394 on indictment. The numbers throughout Scotland as a whole have risen from 149 to 607. I am sure that the provisions of the Act will help to reduce the crime that we are suffering.
In the light of my hon. and learned Friend's answer, may I ask whether he is satisfied that his noble Friend has sufficient deputes to cope with the predicted number of cases, in Glasgow and elsewhere in Scotland?
Yes. The Solicitor-General also helps out from time to time to increase their number.
Witness Payments
29.
asked the Solicitor-General for Scotland if he is satisfied with the arrangements which exist for the payment for witnesses.
Yes, Sir. Since April 1976 about 80,000 claims for expenses by witnesses have been processed, and as far as I am aware there have been very few complaints regarding the arrangements which exist for the payment of witnesses.
Does my hon. and learned Friend accept that it is important, as far as is possible, to ensure that witnesses are not summoned unnecessarily to attend courts, and should not be detained there for undue periods?
Yes. I am especially concerned about that matter. There is an important responsibility upon members of the legal profession to ensure that responsible pleas are timeously given, especially if they are pleas of guilty that can be negotiated, so that witnesses are not unnecessarily cited and, when they attend, are not unnecessarily detained. I hope that the legal profession will use the new provisions of the intermediate diet and the early service of indictments to ensure that responsible pleas, adjusted pleas of guilty, are given timeously so that members of the public are not unnecessarily inconvenienced.
As witnesses, among others, are greatly inconvenienced by the present arrangements in the Glasgow sheriff court, will the Solicitor-General give an assurance that the long-awaited project for a new sheriff court in Glasgow will go ahead?
The right hon. Gentleman knows that I am not entirely responsible for building projects in Glasgow. I understand that there is a dispute about the desirability of spending so much money. I am sure that my right hon. Friend the Secretary of State for Scotland will ensure that the building in Glasgow, whatever form it takes, will not interfere with justice.
Sporting Events (Offences)
30.
asked the Solicitor-General for Scotland if he intends to institute a separate register for charges arising out of offences committed at or near the location of sporting events in Scotland.
No, Sir.
Does not my hon. and learned Friend agree that, until such a register is instituted, it will continue to be more difficult to assess the measures that are needed to control the growing incidence of violence and other offensive behaviour at sporting occasions?
I do not agree with that. It would be difficult to say whether somebody who commits an offence as a result of a dispute about a football match would fall into the register. I am sure that the new measures will have considerable effect. If figures relating to those prosecuted under the new Act are required, they can be extracted with ease.
Although he does not agree with the content of the suggestion of the hon. Member for Edinburgh, South (Mr. Ancram), will the Solicitor-General at least recognise that there is considerable public interest in how the new provisions will operate?
Indeed, I agree with the hon. Gentleman. We shall take every opportunity to demonstrate their effect, or lack of effect. I hope that they will be very effective in controlling football violence.
Evidential Property (Retention)
32.
asked the Solicitor-General for Scotland whether he considers the present arrangements by the Crown Office and procurators fiscal for the retention of property for long periods to be used as evidence needs revision.
There are standing instructions from the Lord Advocate to procurators fiscal relating to the retention, safe-keeping and return of property which is a production in any criminal case. Such instructions must also have regard to the rules of evidence applying in criminal cases which require the Crown to produce the article itself in court unless it is not practicable or convenient so to do. Unfortunately, in the majority of cases the Crown is forced to retain property until the proceedings have concluded. This could regularly be avoided by the lodging by the defence of a minute of admissions and I hope that this will become a much more frequent practice.
Does my hon. and learned Friend agree that the retention by the Crown Office and procurators fiscal of motor vehicles for anything up to six months is a ludicrous practice? After all, those vehicles will never be driven into court as evidence.
I agree with my hon. Friend. It is normally the practice to lodge a label instead of a vehicle concerned in a case, but I should like to see a much wider adoption of the practice whereby the presentation of objects or the deprivation of witnesses of their possessions for long periods can be avoided by agreement with those who act for the accused.
Bills Presented
Indecent Displays (Control)
Mr. Tim Sainsbury, supported by Mr. Ernest Armstrong, Mr. A. J. Beith, Mrs. Peggy Fenner, Mr. Ivan Lawrence, Mr. Ron Lewis, Dr. Brian Mawhinney, Mr. R. C. Mitchell, Mr. Christopher Murphy, Mr. Robert Rhodes James, Mr. Nicholas Scott and Mr. Donald Stewart presented a Bill to make fresh provision with respect to the public display of indecent matter; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time upon Friday 30 January and to be printed. [Bill 23].
Gaelic (Miscellaneous Provisions)
Mr. Donald Stewart, supported by Mr. Russell Johnston, Mr. Gordon Wilson, Mr. Dafydd Wigley, Mr. Dennis Canavan, Mr. Robert Hughes, Mr. Ian Campbell and Mr. James White presented a Bill to provide that Gaelic-speaking areas shall be defined as areas under the Highland Region, the Western Isles Islands Council, Argyllshire and Inner Hebrides, and Perthshire, and that local authorities in such areas provide education in Gaelic; that the legal status of Gaelic shall cover the absolute right of persons to speak Gaelic in legal proceedings in Scotland, and the right to a Gaelic version of certain official forms and documents subject to ministerial order; and that a Gaelic Broadcasting Committee shall be set up to co-ordinate and develop Gaelic television and radio: And the same was read the First time; and ordered to be read a Second time upon Friday 13 February and to be printed. [Bill 24].
Freedom Of Information
Mr. Frank Hooley, supported by Mr. Robin F. Cook, Mr. Christopher Price, Mr. Phillip Whitehead, Mr. Hugh McCartney, Mr. J. W. Rooker, Mr. Michael Meacher, Sir Bernard Braine, Mr. Michael Shersby, Mr. Richard Wainwright, Mr. Dafydd Wigley and Mr. Andrew Bowden presented a Bill to create a public right of access to official information; to make new provision for the protection of official information and articles; and for purposes connected there with: And the same was read the first time; and ordered to be read a Second time upon Friday 6 February and to be printed. [Bill 25].
Shops
Sir Anthony Meyer, supported by Mr. Patrick Cormack, Mr. Clement Freud, Mr. John Heddle, Mr. John Horam and Mr. John Major presented a Bill to permit local authorities to provide exemptions from requirements on shops to be closed for the serving of customers at cerain times on weekdays and on Sundays; to rationalise and extend the transactions for the purposes for which shops may be open during the hours when most shops must be closed; to provide further protection for persons who are employed in shops; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time upon Friday 20 February and to be printed. [Bill 26].
Horserace Betting Levy
Mr. Charles Morrison, supported by Mr. Edward du Cann, Mr. John Peyton, Mr. John Golding, Mr. Walter Johnson, Mr. Arthur Davidson, Mr. W. R. Rees-Davies, Mr. Eldon Griffiths, Mr. Archie Hamilton and Mr. Nicholas Winterton presented a Bill to make provision for and in connection with the making of payments on account of the levy payable under section 27 of the Betting Gaming and Lotteries Act 1963 by bookmakers to the Horserace Betting Levy Board: And the same was read the First time; and ordered to be read a Second time upon Friday 27 February and to be printed. [Bill 27].
Zoo Licensing (No 2)
Mr. John G. Blackburn presented a Bill to regulate by licence he conduct of zoos: And the same was read the First time; and ordered to be read a Second time upon Friday 6 March and to be printed. [Bill 28].
Safety Of Children In Cars
Mr. Barry Sheerman presented a Bill to reduce the number of children killed and injured in motor cars by prohibiting children under thirteen from travelling in the front seats of motor cars unless properly fitted and suitable restraints are used by the child, by requiring the compulsory use of properly fitted and suitable restraint systems for all children travelling in motor cars, and to further provide for the compulsory fitting of rear seat belts in all new cars, and the abolition of value-added tax on child restraint systems: And the same was read the First time; and ordered to be read a Second time upon Friday 13 February and to be printed. [Bill 29].
Industrial Diseases (Notification)
Mr. Nigel Spearing, supported by Mr. Frank Haynes, Mr. Michael Welsh, Dr. M. S. Miller and Mr. Dafydd Wigley presented a Bill to make further provision for regulations concerning the notification and certification of death and for the recording of information relating to industrial disease; and matters related thereto: And the same was read the First time; and ordered to be read a Second time upon Friday 30 January and to be printed. [Bill 30].
Countryside (Scotland)
Mr. Peter Fraser, supported by Mr. Ian Lang, Mr. David Myles, Mr. Alex Pollock, Mr. John Home Robertson and Mr. Michael Ancram presented a Bill to make further provision for the better enjoyment of the Scottish countryside, and as respects the Countryside Commission for Scotland; to amend the Countryside (Scotland) Act 1967; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 20 February and to be printed. [Bill 31].
Disabled Persons
Mr. Dafydd Wigley, supported by Mr. Jack Ashley, Mr. Lewis Carter-Jones, Mr. Alfred Dubs, Mr. Bob Dunn, Mr. Clement Freud, Mr. John Hannam, Mr. John Heddle, Mr. Alfred Morris, Sir David Price, Mr. D. E. Thomas and Mr. Gordon Wilson presented a Bill to make further provision for the welfare of chronically sick and disabled persons; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 13 Febrary and to be printed. [Bill 32].
Development Of Tourism (Scotland)
Mr. Gordon Wilson, supported by Mr. Russell Johnston, Mr. John Home Robertson and Mr. Donald Stewart presented a Bill to amend the Development of Tourism Act 1969 to empower the Scottish Tourist Board to carry on activities outside the United Kingdom so as to encourage people to visit Scotland: And the same was read the First time; and ordered to be read a Second tme upon Friday 27 Febrary and to be printed. [Bill 33].
Aircraft And Shipbuilding Industries (Amendment)
Mr. Geoffrey Rippon, supported by Mr. Michael Grylls, Mr. Peter Lloyd, Mr. Ian Lang, Mr. Richard Page and Mr. James Hill presented a Bill to amend the Aircraft and Shipbuilding Industries Act 1977 by requiring any unquoted securities which vested in British Aerospace or British Shipbuilders pursuant to section 19 of that Act to be valued, in certain circumstances, on an open market basis; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 30 January and to be printed. [Bill 34].
Licensing (Alcohol Education And Research)
Mr. Robert Banks, supported by Sir Bernard Braine, Mr. Ivan Lawrence, Mr. Neville Trotter, Mr. Nigel Foreman and Mr. James Hill presented a Bill to abolish the functions of compensation authorities under the Licensing Act 1964 and to use the assets remaining in the compensation funds managed by those authorities for education about and research into the misuse of alcohol; and for other purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 13 February and to be printed. [Bill 36].
Control Of Disconnections
Mr. John Cartwright, supported by Mr. Peter Bottomley, Mr. Frank Dobson, Mr. Alfred Dubs, Mr. Ben Ford, Mr. J. W. Rooker, Mr. Clive Soley, Mr. James Wellbeloved, and Mr. David Winnick presented a Bill to remove from electricity boards and the British Gas Corporation the power to disconnect the supply or to withhold the supply of electricity or gas from domestic consumers save with the leave of the Court: And the same was read the First time; and ordered to be read a Second time upon Friday 13 February and to be printed. [Bill 37].
Landlord And Tenant
Sir Donald Kaberry, supported by Sir Graham Page, Mr. John Spence, Mr. Leo Abse, Sir Walter Clegg and Mr. Gary Waller presented a Bill to amend Part II of the Landlord and Tenant Act 1954: And the same was read the First time; and ordered to be read a Second time upon Friday 30 January and to be printed. [Bill 38].
Smaller Businesses (Ministerial And Other Functions)
Mr. John Page, supported by Mr. Michael Grylls, Mr. Richard Page, Mr. John Loveridge, Mr. Graham Bright and Mr. Keith Wickenden presented a Bill to promote the expansion of small and medium sized businesses by making provision for the appointment under the Secretary of State of a Minister of State with functions in respect of such businesses and by amending certain enactments relating to the Development Commission; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time upon Friday 6 February and to be printed. [Bill 39].
Local Government And Planning (Amendment)
Mr. Stephen Hastings presented a Bill to provide for control over listed buildings and for the enforcement of planning control and control of listed buildings: And the same was read the First time; and ordered to be read a Second time upon Friday 30 January and to be printed. [Bill 40].
Homeworkers (Protection)
Mr. Frank R. White, supported by Mr. Jim Marshall, Mr. Jack Ashley, Miss Betty Boothroyd, Mr. Neil Carmichael, Mr. Jim Callaghan, Mr. Giles Radice, Mr. Don Dixon, Mr. Ken Eastham, Mr. Jim Craigen, Mr. Robert C. Brown and Mr. James Johnson presented a Bill to amend the law to provide for the further protection of homeworkers arid for the better enforcement of the law as so amended; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 27 February and to be printed. [Bill 41].
Football Crowds (Control)
Mr. William Whitlock, supported by Mr. Jack Dunnett, Mr. John Farr and Mr. Tom Bradley presented a Bill to make further provision for the control of spectators at association football matches; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 20 February and to be printed. [Bill 42].
I may gain some advantage myself out of that.
Question Of Privilege
Pursuant to the leave that you granted me yesterday, Mr. Speaker, I wish to call attention to a conversation concerning British Steel Corporation policy towards Workington that took place in the offices of the corporation on Thursday 18 December 1980 between Mr. Ian MacGregor and myself, and I beg to move,
I should at this point make it quite clear that the content of my motion is not directly related to the matter that is currently before the Director of Public Prosecutions, which has already been the subject of news coverage and relates to the removal of documents by a former employee of the British Steel Corporation in Workington. On Tuesday 16 December I spoke in the debate on the steel industry. In particular, I mentioned that in Workington there were widespread rumours that senior BSC executives had produced questionable statistics in order to justify closure. I also commented adversely on the judgment of some BSC management and certain trends within the corporation. I met Mr. MacGregor and some of his colleagues on the morning of Thursday 18 December. Instead of discussing some of the matters that we had previously agreed to discuss, he interrupted my opening discourse and said that he took exception to remarks that I had made in the House on the previous Tuesday. After further conversation about my general approach in the House concerning the steel industry, he said that if this was the way that I intended to conduct my case in Parliament, and if I persisted in making such statements and attacks on the corporation, further investment in Workington would be ended. He made reference, in passing, to a particular investment project. During the interview I realised the significance of what Mr. MacGregor was saying, together with its implications, and so returned at once to my office in Dean's Yard and dictated to my research assistant notes of the interview and a draft letter to you, Mr. Speaker. This letter was the substance of the one you received from me and referred to yesterday. I later that morning described my experience to three parliamentary colleagues. I then faced a dilemma. If I continued to press my points in the House, it could be said that I was prejudicing the best interests of my constituents, some of whom I had confided in over the Christmas period. Conversely, if I did not pursue the issues that I had already raised I should not be fulfilling my proper duties as a Member of Parliament. Therefore, the only way in which I could protect my independence as a Member of this House and the rights of my constituents was to avail myself of the procedures specifically designed to achieve these ends, namely, to move a motion for a reference to the Committee of Privileges. Right hon. and hon. Members will understand that I have stood by my original decision not without much thought and consideration. I am gravely aware of the implications of my actions. However, I am sure that the House will agree that in my position I have little alternative. The House will be conscious that I have chosen my words with great care. I am not asking for a judgment by hon. Members on the Floor of the House. I am asking only to be given the right to put my full case to the Committee of Privileges, thereby enabling it to make a judgment. I trust that the case that I have made will have the approval of the House and that the motion to refer this matter to the Committee of Privileges will be agreed.That the matter of the complaint be referred to the Committee of Privileges.
I make no comment on what the hon. Gentleman said, or on the matter that has been proposed by him for reference to the Committee of Privileges. I believe that the best course for the House to take is to refer the matter, as proposed in the motion. When the Committee has reported, the House can of course comment if it wishes to do so. On that basis, I agree with the motion and think that the House would be well advised to accept it.
This is obviously a complaint which, under the new procedure, the Committee of Privileges should deal with as rapidly as possible and, I should have thought, without any real comment from the House.
Question put and agreed to.
Resolved,
That the matter of the complaint be referred to the Committee of Privileges.
Rate Support Grant
3.42 pm
I beg to move,
That the Rate Support Grant Report (England) 1980 (H.C., 1980–81, No. 56), a copy of which was laid before this House on 16th December, be approved.
I understand that it is in the interests of the House to take together motions 2, 3, 4 and 5 on the Order Paper.
Yes, Mr. Speaker.
I start by explaining the measures for which we seek agreement today. These are the Rate Support Grant Report (England) 1980; the Rate Support Grant (Increase) Order 1980; the Rate Support Grant (Increase) (No. 2) Order 1980; and the Rate Support Grant (Principles for Multipliers) Order 1980. I shall deal with the report and the orders in turn, but first I should like to set out for the House the background against which the decisions had to be taken. For decades we have over-consumed and under-invested. The Government are as guilty as, if not more guilty than, local authorities, but it is with local government that we are concerned today. Two simple facts vividly demonstrate the need for the change of direction that we seek. First, over 30 years in Britain manpower employed in local government doubled—from nearly 1½ million to nearly 3 million. By 1979, manpower was at an all-time record. Secondly, over the last six years the drift from capital spending to consumption has accelerated alarmingly. Between 1974–75 and 1978–79, under the Labour Government, capital spending by local government —- on schools, houses, roads, and so on—was halved. In Labour's last year of office, capital investment by local government was £3 billion lower than in its first year. On the other hand, current spending—also in real terms—rose by 10 per cent. That is the background to the decisions that I have had to take: a remorseless upward spiral of spending on services employing hundreds of thousands of additional staff and a dramatic slump in investment and capital spending. Today's rate support grant settlement is part of the process of lowering the demand of the public sector for higher levels of annual consumption. The new grant is distributed in such a way that all similar councils can provide a similar standard of service if they levy a similar rate in the pound. It is distributed in such a way that the system used for the purpose is clear and open. I deal now with the increase orders for 1979–80 and 1980–81, and the transitional arrangements. The second increase order for 1979–80 completes the settlement for that year, as I have already announced to the House. The first increase order for 1980–81 makes some provision for cost increases. It amounts to £1,227 million. The House will recall my announcement of 18 September, when we proposed to withhold conditionally £200 million of the amount otherwise due to be paid. It is too early to say whether all or part of this will be restored. It depends entirely on the response of local government to my request for a reduction on current expenditure of 2 per cent. in 1980–81 in real terms over actual spending in 1978–79. I also announced on 18 September the measures that I would put before Parliament if individual authorities sought to deprive other authorities of grant by pre-empting too much for themselves by overspending. In the event, only 23 authorities fixed rate levels so high—at a uniform rate of over 155p in the pound—that they were above the threshold for penalty. Even when applying these penalties I made it clear that, if individual authorities wished to avoid these self-imposed and considerable burdens on their ratepayers, they could take steps to qualify for exemption. Fourteen of the 23 authorities so qualified. Today, only nine authorities persist in maintaining levels of expenditure that force me to act. It is even possible that at this stage one further authority will seek to persuade me to exempt it. At this moment I am not in a position to confirm that it has satisfied the conditions for qualification, but I may be in a position to do so later in the debate. Needless to say, those nine authorities that have persisted in maintaining levels of expenditure that necessitate my decisions are all Labour controlled, each presumably anxious to prove a political point rather than one that is genuinely relevant to services. The total penalty of those nine authorities will be £13 million. The fact that the remaining 14 were able to reduce spending—and of those 12 were Labour councils—demonstrates that the task of exemption was feasible. Indeed, the fact that 447 authorities ran their affairs without penalty is the loudest condemnation of the nine that did not. I should make it clear that this is not money being taken away from local government. It will be redistributed among the other authorities, from whom otherwise the nine would have pre-empted it. I turn now to the report for 1981–82. The percentage of taxpayer support is an essential factor in controlling spending, and I shall explain our decision to set grant for England at 59·1 per cent. Underlying the question of the share that the taxpayer contributes is an even more important decision—the amount that we expect local government to spend on current account. This matters more to the ratepayer than does the level of grant. As I have explained, we came to office when local government manning levels were at an all-time high. Current spending was rising and capital schemes had been slashed over recent years. There is no easy way to reverse those trends. Local government administers a range of services, vital by any standards—education, social services, the police, much of our housing, and a good deal more. These services are not in question, but their scale is under scrutiny. We have to reduce their provision to what we can afford and, within that, achieve the maximum value for money. I have asked local authorities to spend 3 per cent. less than the targets that we gave them last year. That means a reduction of 5·6 per cent. in real terms on current spending since 1978–79. These targets are ambitious by local government standards, but they have to be seen in the context of the far greater strain that recession and inflation are placing on the private sector. Local government's past record on current spending targets set by the Government is good. In four of the last five years it has ended up at or just below the target. If targets have been too high, the Government must carry the responsibility and blame. But while those totals are impressive, they can often mislead. Too many authorities have ignored the Government's targets. It is because of their overspending, and the increasing proportion of grant that they have grabbed, that more prudent authorities have consequently suffered. Put another way, in real terms I want local authorities to spend £6 less in every £100 on manpower, goods and services than in 1978–79. That does not, and cannot honestly be claimed to, hit at the core of essential services. I must now ask local authorities to respond to these targets. As part of that objective, it has seemed right this year that the Government should reduce by 1 per cent. the percentage of grant from the centre. Already a sum equivalent to about half the total income tax yield is handed to local authorities. In today's climate, I felt that a 1 per cent. reduction in grant was acceptable.How can the Secretary of State be so two-faced, bearing in mind what was said in Opposition by him and by the present Prime Minister about the need for less Government control? Here we have a situation in which the Secretary of State clearly is telling local authorities what they should do. He is dictating to them and shackling them.
I came into this House on the last occasion in chains in the hope that—Order. I think that that is a fair length for an interruption.
The hon. Member for Ashfield (Mr. Haynes) will be aware that the Government have to have responsibility for the macro-economic decisions affecting the economy. The hon. Gentleman must be aware also that only the Government can take those decisions. My predecessor was as clear about setting targets for expenditure in local authorities as I have been. The issue of freedom is the extent to which individual local authorities have discretion about where they spend the money within the targets that the Governments set. I argue that this Government have extended that discretion beyond the wildest dreams of local authorities.
I must now ask local authorities to respond to the targets that we have set. As part of that objective, as I said just now, it seemed right this year that Government should reduce by 1 per cent. the percentage of grant from the centre. The percentage for England and Wales together has thus been reduced from 61 per cent. to 60 per cent. In England the reduction is from 60·1 per cent. to 59·1 per cent. So far, I have talked mainly about the volume of local authority expenditure. Crucial judgments are involved in fixing the rate levels necessary to pay for that volume and, in those judgments, assumptions about likely earnings for pay increases are the most important factor in assessing current spending targets. The rate support grant cash limit for 1981–82 will provide for increases of 6 per cent. in the level of earnings for annual settlements between 1 November 1980 and 31 July 1981 and, provisionally, of 6 per cent. for settlements in the pay round beginning 1 August 1981. Allowance has been made for the full effect in 1981–82 for all settlements made before 1 November 1980, including the effects of staging and comparability awards known at that date, taking account of the employers' final offer where settlements were still subject to arbitration. The Government's position remains unequivocal. We are not prepared to finance pay increases above this level. If settlements are higher, the cost must be met locally. Local authority employers and employees can have no doubt about the financial consequences of settlements. Public sector employees are shielded to a large extent from the worst effects of the present economic recession. It would be irresponsible for us to agree to underwrite financially excessive pay settlements in the public services. Inflation has slowed significantly. The cash limit, therefore, includes an allowance for price increases consistent with an average of 11 per cent. between 1980–81 and 1981–82. Given the economic climate, the falling inflation rate and lower wage settlements in the private sector, I believe that the allowance that we have made for pay and price increases is adequate, if local government plays its part. All the grant calculations set out in the report incorporate these inflation provisions, and the cash limit for the grant is calculated on the same basis. This underlines my determination to pull back spending. If councils decide to spend more, it is their decision, and the consequences of it will have to be faced locally.I come from an area that is controlled by a city council and a county council that have no intention of doing this, and business men are concerned that the high rates that they will have to pay will cause even greater unemployment than exists in the area at present.
My hon. Friend has put his finger unerringly on the crucial dilemma facing local authorities throughout the country. The higher they rate, the more unemployment they will create. I hope that this message is understood clearly in all the council chambers that have to make those decisions.
Further to the point just made by my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn), I believe that in Labour-controlled local authorities it will have the effect of increasing the amount of rates above that which is feasible for the local communities to tolerate. Will my right hon. Friend consider placing a limit on the amount of increase that a local authority is authorised to put on rates in the coming year?
My hon. Friend will understand that, if I were to move in that direction, I should be challenging the fundamental relationship between central and local government. It has remained the policy of this Government that we do not wish to embark on such a course. However, I think that my hon. Friend will be as concerned as I am that the relationships have always rested on the assumption that local authorities achieved the Government's overall financial targets. If there were to be a decision now by local authorities that they were not prepared to accept the nature of the real partnership between local authorities and Government, it would not be the responsibility of Government. It would be the responsibility of local authorities if we were forced to recognise the new climate that would thus have come into existence.
If all that is true, why is the right hon. Gentleman's crazy new scheme making such a savage attack on the Conservative-controlled council of Wandsworth, which has already made a great many drastic and damaging economies?
I share the right hon. Gentleman's concern for the London borough of Wandsworth, whose performance I have much admired since it came under Conservative control. However, over the last few years, when the right hon. Member for Stepney and Poplar (Mr. Shore) was Secretary of State, there was a switch of about £300 million from the provinces to London and the very large majority of London boroughs gained on a wholly arbitrary decision of the Secretary of State. There was no measurement of the needs of those boroughs to justify that switch, and the switch was paid for by the constituents of all right hon. and hon. Members who represent provincial constituencies.
The new system that we have devised has measured for the first time the legitimate underlying statistics of the London boroughs — [Interruption.] If the Opposition challenge the analysis, all that they have to do is to show where the analysis is wrong. That is not what they appear to be ready to do this afternoon.rose—
I am in some difficulty. I am happy to give way to right hon. and hon. Members for as long as the House wishes. However, if I do it will result in my speaking for much longer than the text before me justifies, and in my imposing on the tolerance of the House. Therefore, as I have many matters to announce, I think that I should be allowed to make progress.
Loan charges and certain elements in the housing revenue account will be treated as variable items outside the cash limit, and the settlement also takes account of the announcement which I made in the House on 15 December about the local contribution differential and on council house rents. The total relevant expenditure at November 1980 prices for the 1981–82 settlement is £17,338 million. This reflects the Chancellor's announcement on 24 November of a 3 per cent. volume reduction for Great Britain for 1981–82. It compares with a reduction of just over 2 per cent. in the last White Paper on public expenditure. We shall be seeking further reductions in 1982–84. The aggregate Exchequer grant for England will be £10,895 million at estimated outturn prices. Specific grants are estimated at £1,447 million. Transport supplementary grant will be £416·5 million. National parks supplementary grant will be £4·5 million. Rate support grant is therefore £9,027 million. The first claim on RSG is the amount provided for domestic rate relief grant. This remains at 18·5p in the pound, and will cost £663 million. This leaves a sum of £8,364 million available for distribution. Having decided the total, we now have a new system for distributing—on a more equitable basis than ever before — resources to individual authorities. The objective remains unchanged: it is to compensate authorities for differences in what they need to spend on services and in the rateable resources at their disposal. This should enable them to provide a comparable standard of service for a similar rate in the pound, but the method of distribution is radically changed. The old system was a two-part grant, which encouraged and favoured overspending. The needs and resources elements gave grants to those who spent more. Reliable assessments of need for several groups of authorities—notably the shire districts and the London boroughs— could not be calculated. These defects were the subject of mounting criticism, particularly following the years under the administration of the right hon. Member for Stepney and Poplar who, in my view, was guilty of blatant political manipulation for his party. The new arrangements that we have introduced remedy the defects of the previous system. First, the two-part grant, with elements paid to different types of authority, has been replaced by a single block grant paid direct to every authority. Secondly, we have developed a new approach to assessing authorities' needs. This is grant-related expenditure. We look at the unit costs for local authority services. The clients of those services are identified and quantified. We then assemble a series of indicators—numbers of people catered for, or other units and indicators that reflect the social, economic and geographical circumstances of areas — which have a direct bearing on the provision of individual services. The indicators and the costs are based on common sense, evidence and judgment. They will be capable of being developed in the future, with the aim of continuing pressure for the efficient use of resources.I am sure that the House will welcome the assurance that these criteria will be examined in future. Will the right hon. Gentleman not accept that in the past it has been more satisfactory to rely on the wishes of the electorate in the area than to rely on the abstruse criteria that he is seeking to outline to the House?
The wishes of the electorate in the area are in no way changed by what I am proposing. All that is changed is the way in which the central taxpayers' money is distributed to individual authorities. It cannot be right automatically to presume that, because the wishes of the local people are that their authorities should spend more for the benefit of that local community, all people living in areas where authorities spend less should contribute more to the authorities that spend more. That is the system that I have replaced and that cannot in equity be defended.
Does not the fact that ratepayers and electors in a certain area are willing to support a local authority that is proposing to spend more show that the authority has needs that must be met?
The fact that they are prepared to support an authority in spending more is their democratic right. That is not impaired by what I am suggesting. However, there is no way in which one can defend their wish to spend more as entitling them to take more money from other people who do not want to spend more. That is the break in the old to the new system, which is the essence of the new block grant system.
Hon. Members must understand that if they represent a constituency or a local authority with relatively low levels of expenditure, their constituents suffer every time the grant is removed from their constituency in favour of higher spending authorities elsewhere. That sort of situation cannot be justified.The right hon. Gentleman is cutting back on central taxpayers' expenditure. Is it not true that in so doing he is trying to force the local authorities that he classifies as high spenders to sack people and put them on the dole? The effect is surely to switch expenditure from his own Department to the Department of Employment, through payments of dole money, and at the same time to reduce opportunities, reduce jobs and increase indignity.
If the hon. Gentleman follows through what I am doing, he will find that it is not explicable in his terms. The Government are in fact requesting local authorities to make a reduction by a relatively modest percentage two points this year and three points next year lower than the private sector would have to accept in the present recession. Within that lower level of volume we are reducing the Government grant by 1 per cent. That is the overall financial change that is implied in the settlement for this year. It cannot in any way be criticised and is a perfectly legitimate response to the recession. It cannot be described in the headlines of woe that have been used to describe it in many parts of the country.
Block grant curbs the open-ended support for individual authorities that was given under the old system. An authority now receives a constant rate of grant support on increments of expenditure up to a threshold point above its grant-related expenditure. An authority spending beyond that point, however, receives a reduced rate of grant support. It will have to ask its ratepayers to bear a higher proportion of its expenditure. It will get less support for such expenditure from the taxpayer at the expense of other authorities. Under the old system, London was subject to ad hoc arrangements. It is now within the national system. But there are particular effects on London. Under the Labour Administration, on the basis of wholly arbitrary decisions taken by the then Secretary of State without objective analysis, over £300 million was switched to the capital, at the expense of the rest of the country. Block grant, based on grant-related expenditure, reverses this process. The scale of that reversal has been much exaggerated in comments that I have seen. Our assumption is that, irrespective of individual grant-related expenditure standards, all local authorities will reduce their spending to eliminate overspend—that is, the amount by which they overspend the targets that we set for this year—to achieve a further 3·1 per cent. reduction next year. On that basis, we are projecting a switch from London this year of £100 million.Where to?
To the local authority areas outside London. That is the equivalent of the £300 million that came in over the previous four years. The sum of £100 million, on the assumptions that we have made, will switch back to the provinces during the financial year 1981–82.
Too much of the criticism that I have seen reflects the fact that some London authorities apparently have not made reductions and do not propose to make them. As an example, reports suggest that ILEA is proposing to spend £694 million next year. It is claimed that this is a standstill budget and economies are being sought. Yet our analysis shows that in real terms expenditure is being maintained at the 1978–79 levels—over a period when numbers of school children have been falling rapidly. Substantial economies should thus have been possible without impact on standards. If ILEA were to make reasonable economies and were to spend in line with our projections, its precept should be close to the present figure, or could even fall.It will have £100 million less than it needs.
The right hon. Gentleman says that it will have £100 million less. On the assumption that ILEA does not achieve the expenditure targets and keeps at its previous expenditure figures, it will lose ground, but if it achieves our targets there will be nothing like the justification that I have read for the claims that have been made.
The new grant system has meant considerable grant shifts in some areas. Some concern has been expressed about a 13p safety net in comparison with needs element safety nets of 2p and 3p in previous years. Such comparisons do not stand up. The 1981–82 safety net consists of two stages of 8p and 5p. Safety nets have not previously been applied in a year when the level of grant support—the percentage support from the Government—has been cut, but that must be taken into account this year. Of the 8p first stage safety net in 1981–82, 3p is accounted for in this way. That means that ratepayers in areas losing less than 3p overall will do better than average as a result of the new grant system and that the losses which they will suffer will be as a result of the reduction in the percentage as opposed to the changes of the grant. That leaves 5p in the first stage arising from the change to the block grant system, excluding the effect of the taper on overspending. When inflation is taken into account, that is about the same in real terms as the safety net applied in 1979–80, when needs element was paid to the shire districts for the first time. We then have a stage 2 safety net, which is a 5p safety net, for the losses due to the taper on overspending. I think that that is generous. The safety net actually protects authorities from the consequences of their own overspending. It would have been open to me to allow authorities to bear the full weight of such losses, but that would have been too much for ratepayers to bear in the first year. It has been suggested—we have heard it already in this debate—that the new system limits local freedom. That is not the case. Every council decides its own priorities and sets its own rates. However, block grant is a powerful disincentive for high spending councils. If a council decides to spend much more than the standard expenditure likely to be spent by the average authority of its type, the proportion of Government grant is reduced. The council can still spend the money, but as the only beneficiaries of the extra spending are the local people, it is right that the council should have to account more to the local ratepayers for its decisions. To this extent, local autonomy and local responsibility are increased. In other areas, also, local government is being given greater freedom under our proposals. Under the new method of capital allocation, local authorities will be able to spend the resources available to them on whatever schemes they wish. They can switch resources to meet local priorities. We have withdrawn from the detailed controls and scrutiny that were involved in every local authority housing project. To balance this greater freedom, we expect greater accountability. Much more information—on manpower levels, land holdings, time taken on planning applications, and other measurable and comparable facts — will he published regularly. Ratepayers will be sent clearer information comparing one year with the last and showing the breakdown of spending on a comparative basis. I should like to announce a further proposal not contained in the report. This concerns local authority areas suffering severe revenue losses of rateable value in the current year or in 1981–82. I have in mind authorities affected by major steel closures, such as Derwentside and Corby, and, in Wales, Alyn and Deeside. When an authority loses a large part of its rateable value base in a single year, it can be difficult to maintain services. In subsequent years, the block grant calculation will catch up with the loss of rateable value and will compensate the authority, but in the first one to two years there is no compensation. The previous Government introduced a scheme to compensate authorities in relation to the closures of 1976 and 1977. I propose to introduce a similar scheme to redistribute a small part of the rate support grant to compensate the authorities affected now by steel closures and loss of rateable value. To provide a contingency for this purpose, the poundage figures in the report before the House are set to leave £4 million of grant available for distribution if authorities comply with our expenditure projections. We estimate that this £4 million should finance the scheme that I am proposing. We intend now to discuss details with the local authority associations and the authorities concerned. I have described this settlement as a challenge to every councillor and to every council. That is where the battle must be fought. The local pressure group is often articulate, highly organised, and highly visible. The voice of the ratepayer, in industry and in the household, is too often ignored. It is the most commonly expressed delusion of the conspicuous spending authorities that in some way they are preserving jobs, but in practice they destroy more jobs than they ever create. They deter investment, encourage the small trader to go and exacerbate the problems of unemployment. All too often they are preserving unproductive jobs at the expense of ratepayers who may themselves have lost their jobs. I said earlier that when I drafted this speech nine authorities had so far not qualified, by making the necessary reductions in expenditure, for the waivers that I have announced. I can now confirm that the London borough of Greenwich has today announced compliance with our request that it should reduce its expenditure. Therefore, I believe that it will satisfy my Department that it qualifies for a waiver under the transitional provisions.Does my right hon. Friend agree that the councils which he has described as high-spending authorities — mostly in Socialist areas —are driving small businesses out of business rapidly? Does he not agree that many of those people do not live in the areas where their businesses are situated and that they have no control over the rates levied by Labour councillors? Will he study this matter, which has already been mentioned, to see what he can do about it?
I am concerned, as is my hon. Friend, about the consequences of the excessive rates charged by some of these authorities. I do not think that I can go further than the reply that I gave earlier in the debate. It is crucial, when local councils fix their rates, that they should now realise that in many areas it will be possible this year for the rate increases to be extremely modest. That will be a major contribution to creating the climate in which we can seek to enhance our economic performance.
What the right hon. Gentleman has said assumes that all high-spending authorities are inefficient, when in fact some of them have had to spend more simply because of their problems. It is all very well for the hon. Member for Sheffield, Hallam (Mr. Osborn)–1 belong to the Sheffield area—to talk about the problems while dangling his feet in his paddling pool and forgetting about the inner city problems. As for the problems of industry, is it not those authorities themselves which have encouraged industry into their areas, creating hundreds of jobs, and not driven it out?
It is not as simple as the hon. Gentleman suggests. One cannot argue that authorities have encouraged industry in many cases. There are many historical reasons why industry is located in specific areas. I know that the hon. Gentleman will share my profound belief that local authorities can discourage and deter industry if they increase rate levels beyond the reasonable levels under discussion.
Earlier, I referred to the relatively few conspicuously high spenders. We must realise that we are dealing with a minority. The vast majority of those serving in local government understand the constraints and objectives. It is important to make clear that there is no need for a rates explosion this year. For the reasons that my predecessor gave to the House, and I believe that I have given to the House, I do not believe that I should provide or predict an average figure for rate increases. Last year, the range of rate increases in individual authorities was between 9 per cent. and 60 per cent. In such a context, an average figure has little meaning. The Chartered Institute of Public Finance and Accountancy said that if councils were to follow all the Government's guidelines, which include the 3 per cent. reduction in spending, and were to keep pay increases to an overall 6 per cent., rate increases could be very low; even nil. CIPFA went on to argue that, because councils traditionally over-budgeted and allowed for higher inflation than the guidelines set, and because CIPFA did not believe that councils would reduce their spending in order to conform with the Government's plans, such an outcome was not likely. That sets the challenge for every councillor. First, the spending guideline is absolutely clear: it is 3 per cent. less in real terms than this year's targets. Secondly, inflation is falling. We are looking ahead to further falls and we are making judgments about pay and price changes running into 1982. Councillors should look forward and budget realistically. If they allow themselves to set rate levels that are based on other assumptions, they will contribute to the very inflation that we strive to reduce. I urge them, in the interests of their local economies and of their local communities, to recognise that the public sector must cut its demand, and that the wider those cuts are spread, the fairer they will be seen to be. The quicker we restore a better balance between the private and public sectors, the sooner we shall bring to an end the present period of retrenchment.
4. 22 pm
The House has listened to the Secretary of State with the trust and faith in his veracity and accuracy that it is customarily ready to afford him. While the right hon. Gentleman was speaking, we could have been forgiven for believing that all was for the best in the best of all possible local government systems. Unfortunately, the last person that the right hon. Gentleman reminds us of is Candide.
This report is the first to be presented to Parliament under the new Local Government, Planning and Land Act. Two of the orders under discussion pave the way to the new system of rate support grant which has been laid down by the Act. It is therefore right to recall how leading Conservatives, experienced in local government, reacted to the introduction into Parliament of the local government Bill. Sir Godfrey Taylor, then chairman of the Conservative-controlled Association of Metropolitan Authorities, declared:The right hon. and learned Member for Hexham (Mr. Rippon), a former Secretary of State for the Environment, denounced the Bill as a "threat to local democracy". Viscount Ridley, president of the Conservative-controlled Association of County Councils, said that the Bill represented:"This bill represents the biggest threat to the constitutional independence of local government in this country since the nineteenth century."
Sir John Grugeon, leader of the Conservative-controlled Kent county council, stated:"A fundamental and significant shift of power from local to central government … The freedom for an authority to decide for itself is effectively removed."
Lord Sandford, president of the Conservative-controlled Association of District Councils, warned:"The provisions in the Bill … cannot be operated in an equitable manner without a considerable measure of central control over the levels of expenditure of individual local authorities … I do not think I exaggerate when I suggest that this could, in the long term, mean the end of local government as we know it."
The Bill proceeded on its way through Parliament. It was mismanaged, muddled, and constantly rewritten. Huge chunks were removed or inserted as the whim took the Secretary of State. The misconduct was such that the right hon. Gentleman would surely have been demoted last week if the Prime Minister had not run out of vacancies at the Northern Ireland Office. Meanwhile, the Secretary of State proceeded with his interim transitional attack on local authorities. On Report, the Minister for Local Government and Environmental Services volunteered the following assurance:"There is an intrusion here on the independence and autonomy of local government which we would not want to see."
That explicit assurance has been blatantly and dishonourably broken. The Rate Support Grant (Increase) (No. 2) Order withholds £200 million of grant from local authorities in order to cut public expenditure. When Conservative Members vote in favour of the order tonight, they will be voting to break the solemn promise made by the Minister. The Rate Support Grant (Principles for Multipliers) Order carries even further the Secretary of State's vendetta against those authorities that have caused him particular annoyance. I refer to the nine — now eight — local authorities in London that have been found guilty of spending above the limit set by the Secretary of State. I refer to those authorities whose alleged misconduct has incurred what the Secretary of State so eloquently labelled last month "the penalties" that he had in store for them and against which the right hon. Gentleman will now use what he has described as his "weapons". Last spring, when those authorities made their spending decisions for which they are now being chastised, they did not know that they were doing anything wrong. In fact they were not doing anything wrong. They were behaving perfectly properly, in full accordance with the legislation then in operation. Even when the Secretary of State got round to announcing the criteria under which their legal spending decisions were to be retrospectively subjected to disciplinary action, the right hon. Gentleman did not have the statutory power to take such action. He will have that power only if the multipliers order is carried tonight. We were told that the Government had worked out arbitrarily a notional national, arithmetically calculated rate of 119p. The Government then decided that authorities would be punished if they had spent above, not the notional national figure of 119p but a further and equally arbitrarily determined figure of 155p. It turns out that, depending on the criteria employed, quite a lot of authorities could be accused of over-spending more prodigally than some of the councils that ended up on the Secretary of State's hit list. I refer to shire counties, such as Cambridge, Lancashire, Northumberland, Shropshire, Somerset, the Isle of Wight and West Sussex—not to mention the City of London. The trouble was that these were Conservative-controlled and, accordingly, a protected species. Instead, the Secretary of State botched together a list of 14 authorities, 13 of which were Labour-controlled and one of which, Hammersmith and Fulham, he thought to be Labour-controlled. Of those authorities, five, including Hammersmith and Fulham, were eventually let off with a caution. And then there were nine. On what grounds were they penalised? The indefatigable Lord Bellwin, the Under-Secretary of State, explained the position to a bemused House of Lords. He said:"There is no question of our taking money away from the local authorities … It is suggested that the transitional arrangements proposed to claw back money to help cut public expenditure. That does not arise.… Nothing under the transition will reduce the amount of public money going by grant to local authorities." —[Official Report, 8 July 1980; Vol. 988, c. 284.]
Why did not the Government say that in the first place? If the ratepayers of Lambeth, Camden and the rest had known that it was as clear and simple as that, they could have written and offered advice to their councillors about how to escape the Secretary of State's fearsome weapons. The right hon. Gentleman was determined to pick off at least a handful of Labour councils. In words made immortal by Stanley Holloway, "Somebody had to be summonsed". Can anybody, the Secretary of State included, explain the penalties that are being imposed? Brent overspent just under £9 million and loses £700,000 in grant. Camden overspent £4¾ million — half as much as Brent — and loses £5¼ million in grant, that is, seven times as much as Brent and £½ a million more than it overspent. Unfortunately, there was a further complication. While the Secretary of State was roaring his threats to the authorities on his hit list which had overspent, according to his arbitrary criteria, £46½ million, he was encouraging many other local authorities to overspend far more than the naughty nine. Thanks to my hon. Friend the Member for Bootle (Mr. Roberts), it has been revealed that the confused meddling by the Secretary of State last year added another £70 million to local authority spending. Last summer the Secretary of State wrote to local councils asking them to revise their 1980–81 budgets down to a target figure that he provided for each of them. What has now been prised out of a reluctant Secretary of State is that over 106 of those councils, instead of making the cuts that he demanded, added to their budgets by a total of £70 million. Of the 106 councils, 24 were Labour controlled, two were Liberal controlled and 57, full of beans, were Conservative controlled. Thirty-nine had been spending below the new targets set by the Secretary of State. They promptly increased their expenditure plans to achieve his norm. Of the 39 councils which had been underspending until the Secretary of State stirred them up, seven were Labour controlled and 28 Conservative controlled. A spokesman from the Department of the Environment commented last week that the Secretary of State was "satisfied" with the budget revisions. He added that "in pound notes" there had been an increase in spending. I do not believe that that comment was the work of any spokesman. A statement of such effrontery and absurdity could have been drafted only by the Secretary of State himself. Among the underspending councils which decided to increase their budgets as a result of the Secretary of State's initiative, a notable authority was Conservative-controlled South Oxfordshire, which corresponds roughly with the right hon. Gentleman's constituency. It added 7·9 per cent. to its budget, a higher increase than the percentage overspend for which the Secretary of State is penalising Waltham Forest and was to penalise Greenwich. No wonder that, according to the Financial Times, the Secretary of State was so upset that when he saw the figures he locked them away in a safe. Yet the right hon. Gentleman now has the effrontery to penalise local authorities for alleged overspending. The extraordinary fact is that local authorities, far from being congenital overspenders, are much better at controlling their expenditure than are the Government. Last year's public expenditure White Paper showed that local authority spending in this financial year was falling by 15½ per cent. compared with 1974–75. In the same period spending by the Government was rising by 7·2 per cent. A few weeks ago the Secretary of State stated:"The Government constructed two tests: Either that an authority should have contained its expenditure in the current year by providing for a cash increase in rate and RSG—borne budgeted expenditure between 1979–80 and 1980–81 of at least three percentage points below the average for the class; or that an authority should have achieved the target under the recent revision of 1980–81 budgets requested by the Government of at least a 2 per cent. reduction in current expenditure volumes in real terms between 1980–81 and 1978–79." [Official Report, House of Lords, 9 October 1980; Vol. 413, c. 593.]
Yet the whole aim of the new rate support grant is not only to control how much local government spends but to dictate how that money is spent. That is the entire purpose of the new block grant system. To achieve that purpose the Secretary of State has conducted an exercise which is overweeningly egotistical even by his standards. He has invented his own local authority and demands that all the real local authorities conform in every particular to its pattern on pain of condign punishment. The Book of Genesis reliably informs us that the Lord"I am sympathetic to the claims of local government that it has managed its affairs a great deal better over the years than central Government … local government has a record of keeping to its capital and revenue budgets which is better than that of central Government."—[Official Report, 12 November 1980; Vol. 992, c. 474.]
The Secretary of State has created an ideal local authority in his own image. I regret that the result is far less satisfactory. Let us call this ideal authority Heseltinia. The Secretary of State has decided how much money Heseltinia council should spend. He has decided how that expenditure should be allocated among Heseltinia's different services. He has decided what rate poundage the council should raise to pay for the services. All the real local authorities are being required to conform to the idyllic world of Heseltinia. If they do not, they are penalised, often extremely harshly, even though, as the Secretary of State's Blue Book confesses,"created man in his own image … and, behold, it was very good."
He can say that again. The Secretary of State's grant-related expenditure statistics are based on the 48 needs assessments. The whole system depends on the statistics. The Secretary of State is proud that these assessments have been published. Last month he boasted when he made his rate support grant announcement that his system"The assessments are not … tailor-made to fit all the particular circumstances of each authority."
That is a somewhat eccentric way to describe a system which he and he alone has laid down by unilateral and arbitrary diktat. The Conservative-controlled Association of District Councils expressed the situation rather differently last week when it declared that"depends on independent measurement rather than on the arbitrary decisions of politicians."
In his Blue Book the Secretary of State preens himself by claiming that the new system, in its openness, provides the first real opportunity for public discussion of these matters which previously were hidden from view. He said that it provided the opportunity for continuing debate. It is true that his document reveals some curious sidelights on the Secretary of State's thought processes. For example, the report admits that a factor for which a local authority should be compensated by grant is the proportion of persons living in privately rented accommodation. That admission in itself is a commentary on the Secretary of State's obsession with fostering the private rented sector. When allotting grant for the fire service, the document awards points for density of population and evens that up by making allowance for sparsity of population. In a judgment which no sensible person would be ready to challenge it states:"many of the details of the block grant system were introduced unilaterally and the Association is unable either to understand many of the implications or to explain them to its members."
It is this type of fearless revelation that makes for a truly informed democracy. Other revelations are far more disquieting. The document is perhaps at its most disturbing when it deals with council house rents. Of the housing revenue account the document states:"Grant-related expenditure for coast protection is allocated only to coast-protection authorities."
Not only is the housing subsidy under the new Housing Act being used to force up rents by an average of £3.25 a week but the rate support grant is being used to turn the screw even tighter. The document states:"The assumptions which are made about new capital expenditure, management and maintenance expenditure, rent income and income from other sources including interest receipts from the sale of council houses are compatible with the Secretary of State's statutory decisions relating to the housing subsidy payable to local authorities in 1981–82 under the Housing Act 1980."
on rents—"It is not the intention that the rate support arrangements should underwrite whatever decision authorities take"—
The consequence is that in real terms the Secretary of State has in one year cut the rate support grant contribution to housing revenue accounts by 44 per cent., which is nearly £200 million. It is no wonder that that obedient Tory-controlled organisation, the Association of District Councils, wails:"and authorities are accordingly assumed to charge an average rent equal to the average rent in their region."
"Districts which have closely followed Government wishes in selling council houses and restricting expenditure have found themselves losing grant. They are now faced with the prospect of very big rent and rate increases."
Will my right hon. Friend make it clear to the Secretary of State that, far from helping to deal with unemployment, as the right hon. Gentleman was alleging a few minutes ago, the situation is made far worse because builders are being put out of work and are being laid off? In the area that I represent builders are having to apply for social security, an event that I have not been aware of hitherto.
My hon. Friend is right. The National Federation of Building Trades Employers told me only today that unemployment in the building industry has doubled compared with a year ago, and that is the direct result of the Secretary of State's actions.
The Government's needs assessments are not only unfair but often unreal. Areas that do not provide nursery education get grant for it. Areas that do not provide concessionary travel get grant for that all the same. The system is unreal and unjust and to many is incomprehensible. The mathematics of calculating a local authority's grant are so fiendishly complicated that the Municipal Journal, ever mindful of its public duty, has recommended that local authorities purchase programmable calculators and has thoughtfully published a guide for their use. The House, too, may profit from this information, only some of which is as follows:"Calculating the rate under the complexities of block grant is just the sort of problem that is elegantly solved with a programmable calculator."
"The calculator will reliably deal with the complexities of multipliers, poundage schedules, thresholds and the special treatment of changes in balances, interest receipts from revenue balances and parish precepts."
Programs P0 and P5, executed by pressing the P0 or P5 keys, allow the contents of 15 memories to be displayed and altered. The memory number is shown for one second. Press EXE if you are impatient, followed by the present contents of that memory. If a new figure is keyed in or is calculated from the old, this will replace the previous contents when EXE is pressed.
The recommended calculator is unfortunately of Japanese manufacture and I shall therefore refrain from naming it. It is no wonder that the chairman of the Association of County Councils, Sir Gervas Walker, said last month of the rate support grant settlement that it was tough but fair, although he admitted that he could not understand the logic of it. Others are under the same disadvantage. When the Secretary of State made his rate support grant announcement last month, the hon. Member for St. Marylebone (Mr. Baker), a former Parliamentary Private Secretary to the right hon. Member for Sidcup (Mr. Heath), claimed that the City of Westminster would not fare too badly from the rate support grant settlement. The hon. Member for Manchester, Withington (Mr. Silvester), the present Parliamentary Private Secretary to the Secretary of State for Employment, boasted that Manchester would have the highest qualification for grant of any metropolitan district. In fact, Manchester fares worse than all but one of the provincial metropolitan districts while Westminster is one of the four authorities that get no grant at all. In last week's Government reshuffle the hon. Member for St. Marylebone was rewarded with office while the hon. Member for Withington was passed over completely. That demonstrates that under the Prime Minister's new reign of terror it is now less dangerous to have past associations with the right hon. Member for Sidcup than it is to have present connections with the Secretary of State for Employment. The fate of Westminster demonstrates that the Secretary of State does not have even the excuse of political bias for some of the crudities and inequities of his system, although he certainly sought to bias his decisions politically by loading them against London and metropolitan districts. A number of factors make for maximum unfairness. First, there is the cut in money grant. The reduction of 1 per cent. in the proportion of grant conceals a cash loss to local authorities in real terms which is not the £180 million claimed by the Government which is more than £800 million. That was admitted to me in an answer that I received on Monday from the Secretary of State. He confessed that rate support grant had been cut in real cash terms compared with last year by 8½ per cent. That, to use the right hon. Gentleman's words this afternoon, is the overall percentage change and not the 1 per cent. that he claims. London is the most harshly treated area of all. Its real grant loss is not the £100 million that the right hon. Gentleman claimed but more than £211 million, a 13·8 per cent. cut on last year. A second element that makes for unfairness is what the Government euphemistically describe as the safety net, a protective device that is allegedly intended to shield authorities from steep losses in grant compared with last year. In the right hon. Gentleman's rate support grant settlement a year ago he provided safety nets that restricted grant losses outside London to a maximum of a 1p rate and inside London to a maximum of a 3p rate. This year the safety net is an enormous 13p. This means that an authority can suffer the disaster of a grant loss that is equivalent to a 13p rate before the Department of the Environment moves in to cushion the blow. Even that is not the end of it. Losses are restricted to a 13p rate only at a certain expenditure level. If any authority spends more than that which is allowed for in the Government's assumptions for that authority, the loss in grant can be even higher. And then we come to the threshold and the taper. The taper is the Government's method of punishing authorities that spend above the levels laid down for them. The theory is that every local authority within any class — for example, a metropolitan or non-metropolitan district—will levy the same grant-related poundage to obtain rate income for spending at the level laid down for it by the Government. A threshold is then added and within it the authority can add to its expenditure above the grant-related expenditure limit without being penalised. That means that up to the threshold the council need add only 0·5618p to its rate poundage for every extra pound per head of population that it spends. Above that threshold the penalties set in. The additional rate poundage to be levied goes up to 25 per cent., to 0·7023p. The Government have said that the threshold is 10 per cent. That would lead any local authority to believe that it can seek to protect its services to ratepayers without being penalised by spending up to 10p per head above the theoretical expenditures allotted to it. If local authorities jump to that conclusion, they will be mistaken. The 10 per cent. is a proportion not of the real local authority's grant-related expenditure but of the grant-related expenditure in the non-existent authority of Heseltinia, a paradise where expenditure per head is £366 and where the threshold is consequently £36·60. For real local authorities £36·60 as a proportion of their grant-related expenditure may turn out to be a much lower percentage. In Manchester, which the hon. Member for Withington says is so fortunate, it is 8 per cent. In Westminster, which the Minister of State, Department of Industry, the hon. Member for St. Marylebone, claims is so lucky, it is 6·5 per cent. These percentages mean something. They mean that the unfortunate council has to choose much earlier between a harsh cut in services or a steep rise in rates forced on it by the Government. The savagery of the cuts in grant is defeating the Government's stated purpose of controlling expenditure. A point is reached when, far from being the disincentive that the Secretary of State claimed it to be, the deterrent of the taper no longer operates. At that stage the authority escapes from further Government sanctions and regards itself as free to do whatever it likes by obtaining the revenue from local ratepayers. That is why, for example, the Inner London Education Authority, which now faces a devastating cut in grant, has decided to maintain its current service standards and to cut the price of school meals from 35p to 25p. When an authority such as Camden or Westminster gets no grant whatever, the Government have no influence at all over what it spends.Obviously, these programs are not 'the ideal introduction to programming …' So if you are prompted to purchase one to use initially for block grant, I would advise you to persuade your supplier to load the programs for you."
What is the Opposition's view of the Inner London Education Authority's decision? Is the right hon. Gentleman aware that ILEA is seeking a 46 per cent. increase in its precept to the boroughs? In the London borough of Wandsworth, for example, that will mean a 25 per cent. increase in domestic and business rates.
I shall come to the London borough of Wandsworth, about which the hon. Gentleman has spoken so bravely. The ILEA was faced with the choice between cutting its services irreparably or maintaining those services. I think that my right hon. and hon. Friends will applaud ILEA for maintaining its services.
We are talking about punishing local authorities and cutting services, but is not the real argument about looking after the nigh on 10 million pensioners, for whom these authorities provide services, and providing aid and comfort for the nearly 5 million disabled? The "Flash Harry" Secretary of State is not punishing local authorities. He is attacking disabled people in this international year of the disabled. To top it all, he is now so muddled that he has come to the House with an order that was laid on 16 December and has altered it in the middle of his speech. But for the fact that he is handing out some money to the steel towns, it ought to he opposed.
In dealing with the subject of deprivation, my hon. Friend has anticipated some of my later remarks.
So long as the Secretary of State continues to pay some grant to an authority, he retains some weapons in his armoury, because the expected grant that a local authority has worked out for itself with the aid of its programmable Japanese calculator is not necessarily the grant that it will actually receive. Early in the next financial year, all grants will be subject to change when the Department of the Environment has added up the bids from every local authority and crammed them into the cash limit. If the total bids go beyond the limit, there must be a pro rata scaling down. There is liable to be a further change next November, when the Secretary of State has power in his supplementary report to alter the whole pattern of grant distribution. He could at that stage make the taper above the threshold sharper than the present 25 per cent. and so place an even greater burden on an authority's ratepayers. There will be a further recalculation when local authorities notify the Department of the Environment of their total expenditure after the end of the grant year, and yet another when the accounts are audited. It will take an authority literally years to find out what grant it is getting for 1981–82. Meanwhile, local authorities are rubbing their bruises and trying to find out how to cope with what has hit them. Buckinghamshire, a Tory-controlled council which actually seems to have gained in grant, is all the same considering cutting its teacher staffing by 2 per cent. Leicestershire, also Conservative controlled, is launching a national fund-raising campaign to save music, drama and dance classes in its schools. Its director of education has declared:Others are even more desperate. The chairman of the Association of District Councils, Mr. Ian McCallum, has said that the settlement"Arts education in Leicestershire will die a slow death unless we do something."
Mr. R. T. S. Macpherson, chairman of the London Chamber of Commerce and Industry, has written an angry letter to the Secretary of State which says:"will undoubtedly have serious consequences in many areas".
The Secretary of State himself has complacently claimed that rate increases this year"It was with the utmost dismay that I read of your announcement of the Rate Support Grant Settlement. This confirms the LCCI's worst fears about the damaging effects on London ratepayers of Block Grant and suggests that you have failed to understand the scale of the economic problems, and the problems caused by inadequate infrastructure, which face industry and commerce particularly in the Inner London Boroughs … the new system appears to be markedly worse than what it has replaced."
"could be very low, even nil."
indicated dissent
The right hon. Gentleman was quoted thus in the newspapers. If he withdraws from that, I am ready to accept his withdrawal.
I referred to this in my speech. I was quoting CIPFA.
I accept the right hon. Gentleman's repudiation of that organisation. Instead, I shall quote what he himself said in the debate this afternoon, from which I do not think he will resile, at any rate for a day or two. He said this afternoon that rate increases this year could be "extremely modest". Unless he reverts to past practice and Hansard is doctored, that will appear in Hansard tomorrow. But Tory-controlled councils have treated the Secretary of State's pronouncement that rate increases will be extremely modest with all the trust and affection that the former Chancellor of the Duchy of Lancaster reserves for television interviews of the Prime Minister.
Councillor George Hill, finance chairman of Conservative-controlled Solihull, said that cuts would be necessary to keep rate rises below 20 per cent. Wycombe, despite the presence of the Prime Minister as a weekend resident at Chequers and the Foreign Secretary as a major local landowner, is getting no grant at all. The council is composed of two Labour members and 53 Conservatives. The council leader, Mr. Richard Holt. has said that he is "utterly shell-shocked." In Tory-controlled Sutton the rate rise is likely to be 2 per cent. or more. The borough treasurer of Conservative-controlled Congleton wrote in a letter to The Times:"Sir,
As my right hon. Friend the Member for Battersea, North (Mr. Jay) mentioned, however, the greatest lamentations of all are coming from Conservative-controlled Wandsworth. Its leader, Mr. Christopher Chope, has said:Having just had news of my council's block grant for 1981/82, I am left wondering whether the Treasury wizards responsible will now be applying their minds to new and equally meritorious projects. Suggestions which spring to mind involve flying pigs and lead/gold transformations."
Wandsworth is certainly suffering. By the Government's calculations, its grant loss is more than £8 million. As a result, the council has decided to cut its budget by 10 per cent. It will get rid of 700 jobs. It will close a day nursery, a day centre for the elderly, four luncheon clubs for the elderly and a day centre for the mentally ill. It will put up rents by £4·50 per week. On top of all that, there will have to be a rate increase of about 30 per cent. Wandsworth has the right to feel especially aggrieved, because its ratepayers will remember a party political television broadcast given on 30 April 1980 by none other than the Secretary of State for the Environment. The right hon. Gentleman, going adventurously on location, was filmed standing in Hazelbourne Road, SW12, and saying, with unwonted accuracy,"The new block grant system for allocating funds from central to local government was justified on the ground that it would help the provident and penalise the spendthrift. Yet the effect on inner London councils is totally the reverse of what the Government said it intended."
He went on to rhapsodise about one side of the street, situated in Wandsworth, compared with the other side of the street, located in Lambeth. He was especially eloquent about Wandsworth's rates compared with Lambeth's—though not about Wandsworth's rents compared with Lambeth's—and about Wandsworth's services, which he said were as good as Lambeth's. He pointed to one carefully chosen house and informed his audience that its rates were £233 per year. He asked television viewers:"I am standing in Hazelbourne Road".
As a result of the Secretary of State's rate support grant, the ratepayers of Wandsworth are having to face cruel cuts in the services that the right hon. Gentleman praised. As a result of the rate support grant, the householders whose rates he quoted will have to pay a further £70 per year in rates; and to the question"Which side of the street would you like to live on?"
they would be liable to answer "Any side that is not visited by the Secretary of State for the Environment". The right hon. Gentleman is an enemy of local government in this country, which he is reducing to subservience to his Department. He is an enemy of the ratepayers on whom he is imposing such intolerable burdens and whose services he is damaging almost irreparably. We shall be voting on their behalf when we oppose these orders and the report tonight."Which side of the street would you like to live on?"
5 pm
The right hon. Member for Manchester, Ardwick (Mr. Kaufman) was in characteristic good form, and we enjoyed a number of his cracks. However, he is pressing the responsibilities of my right hon. Friends a bit far when he refers to the state of man before the fall. Obviously, the right hon. Gentleman has knowledge which is not given to most of us, who are post-fall men suffering from original sin. Clearly, the right hon. Gentleman knows of a happier state of man. I suggest to him that, whatever existed in Paradise before the fall, and in any ultimate Paradise to which we may go, the rating system will not be part of it. Very definitely, part of what fallen man is suffering from is the rating system.
I appreciate that many hon. Members wish to participate in the debate, and I shall make only three broad points. The first is a procedural one. I find it curious that in this series of orders we are disposing of more than £10,000 million of public money in a one-day debate. There is some doubt as to the status of this report. It is not a statutory instrument. It is referred to in some detail in sections 60 and 61 of the Act. Last year, we were involved in disposing of £10 million a year for the National Heritage Memorial Fund, and we had the full parliamentary procedure of presentation of a Bill and Second Reading, Committee, Report and Third Reading stages in both Houses. Yet here we are tonight disposing in one day of £10,000 million—a thousand times more money than was involved in the National Heritage Memorial Fund, which enjoyed full parliamentary procedure. I do not blame my right hon. Friends for that. That has been the system ever since I have been in the House. If, as a House, we wish to control public expenditure better —I use the word "better" not necessarily in a skinflint sense, but so that the money is used more accurately for the purposes for which Parliament voted—it is mildly inefficient, to put it no higher, that there should be no procedure for the detailed examination of the rate support grant while there are detailed procedures for all other financial matters. As an example, I take VAT, which comes within the annual Finance Bill. Surely we ought to improve our system of scrutiny. I hope that at least the Select Committee on the Environment will look at some of my right hon. Friend's proposals in detail, because clearly we are not able to do so on the floor of the House. That troubles me a great deal. Some of the points made by the right hon. Member for Ardwick, and by hon. Members on both sides of the House, are in the normal sense of the word "Committee" points. None the less, they are important, but we cannot examine them in a once-and-for-all debate across the Floor of the House. What is the status of this report? If during the debate my right hon. Friend is convinced that there are certain matters in it which require amendment, is it possible for him to alter them by his own executive fiat? There are two points of view. One can read section 60(8) of the Act which gives the Treasury authority to pay out rate support grant according to what is in the report and the criteria laid down. However, section 61 is capable of being interpreted as follows. If after the debate, and in consequence of representations made to him, my right hon. Friend wishes to alter some of the weights, he would be free to do so. This is an important question, particularly as this is the first year of this new system of block grant. I very much hope that my right hon. Friend will feel free to alter some of the details within the global settlement, because it is in the actual distribution of grant between one factor and another that the anxieties of many councils lie. These could be resolved by fairly marginal alterations. That is my first broad set of points—the procedural status of this report and the absence of detailed examination of our annual rate support grant orders. Secondly, I do not believe that there would have been any need for this sort of order, with all its problems, if successive Governments over many years had made a thorough job of local government reorganisation. I do not believe that it would have been necessary for my right hon. Friend to bring before the House proposals for an annual rate support grant of more than 10,000 million with all its complexity. I say that whether we take this particular rate support grant distribution or the distribution of the previous Government, because the House should not forget that regression analysis produced some curious results. This is a legacy from Governments on both sides of the political spectrum who funked the rates issue for too long. When local government was reorganised, I believe that it was reorganised on the basis only of function and geography. The other side of the coinage of local government reform, namely, finance and taxation, was avoided because it was difficult. I believe that we are suffering as a result. The need for my right hon. Friend to bring forward orders containing this scale of public finance is due to that failure to deal with local government finance and taxation. Younger hon. Members may ask "You have been here for some time now; what have you done about it?" I merely remind them of what I said in a previous debate in 1970. It was:The terrible rating system continues to haunt us like the ghost of Hamlet's father. It is my wish that that ghost be finally put to his eternal rest. But neither this set of orders, nor the set of orders of the previous Government, will put that ghost to rest. Indeed, the right hon. Member for Ardwick activated that ghost in a very big way. He was rattling its chains. During the 25 years in which I have had the honour to serve the House the one attempt that was made to deal with this problem was the Layfield committee. It was set up in 1974 and reported two years later. It said:"To discuss local government reform without having proposals for the reform of local government taxation is like attempting to act the Prince of Denmark without Hamlet." — [Official Report, 18 February 1970; Vol. 796, c. 513.]
With all respect both to my right hon. Friends and their predecessors, I suggest that since the Layfield report that has not been done and that for the previous Government it was merely cosmetics on a ghost—if I can use that phrase — whereas my right hon. Friend is proposing major facial surgery. However, that still does not produce the new system that we need. Layfield had the right aim when it stated:"Our Report finds a lack of clear accountability for local government expenditure, which results from the present confusion of responsibilities between the government and local authorities. We are unanimous that measures are needed which will not merely be adustments to the present arrangements but will establish a financial system based on a clear identification of responsibility for expenditure and for the taxation to finance it."
I believe that that should remain the aim. I want to bring the right hon. Gentleman back from Paradise, through his Mozartian musings of "Cosi fan Tutti" down to today, and ask him to accept that the Layfield aim is the one that we must pursue. Anything else would not be the radical reform that is needed. I am in the curious position of finding that my arguments are more radical than those of my right hon. Friend, who is moving some way towards reform. I suspect that the right hon. Member for Ardwick, who claims a degree of radicalism, is not with me at all. That is sad, because I should like to think that I could carry him with me. It is clear that my right hon. Friend goes a long way with me in my fundamental criticism of the whole system of local government finance and taxation uniquely through the rates. Otherwise, he would not be proposing in the report the domestic rate relief of 18½p in the pound. There can be no greater criticism of the rating system—and the acknowledgment by my right hon. Friend and by the previous Administration of the inadequacy of the rating system—than that in a settlement which is tough and vigorous it is still thought right to give domestic rate relief at 18½p in the pound. The fact that he does that—and I welcome it—is itself an indictment of our system as no longer viable. I do not know how many Members spent time during the Christmas Recess trying to master the new block grant proposals. I found it a humbling experience. I entirely support my right hon. Friend's rejection of the old rate support grant system. Let me remind the House of what he said last year in moving the rate support grant order. He said:"The system should be based on accountability: whoever is responsible for spending money should also be responsible for raising it so that the amount of expenditure is subject to democratic control".
There was a clear duty on him to do something about it. I have therefore entirely supported the strategic objectives of my right hon. Friend. I cheered him when he said in his statement on 16 December last year that his aim was to establish a system which was"The basis of local government finance actually encourages expenditure".—[Official Report, 16 January 1980; Vol. 976, c. 1672.]
I take modest issue with my right hon. Friend on the question whether the proposed method will achieve all those admirable aims—certainly whether it will achieve them the first time round. I know why he felt that speed in implementing his new block grant was essential. I feel that it would have been better to take a little longer and test some of the new criteria more extensively. I am rather old-fashioned and, like my right hon. Friend, I had modest service in the Army. There I learnt the old military maxim that time spent on reconnaissance is not time wasted. However, I know the pressures that were on him, so I shall mark up only a modest degree of disagreement with him. I turn to the details of the new block grant system. With 62 indicators and 51 weights, it is a formidable formula. I go further: it is a dazzling formula. I admire both my right hon. Friends for their statistical and mathematical courage. It took me many late nights and a lot of black coffee before I could begin to come to grips with the proposals. I put it to the mathematically minded hon. Member for Bethnal Green and Bow (Mr. Mikardo), who is very good at working out the odds, that he should work out the permutations of 62 indicators and 51 weights. They are pretty formidable. My right hon. Friend spoke of a new method of assessing the needs of authorities which relies on service-by-service appraisal of those factors which affect local authority expenditure. My right hon. Friend is being remarkably brave and sensitive. I am a simpler, less elegant person. I should have settled for a much cruder approach—the sort of approach that we had before the Second World War when there were only five factors in the rate deficiency grant. Clearly, my right hon. Friend is well seized of the basic mathematical laws of probability with which, of course, the House is familiar. The theory of probability deals only with the general, never with the specific. In other words, in a game of bridge one knows by the law of probability that the chances of being dealt four aces in one hand are always 378 to 1. If, in the first hand, one is dealt four aces in the next hand that is dealt the odds of being dealt four aces will still remain 378 to 1. It seems to me that my right hon. Friend, with his usual sensitivity and integrity, is anxious to get round the laws of probability. By having much more sensitive indicators and complicated weights, in some cases going to six decimal places, he is seeking precisely to mirror the different needs of each authority. That is a remarkably bold approach. If it succeeds, it will be a magnificent achievement. But I have yet to be convinced that it will be totally successful. Let me make a quick comment to illustrate what I mean by referring to three of the indicators. The category C group of indicators is headed "Social and environmental problems". I notice there is no specific mention of the physically disabled and only a passing reference to the mentally handicapped in one or two of the factors in that group. in this international year of disabled people, I suggest that if my right hon. Friend is to try this sensitive approach, he should take more account of the difficulties of some local authorities in implementing the Chronically Sick and Disabled Persons Act. One of the criticisms made by some local authorities is that we in Parliament are very keen on passing great Acts and imposing great duties on local authorities and then forgetting to give them the resources to carry out those duties. So I hope that there will be more reference to that matter. Indicator C16 gives a heavy weighting to the decline of population in some authority areas, but there is no corresponding allowance for a district growing at a higher than average rate. Yet we all know that a growing authority has as many short-term cash flow problems in providing the infrastructure as a declining authority has with its different problems. I mention that because of the situation that exists in my own constituency in the growth area surrounding Southampton. Then there is the third indicator, E7, under the heading "Notional Housing Revenue Account deficit". Why does my right hon. Friend need this indicator at all? In recent years most housing authorities have not made any contribution from their rates funds to support their housing revenue accounts. The housing revenue accounts have been entirely self-sustaining. It is therefore outwith the rates system, as our Scottish colleagues would say. I wonder why it is necessary to bring it in with all sorts of complicated criteria. I could understand it if, in the case of authorities which had made a contribution from their general rate funds to their housing revenue accounts, my right hon. Friend wished to bring them within the ambit of his control. But that is not a valid factor in the case of authorities, such as my own of Eastleigh, which have made no contribution from the rates fund to the housing revenue account since reorganisation. I shall be interested to hear his comments in this regard. I remain to be convinced. The matter was taken up by the Association of District Councils. It said:"fair, rational and open to scrutiny".—[Official Report, 16 December 1980; Vol. 996, c. 217.]
We find ourselves in that position. I hope to be convinced by my right hon. Friend that he needs the indicator E7. Given that he already has 62 indicators, I believe that he could drop one, as a small parliamentary concession. That would ease the wheels of today's debate. I shall not detain the House further. There is much that I could say, not least to question my right hon. Friend in detail about appendix 3 to annex J — the indicator weights. Having done my mathematical homework during the recess, I am intrigued by many of the indicators, some of which go to eight decimal places. It would be intriguing to hear the justification for those particular weights. However, it would not be right to detain the House on that subject. It merely illustrates what I said about the lack of a Committee stage to discuss these new proposals. I end by referring to an interchange that my right hon. Friend and I had when he made his announcement. I asked him:"it appears that those districts which have been selling council houses and have been unable to increase rents because of the 'no profits' rule are now being penalised."
Having studied the documents that are available, and some of the print-outs, I must confess to my right hon. Friend that I remain agnostic. If, during the course of the year, as particular difficulties emerge, he takes advantage of section 61 of his Act and produces interim alterations within the broad level of settlement, he will have some chance of turning me from an agnostic into a convert."Will my right hon. Friend accept that he has the unanimous support of the Government side of the House for his strategic aims but that many of us will have to remain agnostic until we see the details of what he calls his service-by-service appraisal?" —[Official Report, 16 December 1980; Vol. 996, c. 227.]
5.20 pm
I come to the debate with a strong belief in local government and the role that it has to play in the democratic life of our country. I was born in Durham and have lived there all my life. Today it is a much more caring society, with a better environment, and it is a far more attractive county than when I was a boy. Most of that is due not to the actions taken in this House of Commons and the work of the Government but to the dedicated service of ordinary men and women in local government.
My four years in the Department of the Environment strengthened my conviction that local government in Britain is an example to the world. When I was in the Department and visited various authorities — most of them Tory authorities—I was always impressed by the fact that, although we differed on fundamental principles, on the value of certain public expenditure, and so on, people in local government were anxious to do their best for their own neighbourhood and their own area. I speak in the debate because I am fearful for the future of local government. It has had some hammer blows in the last decade. Local government reorganisation was an unmitigated disaster. It brought about amalgamations and mergers of communities that had no relationship with one another. It has caused unnecessary and very bitter rivalries. We are now suffering from them. If the Secretary of State really believes what he said in his speech about giving authorities more freedom and allowing local authorities to exercise their own judgment more, he has been deaf for the last 18 months, he has listened to nobody, and he has read nothing about what is going on in local government. When I tried to intervene, I intended to ask him whether he could quote one local government association—indeed, one Tory councillor—which welcomed the new block grant formula and believed that it would offer more freedom. It is the kind of freedom that was enjoyed by the Jarrow marchers when they came to London. Instead of having a sandwich on a park bench in Hyde Park, they were quite free to go to the Savoy and have lunch; in fact, they could have stayed overnight if they had had the resources. The Secretary of State has proved this afternoon that he has never sat in a pruning committee trying to fix the rates for a local council. He has had no experience of being in a council and having to decide among the harsh priorities. He has not had to ask himself whether an item can be afforded, knowing that it would mean cutting something else. The experience of councillors today is that more harsh decisions are having to be taken than ever before. A councillor in Durham is faced with having to consider whether to impose a rate that is unacceptable for, whatever the Secretary of State says, there are limits to what we can ask our people to pay. There are also the cash limits imposed by the Secretary of State. Councillors face the threat that if they refuse to cut essential services, they will be punished and penalised. That is the terrible dilemma faced by those in local government today. I know good folk who are now saying that they will not stand for local government office again. A considerable part of the local media is conducting a vendetta against local government, always looking for the worst things that can be said about those in public life. After reorganisation and the rate support grant settlement, we now have a Government who are saying to local authorities "We no longer trust you and we shall determine how much you are to spend in the various areas". Tax reductions are always most favourable to those who are already comfortable and well off. Public expenditure cuts have the greatest impact on the most vulnerable in our society. Their impact is on home helps, on the concessionary fares that old-age pensioners value so much, the various personal social services, school meals, and so on. My hon. Friends are familiar with the importance of these services in creating a caring and a civilised society. My complaint against the Government is that they are still persisting in saying in the House that these cuts can be made in local government without really attacking the essential services. The evidence from Tory councils and Tory councillors who want to do the best for their neighbourhood is that essential services are being cut, and it is the most vulnerable in society who are being hurt most. The Secretary of State must not underestimate the bitter resentment that is felt in local government circles right across the board. I speak for the Northern region. The feeling there is that decisions are now being taken away from the region and are being made in Whitehall. The people to make the judgment about what is required to be spent in Durham are the people in Durham. If their representatives fail them, in our democratic society they turn them out. That is good democracy. Democracy is a tender plant. If we are to maintain it and strengthen it, we must trust the people in their areas to make the right decisions. Unfortunately, however, central bureaucratic control is being imposed on local government. This threat is even more important than whether a council is to carry an extra burden of a 3p or a 4p rate until adjustments are made. The most important task is to protect the tender plant of democracy. Having had a long spell in local government, I know that it is the bulwark of our democratic way of life. In Durham we cannot understand the constant repetition by the Secretary of State that the shire counties are having all the benefits because of what he has done to London. I tell my people in. Durham that if they understood some of the terrible social problems in inner London they would have more sympathy for the claims that are made for the inner cities. We have a reputation in Durham for cautious spending. We have lived with economic reality for the last 50 or 60 years. We know everything about low wages, about long spells of unemployment and about the need to live with economic reality. Nobody can accuse Durham county council or our district councils of lavish spending. We have never had the money to spread around. There are eight district councils in the county of Durham, five of which will suffer an additional burden of no less than 7p in the pound. The worst affected is the Derwentside district council, which covers the location of the Consett steel works. My hon. Friend the Member for Consett (Mr. Watkins) is here, but he knows that geographically the greater part of Derwentside is in my constituency, although most of the people who work there live in his constituency. Apart from the loss of the rateable value because of the closure of the works—and I shall study closely what the Secretary of State said this afternoon about the effect—the loss of Consett this year would have meant an additional 3p on the rates in the whole of Durham county.May I point out that the loss of rates revenue as a result of the closure of Consett steel works is about £2 million per annum, which is exactly half the sum that the right hon. Gentleman announced as being available to make up for the process for the entire country? As we know from experience, it will almost certainly mean cuts elsewhere, which have so far been concealed from us. As my right hon. Friend says, we need carefully to study what the right hon. Gentleman has said, although it is apparent from the start that what he has announced is inadequate.
I remind the Secretary of State that, apart from Consett steel, another factory in Derwentside employing 1,500 workers is also closing. Indeed, industrial projects are closing throughout Durham county.
The Secretary of State said that the allocation was simple and fair. In Derwentside it means a 9.9p in the pound rate increase, the fourth highest in England. What is the justification for that? I regard the multipliers as the safety nets. Can the Minister for Local Government and Environmental Services say whether the multipliers are meant to be transitional? There is a great apprehension. They are vital for the district councils in Durham. They are so fashioned as to reduce the amount that would otherwise need to be raised locally. All eight districts in Durham are among only 16 of the 288 non-metropolitan districts most heavily dependent on multipliers. I should like an assurance that the multipliers will not be phased out, with disastrous consequences for areas such as Durham county. The Government's action is a body blow to democracy. My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) quoted various statements from local government officers, not Labour but Tory, who believe that the block grant system is taking away local initiative and responsibility. I can say without fear of contradiction that people with a lifetime of experience in local government are seriously concerned about what the Government are doing and believe that local government is being destroyed. Democracy has always been difficult to operate. Rights and responsibilities are of equal importance. I therefore differ from the hon. Member for Eastleigh (Sir D. Price) on the rating system. We are told over and over again of the evils of the rating system. Important people in the country are pledged to abolish it. We should be spending more time trying to revise and reform it instead of merely denouncing the anomalies and injustices. In that way we should be doing the ratepayers and the citizens of this country a greater service. Both rights and responsibilities in a democracy are very important. It is not always easy to strike the right balance. The rate support grant settlement, coupled with the Government's insistence that all local government spending is inclined to be extravagant and unnecessary and we can find a better way of providing services for our people, is a backward step. My lifetime experience is that community spending on the whole has improved the lot of ordinary people who would otherwise have been defenceless in the rough economic system that is so favoured by the Secretary of State. Community spending has enriched the lives of otherwise deprived and defenceless people. The rate support grant settlement and the Government's whole attitude to local government is a threat to the great improvement that has been achieved in my lifetime. That is why I chose to make a brief contribution to the debate.5.35 pm
I should like to begin by paying tribute to the very hard work done by my right hon. Friends in the creation of the new system. In particular, I pay tribute to my right hon. Friend the Minister for Local Government and Environmental Services for the kindness that he has extended to me in giving freely of his time to discuss the problems posed by the block grant settlement to the London borough of Wandsworth, wherein lies my constituency.
I agree in principle with the need for Government action. Local government has grown enormously over the past 10 to 15 years. Much of that growth has not met any real need. It has been enormously expensive, and the cost of maintaining it is beyond the ability of commercial and domestic ratepayers at present. Many councils throughout the country have been impervious to reasonable invitations by my right hon. Friend to curb their expenditure, and he was bound to take some action to make them more directly responsible for the financial demands that they make. However, I have objections to the way in which the new system has worked in practice, particularly as it has affected Wandsworth. The London borough of Wandsworth became Conservative controlled in 1978. Since that time the council has pursued a policy of tight budgetary controls, totally in accordance with the Government's philosophy. It is often called the Government's favourite council, and well it might be. As I have said before in the House, I do not believe that any member of the Government could have done more to pursue Conservative policies than the present leadership of the London borough of Wandsworth, in the teeth of fierce opposition—proper parliamentary opposition in the Chamber and some wholly improper unparliamentary opposition outside, such as attacks on the car belonging to the leader of the council.What is wrong with that?
Does the hon. Gentleman condone criminal damage to the car of the leader of a local authority?
What is wrong with people outside the council chamber opposing the reactionary policies of the Wandsworth council? Does the hon. Gentleman believe that the only correct opposition is that which occurs in this Chamber or the council chamber?
As usual, the hon. Gentleman is so hot-headed that he jumps the gun. That is not the point that I was making. The demonstrations that Wandsworth was and still is being subjected to are anti-democratic. They are attempts to prevent properly elected councillors carrying out their work. Notwithstanding that opposition, Wandsworth council under its present leadership has forced through a series of expenditure savings and legitimate cost increases that have commanded widespread support from rent and rate payers. It has achieved considerable reductions in manpower and expenditure.
Thus, even before the present crisis faced the council, it had reduced its payroll by almost 1,000 out of 8,200 and had cut expenditure by nearly 8 per cent. in real terms. I hardly need remind my right hon. Friend that that is 3 per cent. above the target that he set over the past two financial years for local authorities. In the past two years of sound management the council has asked the ratepayers for only 20 per cent. in rate increases. The Labour Members who laugh so ribaldly and seem to be turning this place into a public bar would do well to take their laughs into the streets of Lambeth where they would find residents only too glad if the local authority had raised its rates by only 20 per cent. in two years. The right hon. Member for Manchester, Ardwick (Mr. Kaufman) spoke about a street that was half in Wandsworth and half in Lambeth. He seemed to think that, as a result of the objections which some residents on Wandsworth have put to the Secretary of State, the Secretary of State's appearance in that street was somehow no longer of value. But what the poor fellow has failed to realise is that since the Secretary of State was there the contrast has become yet more apparent, because residents of the Lambeth side of the street are having to pay a further 20p in the pound more merely to help Lambeth council through until April. Labour Members talk about the awful things the Tories have done to employment. But one major employer in Lambeth, Shell, has had to pay an extra £625,000 in rates to help that profligate council through until April. One of the saddest aspects of debates such as this is that hon. Members such as the right hon. Member for Ardwick are prepared to mouth in this House platitudes supportive of people such as "Red Ted" Knight, who in the days when the right hon. Gentleman first joined the Labour Party, would not have been allowed to be a member of the party. That is a classic instance of why the Labour Party is in such a sad state.The hon. Gentleman referred to the burden that has been imposed. When the Government put up interest rates by 1 per cent., it cost Staffordshire county council £625,000.
That was probably because Staffordshire county council, like Wandsworth council in the old days, was so profligate in its spending that it would borrow money at whatever rate of interest it had to pay and saddle future councillors with the burden—which we are facing in Wandsworth—of repaying million of pounds' worth of interest every year.
The hon. Member for Stoke-on-Trent, Central (Mr. Cant) will remember that it was the unique achievement of the Administration that he supported to have interest rates running at 8 per cent. higher than those prevailing in the United States. whereas the present Government have interest rates running at 6 per cent. lower than those in the United States. Interest rates have no bearing on this matter. I should like to finish what I was saying about the contrast drawn by the right hon. Member for Ardwick between Lambeth and Wandsworth. When the Conservatives won control of Wandsworth council in 1978, its rates were higher than those in Lambeth. Now, a mere two years later, Lambeth's rates, with the additional increase, are twice those of Wandsworth. While it is true to say that Wandsworth rates must go up due to the block grant system—I regret that and I shall have something to say about it shortly—when otherwise they would not have had to go up substantially, Lambeth's rates will go up so much more than Wandsworth's that I hope that my right hon. Friend will return to that road and make another party political broadcast, because his action will be even more telling than it was before. I turn to the problems faced by Wandsworth. The effect of the block grant settlement, as well as the wholly irresponsible decision of the ILEA to increase its precept by 46 per cent., means that, even with a 13 per cent. rate increase built into the computations, Wandsworth council faces a deficit of £17 million out of a budget of £70 million. Inevitably the council has had to propose a package of savings. Those will lead to significant increases in rents, higher than most of us would have wished, and expenditure savings totalling £7½ million. It is important to appreciate that those savings have been carried through with considerable care, though it cannot be said that everything on which money has been saved would. but for the crisis, have been saved. The truth is that the council has avoided cutting into the real heart of its services in repairs and maintenance for tenants or the provision for those in real need.Will the hon. Gentleman give way?
I am not prepared to give way at this point.
rose—
May I have your assistance, Mr. Deputy Speaker?
Order. Mr. Mellor.
Compared with the 1978–79 outturn, the council will have made savings of 21 per cent. in two years. Even so, and discounting the ILEA precept, the council will still have to raise the rates significantly above the rate of inflation, such is the shortfall of funds. With the best will in the world, that cannot be fair either to the council or to the citizens of Wandsworth. Of course, substantial savings would have been made anyway, but too much has been asked for by the Government in one year.
As a result of the savings, the council will have cut 1,700 jobs in two years. I am proud of that achievement, because I take the view that many of those cuts needed to be made and will be to the benefit of everyone. While I applaud the fact that any reduction has been effected in Civil Service manpower, the total reduction for the whole of the Civil Service has been only 35,000. No Government Department would dream of achieving a 21 per cent. cut in its expenditure in two years, let alone actually achieve it. It is not fair for the Government to expect a local authority, facing the same problems as a Government Department, to make savings on such a scale and still have to fall back on the ratepayers when the task is too mammoth for the Government to achieve in their own sphere of influence. I appreciate the pressure on the Government to move resources out of London, but I cannot support the Government in the Lobby tonight, because they should have taken fully into account the fact that some inner London councils have made a genuine attempt to do everything that the Government required them to do. But they have been asked to do the impossible. A safety net arrangement should have been imposed to give them fair recognition, while remaining in keeping with the Government's overall strategy. Another subject of great concern to all inner London Members is the policy of the Inner London Education Authority, which is raising its precept by 46 per cent. In Wandsworth—leaving on one side anything that the Government may have done—that means a 25 per cent. increase at ratepayer level. We do not want too many crocodile tears from the Labour Party about how rates will continue to rise in inner London. The truth is that the ILEA will be every bit as responsible for that rise, if not more so, than anything that the Government have done. The ILEA is wilfully forgoing at least £100 million of Government grant because it says that it cannot make savings. I do not know of any institution, large or small, throughout the country, which, when faced with necessity, is not able legitimately to make savings if it wants to do so. The ILEA has more administrators per school than any past or present authority throughout the country, or any that may be conceived in future. How can it say that it cannot make savings? It knows the pressures on business in London, yet it continues to make insatiable demands. It knows that the London Chamber of Commerce has said that, even if rates increase this year by only as much as they did last year, 44 per cent. of the members polled might leave London. Yet the ILEA is determined to go downhill on a collision course. The only reason why the ILEA is able to do that is that it is immune from the democratic consequences of its actions. Its members are not directly elected and, while I am proud to have expressed my support for a unitary authority for London education, we cannot carry on with people sitting irresponsibly in one chamber and imposing a precept that an elected authority has no choice but to pass on to its ratepayers. That is thoroughly wrong and I hope that my right hon. Friend the Secretary of State will do something about it.I see the force of what the hon. Gentleman is saying, but does he apply the same principle to the precept for the Metropolitan Police?
That is an interesting point. There is something in the argument about the Metropolitan Police being controlled. It is a subject of dispute in London, and I am not sure that I agree with that proposal, but I do not rule the hon. Gentleman out of court. I hope that his intervention means that he does not rule my point out of court and that he recognises that there is a need for reform of the ILEA. I am glad that he has joined the ranks of those who will support what the Secretary of State for Education is doing.
The tragedy of the ILEA's policy for the citizens of inner London is that the number of schoolchildren in London is falling and will continue to fall for several years, but the number of elderly people in Wandsworth and other boroughs is going up. The ILEA is saying to local authorities "We are making these demands for schools. Unless you are as irresponsible as we are, you must make savings by cutting your provision for the mentally ill and the old." That is why I did not care for some of the observations of the right hon. Member for Ardwick. Unless my local authority was prepared to sanction an 80 per cent. rate increase, it had to take some of the tough decisions that it took. The rulers of the ILEA shed crocodile tears about poverty and deprivation, but one must think of the poverty that they will cause to so many ratepayers who cannot afford the rate increases. The ILEA leaders also shed crocodile tears about youth unemployment, but one must think of all the prospective employers of young people in ILEA schools who will be driven out of inner London as a result of what the ILEA has done.What about rents?
The hon. Member for Wood Green (Mr. Race) is so helpful. He always reminds us of other good points that remain to be made. The right hon. Member for Ardwick sneered and said that Wandsworth rates may be lower, but its rents are not. But how are we to run these things in a fair society? Are we to say that, in an age when most council tenants rightly receive a fair income for a fair day's work, they should not have to bear at least the cost of repairs and maintenance and interest charges on their property? Are we to say that the housing account should not balance?
My hon. Friend the Member for Streatham (Mr. Shelton) will correct me if I am wrong, but I understand that the income from rents in Lambeth is £14 million, while repairs and maintenance cost £22 million. That means that the rest of the citizens of Lambeth, many not living in accommodation half as good as that provided by the local authority, have to subsidise further the accommodation of council tenants. That cannot be right.I am following my hon. Friend's speech with great interest and I agree with what he is saying. Is he aware that the rate increases for council tenants in Lambeth last year were more than the rate and rent increases together for council tenants in Wandsworth?
I am grateful to my hon. Friend. That is the last word. As I said in the London debate before Christmas, making points about the financial policies of Lambeth council is like hitting a barn door at 10 paces. I am glad that my hon. Friend the Member for Hampstead (Mr. Finsberg), the Under-Secretary of State for the Environment, adopted that view. Most of us have more profitable things to do.
I ask that steps be taken to prevent the ILEA being able in future to impose such rate increases automatically on the citizens of inner London. I ask the Government, even at the eleventh hour, to think about the management problems posed to councils such as Wandsworth and to give some consideration to realistic safety nets. On that subject, even hon. Members from soundly run outer London boroughs such as Bromley—and I associate my hon. Friend the Member for Chislehurst (Mr. Sims) with this point, with his consent—would welcome some sort of assistance on that basis. Consideration should certainly be given to using the £200 million left before the moratorium to help particularly deserving councils. Next year there will be no scope for Wandsworth to make further savings on top of all those that it has already made. I hope that the Government will bear that in mind.:It is election year.
So far, my colleagues on the council have been able properly to distinguish between real needs and those that do not have to be met, but they have now come up against the central core of council expenditure that all of us in the community, whatever our political views, believe is necessary.
The hon. Member for Wood Green mentioned election year. I am fairly confident about election year. Only two months ago, a Wandsworth ward in my constituency had a by-election which the local Labour Party was determined to win. About 64 per cent. of the residents in the ward live in council accommodation and they returned the Conservative candidate. The Labour Party will have to think up a few better lines than the sort of cheap guffaws that we have had in this debate before it will persuade intelligent people such as those in my constituency that they are wrong to support Conservative candidates.5.55 pm
This is the first opportunity that I have had of hearing the hon. Member for Putney (Mr. Mellor) and I am glad to have made his acquaintance. His speech told us a great deal about him, but it told us two things in particular. First, if he really believes that the large rate increases that will be imposed throughout London and that will cause the damage to employment prospects that he rightly described are to be laid at the door of the ILEA and not at the door of the Secretary of State for the Environment, he has a capacity for self-deception which is unequalled, even in this House. Secondly, the most revealing sentence in the hon. Gentleman's speech was his comment that he was proud of 1,700 men being sacked. I dare say that most of those men live in Wandsworth and some live in his constituency.
I do not think that I said that. I said that I was proud of the achievements of the council in the necessary slimming down that it had to do. The hon. Gentleman talks about people being sacked, but he is being unfair to Wandsworth council. One of its first actions was to sign a "no compulsory redundancy" agreement and everyone who has so far left the council's service has done so voluntarily as a result of a highly generous financial package deal, which uses the statutory minimum rates for redundancies that the hon. Gentleman voted for when a previous Labour Government introduced them. The council has improved on that package to such an extent that I believe that what it is putting forward will be acceptable to most employees over 50 who wish for early retirement—and there are many of them.
That was not an intervention; it was a second speech.
The hon. Gentleman got it wrong.
I did not get it wrong. I quoted what the hon. Gentleman said. He said that the staff has been reduced by 1,700 men and he is proud of that. If he thinks that that is such a great thing, perhaps he would like to call on the people affected who live in his constituency and say "I am proud of the fact that you are out of a job". Let him see how enthusiastic they are for the views that he has represented. If other hon. Members want to share in the pleasure of men being out of work when they ought to be at work, that is up to them.
Moreover, I do not see any great virtue in cutting public expenditure in that area only to increase it by the cost of maintaining men in unemployment and losing the tax revenue that would accrue if they were in employment. All one is doing is shifting the burden from one department to another, which is part of the economics of the madhouse of which this Government are so proud. I wish to refer to the effect of the proposals on the London borough of Tower Hamlets, within whose boundaries lies my constituency. I do not want to make a great deal out of the matter. We could all compete with hard luck stories about the effects of the proposed measures on local authorities in our areas—and few would not be hit very hard indeed. I rose to make some general observations, to which I shall come shortly, about the relations between the Government and local authorities, the functions of local government and the long-term effect of measures of this sort upon the functions of local government. Obviously, the London borough of Tower Hamlets is a high needs area. It has been deprived for more than a century. It now has 13 per cent. unemployment, which is much the largest figure of any local authority in the South-East region, and larger than many local authorities in even the less developed regions. It has an abnormally high proportion of elderly people. The percentage of children in care—a heavy burden on all local authorities—is higher than in any other local authority in Britain. For the reasons given by my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), namely, the lack of clarity of the provisions, and the fact that the Secretary of State can add to them almost at will at several stages throughout the financial year, it is difficult to estimate the effect of the provisions on the finances of the London borough of Tower Hamlets. However, it appears that there will be a reduction of about £10 million which, when added to the effect of the precepts over which the council has no control and the effects of inflation, amounts to a cut of something approaching 50 per cent. That is quite disastrous. I doubt whether any other London borough or any local authority in Britain is as hard hit as that. The inevitable result, among other things, will be a considerable rise in poundage. Several Members, on both sides of the House, have referred to the vicious circle of a rise in poundage. It is a deterrent to industry. Tower Hamlets has done a great deal during the past three years to attract both large and small-scale industry to the borough. It has been a remarkable success story. Savage increases in the rate poundage will make that task more difficult and perhaps, in the end, impossible. That deprives us of the opportunity even to extend the rate base. In turn, without any of the Government's carry-on, that will result in further increases in the rate poundage. That is the way to set up a vicious circle. That is why the London Chamber of Commerce and Industry has complained. We have heard about that today. If I bothered to reply to the letter that I and other hon. Members received from the LCCI, knowing as much about that organisation as I do, I would point out that all of the members of the committee who drew up the statement on which the letter was based voted for Conservative Members at the last election. Many are directors of companies that make substantial donations to the funds of the Conservative Party. The reason why my right hon. Friend the Member for Ardwick described that letter as bitter is that they resent being bitten by those whom they have fed. Well, they asked for it and they have got it. I am not weeping any tears on their behalf. But I am weeping tears on behalf of those unemployed people in London who were beginning to hope for employment because industry was being attracted into the area through a great deal of hard work, hard thinking and fresh measures, and who will now have their hopes dashed by the Government's proposals. At this time of the year local authorities are determining their budgets and setting their rates for 1981–82 without knowing clearly the basis of the finances that they will receive by way of grant. My local authority received its first circular from the Department on that subject only yesterday morning. Until then it had had to base its calculations and estimates on reading between the lines of the plethora of press statements that have been issued with great frequency but little precision by the Department of the Environment. Real guidance is lacking, and what guidance is given is unclear. Let us not doubt that implicit in these arrangements is a reduction in the autonomy of local government. I do not believe for a moment that the Secretary of State was doing anything other than talking with tongue in cheek when he said that the measures would increase the powers of choice and decision for members of local authorities. He did not believe it. He did not believe that we believed it. He knew that we did not believe that he believed it. He was having a little game with himself, as is sometimes his wont. He cannot quote a single person in local government in Britain who subscribes to the view that the measures do not seriously limit the autonomy of local authorities. The Secretary of State now has the power to decide, especially on the capital side, and, to a lesser extent, on the revenue side, how much each local authority may spend, when it may spend it, and on what it may spend it. I sat with the chief officers of my local authority yesterday and we went through the arithmetic—with the help of a calculator, but not a computer. We examined all five items. There are not six items in Tower Hamlets because it is not an education authority. There is a departmental determination of the capital expenditure for each item. That amounts to the fact that the Secretary of State determines what every local authority may spend. We have heard evidence in the debate that he discriminates in favour of some local authorities and against others, often in a somewhat capricious manner. The Secretary of State will decide separately for each local authority what it should spend, when it should spend it, and on what it should be spent.Perhaps I can help the hon. Gentleman to clarify this for his local authority, which may not have understood it, although I think that every other local authority in the country now does. What he said is incorrect. For the first time, under the arrangements in the Local Government, Planning and Land Act, the capital allocations, although made under the separate headings of services, become in the hands of the authorities a single block and can be used by them for whichever services they regard as having a high priority.
I am not speaking just for my own local authority when I say that that is not how the local authorities see it. The difference of view may be the product of the lack of clarity over what the Department has been saying. Even if a total blockage were applied, there would be great difficulties. The room for manoeuvre is not as great as the Minister would like to pretend, because certain elements are fixed and cannot be changed. They are fixed by the existing pattern of services, and the commitments therefore will have already been entered into. Local authorities and the Government do not work on a time scale of one year for many projects.
The net effect is that the Secretary of State has now become the director of finance of every local authority, making all the major decisions that were normally made by the finance committee and the director of finance, or, as he is sometimes called, the borough or county treasurer. Those decisions will be made by the right hon. Gentleman. Local councillors will now be free to decide whether they shall have rhododendron or other flowering bushes in the parks and whether the dustbins in a particular street shall be emptied on Tuesdays or Wednesdays. All the major decisions, however, will be taken over their heads. When I was first elected to Parliament after the war, the Conservative Party was the great protagonist of strong, independent, autonomous local government. That was the old Toryism, of course, the Toryism of the kin Macleods, the Harold Macmillans and the "Rab" Butlers. They would not recognise the new breed of vicious animal that has usurped their name and their place. Those old Tories, however, were sincere. Many of them had come from local government and knew its importance. They wanted people of quality in local government. However, people of quality will not stand for election to local authorities if all that they are to be is puppets and if their only power of decision is over rhododendron bushes. That is why my right hon. Friend the Member for Durham, North-West (Mr. Armstrong) was right to say that the process is not just the creation of current difficulties for local authorities, but a threat to local government as a whole. In the past year, under the tender ministrations of the Secretary of State, the whole carefully structured, delicately nurtured relationship between the powers of central and local government, which, with a bit of amendment here and there, has stood this country in good stead for centuries, has been broken. The threat is significant. The people of this country will be deprived of services which, as my hon. Friend the Member for Durham, North-West said, make up the warp and weft of community life in many parts of the country, services which mean so much to so many, above all to the more disadvantaged. When that happens, people should understand that it is not their councils, Labour or Tory, Wandsworth or Tower Hamlets, that are responsible, but the Secretary of State. They must understand at whose door they must lay the blame for the considerable reduction in their standard of living that will be caused by the measures that we are considering today. The hon. Member for Putney told us that he would not support his Government in the Lobby tonight. I honour him for that. As one who has voted against Governments of his party more times than any other Labour Member, I am always glad to encounter someone who will put his vote where his voice is. All too few will do that. If there were any sort of honesty on the Conservative Benches, the hon. Gentleman would not tonight be alone in his determination.6.15 pm
Before Christmas I spoke on the Floor of the House and in Committee on the block grant system, opposing a number of aspects of it. When the final decision came, comparatively few of my hon. Friends remained to join me in my resistance. I suspect that they were seduced by the velvet tones of my right hon. Friend the Member for Bridgwater (Mr. King), but it is possible that, with the publication of the rate support grant details and the consequential study and attention that they have received, a number of my hon. Friends feel, as with so many seductions, that it may not have been such a wonderful experience. Now that we can see much of the reality behind the theory, it is obvious why many of us were concerned about some aspects of the block grant.
I begin by welcoming the detail and volume of paper that have accompanied the settlement. Whatever their views on the substance, hon. Members will welcome the ability to have the much wider debate that we now enjoy under this system. Would that I could say much more in its favour. In his December speech to the Consultative Council on Local Government Finance my right hon. Friend the Secretary of State said that the local authority current expenditure volume target was 5·6 per cent. below the authorities' spending in 1978–79. He went on to say thatI do not wish to get involved in a semantic discussion of what is meant by "reasonable", but I draw my right hon. Friend's attention to what is happening in many parts of London as a result of the current redistribution of grant and the adjustment of the total figure. I have no intention of defending what might be termed the excesses and aberrations of local government—the 40 extra staff a month for the London borough of "Looneybeth" and the wild over-estimating and wildcat expenditure that may seem so attractive to a very small number of authorities—and they are a small number. They properly attract a tremendous amount of attention, investigation and publicity in The Sun and the Daily Mail and all the other papers read by those of choice, but those papers do not give any indication of the many authorities that go about their businesses efficiently, stay within their cash limits, get their estimates right year after year, are on target and abide by Government guidelines. The effect of the new system is chaotic. I quote from the article by Robin Pauley which appeared in the Financial Times on Monday. An extract reads:"if local authorities plan for that target and budget in line with the cash limit assumptions rate increases should be contained within reasonable levels."
of the system—"The wild disparities"—
This is the form of Government measurement."are the result of the difference in the rate base and the effect within the new system of high rateable values. As the graphs show, an authority with large resources like Spelthome or Camden will do proportionately better if it can manage to spend less than the Government's assessment of its spending need. Poorer areas like Lewisham or Allerdale get a completely different result out of the mechanisms: their grant falls if they underspend but rises if they overspend the GRE level or the tolerance threshold"
In contrast, I offer the House a textbook example of how the current grant militates against the authorities that have abided by the rules. The London borough of Sutton, which I do not represent here, but previously had the privilege to lead, is a progressive, Conservative-controlled outer London authority with a good name for financial management. In 1973–74 and 1974–75 its estimates were within the increase of relevant expenditure accepted nationally. In 1975–76 growth was estimated at 4 per cent., and the borough was spot on. In 1976–77 there was a virtual standstill, and again the authority kept within that target. In 1977–78 there was a 1·6 per cent. reduction on the previous year's outturn. The authority not only kept within that target figure, but, because of savings elsewhere, managed to provide some expansion. In 1978–79 there were no specific guidelines, but merely an indication that expenditure should be pegged. Sutton's expenditure was right in line with national expenditure. In 1979–80 the rate support grant order allowed for a 1·04 per cent. increase in expenditure. The borough prepared its estimates in line with that order, the Minister then cut it by 3 per cent., and the authority went back to the drawing board and achieved a final outturn that was 4 per cent. below the original settlement. That is not a record of which to be ashamed. Moreover, in the current year, the guidelines were 5 per cent. below planned expenditure, and again these are being met. That is a record of an authority that stuck within the rules. But, lest it be accused of being a low spender in every area, I should point out that at the same time it provided a civic centre, which is fully paid for, a leisure centre, and so on. Sutton employs the second lowest number of full-time staff in London and the lowest number of part-time staff—on the Government's figures. That is but one authority. I apologise to the house for going into detail, but unless we look at the authority in detail, the judgment and our response to the judgment of the authority will not be fair and proper. On those figures we can start to see why the officers and councillors of that authority feel aggrieved that those years of good housekeeping are falling by the wayside. I stress that that is only one authority, and I have not yet said what is to happen as a result of the present system. Sutton is to lose £2¾ million immediately—equivalent to an 8p rate—and, as a result of the effect of redistribution and the cutback of rate support grant, the full effect of inflation this year and including inflation in 1981–82, its rates will rise by at least 25 to 30 per cent., which is even greater than the figure supplied by the right hon. Member for Manchester, Ardwick (Mr. Kaufman). I stress that that authority has complied with every guideline for several years. It is extremely unfair. My hon. Friend the Member for Putney (Mr. Mellor) described how Wandsworth had been similarly treated, and I am sure that there are a number of other such authorities in London, but not only here. My borough of Havering had a good rate settlement, so I am not pleading on behalf of my constituency, but that is its first good settlement in many years. We seem to have devised a new form of borough lottery whereby those who are the most deserving pay not only for the price of their ticket, but for everyone else's tickets too. I do not speak only for London, because outside London other areas have similarly suffered a tremendous cutback in grants. The nub of the problem is not necessarily the system, but the pace of change that the new system of grant represents. I believe—I do not suggest it for mendacious reasons—that we are trying to do too much too soon, and that we are forgetting that it is almost physically impossible in the space of one year to make cuts of 5 per cent., 7½per cent., and certainly 10 per cent. in an authority's spending programme when it is geared so much to salaries, many of which are negotiated nationally, and many of which have already been determined for the year in question. That is not on. My fear is that, should the Government rely on a total expenditure pattern that is based on the belief that authorities will be able to make these cuts, they may find that the expenditure in certain authorities will be higher, not because the authorities wish to oppose the Government of the day, but because of the near impossibility in some cases of meeting those targets. In a debate of this nature it is difficult to make amendments to what is being discussed, but I suggest that the Government should look again at two areas. The first is that of the safety net. This point has been raised by other hon. Members, but it is important to re-emphasise it. I accept the point made by my right hon. Friend the Secretary of State that, with a net loss of support to local government, a safety net of 2p or 3p would not be feasible. In theory, everyone is losing that, and therefore the safety net becomes nonsense. It is a far cry from that 2p or 3p—perhaps adjusted up to 6p—to the 13p that is being used on the combined safety nets in this distribution and that is drawn so wide that all the fish that it is expected to hold will escape through the bottom. I believe that that has been an errorst and I hope that it will still be possible to rectify it. The second matter that I highlight and about which I hope we shall be able to do something is the fact that the Government have set out expenditure targets. These are calculated targets that will attract a certain element of grant, but which in reality we shall not see. The Government calculate that about £100 million or more will be taken from Greater London. Other speakers, not necessarily in this House, have suggested that that figure is a major underestimate. We do not know, and any hon. Member may make suggestions about the figure, but if that suggestion is right, and if the figure is £150 million or £200 million—let alone any more—the Government should look carefully to see how those surplus funds—they are in the totality of the grant and will not escape from the total settlement—should be allocated, spread back, or whatever the "in" word is, to those authorities, not only London authorities, and certainly not only those of my party, which, having complied with all directions, are facing rate increases of 12½,15 per cent. or higher. With all the wonders of the new system, I do not believe that it would be impossible to do that. If it were done, there would be some redress and relief for areas which otherwise will feel that they are being made to suffer unfairly. If that takes place, and if there is a temporary shift back —it is the speed of change that is the problem—it might be possible for the words uttered by my right hon. Friend at that meeting in December to turn out to be true."These authorities are given a positive incentive to overspend by the system, and authorities in this situation form the majority of English councils."
6.30 pm
Those hon. Members who did not serve on the Standing Committee that considered the Local Government, Planning and Land (No. 2) Bill will appreciate why the hon. Member for Homchurch (Mr. Squire) was something of a thorn in the Government's side. To his contributions he always lent the benefit of great experience, and that experience amongst those hon. Members who were present, excluding the Secretary of State who did not once grace the Committee with his attendance—
He did once, for 10 minutes.
That must have been the only 10 minutes during which I was absent. The only other Minister there with local government experience has disappeared, but I do not think that any conclusion is to be drawn from that. I am certain that the hon. Member for Homchurch was right to say that there may be problems associated with the scheme that the Government have drawn up, and one of the basic difficulties is the speed with which the Government are attempting to introduce it.
We cannot blame the Ministers who were responsible. They were there. They had a job to do. This job, alas, was a consequence, in the final resort, of that single factor which eventually will bring down this Government, and that is their adherence to money supply targets. The money supply, so the ritual went, was associated with and determined by the public sector borrowing requirement. All the fallacies of that argument we know only too tragically now. Once a Government begin to argue like that and are led to cuts in Government spending, anyone who has been in politics for more than 12 months will know that the burden of public spending cuts must fall on local government. The civil servants who run Whitehall are vastly superior intellectually to the people who work in local government. Politically, they are much more sophisticated. If there are those who can not only maintain, but expand, their empire in conditions of even the greatest national difficulty and crisis, it is these estimable gentlemen. Once they see the picture, they lend support to the argument that Government expenditure cannot be reduced, but can only be increased, and therefore the attack on local authority expenditure begins. There is no doubt that once the argument is put forward that cuts must take place we face problems of the sort mentioned by the hon. Member for Homchurch, which are all too familiar to anyone in local government. The cuts are managed by using a form of blackmail, associated with reductions in expenditure by way of grant. When one looks back on local government finance one sees, of course, that we have had changes. This is another change. We had the halcyon days of the 1950s and 1960s. Then we had the IMF in the late 1960s, and there were cuts. That led to the introduction of the rate support grant scheme. We had cuts in the 1970s. Today, once again we face a crisis associated with what is alleged to be overspending, and local government is being cut. However, the real problem is that at the same time an attempt is made to change the basis on which Government grants to local authorities are made. It may be that there is a case for this, but, in effect, what is happening is that local government is having to do a number of things at the same time. We are not dealing with all the other provisions contained in the Local Government, Planning and Land (No. 2) Act. We are not even dealing with capital expenditure, about which my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikado) spoke. We are dealing here only with the block grant. I am trying to suggest that not only are the cuts of a significant magnitude, but that local government officials and elected representatives are having to assimilate an entirely new system. This is where the Opposition part company from the Government. I agree with those who say that the introduction of this new system is an attack on local democracy. That is important. We have had other crises during the 28 years that I have been a member of a local authority, and different people—elected representatives and officials—have reacted in different ways. There were varying degrees of bitterness and criticism of what the Government were doing, but I have never known a crisis that has so united all sections of local government. Surely the Government should say—they will not, of course—"Perhaps we are wrong. Is it right that only Ministers in the Department of the Environment happen to be in step in present circumstances?" In a sense, the problem is that the Secretary of State, aided and abetted by his civil servants—I know that I should not attack people who cannot answer; nevertheless, they are there, and I think that they have had an influence—has arrogated to himself the task of devising a scheme which, in the last resort, will result in a massive shift of power from local authorities to the centre. How will it do that? For the answer one has only to look at the way in which the block grant is structured and at this grant-related expenditure. In effect, the Secretary of State, again aided and abetted by his civil servants who are providing the statistical back-up, the mathematical competence and no doubt the programmable calculators, and so on, is saying "We know best how any group or cluster of authorities should provide their services and how much they should spend on these services in their areas". That is a piece of superb arrogance. "Grant-related expenditure" says the Secretary of State "must have no reference to past expenditure. That was really the Achilles heel of the rate support grant system". The basis of it was that grant equalled need based on what had happened before. The Secretary of State says "We shall dissociate ourselves from all past experience in these matters. We shall throw it out of the window. We shall get these delightful profiles based on services, and so on, and we shall tell all local authorities what they should spend". The hon. Member for Eastleigh gave details of all the items, weightings, indicators, and so on. The Secretary of State is to decide what weighting should be attached to the different indicators. This makes it possible for the right hon. Gentleman to exercise enormous influence in another direction. I was almost persuaded that the Local Government, Planning and Land (No. 2) Bill would never become an Act. I must have been soft in the head. I thought that it would be stuck in the House of Lords and that it would not let it out, because nobody likes the block grant. We know that the Secretary of State, according to the papers, brought together the various Lords from the shire counties and told them that the Government needed the Bill and that the Tories in the counties needed to win the May election. He told them that if they let the Bill through, the distribution of the block grant would be adjusted so that the election would be won in May. That is what has happened. The shire counties are happy. The total amount of the distribution was a little more generous than everybody expected—perhaps about 1 per cent. more generous. However, it is grossly unfair. I feel a little churlish, because I am criticising the block grant when my shire county did reasonably well. Having been a treasurer for many years, and having gone through one crisis after another, my county treasurer is a rather solemn person. He is a man of immense ability, but he goes around as though he hears many of the nation's burdens on his shoulders. In a report that will go to the policy committee the treasurer talked of taking a reasonably optimistic view. That shows that things in Staffordshire cannot be too bad, but they are not too good, either. I should not like to say anything about the rate support grant that might have the effect of cutting the additional money that we are to get under the new system. However, the unfairness of distribution shows its totally arbitrary nature. The Secretary of State can always intervene throughout the structure and the method of calculation of distribution. Having reached the threshold, he can say what sort of taper he wants and whether it will be a non-linear taper or a discontinuous linear taper, and so on. He has immense power, and he can make changes at any time, just as he can take any item of expenditure out of the grant-related expenditure list. One could go on to factors such as the disaggregation of revenue split among different types of authorities. The right hon. Gentleman has taken the one that has produced some of these distortions. Those matters must be considered. Had we had a little more time it would have been possible to avoid some of the problems that have arisen in some areas. One might have had not only to adapt the statistical techniques, but to take some of the politics out of the argument. However, the measure will go down in the history of local government finance as one of the most disastrous experiments in change, undertaken under great pressure because of the need to control money supply targets and from the Chancellor of the Exchequer who says "Local government is always the soft touch when it comes to cutting anything, so have a go at that". A Secretary of State who has his eye on eventually reaching the supreme office in our democratic nation must make a success of his job. I suggest—no doubt he has done so already—that he reads not the article in the Financial Times on Monday, but the leader in the Financial Times this morning, which I consider to be extremely perceptive. It points out that the Government think that they have certain theories and that the civil servants have handed over the theories on the determinaton and distribution of the rate support grant, but the realities are vastly different. The Secretary of State said that the matter is clear and open, but the Financial Times writer says thatThat is not Tribune, but one of the great organs of public opinion. The article goes on:"the relation between assessed needs and resources and the actual money that is paid out is impenetrably obscure."
That is one of the reasons why the rate support grant mark 1 was thrown out of the window. The Government say that there will still be overbudgeting because authorities expect to get only a proportion of their entitlement. Thus, they make the entitlement determination as large as possible. The uncertainty of the situation is also referred to. People have referred to the fact that the situation is supposed to be clear and open and that local authorities will be certain of what they will get, and so on. However, what local authorities actually get in the final analysis may not be determined for between two and a half and three years. How can one recommend the system when that element of uncertainty is even greater than before? I do not have a crisis view of history. We are not reaching the end of the world—democracy has not vanished from local government. However, the method that has been used in indecent haste to impose a new system of local government grant on local authorities has given rise to a great deal of bitterness because it has created much unfairness and because, in the last resort, it will create a massive shift of power from local authorities to the Government."Secondly, and partly to allow for known imperfections, individual grants are not fixed, but still partly related to expenditure."
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One of the fascinating aspects of the Government document entitled "Grant Related Expenditure. How the Expenditure Needs of Local Authorities are Assessed in the New Block Grant" is that its logic leads to different conclusions from what the Government are doing in the order.
I should like to share with the House a specific example contained in paragraph 3.1.2 of the Government document, in which we are treated to some excellent logic. We are told:that is, the housing revenue account—"There are many factors which influence both the income and expenditure sides of the account"—
that is, from the general rate fund."and so the size of the necessary contribution"—
That is obviously correct."Some of these factors are outside the control of individual authorities."
up to that point, the logic is impeccable, but logic is then abandoned:"It has been decided, therefore, that the most direct way to calculate GREs is by reference to the deficits or surpluses which authorities may now make"—
How is it to be modified to take account of the level of rents charged and why should it be so modified when what matters is whether the housing revenue account is or is not being subsidised from the general rate fund? We then read on, and, helpfully, we only have to read on to the next paragraph:"modified only to take account of the level of rents charged."
Quite so, but if authorities are not subsidising it at all from the general rate fund, they are not splitting it between their tenants and their ratepayers. The tenants are paying for it wholly. The document goes on:"Local authority rent levels reflect each authority's decision on the way in which they choose to split the cost of their housing service between their tenants and their ratepayers."
Quite so, but, because it is Government policy that the rents should not be subsidised from the general rate fund, that clearly does not apply where there is no such subsidy. Paragraph 3.1.3 continues:"It is not the intention that the rate support arrangements should underwrite whatever decisions authorities take on this matter".
What does the word "accordingly" mean? Let us look at the history of regions. Some hon. Members may not be aware how regions came into existence. They did not come into existence by Act of Parliament, by a Bill subject to amendment in Committee and on Report. They did not come into existence by any statutory instrument subject to the affirmative, or even the negative, resolution procedure. They did not come into effect by any action of Government in Parliament. According to the House of Commons Library, which was good enough to conduct a little research into this for me a few years ago, the regional boundaries were drawn up by a civil servant, whose identity cannot now be recollected, in the defunct Department of Economic Affairs, then headed by George Brown."and authorities are accordingly assumed to charge an average rent equal to the average rent in their region."
indicated dissent.
I am reporting a fact—that, according to the House of Commons Library research department, that is how the boundaries came into existence, and the Library has no record of any statutory instrument setting them up.
I entirely agree that the regions were not established by any significant act of this House as a result of legislation being placed before us. I should like to suggest that they were established during the war in order to cater for the regional commissioners, as I think they were then called, who had to operate in circumstances of war, enemy attack and so on.
indicated dissent.
My hon. Friend does not agree with me, but I think that I am right in saying that the very act of establishing those regional commissioners was very much resented then by local authorities, as I well know, because the commissioners seemed to be acting in a way detrimental to local democracy as we knew it. Certainly the antecedents of regionalism go back to the war, if not further.
I was not talking about the antecedents of regionalism. I was talking about the regions as they exist, within their boundaries today. I requested the research department of the House of Commons Library to ascertain and report to me by what process those boundaries were determined and what is their basis in statute law or delegated legislation.
What my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) has said is right, and what the hon. Gentleman is saying is right, but of course, if one goes back to their origins, one finds that those boundaries were fixed by negotiations between Alfred, King of Wessex and Offa, King of Mercia and a few of their friends.
I am grateful to both hon. Members. If that is the intended import of the word "accordingly", it will be generally agreed that it has been strained beyond its elastic limits. We are told:
Whether regions were set up by King Alfred or for other purposes, the proposition which needs to be proved, if what the Government propose is rational and is to be accepted, is that the regional boundaries as they exist at the moment are relevant to levels of rent charged by a specific district council anywhere embraced within that boundary. This is not a case which has to be disproved, but a proposition which must he proved if the word "accordingly" is to be acceptable to the House. To date, no justification whatever has been given for that. Indeed, I suggest that the movement of the Government on this matter has been in the opposite direction. The inappropriateness of these regional boundaries as creating a unit of any significance for anything at all has been recognised by the Government in abolishing the regional economic planning councils. They were abolished partly because the regions that they were supposed to he advising were not meaningful entities. Yet, resurrected from that insignificant past, we suddenly espy the word "accordingly." I am not merely treating the House to a bit of semantic argument; this is relevant. One of my own district councils, the Mid-Devon district council, has a good record in housing and does not subsidise its housing from the general rate fund. It charges low rents because incomes are low, but they are not subsidised from the general rate fund. The effect of the word "accordingly" and of the regional boundaries, the result of applying the new formula, will be to increase the district rates by 50 per cent.—not by 30 per cent., as one of my hon. Friends reported of his own council's area. That is the effect of importing this proposition which has not been sustained in argument by any Minister on any occasion. I repeat the relevant words:"and authorities are accordingly assumed to charge an average rent equal to the average rent in their region."
The document goes on:"It is not the intention that the rate support arrangements should underwrite whatever decisions authorities take on this matter, and authorities are accordingly assumed to charge an average rent equal to the average rent in their region."
Does that mean that, if the housing stock is larger, the rent should be higher, or that if the housing stock is larger, the rent should be lower? It must mean one of those two, if it means anything. Perhaps my right hon. Friend the Minister would like to help."These figures are calculated so as to take account of both the size and the composition of the housing stock."
My right hon. Friend will find information about the housing stock in the report.
I asked my right hon. Friend a direct question. It must mean one or the other. It says:
If that is so, if the housing stock is larger than average, the rents must either be higher than average or lower than average. If it does not mean either of those two, the statement must be void of meaning. If that is so, what is the point of including it and of using it to justify a formula which contains such ridiculous results? The paragraph triumphantly concludes:"These figures are calculated so as to take account of both the size and composition of the housing stock."
we have progressed from "accordingly" to "therefore"—"GRE is therefore"—
Why should such an assumption be made? What justifies a region being used as the criterion for rent levels? Why should there be such a criterion if the council adheres to the Government policy of not subsidising rents from the general rate fund? We should not be surprised by such bizarre results, given the bizarre logic of those two paragraphs. However, when such bizarre results occur, the burden of rates becomes particularly intolerable to ratepayers. It is not only the size of the rate burden, but the rating system itself that results in only a minority of the electorate paying the intolerable domestic rate burden. The majority do not pay. That is the logical corollary of the first proposition. The Government should, therefore, introduce a system of rate reform. I do not think that anyone has challenged the proposition that too high a level of rates for commerce and industry has a disastrous effect on the level of economic activity and on local employment. It is equally true that if local government taxation is based on the ownership of one form of property, namely, housing, the results are so unjust, burdensome and bizarre that the system cries out for amendment. Why has not the system been amended? Recent history began when Dick Crossman set up the Royal Commission on local government under RedcliffeMaud. However, either as a result of tragic negligence or for reasons that have never been explained, the question of how to finance the new structure of local government was omitted from its terms of reference. As a result, the local government reforms of 1972 and 1973—which came into effect in 1974—had to be based on an archaic and inappropriate system of local government taxation. An abortive committee under Mr. Layfield was then set up. It produced a deluge of papers that gave all the reasons for doing nothing, and none of the reasons for doing anything. The committee proposed to retain the archaic and expensive rating system and to superimpose one or two other forms of taxation. None of the administrative economies that might have been derived from reforming the domestic system were reaped. The only results were additional administrative tasks. How should this nettle be grasped? First, we should do away with the existing basis of local government taxation, which will be exacerbated by these orders. If we were to do away with property valuation as a basis for local government taxation, we could do without the entire Inland Revenue valuation service and the immense cost involved. In some circumstances—for example, if a compulsory purchase order or a transfer that was not at arm's length was involved and it was necessary to value the property for stamp duty purposes—it would still be necessary to value property. However, those functions could easily be handled by surveyors in the private sector whose names could be held on a list approved by Government. Indeed, auditors are treated in that way. We could replace the domestic rating system with a form of taxation based on every elector. Rebates would not be decided by rate rebate departments in district councils, which duplicate the functions carried out by those who work out tax code numbers in every income tax office in the land. The tax would be rebated by means of income tax code numbers. If that were done. we would save an enormous amount pf the administrative expense that falls on taxpayers either from the Government or from local authorities. The system would also be fairer in relation to water charges. The amount of water consumed and sewerage resulting is more nearly proportionate to the number of people living on a premises than to any other factor. The only alternative would be to become involved in the immense complexity and capital expenditure of a metering system. The burden of rates will be exacerbated if a formula is introduced that has such bizarre consequences. A number of my hon. Friends on the Back Benches have demonstrated that the formula has such consequences. I hope that my right hon. Friend is satisfied that the formula will have such results. Even if my right hon. Friend were to cut out of the formula the part relating a non-subsidised housing revenue account to some other mythical level—whether of a region or county or whatever—the burden of the domestic rates falling on the minority will continue to cause an intolerable amount of agony. Since the Government cannot in the foreseeable future remove the agony or reduce it to a tolerable level by increasing Government subventions to local authorities, there are only two alternatives; they can either do nothing or reform the rating system. I believe that we should do that in two stages. We should reform the domestic rating system first, since more discussion is needed about the possible ways of reforming the commercial and industrial rating system. To wait for the latter would delay the former intolerably. The Secretary of State has put a lot of work into producing his formula. I share his objective of replacing the old Government grant system with a formula which is comprehensible, and therefore arguable and disputable rationally. My second proposition, however, is that he has not done that in one particular respect. He has departed from treating a balanced housing revenue account on its merit and has instead taken a spurious or assumed figure for rents. As a result my right hon. Friend has produced not only avoidable anomalies but avoidable injustices. Councillors who have run their council on a tight and economic rein, and have done everything that the Government have asked of them, are faced with a 50 per cent. rate increase because the Government have adopted the wrong formula. What view are they to take of the Government's competence? Having had his attention drawn to the defect in the formula, the Minister could say "I agree. I did not realise it sufficiently far in advance. I shall introduce an amending statutory instrument to get rid of the anomaly." If the Minister said that, I would join many others who have said that, although the new formula may have a marginal effect on the fortunes of the different categories of council in general, we have entered a new and meaningful area in which logical discussion is possible."derived by calculating notional HRA deficits or surpluses (E7) for authorities on the assumption they charge the average rent level for their region"
Is my hon. Friend aware that under section 61 of the Act the Secretary of State could do what he suggests without a statutory instrument?
I am grateful to my hon. Friend. I was not aware of that. It makes it all the more important that the Minister should take that point on board, realising that it will not take more parliamentary time to act.
A number of hon. Members have pointed out the unintended effects of certain aspects of the Secretary of State's formula. It should be treated on its merits and the damage should be repaired. Instead of the Secretary of State saying that, because the process of a statutory instrument is not subject to amendment by the House, the House must either accept it as it is and live with it for another year, or reject it, fortunately, we have the option of accepting it against an undertaking from the Minister that he will cut out in the next few days the anomalies drawn to his attention. That would be the most profitable outcome of the debate. It would get us round the dilemma which besets the House when debating unamendable statutory instruments.7.14 pm
I hope that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) will forgive me for not commenting on his remarks, because I could not follow all that he said. I am sure that I am at fault in that respect. Local government finance has always been a mystery to me, as it is to 90 per cent. of the population. For my sins, many years ago I was a member of two local authorities for 13 years, but even then I found it difficult to grapple with the more simple way of financing local government.
My right hon. Friend the Member for Durham, North-West (Mr. Armstrong), in a thoughtful speech, explained how good local government is generally. Good local councils are excellent. They have superb records and have made real changes and improvements throughout the country. I come from near Durham, where there have been massive changes since I was a small girl and lived there. However, the Government are putting the good intentions of excellent local councils in a straitjacket. Anybody can be forgiven for believing that he is living in a madhouse. For all the money that I could be offered, I should not wish to be a councillor today. We should take our hats off to councillors who have to grapple with the difficulties brought upon them in the last 18 months by Government action. The Secretary of State said that the majority of councillors would understand the problem. The truth is that the majority of caring councillors believe that the Government are hell-bent on tearing down the structure and fabric of local government. To hear the Secretary of State speak as he did a few hours ago one would think that the majority of local authorities had been profligate and wasted the money entrusted to them by the ratepayer and the taxpayer. The right hon. Gentleman constantly reprimands and chastises local councils. He slaps them on the wrist saying "Naughty boys and girls, I shall not give you the money to continue your services". I believe that the majority of councils have husbanded their resources well. We might all disagree and argue about certain actions by local authorities, but good local democracy involves argument and discussion. I make no apology for referring to my constituency and the London borough of Barking. Many years ago, before many of the other London boroughs took the slightest interest in the provision of services for the disabled and the elderly, the London borough of Barking, although it was not called that in those days, was in the forefront of boroughs that cared and provided services for the elderly and disabled. The homes in the borough are a tribute to the councillors of those days and to the councillors of today who have maintained their upkeep. Reference has been made to the implementation of the Chronically Sick and Disabled Persons Act. It is a piece of legislation that we should all keep in the forefront of our minds, especially during the International Year of Disabled People. I hope that it will not disappear from our minds at the end of 1981, when the International Year of Disabled People is over. Barking and Dagenham have a fine record of achievement under the Act. However, all that will come to naught and will go out of the window because of the Government's cuts. Recently, the borough in the constituency that I represent acquired 12,500 properties from the GLC. They were transferred from the GLC to Barking. The council has been in dispute with the GLC because it wishes to improve the properties, many of them being made of timber and in need of updated fire precautions. Many of them have no hand basins and no baths. The council intended to undertake massive improvements throughout the part of the estate that it acquired from the GLC. It was understood that the GLC would make a contribution to the cost of improvements from its housing investment programme, but it now says that it is unable to do so. The council has told the Department of the Environment that it is in a mess. It has said "We were to convert many of these properties, or a percentage of them, for the disabled. We are especially concerned about the disabled in our part of Essex, and there are many disabled in our area. However, we cannot do that without your giving us an extra allocation this year and certainly another one in 1981–82. That will be needed on top of everything else for our housing investment programme." The Government, predictably, have said "No". The area that I represent is faced with tremendous problems. The effect of the rate support grant on Barking is adversely to affect my borough more than any other outer London borough. The loss of grant from the estimated base position is well over £4 million, which is equivalent to a general rate of 15·6p. The precepts of the GLC and the Metropolitan Police will mean a loss of grant at ratepayer level of 12·4p. That is a huge amount for a London borough to lose. All the councillors in my local authority are despairing because they do not know what to do. They have already forecast that they will have to increase the rates by about 30 per cent. That forecast was made before the rate support grant problem arose. They are now agonising, as are other councils and councillors, over what can be done to cope with the new situation. What are they to do? Should they raise the rates even further? There are many who have made that suggestion. That would mean raising the rates to an astronomical level. However, it would enable services to be retained. Alternatively, do they, as they have decided to do, consider the spectrum of the services that they offer and ask themselves where they can effect savings? Whichever department they consider, and whichever department any one of us can think of, the effect of savings will be deprivation in one area or another. I have referred to the disabled and the elderly. What will be the effect on our education services? Barking is, of course, outside the Inner London Education Authority and has its own education authority. I understand that last night one of the sub-committees of the borough's education committee met the local branch of the National Union of Teachers and initiated discussions with it about the possibility of cuts in the education services throughout the borough's schools. The proposal to be discussed is that there should be a cut of 8 per cent. in secondary school staffing. That will mean a reduction of 10 teachers in one of the best-known schools in the borough. That will be disastrous for a borough such as mine, and I am sorry to say that, in any event, it is always criticised for being fairly near the bottom of the league table of the boroughs that send students from school to universities. There are a number of other factors that cause Barking to be near the bottom of the league table, but it is now faced with the possibility of an increase in the number of children in each class, a cut in the amount of time that teachers will have to prepare the work, a narrowing of the curriculum and a cut in the pastoral work that teachers undertake. That will be especially disastrous in my area. I hope that a way will be found of coping without implementing cuts. The cuts that the Government have imposed, and their decision to rejig the rate support grant in such an unfair manner, will have the effect of depriving children of the education to which they are entitled. Is that what we are aiming at? I ask the Secretary of State for the Environment, if he is able to spare me an ear for a second, to ask his right hon. and learned Friend the Secretary of State for Education and Science what he has to say about his pledge to maintain standards in education. Those standards cannot be maintained if the result of the cuts in the rate support grant means that there are education cuts. It is cruel that the Government should impose such a burden on authorities. They are causing local representatives to make agonising decisions and present them to those who elected them. We all know that in many instances good councils will be blamed and not the Government. It is not always recognised that, when councils have to carry out decisions, they are implementing not their decisions, but those of the Government. It is up to us to ensure that the blame is put fairly and squarely where it lies, which is on the Government's shoulders.Has it occurred to my hon. Friend or to her local authority that one of the disastrous consequences that face her authority is that it will have to rely on natural wastage to make cuts, in which case, if a teacher of mathematics leaves, he or she will not be replaced, or it will have to create redundancies, which will mean that it will have to make redundancy payments, which may cost almost as much, if not as much, as paying a teacher his or her salary for another year? I do not know how some local authorities will cope with that problem.
I accept that. Indeed, as local authorities have had only two or three weeks during which to consider the implications of the announcement of 16 December, and as some are still casting around to see what to do, it must follow that they have not yet had the chance to consider the implications beyond the immediate ones and to realise, as they will have to, that some of those implications will cost them more in the long run. There will not necessarily be a cut, but rather an increase in expenditure in some other way.
It is possible that local authorities—mine might be one—will have to cut staff, either through natural wastage or through redundancies. They might have to sack people. That will not necessarily mean a charge on the local authority, except in the form of redundancy pay, but it will certainly be a charge upon the taxpayer in terms of the unemployment benefit that those people will have to be paid. My borough, I am thankful to say, does not at present have the same rate of unemployment as that of my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). The rate there is roughly double what it is in Barking, but the rate is creeping up in my own area, and we cannot stand a big increase in the number of unemployed in our borough. We are also getting complaints—and we shall receive more and more of them—from small businesses in Barking and Dagenham which will find the extra rate demands extremely difficult to meet. Several local firms have already gone out of business for one reason or another —usually the monetarism of the Prime Minister. This is yet another way in which small firms, which in normal circumstances have been reasonably successful, have been forced out of business by the very person who, apparently, has always stood by the private enterprise of the small firm and the small factory. Given the extra rates that local businesses will have to pay, some of them, too, will go to the wall, and we shall have further unemployment as a result. Finally, I hope that the unions involved, whether in local firms or in local government, through local committees and campaign committees will join together to make known to their membership and to the public in their districts the harshness of the cuts that the Government are imposing upon each area. I have read that NUPE and NALGO are to join together to try to publicise what the Government are doing and to run campaigns on this matter. I hope that those campaigns will be successful. I also hope that, as a result, ordinary citizens, those who are not involved in any political sense and perhaps are not even members of a trade union but go along in their own small way and want reasonable support from their local authority and from the Government, will understand, as they have never before been able to comprehend, the disaster that the Government have brought upon the whole country. I hope that that will result, in the very near future, in this Government going altogether.7.35 pm
I am pleased to be the fifth London Member to speak in the debate on this year's rate support grant settlement, because the settlement represents one of the most important changes in policy introduced by my right hon. Friend and because it has very important effects upon London. I served for 12 years in local government before coming to the House and I certainly cannot agree with those who have said that this settlement represents an attack on local government. It is not. It is a fundamental change in the financing of local government. That is an important distinction which must be drawn.
I believe that there are acceptable reasons for supporting the policy which lies behind the calculation of the rate support grant. The most important is that it represents the beginning of a better way of relating needs to grant than did the old system. I emphasise the words "the beginning of a better way". I do not claim for one moment that it is perfect. It is, after all, a new beginning and there are bound to be teething troubles, perhaps of the kind referred to by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). I hope that in the coming year my right hon. Friend the Secretary of State will be bold and that, if he finds that real problems or bizarre results arise from the formula that he has adopted, he will not hesitate to use his powers under section 61 of the Act. This is a major change and it has resulted in an interesting and important debate. My right hon. Friend should therefore feel that the House would support such action as he might take from time to time in using those powers to improve the system during the year which lies ahead. A number of questions arise out of the new method of calculation, to which I hope answers will be given today if there is time. I should first make clear to my right hon. Friend that I support his decision to reduce by 1 per cent., from 61 per cent. to 60 per cent., the overall level of grant for this year. That is a painful but necessary decision, and an important step in the fight against inflation, which is the greatest battle all of us must fight. I also welcome the ending of the old system of calculating grant, which rejoiced in the description of "stepwise multiple regression analysis". It was an unfair and unsatisfactory system, based upon an arcane method of calculating grant which many hon. Members have admitted was beyond their ability to grasp. I believe that, as well as being largely incomprehensible, it encouraged high spending and waste and penalised thrift. I do not believe that it related sufficiently well to local needs, although some have spoken in favour of it and have nostalgic memories of the good old days gone by. The new system relies upon assessing the needs of local authorities when considering the amount of grant to be allocated by the Government. As we have heard, this is done through a new method of grant-related expenditures, based on a comprehensive, if complex, formula which involves analysing national unit costs for each local authority. I very much welcome the publication of the details of the method involved. Before the Secretary of State made his announcement, there was a good deal of talk within and outside the House to the effect that we should not know what the formula actually was. That has proved to be no more than idle rumour. We have the facts and the figures, and, even if they are complex and complicated, we have the opportunity to study and debate them. As has been said, the formula involves the use of indicators of the requirement for local government expenditure. As those of us who have studied appendix J of the report know, there are five main groups of indicators, which are broken down into a number of subgroups. Those five main groups are straight forward and can be understood by everyone. They are, first, the number of people in the area; secondly, the physical features of the area; thirdly, social and environmental problems; fourthly, differences in the cost of providing services; and fifthly, special requirements of particular services. I invite the House to consider the effect of this formula on London. I do so as a Member representing an outer London constituency who is nevertheless concerned about the position of London as a whole. The settlement is a tough one for London—I do not believe that my right hon. Friend would dispute that—but London expected it to be tough. As I understand it, it represents a 5·7 per cent. swing of grant away from London, which is far greater than other parts of the country have ever experienced in a single year. I emphasise the phrase "in a single year". Here I pick up the point made by my hon. Friend the Member for Hornchurch (Mr. Squire), who said that it was not so much the change itself which worried him as the pace of change. Moreover, the actual loss to London is likely to he somewhat greater than shown in the Government's estimates. We have heard about the problems of the safety net. I think that many London councillors will feel that the safety net is too wide to provide the kind of protection against grant losses which they want to see. We have also heard from my right hon. Friend in his helpful explanation that the comparison which has been made by some hon. Members and, indeed, by some of the local authority associations is not valid. I hope that when the Minister replies we shall hear a little more about he question of the safety net so that we can understand the precise reasons why the comparisons made are not valid. I now turn to the important question of threshold. The 10 per cent. threshold above which grant penalties begin is, as I understand it, a national average, but for London as a whole it is only 8 per cent. Yet for many authorities outside London it is well over 10 per cent. I therefore invite my right hon. Friend to explain the 1981–82 distribution in two respects. First, does he consider that the amount of shift away from London is tolerable in a single year? Secondly, will he consider whether some adjustment to the safety net could be made during the year if it is found to be intolerable? I also hope that my right hon. Friend will have another look at the threshold margin. For example, could he establish it at the same percentage for all areas of the country? What I and all London Members wish to avoid is unduly tough treatment for London over a short period. That is the message that has come from London Members throughout the debate. It is often said that London ratepayers pay 40 per cent. more equivalently than the rest of the country. Therefore, if there is to be a shift of grant away from London, surely that should be of an amount which, in a single year, can be financed by London local authorities without major disruption in their finances, with consequent rate increases which will not be within those reasonable levels about which I know my right hon. Friend is much concerned. I know that my right hon. Friend is aware of all these dangers. In addition, he has always made known his enthusiasm for the regeneration of the rundown areas of London. He believes in the enterprise zones and the benefits which firms operating within them will derive from rate relief. However, is he absolutely sure that industry and commerce and individual ratepayers in the rest of London are getting a square deal? Perhaps he will explain whether he feels that the policy decisions that he has taken in relation to London are such that throughout the period of the year they will he sustainable without using his powers under section 61. I should like to illustrate some of the effects of the settlement on London as a whole and on my own borough of Hillingdon in particular, which is situated on the western periphery of Greater London. I do not apologise for doing so, because other hon. Members have done the same for their constituencies. One of the anomalies is the loss of grant before the threshold limit is reached. The grant-related expenditure asessment for Hillingdon, which is the level of expenditure which the Government assess as being required to provide a standard level of service, is £70·612 million. The threshold, which is the level of expenditure beyond which block grant is drastically reduced, is £77·196 million. However, if we examine the relationship of grant to expenditure, it appears that the level of grant is reduced before the threshold is reached by 6·61 per cent. of each increment of expenditure. I would be grateful if my right hon. Friend could explain why the formula produces loss of grant in that way. Would not it be more appropriate if loss of grant occurred only after the threshold had been reached? I hope that he will examine this matter again, because, as he will appreciate, a reduction of 6·61 per cent.—equivalent to £66,000 for every £1 million spent before GRE and before the threshold—is a serious matter for a London local authority. Unfortunately, Hillingdon is still saddled with some of the enormous debt charges that were incurred by the previous Labour-controlled council. I give but one example. A theatre complex in Hayes has annual debt charges of £400,000 and a running loss of £200,000. Because it is not a viable financial proposition, my constituents must suffer from the financial mismanagement of the former local authority. Unfortunately, the new RSG settlement, based on the new formula, does not, as I understand it, take such commitments into account. Perhaps it should. I now turn to my right hon. Friend's statement on the settlement which he made to the consultative council on local government finance. It has already been referred to. He made the point that rate increases should be contained within reasonable levels. Again, I should like to quote the position in which my own local authority now finds itself. It has achieved cutbacks of 5.6 per cent. at 1978–79 levels, but, despite this and as a consequence of the way in which the formula works, it may have to increase rates by as much as 25 per cent. this year. Does my right hon. Friend consider that is reasonable in the circumstances? Perhaps he will also bear in mind that this is a transitional year. I invite him to spell out the incentives for the future for local councillors in boroughs such as Hillingdon who have fulfilled the Government's requirements to the letter. I also ask the Government to take note of the fact that Hillingdon has reduced its budget by £10 million, but still has to face a most unwelcome rate increase this year. I therefore invite my right hon. Friend to examine the possibility of adding a new indicator, one which will take account of the extent to which local government—and particularly local authorities such as the one that I represent—has been cost efficient. I believe that an indicator enabling the Secretary of State to calculate the cost efficiency of providing services is one of the important elements lacking in helping him to do his sums. I recently looked through some of the Department of Environment's press releases and noticed that the Secretary of State has relaxed the regulations that apply to improvement grants and that the authorities that are not high overspenders are being treated more favourably than those that have overspent. I very much welcome that development, because it shows that the local authorities which have done their stuff, observed the rules and played the game, are now benefiting. The people who live in those local authority areas will benefit in terms of the improvement grants that they will receive. Why cannot such a system be built into this formula during the coming year so that good management, good councillors and well-run local authorities are factors that affect grant, thus avoiding rate increases occurring in areas where the local authority has done a splendid job? I should like to make a couple of other points which are important, because they represent two other elements of this whole business of local government finance which are not included in the rate support grant settlement. The first concerns the important question of people who pay the rate bill being able to vote for the councillors who fix the rate. At the present time, as we all know, eligibility to vote for one's local councillor is based on residence. I believe in the principle of "No taxation without representation", and it is urgent for my right hon. Friend to consider, during the course of this year, the introduction of legislation providing for some form of business vote. It is intolerable, in areas where the business community pays the vast majority of the rate bill—there are many such areas in London—that it should have no opportunity to choose the councillors who spend its money. That is one important element to which the Government should address their mind. My hon. Friend the Member for Tiverton put his finger on the other important element, and that is rating reform. I know that the Secretary of State has been considering this matter. It has been said that it must await the major reforms of taxation which the Government are now undertaking. I understand that, but nevertheless I believe that the new settlement and the new formula will inexorably push forward the date when we must grasp the nettle of rating reform. If we do not do so, we shall find that people who have acted quite properly will be unable to meet their rate demands in a few years" time. I offer my congratulations to the Secretary of State and his right hon. and hon. Friends on their courageous move in bringing forward the new formula. I hope that they will not be in the slightest perturbed by uninformed criticism, and that they will take the remarks made in the debate as encouragement to have no hesitation in improving the formula where it seems during the year that it is operating in a way that was not foreseen when it was first drafted.7.52 pm
Several speeches from the Conservative Benches have been critical of the report. The Secretary of State might, to some degree, have been encouraged by the speech—to which he has presumably just listened—of the hon. Member for Uxbridge (Mr. Shersby), but even he, in the politest possible way, was not entirely uncritical of the effects of the new system.
The system has been described by hon. Members on both sides of the House as a bizarre set of results, and "capricious" is another word that has been used. It was suggested that the old system—the system of multiple regression analysis—was incomprehensible, but that system is like Noddy in Toyland compared with this, which is incomprehensible. I am sure that it is not understood properly by the Secretary of State or, indeed, by the Ministers responsible for it in the Department of the Environment. If they had understood it, they surely could not have allowed it to produce consequences of the kind that have arisen, even in Conservative constituencies. I want to revert to an issue that was dealt with expertly by my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), and mentioned by other hon. Members, namely, the effect of the Local Government Planning and Land Act and this order made under it—on the relationship between the Government and local authorities. It is important for the House to concentrate on this issue, because initiatives were taken during the Labour Government's term of office to try to develop a partnership. The late Tony Crosland set up a body—reference has already been made to it—called the consultative council on local government finance, which was, in effect, an expression of that partnership. I have always hoped—I have seen this expressed in articles that have been written recently—that that development could be continued so that local government, or the representatives of local government, through the local authority associations, could play a gradually increasingly positive part in the annual survey of public expenditure. The rationale of that view is that elected members of local authorities have a legitimacy that is not different from ours. It is based upon their own election as councillors, and in that position they decide their budgets in the light of the estimate that they make of the needs for the services for which they are statutorily responsible. In the past the Government have always assumed that their identification of what was needed was well founded, but it has been said repeatedly that the consequences of the changes that have now been made by the concept of grant-related expenditure have changed that relationship fundamentally. I want to quote a definition of grant-related expenditure which appeared in a paper issued by the Department of the Environment. It is described asThe word "typical" is a value judgment—typical in the eyes of the Secretary of State or of an official in the Department of the Environment. I take as one example the view expressed by a man for whom I have the highest regard, the education officer of the Inner London Education Authority, who sent a circular to members in which he indicated that it was his view—and he is an educationist of the highest standing—that the grant-related expenditure for the Inner London Education Authority of £468 million could not provide a standard of education service typical of anything which would be recognisable as an effective education service for Inner London. How, then, has the grant-related expenditure been arrived at? As we know, the Secretary of State has chosen a grant-related expenditure that is as little dependent upon the analysis of past expenditure patterns as possible. The ground on which he has done that is that he thinks that to do what has always been done will have the effect of favouring big spenders—and therefore, in his eyes, extravagant spenders—but the effect of what he is doing is to imply that the spending decisions of locally elected councillors in previous years have little or no validity as a guide to locally identified needs. That seems to me to be the real reason why the new system is so damaging to the relationship between central and local government, and why it is properly described as an attack on the competence of local government. Indeed, Sir John Grugeon only recently had this to say:"an assessment of how much it would cost that authority to provide a typical standard of service, having regard to its general circumstances and responsibilities."
What really gave the game away was the Department of the Environment's description of the method of analysis that determines the GREs as "an eclectic approach". I looked up the word "eclectic" in the Oxford English Dictionary, and it was defined as applying to those who selected:"There is an ever increasing danger that local authorities will, over time, become no more than agents for central government."
The House needs to understand that the system now being operated, in contrast to the previous system, permits Ministers to make an entirely arbitrary choice about which option they select. My information is that 27 different options were submitted to Ministers by the Department and that the choice that was finally made was made by the Secretary of State. He made it, as he himself has said, on the basis of the option that he found bore the least possible relationship to past spending patterns. It was indeed an eclectic approach. How were the grant-related expenditures arrived at? My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) has pointed to the fact that there were no fewer than 48 pieces of analysis. One might, to begin with, assume that, as a consequence of the immense amount of work that went into it, that would provide an accurate assessment of the need of a local authority, based on the resources that it has, but it has to be more accurate, because barely any account is being taken of the spending patterns of the past, which I maintain are themselves a guide to the needs of the local authority. Grave consequences arose from the decision to make as few assumptions as possible based on those past spending patterns and to make arbitrary decisions—because they are arbitrary decisions—about the factors that were to be used in the assessments. I say that advisedly. Under the multiple regression analysis system we could not choose factors merely because we happened to like the look of them or thought that they might be relevant. We had to choose them and show a relationship between the factor and spending patterns of the past. I wish to give one or two examples of the absurdities that have resulted from the system that has been adopted. First, the Government used sample data based on children who were not white and who were not born in the United Kingdom. At first sight that looked an important and sensible factor to use, but as a consequence no account is taken of the problems that arise from children of white parents who arrive at school with no English. Recently I read the much-publicised report of Her Majesty's inspectors about the Inner London Education Authority. They had this to say:"such doctrines as pleased them in every school."
That is a factor that has not been taken into account, yet schools and individual teachers find themselves having to deal with a problem that is bound to take more teacher time and be more expensive. Let us take another example—nursery education. The Prime Minister, when she was Secretary of State for Education and Science, introduced a White Paper in 1972, which most of us still remember. The objective was to provide free nursery education for all children of 3 and 4 whose parents wanted it. That was to be achieved in 10 years, so we have just over a year to go. The White Paper said:"ILEA pupils have over 125 different mother tongues, more than any LEA in England and more than in New York."
The Inner London Education Authority followed that lead, laying emphasis, as the right hon. Lady at the time asked authorities to do, on areas of social deprivation. We have in London a system of nursery education that goes a long way towards meeting the right hon. Lady's objectives. What reward does ILEA get as a consequence of the initiative that it took? Under these grant arrangements, the authority would get more money under the order for shutting down its nursery school service. By ignoring that client group it would be able to spend more grant on primary and secondary schools. The right hon. Lady is a wiser person than is the right hon. Gentleman the Secretary of State for the Environment. I consulted Hansard to read her speech when she introduced that White Paper early in 1973 and discovered that she had made this remark:"While the Government can give a lead, success or failure will depend much more on the enterprise, skill and sensitivity of local authorities."
How right she was. That seems to me to be the most devastating criticism of the system that the Government have adopted. However many indicators they attempt to use, they will never be able to take account of the varying needs of local authorities up and down the country. It is no accident that the exceptional local authority, which is besieged by more problems and difficulties than almost any other local education authority—ILEA—should have been so badly treated. If we treat local authorities as agents of the Government, we might just as well do the job ourselves. If we do not trust them and the evidence that arises from their spending patterns, we are bound to create a system, as the Government have done through this order, that is, bizarre, unpredictable, chaotic and even absurd. I want to ask a question about my borough. For small mercies in Greenwich we are always grateful. However, can the Government give any rational explanation why Greenwich has the lowest grant-related assessment per head of the population of any borough in London? The next lowest is Lewisham. Both boroughs have been recognised in the past to be stress boroughs, and significant parts of each borough were incorporated in the old docklands area. Now, apparently, the cost of providing the "typical"—to use the old word again—standard of service in Greenwich is significantly lower than in any other borough in London. Incidentally, Greenwich has one of the lowest levels of rateable resources of any London borough. The issue of resources cannot therefore be advanced as a sensible answer to my question. Many hon. Members have referred to anomalies and absurdities in the system. I agree very much with what the hon. Member for Uxbridge said towards the end of his speech, namely, that by attempting to do too much too quickly the Government have arrived at some of the absurdities that have been pointed out. Basically, I believe that the criticism of the system is that the financial arrangements written into the Act of Parliament and now interpreted in the order have upset an important relationship between the Government and local authorities. Where, before this Government came to power, there was a gradual recognition of the need for partnership between the Government and local authorities, alas, the consequences of what the Government have been doing have virtually destroyed the independence of local government."We do not want to attempt central detailed control over the way resources are used, because the statistical methods at our disposal for measuring social deprivation are crude."—[Official Report, 19 February 1973; Vol. 851, c. 77.]
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Unlike the hon. Member for Greenwich (Mr. Barnett), I cannot accept the premise that past expenditure is sacrosanct in deciding need for future expenditure. Local authorities are governed by human beings. We must expect that some will be much more profligate than others. If we accepted the hon. Gentleman's contention, we should not see human beings in the bankruptcy court. We must expect that some authorities will spend unnecessarily. It is, therefore, only right and proper for the Secretary of State to give guidance on levels of expenditure.
I have no quarrel with the principles that the Secretary of State proposes in his endeavour to refine the present system of grant by giving greater guidance on levels of expenditure and awarding grants at the expense of the taxpayer on that basis. I am afraid, however, that the other side of the equation—fairness in payment—leaves me less happy. As far as payment is concerned, we have to look at the rating system. Some of my hon. Friends have already expressed dissatisfaction with the continuance of the rating system. When the system was created in the sixteenth and seventeenth centuries it was designed entirely to satisfy local needs at the local taxpayers' expense. These days it has a much greater responsibility in determining what level of expenditure would also be provided by the taxpayer. We therefore have to look at it in greater detail and I am less than happy, because I believe that the ratepayer in London is particularly disadvantaged. The present assessment of rates goes back to the 1960s when the current valuation list was established and when London was rather more prosperous compared with the rest of the country. I understand that the level of rating is generally 50 per cent. higher in London than in the rest of the country, but the level of incomes in London is only 15 per cent. to 20 per cent. higher. Therefore, when grant-related expenditure is assessed, it is wrong that London ratepayers should have that taken into account against their interests. The previous Government, in giving to London grants of which the present Secretary of State proposes to take away 5·7p this year, may have had that fact in mind. They were making amends for the fact that, as the valuation list gets older, the tax base for London moves against the ratepapers' interests. It is inequitable that local taxpayers should be paying on that basis. It is also important that the Secretary of State should consider the other effects of the new system. Many of my constituents have businesses in the centre of London and they therefore have an interest in the ILEA and its expenditure. There have been comments in the debate about the ILEA's expenditure and the fact that there is no direct electorate for that body. My right hon. Friend the Secretary of State must take account of what is likely to happen and of the fact that it is unfair that business people and residents in inner London should suffer unduly because of the rate demands levied by the ILEA. I hope that he will agree to get together with my right hon. and learned Friend the Secretary of State for Education to consider the possibility of allowing local authorities that wish to opt out of the present education system to do so. If, as those who run the system believe, it is such extraordinarily good value for money, no one would want to take advantage of such an opportunity, but if, as I suspect, a number of authorities are not happy with the present arrangements, they would be free to provide their own education services at their own expense. It also seems entirely wrong that ratepayers should be required to bear the heavy rating burden imposed by local authorities without having the right to direct representation on that authority. I do not advocate that everyone should have two votes, but I believe that everyone should have the right to decide in which of the areas in which he pays rates he may vote. I hope that the Government will allow business men, who have to pay enormous sums to rate funds, to determine whether they wish to vote in the area in which they live or in the area in which they conduct their business. The effect of the removal of the 5·7p subsidy from the London area in the first year of the new system will be serious. The London borough of Redbridge, which covers my constituency, has been careful in its management. The borough has had the good fortune to be Conservative controlled since the London Government Act 1963 and the council has been careful to abide by the requirements of all Governments in terms of economies. The council tells me that, in spite of all its efforts, rates are expected to rise by 30 per cent. or more this year. That is quite unacceptable. The Secretary of State could have been much more helpful by providing for a safety net of 5p. I urge him to consider introducing a safety net of 5p and perhaps a ceiling of the same sum. I hope that he will undertake to do that before the supplementary report stage of this matter.8.16 pm
I disagree with the hon. Members for Ilford, South (Mr. Thorne) and Uxbridge (Mr. Shersby), who suggested that we should bring back the business man's vote. It would be a retrograde step to return to a system under which people are able to buy themselves a greater share of democracy.
Is the hon. Gentleman aware that, typically, the business contribution to the rate burden is in excess of one-third of the total?
One-half.
My right hon. Friend says that it is one-half. I am speaking of my own borough where the figure is more than one-third. Can we call a system democratic when persons paying between one-third and one-half of the rate burden have no say in electing those whose decisions will determine how the money is spent?
Every person who lives in a borough has the opportunity to elect local councillors. I do not believe that people should have the right to do that twice or that they should be able to buy an extra vote merely because they have a business somewhere.
The whole rating system and the way in which we organise local democracy need to be changed. The present Prime Minister said on 28 August 1974:For once, I find myself in total agreement with the right hon. Lady. I only hope that the Minister for Local Government and Environmental Services will be able to assure us that the Government will move some way towards the abolition of the present rating system and its substitution by something fairer. I do not think that the Government doubted that there was opposition to the way that the block grant system had been established, not only on the Opposition side, but among their own Back Benchers and in local government. If they were in any doubt, the doubts will have been removed during the debate, because we have heard from the hon. Members for Hornchurch (Mr. Squire) and Putney (Mr. Mellor) and previously from the right hon. and learned Member for Hexham (Mr. Rippon), a former Secretary of State for the Environment, how much they oppose the block grant system. There is clearly opposition on both sides of the House. No one can say that the Government were not warned. During debates on the Local Government, Planning and Land Act, many of us said that we were opposed to the system. The problem with the Act, which has given birth to the block grant system, is that it was the invention of the Secretary of State, clearly a middle-aged man in a hurry, who insisted on cramming five major Bills into one unwieldy piece of legislation. The House had to deal with planning and new towns, urban development corporations and enterprise zones, the balance between the public and private sectors of the building industry, reduction in local government bureaucracy and, finally, as one part of that mad Act, the new rate support grant settlement through the block grant system. As a result, none of the issues was properly debated and we are now faced with a fait accompli. The Liberal Party recognises that the current system of local government finance desperately needs reforming. We favour local income tax as the best way to achieve local autonomy and as a fairer way to finance local government. We are still waiting to discover what the Government intend to do to honour the Prime Minister's pledge in 1974, to which I referred earlier. When the Government were elected it was clear that, although they would not immediately implement the pledge to abolish the domestic rate system, they were determined to reform the current rate support grant system. After consultation with those involved in local government up and down the country, we tabled amendments in another place in support of a population-based rate support grant as suggested by Tyrell Burgess and Anthony Travers of the Outer Circle Policy Unit. Our first argument was that that system would be practicable. A population-based grant, weighted to take into account the large number of old people, the problems of unemployment in a certain area, or the large number of school leavers, could be introduced over three years without causing any greater changes in grants to local authorities than have been occasioned during past years. Secondly, such a system would be simple, which could never be said about the system that we are debating now. Thirdly, and perhaps most important, the per capita grant system would not have been centralised. That would have avoided our fundamental constitutional criticism of the block grant system, namely, that under such a system local government would wither away and become a mere agency of the Government. The only centralised decision required would have been the global amount of the grant. It would not have required invidious and punitive decisions made on questionable grounds against individual local authorities. We did not claim a divine right for the proposals, but at least they were discussed with those involved in local government before they were submitted. The block grant proposals, however, brought to the House by the Government, were put forward in the teeth of united opposition from all local authority associations. The freedom that the Secretary of State continues to claim is being given to local authorities is a myth. It is the sort of freedom that a condemned man might have of choosing between the electric chair and the noose. The freedom is the freedom to choose between cuts in the home help service, meals on wheels, social services, housing or education services—the sort of services that every community has a right to expect. Now we can see how the new system measures up. First, it is unbelievably complex. There were criticisms of the old needs assessment system, with its regression analysis, but calculation of grant-related expenditure under the new system involves no fewer than 48 separate pieces of analysis. How can such a system be seen to be fair? It lays itself open to allegations of chicanery. The bias against urban areas and certain non-Conservative-controlled authorities suggests that political considerations were paramount in the allocation. That criticism may be unfair. The point is that the system is so complex that it is difficult for outside groups to know whether it is unfair. The Association of Metropolitan Authorities has demonstrated how arbitrary are the calculations of many of the 48 elements of grant-related expenditure. One example should suffice, namely, the part of the grant-related expenditure that covers primary and secondary education. Thai assumes that 15 per cent. of all pupils have special needs and that 1·8 per cent. of them need to be educated in special schools at a cost of about 4·5 times the average unit cost for ordinary children. The remaining 13·2 per cent. of all pupils need some other form of additional help at a cost of about 1·5 times the average unit cost for ordinary children. The AMA said that those proportions and weights were plucked out of thin air. The larger of the two groups of special children is assumed to represent: children born outside Britain or belonging to non-white ethnic groups; children living in households headed by semi-skilled manual workers or farm workers; children living in households lacking standard amenities. or living in overcrowded conditions; children of single parent families; children from families of four or more children; and children receiving free school meals. All those factors are given equal weight. The farm worker's child is considered to make the same demands on the education service as a Bengali-speaking child, a class of children with several different mother tongues, or a child living in poor conditions in an inner city area. That touches on the points made earlier about the way in which the settlement will affect the ILEA. Yet the primary and secondary education elements make up a large part of grant-related expenditure. It is not surprising that they should have come out biased against major urban areas. The result of the settlement is some catastrophic falls in income for certain inner city areas. Even with the so-called safety net, grant losses for the metropolitan districts could be as high as a 13p rate. On the other hand, non-metropolitan counties cannot lose more than the product of a 1·1p rate. How can that be seen as anything other than a politically motivated attack against certain authorities because they are controlled by non-Conservative councils? How are councils supposed to budget and plan ahead when they are faced with such catastrophic fluctuations in income? I have considered the effects of the settlement on my city of Liverpool. I served on the Liverpool city council for eight years, being deputy leader for part of that time. I was involved in determining the rates for the following year. Liverpool has been badly hit. Even the city council, which the Secretary of State himself said had followed the Government's guidelines—and those of the Labour Government—was faced last year with a £10 million reduction. The council made that saving and kept within the guidelines without, thankfully, having made any compulsory redundancies. Now it has been told that this year it will have to make a further £8 million reduction. It may not even be able to take up grants under the inner city partnership scheme because it has to find 25 per cent., or even more, of the money towards the partnership contribution from Government. It may not be able to take up that money because of the cut in the rate support grant. The Secretary of State said earlier that there would be massive unemployment if rates rose. I agree with him. Many small businesses would not be able to meet massive rate increases. Inevitably, that is the effect of such great reductions in rate support grant settlements. He is crying crocodile tears. He spoke about the dilemma of local authorities. The alternative for local government is to sack more of its employees. In which way does that help the unemployment position? It simply adds to the problems of paying out more unemployment and social security benefit and increasing the public debt—apart from the social problems that it inevitably creates. The problem does not lie only with the metropolitan districts. Shire districts have also been badly hit by the vagaries of the new system. Was it really necessary to choose this year to make district councils bear the full burden of rate collection, the full burden of rate rebates and the full burden of disability relief? Shire counties have been relieved of the burdens that they used to bear pro rata. In general, they have also done well out of the allocation. Yet some of them are, nevertheless, raising their rates. Meanwhile, some shire districts may have to raise the equivalent of a 5p rate simply to cover the cost of the new burdens, without thinking of inflation as well. One wonders whether there is a further political motivation behind this in a year of county council elections when the Conservative Party faces heavy losses. I turn next to the control of public expenditure. The Government are treating local government as though it were the only part of the public sector to be overspending. What is worse, it is singling out Liberal-controlled and Labour-controlled councils for particular treatment. We all know, however, that local government has an extremely good record for keeping within its allowed spending limits, even in the past year when it has been faced with sudden and arbitrary cuts. This week, the appalling overspending by the Government has been highlighted in the press. Instead of controlling the lunatic costs of the Ministry of Defence, the Government are using the nationalised industries and local government as their taxing agents. They have no moral right to do so when they have so signally failed to put their own house in order. Local government has been made the whipping boy for Government failure. As the right hon. Member for Durham, North-West (Mr. Armstrong) said, this is having an effect on the people in local government. Particularly disturbing is the loss of good people. They no longer see any point in giving up their spare time simply to act as Government rubber stamps. Last week the chairman of the Liverpool city housing committee tendered his resignation over the rent increases which have been necessitated by Government cuts. I hope that he will change his mind. However, what hope is there for local government if people are made to feel that they are doing nothing more than the Government's dirty work? Inevitably, they give up in disgust. The Secretary of State is tilting at the wrong windmills. It was local government reorganisation, the brainchild of the last Tory Government and probably the worst disaster ever to befall local government in Great Britain, that set the scene for the current financial disasters. We should be investigating the duplication of resources and discovering the costs of local services before reorganisation in order to see how, since then, they have vastly outstripped inflation. Metropolitan county councils should be abolished and their powers transferred to the district councils. They would never be missed, and the vast amounts of bureaucracy in them could be eliminated. People could be transferred to other jobs where they could be far more usefully employed. Joint boards could run the police and carry out other functions. It is the failure to tackle these fundamental problems of structure that has led to the closure of nursery schools, the cutting of services and the rundown of our inner cities. The metropolitan county councils are the real maggots that are eating away at local government spending. They are remote, meaningless and profligate in the extreme. This rate support grant settlement is divisive. It is setting local councils against each other, the shires against the cities and local authorities against Government. Having cut local government grants for 1980–81 by £200 million, the Secretary of State will be remembered for his vicious and mean treatment of local government and for a ruthlessness that is matched only by his incompetence. He is playing God with local government and he will be remembered for presiding over the dismantling of the last vestiges of local government democracy in Britain."Within the normal lifetime of a Parliament we shall abolish the domestic rating system and replace it by taxes more broadly based and related to people's ability to pay."
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I should like to pursue some of the points made by the hon. Member for Liverpool, Edge Hill (Mr. Alton) and a number of other hon. Members—including the right hon. Member for Durham, North-West (Mr. Armstrong)—who have said that the arrangements are a body blow to democracy. The hon. Member for Edge Hill said that they were so complicated that there might be allegations of chicanery. The hon. Member for Greenwich (Mr. Barnett) said that, however many indicators the Government used, they could not take into account all the problems faced by local authorities. That is, of course, true.
I must ask those hon. Gentlemen however, to choose whether they would have, as in the past, a more or less arbitrary decision by a Minister based on no published criteria, or a published set of criteria, as we now have, which can be examined in detail in the House and can be modified, with reason, in the future. Between those two, it seems that the latter must surely give greater democracy and freedom for councils because, for the first time, they know where they are. They may not agree with the results, but they can make representations. That must be an advantage.Why, therefore, does every local government organisation in the country oppose this new block grant system? How can it be fair that local authorities that are prudent and try to make savings and secure value for money are penalised in the same way as the big spenders?
The hon. Gentleman's second point constitutes the main burden of my speech, and I shall come to that. On his first point, I was not privy to the consultations with the AMA and the ADC. Probably, they just do not like change. Furthermore, they will lose money by it because the Government are cutting back on grant and they do not like that either. However, I have never in general understood their objections.
A number of hon. Members have voiced concern about certain aspects of this complicated formula, and I am concerned about the distribution option chosen by the Government. I suspect that one of the reasons why London does badly is that the option that the Government have chosen militates against urban areas, and therefore certainly against inner London. The January issue of the Municipal Review states:I have a slight query in my mind. It is whether under the block grant system one of the problems in London might be the lack of weighting for the areas of deprivation. I cannot resist mentioning that, bearing in mind that my right hon. Friend the Secretary of State said that some of the various indicators reflect the geographical circumstances of the areas to which they correspond. I ran my eye down the list to B17, "Coastal areas", and found that the Isles of Scilly rightly had £1·03 per unit, but that neither the GLC nor the ILEA had any poundage for coastal areas. I was disconcerted to find that both the City of London and the inner London boroughs had the same weighting for coastal areas as the Isles of Scilly. I accept that there is no likelihood of change on either of those two points, because the matter is already set in concrete. I hope that what is not set in concrete, and for which I make a plea for change to my right hon. Friend, is the safety net. I hope, too, that it can be made more realistic. This is not a special plea, because my constituency lies in the borough of Lambeth, and whatever safety net was devised, Lambeth would plummet through it so fast that nothing could catch it. Indeed, as I said during the Adjournment debate on Monday, the only "Lambeth Walk" will be the sad shuffle of those who are unable to pay the rates leaving for Wandsworth. In general, the Government's guideline figure for London must create some hardship. We have been told by my right hon. Friend that, if the guidelines are achieved, there will be a grant loss of about £100 million. I calculate £107 million in giant loss for London, which is a 3·7 per cent. cut, or a 5·6 or 5·7 per cent. shift in grant in one year from London. I accept that London has done remarkably well under the whims of the previous Secretary of State, and that, perhaps regretfully, some of the money might have to be shifted back. In the past four or five years London has gained about 6 per cent., but to shift back 5·6 or 5·7 per cent. in one year to redress 6 per cent. in four or five years is a hardship, especially as I am unaware of any previous shift in recorded grant history of more than 2·3 per cent. in one year. As if that were not bad enough, I believe that the situation will be worse than I have described, because I do not believe that the Government's guidelines can be achieved in London. Their expectations are unrealistic. Would that they were achieved, but I am afraid that they might not be. While it is true that some councils, among them Lambeth, will deliberately defy the Government and go hell for leather for high rates and expenditures, there are other prudent councils, including Wandsworth, that cannot achieve such a massive change of direction in a year and therefore will be penalised when they exceed the Government's guidelines. I suggest to my right hon. Friend that there will not be a £100 million grant loss in London. It is more likely to be £200 million or more. The circular that was distributed by the Inner London Education Authority indicated that the authority will almost certainly lose its grant of £63 million and will probably have no grant. This is not the moment to go into the need for financial control of ILEA, but there we have an additional grant loss, uncalculated by the Government, of at least £63 million. I am told by my friends on the Greater London Council that they expect to receive a grant loss of an additional £12 million because they will be unable to meet the Government's guidelines. I am also told that Kensington and Chelsea will add another £4 million. In those three cases we have a minimum of £80 million, to which we must add the £107 million about which I have spoken already, and we come very near £200 million, which I fear we may even pass. So I believe that we are talking about more like a 9 per cent. cut in London grant, and I am sure that my right hon. Friend cannot mean that to happen. I do not believe that the capital city, with all its problems, could possibly bear with fortitude the hardship of a 9 or 10 per cent. cut in grant. It would mean great hardship for the ratepayers and for the services. I ask my right hon. Friend to consider seriously a higher safety net in this transitional period. I turn again to the Municipal Review, which I saw only today, but which says very much what I wanted to say:"The Government went for Grant Related Expenditure Assessment based on Option B,…that took the least account of social factors. There was minimal weighting for ethnic minorities, for example, and a total absence of weighting for nursery education…a sound indicator of a wider social need: 75 per cent. of nursery places are in areas of social deprivation."
I do not, of course, ask for a safety net only for London. It would have to apply to the whole country. There will be many prudent councils that will be penalised because of the sudden, and no doubt proper, change in direction in Government finance. I urge a safety net of 2p or 3p on top of the 3p that has been cut already, giving a 5p or 6p safety net. I understand that perhaps this could be looked at during the supplementary order stage. Therefore, perhaps it is not as cast in concrete as the weighting for coastlines for the inner London boroughs. If the Government were able to do that, it would have the following results. If the Government's expectations are met, no harm is done. If they are not met and my gloomy foreboding turns out to be correct, the higher safety net will help the responsible authorities, but will not help the irresponsible authorities or authorities such as ILEA and Lambeth. Therefore, there will be no greater net cost in London. But at least the prudent areas will not be penalised, and there will be an incentive for areas deciding what their expenditures should be to try to become more prudent. If that is done, there is nothing to lose and much to gain. I agree with all those hon. Members who say that we should abolish the domestic rate and put a more broadly- based tax in its place. I hope that shortly the House will unite on this and so urge the Government. As a first stage, I suggest that teachers' salaries should be put on central funds and not on rate funds. That would reduce the rate problem almost by half in one fell swoop. I have made a passionate plea to my right hon. Friend. I know that he has listened. I hope that he will be able to help us in London."The safety net has such big holes that few look likely to be saved by it. The two-tier net limits grant losses as a result of operation of GREs to the equivalent of an 8p rate and the operation of the grant taper to a 5p rate. But the full benefit will be received only by authorities whose spending conforms exactly to patterns in line with the Government's overall proposals."
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Like other hon. Members on both sides of the House, the hon. Member for Streatham (Mr. Shelton) commented on the iniquity of the new system as it affects London.
Like a number of other Conservative Members, he has demonstrated that even a rabidly Tory council which has made draconian cuts in every sphere may still have suffered th most tringent reductions in eligibility for rate support grant. Another category which has suffered considerably is that of authorities in areas in which rapid population growth has taken place, above all, local authorities in new towns. In a list which was recently published in the Financial Times, 28 authorities were named as having overspent by more than 15 per cent. as against he Government target. Seven of these—25 per cent. of those authorities—were in new towns. This is connected with the problems which new towns face, but which have received scant consideration in the present settlement, with the result that they lose heavily. Harlow, which I represent, lost the equivalent of a 9·2p rate. Stevenage has lost the equivalent of 6·5p, Dacorum the equivalent of 7·1p, and so on. There are exceptions. Northampton and Basildon in particular are exceptions for special reasons, but on the whole insufficient weighting has been given to the problems of new towns or of rapidly expanding areas. That is illustrated by the fact that other district councils in Essex, neighbours of Harlow, have been unfairly hit—for example, Epping Forest and Chelmsford. The idea that either of those authorities is in the hands of a profligate council is laughable. Epping Forest has been particularly parsimonious in many respects, but it has still been hard hit. The system which has been devised is utterly discriminatory towards new towns and other expanding areas. In this respect it is disgracefully unfair. The grant-related expenditure which has been fixed is far less than actual expenditure. In Harlow it is only just over half real expenditure. That is because the assessment does not take into account the particular circumstances of the town or of an expanding area. In calculating the grant, the treatment of housing revenue has been dealt with in a particularly unfair manner. It is assumed that there are standard costs for housing and that rents charged are equivalent to the average for the region in which the new town or expanding area is situated. Therefore, all local authorities which have had houses transferred to them from new town corporations or the Commission for the New Towns at outstanding loan debt have been penalised because costs of those houses are not high in terms of interest rates paid. However, it is assumed that the authority could make a profit on its houses by charging higher rents, when it was not possible to budget for a surplus until the passing of the 1980 Housing Act. The effect of that factor is demonstrated by the fact that Basildon, the one London new town which refused to take over housing, has done infinitely better than any other London based new town. Stevenage, but for the assumptions on housing revenue, would have been £700,000 better off. The Secretary of State knows that it has been said that that factor was introduced owing to pressure from the Association of County Councils and the desire of the Government to get their business through the House of Lords. I believe that it is wrong that the new towns and all such areas should be saddled with this adverse factor for this or any other reason. The fact that it applies not only to new towns is shown in the neighbouring Epping Forest area, part of which is in my constituency, which has also suffered because its council rents are deemed to be below the regional average. Epping Forest council, which has been under strong Conservative control and has a policy of sale of council houses, can be regarded as anything but extravagant, yet it has still been hard hit. The hon. Member for Eastleigh (Sir D. Price) referred to the housing factor earlier and said that he hoped that it would be dropped. I add my voice to his. New towns have also been hit because no account has been taken in the formula of the heavy burden of interest charges on amenities which have had to be provided in bulk over recent years when rates of interest have been particularly high. Other towns have inherited many of their amenities from long ago. A new town or an expanding area has had to build them in a comparatively short time. Despite that, the Government have not allowed any benefits that district authorities receive from interest on capital balances to be used to offset expenditure targets. In Harlow, this means that we may be penalised to the tune of £500,000 a year. The new formula, as the hon. Member for Liverpool, Edge Hill (Mr. Alton) said, in addition imposes on district councils the cost of rate collection and rent rebates. which were previously shared with county councils on a pro rata basis. The Government assessments of what council expenditure should be have also assumed that the cuts of 5·6 per cent. of current expenditure were possible. There were various other assumptions which are highly controversial. All these disadvantages have been loaded on to new towns and expanding areas to a greater extent than on most other authorities. The Government have made no provision to meet these problems. If Harlow is forced to spend above the threshold, each £100,000 that it spends will cost it £120,000 because of the loss of grant. Certainly for new towns the safety net is totally inadequate and vast new and unfair burdens are being imposed on residents of areas which have rapidly increased their population over recent years. The Government have seen fit to introduce a special factor to benefit coastal towns. I recognise the problems in those towns and sympathise about them, but seaside towns usually have no slums and do not have the social problems that prevail in inner city areas. Yet they qualify for grants. In those circumstances, why on earth should new towns be penalised and not get some special benefit? If we are forced to stick to this complicated system, which is totally wrong, at least the Government should have included a factor to offset the heavy burdens imposed on new towns in general. This is not the only example of Government prejudice and discrimination against new towns over recent years. Despite the fact that the notional housing revenue has been used to reduce eligibility for grant, the Government have still not agreed to a settlement on the section 10 claims—that is, on a grant towards maintenance and making good defects in houses transferred to councils from the development corporations and the Commission for the New Towns. The Government have procrastinated for nearly two years despite promises and all sorts of time-wasting investigations of claims. In addition, one must take into account the loss of the housing subsidy. Last year, Harlow received £5 million. This year, it will be £2 million down. Therefore, it is clear that new towns have been subjected to an overall Conservative attack.Will my hon. Friend confirm that procrastination about the section 10 claims involves large sums of money? For example, as regards Harlow, I understand that the claim of £10 million has yet to be vetted, let alone considered. Again, about £10 million is involved in the case of Welwyn and Hatfield. In the case of Peterlee in County Durham, the colossal sum of about £40 million is involved. Does not this amount to a severe detriment to places such as new towns?
I agree with my hon. Friend. It is clear that new towns are being discriminated against. In addition, even on the notional Government figures, Harlow is losing £1,246,000 in rate support grant compared with last year. Other new towns and other areas with expanding population, particularly in Essex, are losing only slightly less heavily. From the point of view of new towns of several district councils in Essex and of my constituency, the present rate support settlement represents a savage attack on the population. Given the other proposals for cuts, rent increases and reductions in living standards, such measures should convince even those in the so-called prosperous areas of the callous indifference and destructive intent of the Government. The people of the new towns will not be prepared to accept such measures. The proposals will lead to an even greater revolt against the Government's policies and against the Conservative Party which they represent.
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An interesrting feature of the debate is that most of those who have criticised the Minister have represented urban areas. Yet there is also an uneven effect in many rural areas. However, I shall turn to that matter later.
I agree with the Minister's strategy. I admire the determination with which he has sought to achieve this change. It would be a mistake to think that the strategy involved local government rate expenditure alone. It is also an attempt to end the Government's open-ended commitment to local government expenditure. In certain areas, there was runaway expenditure. Part of the problem was caused by certain rogue elephants that gave a lead. When that happens, there is always a danger that other authorities will think that they can do it as well. That happened. There is another ingredient that I hope the Government and hon. Members will bear in mind. Hon. Members should remember that in recent years much of local government expenditure has been initiated in the House. We have imposed many commitments on local government. We should consider whether some of those commitments can be rolled back. Much of the increased expenditure from legislation occurred under the Labour Administration, but some of the blame must be laid at our door. I agree with the strategy and shall vote for it. However, an hon. Member's privilege is to agree with the general and object to the particular. That I shall do. I do not normally do that. I have gone along with a number of actions which have affected my constituency without taking a particular line in the general interest. However, in this case, there is a strange contrariness in the so-called formula. The hon. Member for Stoke-on-Trent, Central (Mr. Cant) said that the shires had done rather well out of the formula. Parts of my area have done far from well. When Ministers act on a formula which is cooked up by their Department, they must live with it and react to it. They must not allow the formula to dominate their policy. They must be prepared to be flexible when ironing out the difficulties that might be caused by the formula. Otherwise it becomes a case not of rough justice but of rough injustice. The Minister has been kind in listening to what I have said about this issue. He knows that I am unhappy about Rutland's position. I have not made a speech in the House about Rutland as such for some years. I made many speeches in the 1960s when it was proposed that Rutland should be done away with as a county. We won that battle, but we lost it in 1972 under a Conservative Administration when Rutland was demoted to a district. Now, if Rutland had still been a county, it would have done better under the Minister's formula. When we fought the 1972 battle, we were told that one of the main reasons why Rutland could not remain a county was that it was not spending enough. The Department and the Minister at the time told us that. Rutland was not spending on social service facilities— for example, on help for the mentally defective. I argued that we did not have any mental defectives in Rutland—[Interruption.] Yes, as the hon. Member suggests, in good humour, I hope, apart from its Member of Parliament. Even now, Rutland does not need to spend money on several facilities which other councils must provide. Rutland's expenditure has always been economical. Rutland's grant has now been cut by 42 per cent. That is a dramatic cut for a district with only 26,000 people and therefore even fewer households. The cut of 100,000 in the grant will impose a heavy burden on each household. There will be an increase in the rates due to normal inflation which has not been low in the last 12 months. There will be an increase in the county rate and in the district rate. On top of those increases, there will now be an increase of perhaps between 5 and 6 per cent. The Tories in the area will find that difficult to understand. They will see their economical council—they consider it to be so, and it is not entirely Tory as there are a number of independents—hit hard. They themselves will be hit hard. They will ask "Why did not we declare UDI in 1972 when it was suggested that we should do so?" They are right to be aggrieved, because 16 miles down the road the Leicester city council, which is Labour controlled, will do better under the formula than the Rutland district council. I hope that the Minister will use his powers to consider the formula in the next year, to put right this anomaly and to make an adjustment. That may not help us this year, but I hope that sooner rather than later we shall get rid of an outrageous anomaly that happens to affect the Rutland district council and probably certain other district councils. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said that the formula had created some bizarre results. I have referred to one of them. I hope that it will be recognised that in supporting the Government tonight I shall be supporting the plan on the basis that, if it is accepted, it will be reconsidered in general, and in particular for Rutland.9.7 pm
It is notable that every hon. Member who has spoken in the debate has been critical of the Government's rate support grant settlement proposals for this year. The criticism has varied from the mild, as expressed by the hon. Member for Rutland and Stamford (Mr. Lewis), to savage criticism of the basis of the Government's new method of financial local government.
I do not regret the departure from the old formula—the multiple regression analysis—for the financing of local authorities. However, the Government's scheme has so many demerits that the House should reject it. It has the demerit that it penalises local authorities if they spend slightly more. I shall give an example from Wandsworth to demonstrate how that works. Secondly, the scheme has the demerit that it is being used by the Government as a vehicle for cutting all support to local authorities. It has the third major demerit that it represents a major and savage attack upon London. I have tried to understand what the new system is about. I have considered the statement by the Secretary of State to the consultative council on local government finance that was made in December 1980. When talking about the allocation of money he said:—that is, the allocation of money—"The new system that I have announced today achieves this"
I find that it achieves quite the opposite. I find it unfair and obscure, and verging on incomprehensibility. I agree with the suggestion that, because of the major changes that are envisaged in the allocation of money, we should have had the advantage of discussing the proposals in detail, as we would in Committee. We are unable to get down to the real details of the Government's proposals and their significance when considered in the light of the range of local authorities affected. I have spoken to local authority representatives recently and it is clear that many of them have had their work cut out to assess the effects on their authorities. That has made it difficult for those of us who are interested in trying to gauge the effect of the Government's proposals on the range of local authorities that have been affected. I understand that the concept of grant-related expenditure is a key element in the Government's thinking. In an effort to understand that better I have read the statement that was made by the right hon. Member for Bridgwater (Mr. King), the Minister for Local Government and Environmental Services, last September when talking to public sector accountants. He said:"through a system that is fairer, more visible and more comprehensive."
That was not the impression that was given to the House by the Secretary of State today or, indeed, to the country by successive ministerial comments. The basis of the argument put forward by the Secretary of State in opening the debate was that, if local authorities kept to the GRE levels, they would not be penalised; that indeed some of them might be better off than last year; and the right hon. Gentleman referred to local authorities in London as an example. The Government therefore seem to be talking in two different ways about the same concept. I find it hard to understand why they cannot be consistent in explaining what they are really about in setting the GRE. I wish to deal briefly with the effects of the Government's proposals on the ILEA and on Wandsworth borough council. The ILEA has a legitimate grievance in saying that no Minister last year told it that its expenditure was too high. It is now in the difficult, indeed, impossible position of theoretically having to get its expenditure down to the levels set in the Government norms. The GRE calculation is vital in this respect. I shall give two examples of how this works out. One element in determining GRE is the ratio of children thought to require special treatment, as instanced in the Warnock report. That report concluded that, nationally, one child in six would require special treatment within the education service. However, the ILEA's own investigations suggest that the ratio should be one in five. Arithmetically, the difference would have a major impact on the level of GRE set for ILEA. A second quirk of the GRE calculation is, as I understand it, that the ILEA would get more grant for discontinuing a service such as adult education than for continuing to provide it, as, mercifully, it intends to do. I can only conclude from those two examples—I am sure that there are many others—that the Government expected the ILEA to spend at a much higher level than that set in the GRE. I understand that this year, on the old basis the ILEA would have received £125 million in support from the Government, but it looks as though it will have to forgo any financial support from them. The reasons for that, which were questioned earlier by Conservative Members, are fairly simple. Given that most of the ILEA's expenditure is on wages and salaries, it is impossible for it to fire or get rid of enough staff to make the saving, because it would then have to bear the cost of redundancy payments. It is therefore arithmetically impossible to make the saving in that way."Let me first of all explain what grant-related expenditure is not. It is not an estimate of what an authority should spend. It is not some kind of norm or directive to which you are all expected to conform."
Surely the hon. Gentleman knows that the number of secondary school pupils under ILEA will fall by 33 per cent. over the next five years and that the number of primary school pupils will fall by 16 per cent. proportionately through the next five years. What plans has the ILEA to deal with that situation and to reduce its staff accordingly, particularly the number of its non-teaching staff, of whom it has far too many?
First, the reductions will not take place in one year, but over the longer period to which the hon. Gentleman referred. Secondly, the ILEA's planned expenditure for the coming year takes account of falling rolls. Had it not done so, it would have been forced to have a higher level of expenditure to maintain its services at the same level as in the previous year. The ILEA has taken that point into account. The hon. Gentleman's criticism is, therefore, not valid.
The other alternative for the ILEA would be simply not to fill any vacancies that occur, on the assumption that enough vacancies would occur among its teaching and other staff. But that might leave individual schools in the ludicrous position of having, say, no headmaster, no senior staff in the mathematics department, and so on. Clearly, no responsible education authority could adopt such a course. Therefore, the ILEA is to be congratulated on its decision to maintain services at last year's level, except for the fact that it will take into account the decline in the number of children attending ILEA schools as well as making a sensible reduction in the cost of school meals to children in the inner London area. The ILEA is to be warmly congratulated, and I am sure that the electors of London will show their tribute during the GLC elections in May. It is wrong to say that the ILEA is not an accountable authority through the political process. The majority of GLC places for inner London are also ILEA places, and they are all open for election on polling day in May. Therefore, the electors of inner London will have a chance to pass their verdict on the decisions that are now being made by the ILEA about future expenditure. The Secretary of State said that it would be acceptable to him for local authorities to increase expenditure, provided that such increases did not take money away from other local authorities. If the ILEA forgoes any support from the Government, I trust that the right hon. Gentleman will be consistent and make no complaint about the level of ILEA expenditure that will follow. I therefore hope that the ILEA will at least have that threat to its financial future removed by what the Secretary of State said earlier. I now turn to the subject of Wandsworth borough council, and I congratulate the Secretary of State on one notable achievement. Through his decisions today, if not through earlier decisions, he has become the best election agent for the Labour Party in Wandsworth. At a stroke he has dismayed all his supporters in the borough. He has dismayed the leader of the council and the only Conservative Member of Parliament in Wandsworth. He has made certain, if it was not certain before, that Labour will win all the GLC seats in Wandsworth next May and, indeed, that it will win back control of Wandsworth borough council in 1982. He is to be thanked for that gesture of support for the future of the Labour Party in Wandsworth. I turn to the financial difficulties facing Wandsworth borough council, which is Conservative controlled. As a result mainly of the Secretary of State's decision on rate support grant, the council will have to find an extra £21 million in the corning financial year. I understand that it had intended to get £8 million through the biggest rent increases ever—an average of £4·50—£7½million through further cuts in local services and £6 million through an increase in the rates. But here is the sting. The £8 million rent increase and the £7½million cut in expenditure will total £15 million-plus, but, because Wandsworth council is trying to cut expenditure and as a result of the new support for local authorities, it will lose a further £3 million under the block grant fonnula. Therefore, instead of having to raise £6 million from the rates, as a result of the Government's decisions it will have to raise an extra £9 million, which will effectively mean an extra burden on the ratepayers of 30 per cent. That will be on top of all the problems experienced in Wandsworth as a result of cuts in local services since 1978. I understand that since the Conservatives took control of Wandsworth council in 1978, rent increases there have amounted to two and a half times the rate of inflation. What a burden to place on people in the borough! I should like to refer briefly to the consequences of today's proposals for Wandsworth borough council next year. It will mean a reduction in staff of 700, of whom 600 will be people who are presently employed. Another 100 unfilled vacancies will make up the 700. There will be the closure of a day nursery, closures of luncheon clubs, a reduction in holidays for the elderly, the closure of an assessment centre for young offenders, a reduction in the number of social workers, the closure of a library, the closure of all the record libraries in the borough, the closure of a swimming pool and adventure playgrounds, cuts in housing action area staff, cuts in street cleansing, the closing of some public conveniences and many other cuts. There comes a point at which the level of services provided by a local authority can fall to such an unacceptably low standard as to make one question what the purpose of local government should be in the eyes of the Secretary of Stale. I understand that Wandsworth is the second worst affected London borough as a result of the rate support grant settlement. I do not agree with the way in which the Conservative-controlled Wandsworth council has been cutting services since 1978. This year the council should have taken advantage of the formula to put up rates a bit more and do something about maintaining or improving services, but it did not do that, and the electors of Wandsworth will hold it to account for that. Half of Hazelbourne Road—mentioned already several times today—is in my constituency of Battersea, South. I hope that the Secretary of State will visit it again when the latest cuts begin to bite. I hope that he will talk to people on the Battersea, the Wandsworth, side of the road and hear what they say about the decline in services in Wandsworth as a result of the activities of Wandsworth council, stimulated and supported by his own activities in this place. The hon. Member for Putney (Mr. Mellor) commented earlier on the effects in Wandsworth. He also criticised the Inner London Education Authority. In criticising the ILEA he said that it would increase its rates and that that increase would have a damaging effect on the ability of London boroughs to raise enough money to cope with the needs of the mentally ill, the elderly and the handicapped, but why does he not protest when Wandsworth borough council cuts—as it has been doing since 1978—services for the mentally ill, the elderly and the handicapped? The hon. Gentleman cannot have it both ways.The hon. Gentleman knows full well that all the cuts that have been made are in under-used facilities that are available elsewhere. I challenge him to name one facility that is not available elsewhere in the borough, and within easy reach. The hon. Gentleman mentioned lunch clubs. There is one in my constituency that is only 40 per cent. utilised, and it is a quarter of a mile from a day centre that can provide an alternative facility. My colleagues have spent many hours making sure that the savings that they have been compelled to make by the Government—that is why I shall abstain from voting tonight—will not damage the citizens of my constituency.
I deny the hon. Gentleman's suggestion. He is talking rubbish. A series of harsh cuts have been made on local services in Wandsworth, services that were well used by the people of Wandsworth and the lack of which has been noted and felt by local people.
Name them.
I shall name them. They are the children's library in Battersea, North, the closure of a day nursery in my constituency, the closure of the law centres, and a whole range of cuts in social services and housing, two areas which have been badly affected. The hon. Gentleman has only to talk to the ordinary people of Wandsworth to find out what they think about the cuts that are being made. The situation might be different on the Putney side of the border, but I very much doubt it.
In conclusion I want to say a word about the other effect on local government. Before I was elected to this House I was a local government officer. I understand the widespread feeling that it is important for local authorities to maintain and increase the efficiency of their services. I agree that there are times when local authorities are not as efficient as one would wish, but the pressure put on them by the constant need to cut services gives the staff very little time to think about the longer-term problems of how to deliver services with greater efficiency to the ratepayers in the areas that they serve. I wish that the Secretary of State and his colleagues on the Front Bench would devote a little time to considering how local government could be more effective in delivering services, rather than simply imposing on local authorities the need to make more and more cuts. I can only conclude from today's proposals that the Secretary of State is conducting a vendetta against the people of London. He has grotesquely underestimated the financial effect on London of the proposals that he is putting forward. He is ignoring the fact that local government will be denied more than £200 million in the coming financial year, a sum which otherwise would have been used to the benefit of the people of London. I accuse the Secretary of State of having no real understanding of the problems of inner city areas. I accuse him also of failing to accept that many of the problems of inner city areas require more resources, not fewer. I can only leave it to the people of inner London to show what they think of his and the Conservative Government's policies in the coming elections for the GLC this May and in the elections for the London boroughs in 1982.9.25 pm
Unlike my hon. Friend the Member for Putney (Mr. Mellor), I shall be supporting the Government in the Lobby tonight.
I spoke in favour of the strategies of my right hon. Friend the Secretary of State for the Environment in the Adjournment debate before Christmas. One cannot will the ends and then seek to deny the Government the means. But it will not have escaped the attention of my right hon. Friend—as many speakers have said in the last hour or so—that a long procession of London Members, and particularly Inner London Members, have expressed their anguish at the prospect before us in the inner city here. I do not want to prolong my remarks by mentioning any of them by name, but one can see on each side of the House those fat cats whose seats are not in London and who are not suffering to the same extent, if at all. [Interruption.] I greatly regret any offence that I may have caused to my hon. Friend for Eastleigh (Sir D. Price). The effect of the present proposals on the London borough of Hammersmith and Fulham is that the ILEA precept is likely to go up by 7p more than had been expected, the police precept is likely to go up by 50 per cent., the GLC precept will go up a bit, and at the end of the day our present rate poundage of 87p for the domestic ratepayer will go up—even assuming that council rents increase to the proposed level and that no further developments or expenditures of any kind are made—by 45p. That is a rate increase of over 50 per cent. I am no blind supporter of the ILEA. I have made proposals to my noble Friend the Minister of State, Department of Education and Science, which, while leaving ILEA intact, would devolve responsibility for the day-to-day running of the secondary and primary schools, including the appointment of heads, to the divisions. This should achieve a number of cost savings. In the same way, I am at the moment in discussion with ILEA on a great number of possible economies. But none of them begins to approach the £200 million of which the education officer reckons the authority will be short if it is to maintain provision at the present level. We must be fair minded and non-partisan about the ILEA, as we are about other public bodies, but, even if one argues that the ILEA has been spendthrift, it is simply unreasonable to expect it, in a single year, to make the kinds of savings that are now required, and the penalties for overspending put the authority anyway into a "Catch 22" position. The fall in school rolls, to which my right hon. Friend and my hon. Friend the Member for Putney referred, will not show benefits this year, although they will show cost savings in the future. To save money, to carry out the reorganisation of London schools to reflect the fall in school rolls has involved the expenditure of more time and money, not less, and will continue to do so. Although the population will fall, the school and the teachers will still be there. I therefore add my voice to the pleas of other hon. Members on both sides of the House and say to the Secretary of State, as all London Members have said, that we support him and accept the rough justice and courage of what he is doing. However, it must be clear to him that London Members would not be expressing the fears that they are expressing if London, and particularly inner London, was not suffering more than any other part of the country. I beg my right hon. Friend, particularly in regard to ILEA, to temper the wind to the shorn lamb. I will support him and others will support him, but we ask him to look once again at the precise effect of what he is doing to us.9.31 pm
The debate has been conducted from the Government Benches as a statistical exercise. Certain Conservative Members have implied that in a way the Secretary of State has got it mainly right but partly wrong, particularly when it comes to their local authorities. That type of statistical politics is wide of the mark. It misunderstands totally the character of the exercise. After all, it is based on a number of straightforward political assumptions—the political assumption that price inflation will fall to 11 per cent., that local authority wage increases will be held to 6 per cent. in the coming pay round and at the beginning of the next and that the weightings that the Government have produced in the order and in the settlement generally are correct. Somehow, because a great deal of work has been done on them, it is assumed that they are automatically to be trusted.
The weightings in the settlement are not to be trusted. The assumptions behind the settlement should be challenged. The structure of the settlement is political and is based on an attempt to prevent local authorities spending money to alleviate hardship and social problems. A major golden thread running through the debate has been that local authorities spend too much, employ too many people and consume too high a proportion of our gross domestic product. In the December issue of Economic Trends there is an article by Mr. Eric Lomas of the Central Statistical Office, who pursued a comparison of public service employment in the United Kingdom with five other European countries. It included local government. At the end of that interesting article, he stated:— that includes local government—"On the basis upon which countries can be most satisfactorily compared (i.e. general government employment in armed forces, other services and administration)"
We are sometimes in danger of ignoring international comparisons that give lie to the silly remarks made by Conservative Members about local government. They seem to feel that it should be a residual service, dealing only with the most severe social problems and employing as few as possible. My hon. Friend the Member for Greenwich (Mr. Barnett) referred to the fact that the Secretary of State had chosen in the rate support grant settlement the option that was least dependent on existing patterns of local authority spending. That is clearly correct. But what is even more interesting about the settlement is that there is a pretence that somehow the RSG is being more equitably distributed than under the old rate support grant settlement, when a domestic element and a needs element took account of special factors in each local authority's situation. That is blatantly untrue. In the orders there are two factors to which I would particularly draw attention. One of the alleged factors to which the Secretary of State has given due regard, in relation to the amount of block grant to be given to each local authority, is an adjustment factor for low incomes. The factor is based on the numbers in a local authority area who claim supplementary benefit. However, that does not take into consideration any individuals who are in employment on low incomes, who presumably have the same problems related to low income difficulties as those who receive supplementary benefit. I refer to those on family income supplement and to those who cannot claim FIS but who are in receipt of low wages. A further major point gives the lie to the adequacy of the settlement. Paragraph 1.3.2 of the observations of the Secretary of State states:"the United Kingdom does not appear to be out of line with other countries in the study in the total employment resources devoted to these activities."
That is not a statement of fact. It is a value judgment, and a statement about the sort of local authority services that should be provided. The reality is that in many parts of London the needs of the elderly are of paramount and urgent importance. Between the sample census of 1966 and the full census of 1971, 49·5 per cent. of the 20-to-25-year-olds in the borough of Haringey left the area. For part of that time, the borough had a Conservative-controlled council. These people left elderly relatives in the borough who, as a result, often had no members of their family to turn to for advice, support and succour. That is important to social services, because at the end of the day those services have to pick up the tab. That applies not only to Haringey, but to every other inner London borough. The figure that I have quoted of the proportion of young people moving out of Haringey is not untypical of the GLC area as a whole. The Secretary of State's claim that few of the elderly require social services is blatantly untrue in London. It is a value judgment and anything built into the RSG settlement on the basis of that statement must be questioned. Of course, that leaves aside the question of the weightings given to such social factors in the final settlement. In terms of local authority spending, the socially isolated elderly and the low paid are ignored. There are other major problems involved in the settlement. For example, there is no statutory provision for a safety net. The Government could decide next year that there will be no safety net in the 1982–83 settlement. That must be clearly understood. The RSG settlement and the safety net provisions built into this year's arrangements mean that some boroughs will lose several million pounds of grant-related expenditure that they might otherwise have received. If the Government establish safety nets that are so wide as to be meaningless, or have no safety net provision next year, authorities will rapidly get down to the projected level of expenditure that the Government say they ought to spend in the light of the social backgrounds and needs of their areas. That would mean that, instead of a projected expenditure of £114 million in the coming financial year, the London borough of Haringey would be able to spend only £80 million, a shortfall of £34 million. Changes of that magnitude would mean 4,000 redundancies in the borough, and that would be totally unacceptable with unemployment at its present level. In addition, the social problems of the area would be greatly aggravated. The Secretary of State vigorously denied the possibility of local authorities subsidising one another and he denied that the Government were acting as arbiters of equality. The previous RSG system at least redistributed some of the income from rates and taxation to authorities that did not have the income support from their properties and populations that they needed in order to provide services. The new settlement and system remove that process of equalisation."Few elderly people require help from the social services".
That is untrue.
The whole impact of the settlement on inner London boroughs is exactly that. It will remove substantial sections of Government financial support from boroughs that have the least means to provide services that their populations need. It is nonsense for the Minister to deny that, and everyone knows it.
What about Newham?
Newham is an exception. If the Minister wishes, I shall list the inner London boroughs that will have substantial falls in their rate support grant. I shall go through them. There is Haringey, Islington, Hackney and Tower Hamlets. They will lose substantial amounts of Government support. For some peculiar reason, Newham—a borough in the same area—will not be affected in the same way. My hon. Friend the Member for Barking (Miss Richardson) referred to her borough, which will also lose substantial amounts of finance. Many other boroughs south of the river will be similarly affected.
Equalisation between rich and poor boroughs is being undermined by this process. The Government are also removing the option of Poplarism. By the tapering of grant they are saying "We shall not allow you to continue to allow poor people to pay for the services that benefit poor people in a certain area. We shall penalise you through the rate support system that we are now introducing". That option undermines even the George Lansbury concept of Poplarism. The idea put forward by Labour local authorities in the 1920s and 1930s was that even if the Government did not care about the social problems of their areas, they would be able to do something about it. The Government are removing even that option for Labour-controlled local authorities. They should be ashamed that they are removing that element of local democracy as well as undermining important local authorities in the way that I have described. I hope that many Conservatives will feel disappointed and dismayed with their Government and vote with us tonight.
9.47 pm
I regret that I have been absent from the Chamber for two hours for family reasons. It may be that in my brief speech I shall repeat one or two points that have already been made.
From the speeches that I have heard, mostly from the Opposition Benches, I have gleaned that all in the garden was well until this year. The way in which the arguments were presented led one to suppose that no change should be made and that the system that existed until now was thoroughly equitable, but we all know that that was not the case. The new system of rate support grant, based on grant-related expenditure assessment, is to be welcomed as a more equitable system, for a number of reasons. The Government will no longer be a super ratepayer in those areas where local authorities have rateable resources below the national average and therefore were encouraged to be profligate spenders without any sense of responsibility because they knew that the money would be made up by the Government. That is valuable. It is a move forward of great importance. Secondly, needs assessments are no longer to be based upon past experience patterns which took insufficient account of change. That was a deficiency of some gravity in the old system. Thirdly, the statistical technique formerly used to calculate needs was too arbitrary. The new system, by concentrating on the numbers catered for, introduces a welcome air of common sense, especially as it relates the indicators to the services to which they are relevant and not to expenditure on all services indiscriminately. There is no longer an automatic rejection of needs that do not correlate with past expenditure. Having calculated grant-related expenditure assessments, the settlement penalises those authorities whose expenditure exceeds the threshold, which is 10 per cent. above the national grant-related expenditure assessment per year. The more an authority spends above the threshold, the more it will be deemed to be placing that burden upon the ratepayers, and the less support it will receive from Government funds. I congratulate Ealing council on its efforts to reduce expenditure fairly, as it has done during the past two or three years. Together with a remarkably accurate assessment of spending needs, that has left Ealing in a broadly neutral position. I have reservations about the way in which the new system will inevitably affect London. London's expenditure needs are inadequately reflected by the use of a nationally applicable formula, especially its social and educational needs. Nursery education has gone to the bottom of the pile in some areas, which is a great sadness for deprived areas. The new scheme implies complete equalisation in respect of rateable resources. It is generally accepted, however, that rateable values are higher in London, and if the process of equalisation is pursued, the rates bills in London will be higher per head than elsewhere. A proper measure of ability to pay would be fair to the capital. London has suffered by the selection of GREs which are less related to past spending patterns. I urge my right hon. Friend the Secretary of State to reflect upon the social, educational and other pressures on London. They are unique and should be considered in the handling of these matters. London cannot be equated with the rest of the country at a stroke, but that is what is happening. In spite of these reservations, and bearing in mind my earlier remarks, my right hon. Friend may be assured of my support in the Lobby this evening.9.52 pm
The purpose of the changes in the means of assessing rate support grant is, we have been told, to transfer resources from the profligate Labour authorities, particularly those in inner urban areas, to the needy shires.
I have sat throughout the debate holding a letter from Essex county council. The council has arranged meetings with all the Essex Members of Parliament in order to discuss the problems it faces, particularly the extent of the rate support grant. However, only one other Essex Member has participated in the debate, namely, my hon. Friend the Member for Harlow (Mr. Newens). Essex county council is a Tory authority, but none of the Essex Conservative Members has taken the trouble to participate to defend the interests of constituents as they have been ably spelt out to them by the officials and county councillors from Essex. Their complaint is based on a comparison of Essex with other county authorities such as Hampshire, Kent and Lancashire. In the case of the first two the populations are more or less the same, but Lancashire's is rather smaller. However, of these four authorities Essex will receive the lowest amount from the rate support grant. It is a further irony that under the old system, and particularly under the last Labour Administration, as a result of representations made then, of course, by Tory as well as Labour Members, Essex would have stood to gain more than under the present somewhat incomprehensible system produced by the Government with an eye to benefiting the Tory authorities, particularly the shire counties. It is ironic that, had Labour been in power and employed the old method of assessment, Essex county council would have been far better off. A further threat has been made during the debate, especially from the Conservative Benches, that to spend money on the services provided by local authorities is somehow profligate and unwise, and that it is the sort of spending that must on all accounts be curbed, and particularly by the Government under the Local Government, Planning and Land Act and whatever other means they use to apply the new method of assessment for each local authority through the block grant system. The sole criterion of the Government seems to be how much money they can possibly save. They never look at the services provided by local authorities from the point of view of how efficiently and how well local authorities meet the needs of the population that they exist to serve and whose interests they exist to preserve. All the Government care about is how they can save the pennies, how they can save the pounds, and how many people they can sack. They do not look at the needs of the population or the local services — particularly education and personal social services—and ask whether those services meet the real needs of the population. If the Government were to look closely at the services that are offered by Essex county council, far from trying to curb its expenditure, they would ask instead how Essex, which is notoriously mean in many areas of its expenditure, could be encouraged to spend the right amounts of money in the right way in order to meet the needs of the local population. Let me give one or two examples. One of my hon. Friends reminded us earlier of the Prime Minister's words about nursery education when she was Secretary of State for Education and Science. She recognised then the need for nursery education, but since she became Prime Minister she has done everything possible to cut down on nursery education and other services that would enable women to work outside the home and at the same time ensure that their children were properly cared for. In Essex, only 3 per cent. of the children in the 3-to-5 years age group receive nursery education. The best authority provides for 42 per cent. The average for the whole country in providing nursery education for children aged between 3 and 5 years is 16·7 per cent. As usual, in this service Essex is near the bottom of the league table of services provided by local authorities. Paragraph 1.3.2 of the observations of the Secretary of State on the means of assessing the extent of the rate support grant that the Government have proposed contains the words which my hon. Friend the Member for Wood Green (Mr. Race) has already quoted:I wish that whoever wrote those words and the Secretary of State, who no doubt endorsed them, had met many of the elderly people in my constituency. They would then have seen the extent of their need and the extent to which they rely on the local authority and the personal social services in order to meet it. Then, far from discouraging Essex county council from spending money on services for the elderly and on personal social services, he would positively encourage Essex to care better for its increasingly elderly population. Let me spell out exactly what Essex county council is proposing to do. The services covering the elderly do not appear at first glance to have been reduced seriously from the November 1979 prices and figures. The reduction is about 0·5 per cent. In reality, however, the reduction is greater than that. Compared with the other shire counties, Essex was projected to spend 84·6 per cent. of the average in 1980–81. That put it at No. 37 out of 39 in the league table, and that compared with 88·.4 per cent. of the average in 1979–80. In other words, its expenditure on care for the elderly has been falling and will continue to fall in spite of the fact that the Association of Directors of Social Services said a year ago that it condemned the cuts for hurting the most vulnerable in society. The association said:"Few elderly people require help from the social services: of those that do not all have the same degree of need."
Perhaps that is what the Government would prefer to happen so that the elderly would not constitute a burden on the rates and on income tax. At times, one wonders what the Government really have in mind. Not only is the Government's policy parsimonious and concerned only with cutting the amounts of money. It is also shortsighted. To fail to provide through the personal social services and the education services, nursery education especially, for the needs of the people is merely to transfer the burden in the end from one form of expenditure to another. Failure to care for the elderly in their own homes, for example, through the home help service, merely means that sooner or later the elderly will have to be transferred to hospital. To fail to support families in need through proper social services and their care merely means that the mental and physical stress in those families increases and that the members of those families are much more likely to end up in hospital, if not in prison. Public expenditure will be involved, but it will be expenditure on the hospital services as well as on prisons. It may not be expenditure on the personal social services. For some time, Essex has been well in advance of the kind of thing that no doubt the Government wish to see. It was one of the first counties to introduce charges on the home help services. Essex county council even went to the extent this year of introducing a charge of 25p a day for the mentally and physically disabled to attend day centres. Far from encouraging Essex to pursue activities of this kind and to pursue its notoriously mean policies, the Government should be ensuring that Essex raises the right amount of money, is given the right amount of money and is encouraged in every way possible to spend that money properly. I turn finally and specifically to my own constituency. The Government are using a number of criteria for assessing spending on the rate support grant, but they are used in much too simplistic a way, especially when applied to my constituency. I deal first with planning applications. The basis for calculation seems to be the number of planning applications with which the authority has to deal. What should be taken into account in the case of a constituency such as mine is not simply the number but the complexity of those planning applications. Many of them are planning applications for industrial uses. But Thurrock has to take into account not only an application itself but all too often has to draw into account the Health and Safety Executive, which hon. Members will no doubt recall already has had to report on the environmental dangers implicit in the existing industrial activities in the Thurrock and Canvey Island area. Therefore, any planning application does not just have to go through the normal procedures. The Health and Safety Executive often has to be called in as well to give its view of the impact of the construction of further industrial plant in Thurrock. It is not enough just to take account of the number; the complexity, the nature and the length of consideration given to planning applications all add to the problems of Thurrock and Canvey Island. This is therefore a step which must be taken with great caution in my constituency. Thurrock also has the problem of land dereliction, which is not taken into account in assessing the RSG. I do not mean that money should be given to make Thurrock pretty again. That would indeed be a gigantic task. The problem is much more difficult. Abandoned gravel and sand and particularly chalk quarries in low-lying land adjacent to the River Thames cause serious problems. Roads collapse into quarries, there are sewage and drainage problems and housing has been known to disappear over the sides of the chalk pits as the sides crumble away. Yet no account is taken in the assessment for RSG of the special problems of an area of high industrial concentration and devastation. The basis on which the Government are trying to assess the distribution of block grant is both obscure and inadequate. In applying it to Essex they have failed to help even their own political supporters. I can only hope that people in Essex will be aware of that, and that, in the coming county elections, they will vote out the Tories, who have ill served particularly the elderly and other deprived families. I hope that they will note that the Government particularly neglect an area such as Thurrock and that they will ensure that not a single vote is cast again for such a mean and parsimonious Government."Any further cuts in the personal social services will have very serious consequences and will bite much deeper into existing services than even those made so far. Further cuts may well endanger the lives of children and young people and foreshorten the lives of the elderly."
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I have been present for most of the debate and since I became a Member of the House I have attended most rate support grant debates and have spoken in several. I made my maiden speech on rate reform, so it is something in which I have always taken an interest.
All debates on this subject are familiar. Each time, those who have been badly affected come to the Chamber to complain, while those who have been looked after reasonably well go off to have dinner instead. Thus, these debates are always complaining sessions. This year there is a new element—the new system that the Government are seeking to introduce. In every debate that I have heard on this subject every speaker has said that the system needed changing, that the regression analysis was incomprehensible and that something should be done about it. It is hardly surprising, then, if the Government seek ways to change it. The Government have now tried to change the system. In the past, the counties, the districts and all other organs of local government complained about the old system because it was not easily understood. Now we have a new system which takes many factors into account. Every hon. Member today has complained about the number of factors in the formula, only to add that there are not enough in this or that respect. Examples quoted are the old, ethnic groups and the mentally deficient. How many elements do we want in addition to the fair number provided for in the system? Hon. Members cannot have it both ways. We must either have a simple system or introduce all the provisions. One cannot have both, yet that is what we seem to be demanding. The system may need examination. Perhaps more cushioning is needed and perhaps the safety net should be reconsidered. I support the case that my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) made about housing, particularly in rural areas. In such areas housing has been run efficiently and competently, and rents have been deliberately kept down because of the type of employment available. I hope that the Government will consider that case, because rent rises in those areas could have serious effects. It is important to consider local government expenditure. It is part of the national cake. It is no good absolving ourselves and saying that they are all decent guys in local government and that we should not have anything to do with it. That is nonsense. We are concerned about the national economy, and local government is an integral part of it. We must speak up for ratepayers. We never hear about the poor old ratepayer. All he does is pay. We hear only about the unfortunate local government workers and the poor deprived services. I am keen on the ratepayer. He has got a view as well. Over the past few years he has become fed up to the teeth with rates. Something must be done and the Government are trying to help. Mention has been made of small businesses. I went to a conference in Sheffield. When I got in a taxi, the driver did not know who I was. The conference had nothing to do with politics, and I did not tell the driver that I was a Member of Parliament. He said "Do you know anything about the blinking council in this town." I said "No". He said "Do you know that the rates are forcing shops out of the centre of Sheffield and into the provinces?" Is it right that large stores in a city should have to seek premises outside the centre?Perhaps the hon. Gentleman should consider the rent and rate burden per square foot on buildings. In the City of London it is £33·20, in the City of Westminster it is £21, in Birmingham £7, in Leeds £6·50, and in Sheffield £6·15. Therefore, Sheffield is well down the league.
I base my remarks on a conversation that I had in Sheffield. I was told that large shops had had to move out of the centre. There is evidence that small businesses are being forced to consider whether they can remain in the central part of a town because of the rate burden. That is not good.
We must consider not capital expenditure, but current local government expenditure. I refer particularly to local government overheads. If a small business finds that it is not making enough money or that it is in a dangerous state, it looks at its overheads. That is where one starts. One asks whether the chairman is worth keeping or whether he should be fired. One does not first consider whether to get rid of a salesman or whether to get rid of the productive part of a company. Local government begins by closing two schools or shutting a nursery. People never look at the town hall. No one asks what those people are doing. No one thinks of getting rid of some of them. A large number of local government departments are not doing much because of the cuts. Nevertheless, the staff are still there. The housing departments are just as big as they were when they were carrying out large developments. There are just as many people sitting in those departments. Surely local government could do something about that. I still believe in rate reform. I support hon. Members who have said that we must undertake such reform. It can be done. I do not agree with those who say that it is too difficult, that they have looked at all the options, and that none is possible. I do not believe that. We can find a way of changing the rating system. I shall continue to fight for reform because I said I would when I came into the House, and I shall not give up. We must make the system fairer. While rates, as a proportion of taxation, are about equivalent to direct taxation in the percentage increase, the old and spinsters who look after the elderly suffer because they pay the same rates as those earning a considerable amount and as those who have many members of the family bringing in wages. The system is not fair and we must find a way to deal with it. I welcome the idea of a new system. I agree that there are anomalies, but the exercise is worth while and I shall support the Government.10.15 pm
The closing remarks of the hon. Member for Reading, North (Mr. Durant) will be a great relief to the Government.
My clear objection to the rate support grant settlement is that it does not reflect need. Some of my hon. Friends have discussed the technicalities. If they reflect, they will realise that the Government do not intend to reflect need. The intention is to allow the Secretary of State to be arbitrary and vindictive. The only objections lodged against his proposals by his right hon. and hon. Friends are that, because of incompetence, he is being arbitrary and vindictive to some Conservative-controlled authorities. Conservatives seem to think that, provided he is arbitrary and vindictive to Labour-controlled authorities, that is fine and dandy. However, hon. Members who represent areas with local authorities which are targets do not want any more of the right hon. Gentleman's arbitrary malice. We can do without it. Crocodile tears from Conservative Members are unconvincing. I have no doubt that Conservatives representing London constituencies will be able to attract publicity to their paper-thin opposition to the Government's proposals. The newspapers should carry headlines stating "Small revolt from the Government Benches—no one killed or injured". Tory Back Bench action will not damage or injure the Secretary of State's intentions. Tory interventions were not intended to damage or injure his intentions. I have the peculiar privilege of representing two out of the five authorities which will receive nothing from the settlement. Camden will certainly receive nothing from the settlement. If the Inner London Education Authority decides that the interests of the children, the schools and the teachers come first, it may not qualify for any grant from this awful Government. The Secretary of State is asking ILEA to cut its expenditure by one-third in a year.The hon. Gentleman is wrong.
I am glad that the Minister of State said that, because the Secretary of State frequently denies that he wants to cut ILEA.'s expenditure by one-third in a year. If he does not want that to happen, why does he intend to punish the authority financially for every pound by which it does not cut its expenditure? He cannot have it both ways. He cannot say that that is not his target and that he will punish the authority for not meeting the target. The Government are guilty of hypocrisy. Ministers are trying to escape the consequences of their actions.
The Government wish to damage the ILEA as severely as possible. I am sorry that the hon. Member for St. Marylebone (Mr. Baker) has left the Chamber, because he has been the main weapon which the Government have aimed at ILEA. The hon. Gentleman was used to prepare a squalid and shabby report on it. Now he has his squalid pay-off and is on the Government Front Bench. To base one's political promotion on damaging London children is disgraceful. In a few years the hon. Gentleman will be ashamed of that. The Secretary of State has decided to attack London. He attacked London in his housing investment settlement and in his rate support grant settlement. The Government say that the reduction in the amount of Government money going to London is about £100 million. There are others whose estimates tend to be more accurate than the Government's, such as the Association of Metropolitan Authorities and a number of others who are fairly expert in these matters and who believe that the reduction in the forthcoming year will be nearer £200 million. The Secretary of State says that the decision has been made on objective factors. That is poppycock. The factors have been selected by the right hon. Gentleman himself. Even his best friend, and his worst enemy, would not say that he was objective. Objectivity has not been one of the attributes that he has laid claim to in the past and I do not think that he can try to start laying claim to it now. If it is not true that the Secretary of State has selected spurious factors, his officials have done so. If he argues that it is the responsibility of his officials, he is saying that the man in Whitehall knows best, and I thought that that went out with Hartley Shawcross. It seems uncharacteristic of the right hon. Gentleman to base his future political career on the idea that the man in Whitehall knows best. The worst aspect of everything that the Secretary of State has done, and of the sedentary intervention of his right hon. Friend the Minister for Local Government and Environmental Services, is the attempt to try to put the blame on others for what the Government are doing. I have no doubt that, when the Minister for Local Government and Environmental Services replies, we shall hear again that, if the rates are increased in London as a result of the settlement, it will be the fault of London local authorities. Nothing could be further from the truth. It will be the Secretary of State's fault if the London local authorities have to take in an extra £150 million from ratepayers in the coming year. The right hon. Gentleman has taken away such sums of money. Throughout London, those who are involved in local government as elected members and as officers — I include some of the Tory authorities — are agonising over what can be done. They know that rate increases will damage the interests of the poorer people in their areas. They know that they will be damaging to some extent to business. They know that they may drive out industry. They know also that to bring about the catastrophic cuts in services that the Government are seeking will be equally damaging to those whom they represent. They are agonising over what to do as a result of what the Secretary of State has decided. We can be sure that the right hon. Gentleman has not agonised. We know that there has been no agonising on his part or pleading with the Cabinet for more money. It appears that he offered local government's head on a charger and said "There you are. Take as much as you like." There has been no evidence—not even from this leakiest of all Cabinets—that the right hon. Gentleman has tried to preserve and protect the services on which the standard of living of so many depends. His record has been disgraceful and he, or his right hon. Friend, will continue to blame everyone else for what has happened. All that I can do is refer to what the Prime Minister said on the radio the Sunday before last. She was directing her remarks to those who might take industrial action to get higher wages, but her comment applies to everyone. She said:The Secretary of State's actions will have considerable consequences in London. There will be severe damage to services and gigantic rate increases. The right hon. Gentleman is the man responsible, but others on the Government Front Bench are equally responsible. London Tories who do not vote against this measure will also be responsible. I expect that the people of London will remember that when they vote in the GLC elections at the beginning of May."People must be presumed to intend the consequences of their own actions."
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This the first debate which the House has had on the brand new system of rate support grant which has been introduced by the Government. They told us—and to some extent I tend to agree — that the old system was full of anomalies, that it was based on regression analysis and that it favoured the spending authorities and that, therefore, they would bring before the House something which was not only different and would remove all the anomalies but would be crystal clear. It was said that it would be so simple that even a child could understand it.
We have had an interesting debate which has been full of multipliers. There are 48 different factors which make up how the rate support grant shall be fixed. The needs element has been abolished and the general block grant has been introduced. Apart from the hon. Member for Reading, North (Mr. Durant), who spoke late in the debate, every other Conservative Member who spoke did so against the rate support grant and the system which the Secretary of State has introduced. Even the hon. Member for Reading, North said that there was something wrong with it. The Secretary of State did not have one friend. The kindest Conservative Member who spoke was the hon. Member for Eastleigh (Sir D. Price), who advised caution. He told the Minister "You should try these things out before you launch on this completely new system of rate support grant." The hon. Member for Putney (Mr. Mellor) told the House "I cannot find it in my heart to go into the Lobby tonight and support the Government." The hon. Member for Hornchurch (Mr. Squire) made an excellent speech. I served with the hon. Gentleman in Committee on the 1980 Bill where he made a series of excellent points. He has experience of local government. He told his right hon. Friend that this was a grossly unfair system, and at one point he called it a lottery. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) talked about regions. He does not like this settlement at all and wants a completely different kind of rating system. I was doubtful of the hon. Member for Uxbridge (Mr. Shersby). I thought that he would be the hon. Member who would back his right hon. Friend. Indeed, he said that his right hon. Friend had made a courageous move. He thought that this was the beginning of a better way. But when he talked about the London borough of Hillingdon, he did a marvellous job of demolishing the settlement, particularly with regard to the threshold. There was no support for the Government from him. The hon. Member for Ilford, South (Mr. Thorne) pointed out that Redbridge had been a Conservative - controlled borough ever since 1963. He said that it was not one of those profligate authorities that wasted money but was a solid Conservative borough. He told his right hon. Friend "As a result of what you have done, rates in Redbridge will rise by more than 30 per cent. this year." He is no friend of the rate support grant. The hon. Member for Streatham (Mr. Shelton) pointed out that a £200 million grant loss—that was his estimate and I accept it —for London and the London area would create some hardship. The hon. Member for Rutland and Stamford (Mr. Lewis) said that this was a bad settlement for his area. The hon. Member for Ealing, North (Mr. Greenway) had some praise for the Government but also many reservations. I mention all those hon. Members because of an article in this morning's Financial Times, which was quoted by my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant). The headline was "Good plans — bad algebra". Incidentally, I would not call it algegra but rather advanced calculus. The opening paragraph of that article stated:The right hon. Gentleman's suporters in the House have been concerned with salvage. They have been putting to him the disastrous position in which their usually Conservative-controlled boroughs will find themselves as a result of the settlement. They have been making suggestions to the right hon. Gentleman. I am certain that he will no more listen to suggestions from his own Back Benchers than he will listen to Opposition Members or to people in local government or anyone else. He listens only to himself. I accept the Secretary of State's point that, in regard to macro-economics, it is the duty of the Government—as of any Government — to make the global figure. No hon. Member challenges that. Our objection is that, having done that, he starts to interfere in minute detail in how local authorities spend the money that the rate support grant will give them. Let us look at the global sum. As my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) pointed out, it is a reduction not of 3·1 per cent. but of over 8 per cent. in the level of rate support grant that the Labour Government's expenditure White Paper set out in 1979. That is a loss to local authorities of £1,750 million. That is how much the pool has been reduced from what it ought to have been under our White Paper. But in addition we have the cut of 1 per cent. and the two absolutely fallacious assumptions that the Government have made. First, the Government have assumed that wage costs —a principal item of local authority expenditure—will not exceed the cash limit of 6 per cent. set by the Government, not only for this year but for next year as well. What do we know already, without looking into the future? We know that the firemen—quite rightly, in my opinion—settled for 18 per cent. The Government may say that there are not many firemen, so it does not matter a great deal. Even supposing that the manual workers' figure of 7½ per cent. is accepted—it has still to go to the people concerned—that is 1½ per cent. above the Government's 6 per cent. The Government may say that it is not much, but it is an enormous amount when spread throughout local authorities. We do not yet know about the teachers and those covered by NALGO. Although the water workers do not come directly under local authorities, they will set a pattern for local authority workers. So it is like Alice in Wonderland to say that local authorities will be able to stick to the 6 per cent. If the Government do not increase the amount, the ratepayer will have to pay the inevitable difference. The Government are rather proud of the fact that in what will be their third year of office the rate of inflation will be about 11 per cent., which is more than it was when we left office. But even on that assumption of 11 per cent., surely the Secretary of State and the Government should be aware that the factors of inflation for a local authority are totally different from the ordinary national inflation factors. Food is an important element for the nation, but it is not so important for local authorities. They are concerned with items such as heating, gas, electricity, oil and petrol, which matter a great deal to them. We know that their cost is going up very considerably, in many cases as a result of Government policies. Telephone charges and postage rates also massively affect the local authorities, and they are going up. So where does the 11 per cent. national figure come from? It bears no relation to the inflation that local authorities have to face in the areas that they have to face it. Most of the debate has rightly concerned the distribution of the grant. Not a lot has been said about district councils, except by my hon. Friend the Member for Harlow (Mr. Newens), and I agree with every word that he said. I am the only Labour Front Bench speaker who comes from a non-metropolitan county area. District councils are most aggrieved about the Government's decision that all rate collection costs should be borne by the district. The precept by the county in a non-metropolitan area is an enormous sum set against the comparatively trivial amount that the district council spends. However, the district council will have the entire cost of the collection of the rate and now cannot recover a penny from the county council. In my authority the cost of collecting rates is no less than £420,000 a year, which is greater than the cost of street cleansing throughout the borough. My borough council in Halton, having had that burden placed on it, has to decide whether to abandon or reduce concessionary fares for old people. By a sleight of hand, a bill for £420,000 has been placed in its lap. The Minister may argue that there is provision within the support. However, the Government must admit that, whatever provision has been made to compensate, district councils believe that it is a penny rate for the cost of collection, and a penny rate is a lot for a district council, although it may not be much for a metropolitan district council or county council. My hon. Friend the Member for Harlow rightly pointed out the discrepancy in the distribution for his area. Under the system that the Government have adopted, the GRE comes out at £68 per head for Eastbourne and £34 per head for Derwentside, which we know as Consett. How can any Government explain why Eastbourne should be so much better off than Consett, which is facing enormous steel closures? The Secretary of State told the House—this time not by written answer—that he will take action in regard to steel. Is he confining the action to areas that have experienced steel plant closures? Will he do something about Ellesmere Port, for example, where there are massive closures of paper factories, and the many other areas where industries are disappearing, leaving towns on their knees? Perhaps we shall have a little more enlightenment in the reply. Most of the speeches have centred on London, as we are dealing with redistribution. A consistent pattern seems to be that, just as the poorer districts suffer most—and I have given the examples of Eastbourne and Derwentside —the same happens in metropolitan county areas. The hon. Member for Liverpool, Edge Hill (Mr. Alton) pointed out that Liverpool is the worst area affected on Merseyside. It is. A tiny part of my constituency, St. Helen's, does well, and I am glad about that. However, Liverpool, which has the central problems of the whole of Merseyside, comes out worst. As my right hon. Friend the Member for Ardwick told the House, the same is true of Manchester. Greater Manchester does badly generally, but it is particularly bad in Manchester. The same is also true in Newcastle. In the capital, we see the system at its worst, in London in general and in inner London in particular. The greater the problems and difficulties of an authority, the worse it will come out of the settlement. The Inner London Education Authority has decided that, as the standard of education in inner London would be so poor if the authority adopted the Government's guidelines, it will ignore those guidelines in order to be able to continue providing a proper education service for our capital city. I applaud the ILEA. I believe that it is right to take such a course. Some authorities may decide to spend the full amount and ignore the Government, but few councils, even among those that are Labour controlled, will make that decision. Instead they will make a decision based on cuts in services and increases in rates. That will be inevitable in almost every authority. They will get the worst of both worlds as a result of the settlement. We have heard that that is to happen in Redbridge, and we have heard from a number of hon. Members about the plight of Wandsworth. If ever there were a Government who did the dirty on their so-called friends, it is this Government. Wandsworth council did everything it could, under Tory control, to cut services which ought never to have been cut. It excelled at the job, but it will have to impose a massive rate rise this year because of the actions of the Government, who were praising the council only a short time ago. In most authorities there will be increases in rates, which will annoy ratepayers immensely. The Government should be under no illusion on that score. Ratepayers will be well aware—we shall make them aware—who has caused the increase in rates, whether in Conservative or Labour authorities. It is the Secretary of State, with his RSG settlement, who will cause the rate increases. There will also be cuts in services. We tend to talk in such debates about multipliers and figures and how much local authorities will get, but, for goodness sake, let us remember what cuts mean. We are starting the International Year of Disabled People by cutting savagely social services for the disabled. The Government are attacking children, old people, the meals on wheels service and concessionary bus fares as well as requiring massive increases in rates. The increases will not be the fault of the authorities concerned, whether Labour or Conservative controlled. They will be the fault of the Government, and in the GLC and county elections, the Government will find that every elector realises that fact. There will be a massive swing in those elections."The House of Commons turns its attention today to the practical result of Mr. Michael Heseltine's restructuring of local authority finance; and if all goes according to the usual pattern, many columns of Hansard will be filled with the angry grievances of particular local authorities, with no result at all. This will be a pity, because Mr. Heseltine appears, with the best of intentions, to have produced the worst of results, and his supporters in the House should be concerned with salvage."
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I know that the right hon. Member for Widnes (Mr. Oakes) will not mind if I say that he made the speech that every Opposition spokesman makes in rate support grant debates. His recounting of the number of hon. Members who had complained would have been more effective if his speech had not been preceded by a robust contribution from my hon. Friend the Member for Reading, North (Mr. Durant), who said that it was ever thus. My hon. Friend has attended all the recent RSG debates and, given that there will always be some gainers and some losers, it is in the nature of such debates—I make no complaint about it—that the hon. Members who most wish to speak will be the losers.
The right hon. Members for Manchester, Ardwick (Mr. Kaufman) and Widnes made play of the Financial Times leader "Good plans—bad algebra" which described the algebra as "impenetrably obscure". I thought that surprising. My only conclusion is that there are two leader writers at the Financial Times who have slightly different views on the merits of the system that my right hon. Friend and I have put forward. I checked back to the leader published at the time that my right hon. Friend made his statement on the rate support grant. It said:If we wish to reconcile the Financial Times's "impenetrably obscure" phrase with its phrase about bringing light into dark places, the only explanation is that there are two different points of view. And why not? It is a great newspaper. I am sure that the staff have constructive discussions about it. I wish to endorse a remark made by my hon. Friend the Member for Eastleigh (Sir D. Price): this should be one of the most important debates in the calendar of the House. If one of the roles of the House is the approval of the raising of taxation and its distribution for certain purposes for public good and public benefit—and this debate is concerned with the distribution of £11,000 million of public money—tonight the rate support grant report will provide for the distribution among 413 different authorities of more than half the total yield of income tax for this year. That is the size and scale of the responsibility that we must discharge under the rate support grant report. I make no pretence that it is not a tough settlement. The hon. Member for Stoke-on-Trent, Central (Mr. Cant) said that in respect of the grant percentage the settlement was quite generous. But many hon. Members feel that the combination of the reduction in grant percentage with the need for reductions in the volume of public expenditure which my right hon. and learned Friend the Chancellor of the Exchequer announced—and which are part of the economic position that we face in Britain which requires such economies—means that the settlement is tough. Although when one looks at the sheet if the gainers and losers one forms an impression that some are doing well, in fact all authorities are in a tough position. As a nation we face the need for economy. Local government represents 25 per cent. of public expenditure in Britain. Obviously, it must play its part. We have to set the settlement against two clear objectives. First, there is the need for overall help to secure our economic objectives. Secondly, there is the fairness of the distribution. I turn first to distribution. The hon. Member for Battersea, South (Mr. Dubs) — whose remarks were endorsed by my hon. Friend the Member for Reading, North — was honest enough to say that the previous system had few friends. It is not what Opposition spokesmen say but what they do not say that is significant. They know that the previous system was virtually incomprehensible, certainly to almost every Member of the House and—I say this without embarrassment to my officials—to virtually everybody in the Department of the Environment. In the work that we have done preparing the new system my officials mentioned to me that certain quirks in the previous system had come to light which, because of its incomprehensibility and complexity, had not previously been apparent. The arguments in previous debates about stepwise multiple regression analysis were examples of the blind leading the blind through a computer-dominated system in which there was little human involvement, except for one crucial ingredient, namely, that it started from the basic premise that past expenditure was proof of need. It tended to perpetuate that position in a way that was grossly unfair. Our new proposals are established on general principles. In every rate support grant settlement there are bound to be variations in the impact, and some of these are, I know, of great concern to my hon. Friends. I said that this was a tough settlement. Every ratepayer starts, effectively, with a 3p loss because of the decision to reduce by one point the percentage grant. One of the other changes that will have a considerable impact on a number of district authorities concerns what was an arbitrary system of distributing needs element. It was not done on a scientific basis. To his credit, the right hon. Member for Stepney and Poplar (Mr. Shore), who introduced it, said that it was on a temporary basis and one that would have to be improved. That is one of the systems that we have removed in now paying the grant directly to authorities on an individually assessed basis. Contrary to what the hon. Member for Wood Green (Mr. Race) said, there is for the first time full resources equalisation where previously under the old system, which sought to equalise fully, certain authorities were able to keep high resources above a certain level. There is full resource equalisation except for London, which, under our distribution this year, keeps the same share of extra resources as it kept under the previous system. A number of hon. Members have raised in connection with this settlement the need for rate reform. I am deeply aware of the concern of my hon. Friends about this. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) advanced specific proposals for tackling this problem. My hon. Friend the Member for Uxbridge (Mr. Shersby) also raised the point. The concern about rate reform, particularly in London with its impact on the industrial and commercial ratepayer, and, bearing in mind the business vote, is a matter that I can well understand being raised in the debate. I can confirm that rate reform is under active review at the moment. I have no statement to make tonight about the business vote. I hear what my hon. Friends say, and I well understand why this is a matter of such great concern. My hon. Friend the Member for Eastleigh asked a technical question about the status of the report. It is laid before Parliament under the Local Government, Planning and Land Act. It requires to be approved under an affirmative resolution. It will then become the legislative authority for the determination and payment of grants. I welcome his proposal that it and the system should be examined by a Select Committee. It is right that, on a matter of this magnitude, the traditional way in which the House deals with it should be the subject of continuing scrutiny, and 1 would welcome such examination on behalf of the Government. He and my hon. Friend the Member for Tiverton asked whether the report was amendable. It is not. However, there is under section 61 the power to lay a supplementary report. I have no wish to mislead my hon. Friends and I must say, therefore that we have no immediate proposals to lay such a supplementary report. There will be no further increase orders. One of the advantages of the new system is that, instead of having the basic grant paid with the pay and prices inflation element paid subsequently under increase orders in later years, we shall pay at outturn prices throughout the year, and there will be no need in future years for increase orders. That is a major improvement. I turn next to a number of questions asked about the composition of the needs assessment that has been made. Something remarkable has happened tonight. My hon. Friend the Member for Reading, North said that today was just like every RSG debate. He will have noticed one essential difference. For the first time hon. Members have been able to discuss the way in which the assessment has been made and its ingredients. My hon. Friend the Member for Eastleigh said that he drank much black coffee over the recess while analysing the way in which the assessment had been made. If there is one major improvement, it is that out of that computer black box has now come the rate support grant assessments system, and it is now possible for hon. Members on both sides of the House to argue, criticise, discuss and contribute to the debate on the way in which the assessment is made. I hope that all hon. Members will recognise that that, in the words of The Guardian,"Mr. Heseltine's most important achievement is to bring light into dark places."
[Interruption.] I am sorry to disappoint hon. Members if they do not like that quotation, but it comes from a leader on this subject. My hon. Friend the Member for Eastleigh mentioned handicapped people. They are covered in a general category under the personal social services lump expenditure sum. I should like to clarify with him the way in which it is dealt with, but I can assure him that the funds are available to local authorities for helping handicapped people. I turn now to a matter that has concerned many of my hon. Friends, including my hon. Friends the Members for Tiverton, Wycombe (Mr. Whitney), who has raised the matter before, Rutland and Stamford (Mr. Lewis) and Eastleigh. It concerns the way in which the rent and the famous E7 indicator is compiled. My hon. Friend the Member for Tiverton discussed assessing it on a regional average rent. He took exception to the use of a region, and, while we argued about whether those regions were established by King Alfred, Sir John Anderson or Lord George-Brown, the reason why it was adopted was that in determining the fairest basis on which grant should be paid it was thought wrong that authorities should be able to attract extra grant because they charge a lower rent. For that reason, it assumes a regional average rent. A region was chosen as being an area that was not so large as to remove certain local characteristics, and not so small that if it were an average it could be distorted by one authority. Hon. Members wrongly implied that this system has been personally invented by my right hon. Friend the Secretary of State, and that he has determined every factor. He has the final responsibility for laying the determination before the House, but these factors are arrived at as a result of work throughout the year by a series of grants working groups and expenditure subgroups, which are comprised of local authority representatives and representatives of various Government Departments. The proposal on how the rent should be dealt with in the housing revenue account approach derived from a suggestion put forward by the Association of District Councils. The comments of my hon. Friends on this matter are serious and will have to be carefully examined. This area of the treatment of housing and the other ingredients—I hope all hon. Members will address themselves to the way in which the grant-related expenditure is calculated—will give an opportunity next year, for the first time, for a more constructive debate on the way in which the ingredients are put together. Another matter of great concern was discussed by my hon. Friends the Members for Fulham (Mr. Stevens), Hornchurch (Mr. Squire), Streatham (Mr. Shelton), Ilford, South (Mr. Thorne), Uxbridge, particularly in reference to the Hillingdon situation, and Putney (Mr. Mellor) in an impressive speech about the position in Wandsworth. My hon. Friend the Member for Putney was kind enough to comment on the discussion which I have already had with him and with others of my hon. Friends representing London constituencies. As a result of that, and having listened to the comments of other hon. Members in this debate, I recognise that London faces a difficult position this year. My hon. Friends have recognised that London has benefited in recent years from a shift of grant into London from areas outside London. The percentage grant that London has gained over that period has been worth nearly £300 million. This year, the settlement results in a switch back, on our estimate, of £100 million."is a further advance for democracy".
More.
That, of course, results in a problem for London. It also faces the problem that the rest of the country faces of the loss of the one percentage point as well. The hon. Member for Newham, South (Mr. Spearing) says that it is more than £100 million. It is more if the authorities are not able to spend at the levels that we have anticipated and forecast.
There is a basic misunderstanding here. I understand the concern expressed by a number of my hon. Friends about the budgeted intentions of ILEA and the possible consequences for London ratepayers. However, we have forecast in the rate support grant settlement that ILEA could receive a grant of £70 million if its level of expenditure were kept at 5.6 per cent.—not 25 per cent. as certain right hon. and hon. Members have suggested —below its 1978–79 level. My hon. Friend the Member for Putney quoted some figures of the falling school rolls in ILEA: 13 per cent. over the period, and up to 30 per cent. due in the next four years. If ILEA and other London authorities spend at levels way above that which we have forecast and make no attempt to match the volume targets that the Government are asking the whole country to match, the grant position will change. However, on the basis on which the previous rate support grant system was calculated of equalising the average level of service for the same rate in the pound, that is the natural consequence. I am not prepared to support a system such as the previous one in which certain authorities could, by higher spending, attract to themselves more grant, with that grant having to come from lower spending authorities which found that their grant entitlements were thereby reduced. I recognise the problems that will be faced this year. My hon. Friends have made the point most forcefully that, although there may be an argument for some shift back out of London to redress the balance, the problem is the speed at which it is being done and, of course, that of the safety net. We have constructed a safety net which, at the level of 8p, is not far out of line with the levels of safety nets which have existed in previous years, allowing for the 3p reduction following the 1 per cent. grant reduction. There is a further safety net of 5p against the consequences of overspending way above the levels indicated in the grant expenditure assessments. My right hon. Friend made it clear that it was fairly remarkable to have a safety net for overspending authorities. We thought it right in this year to have such a safety net. I listened carefully to my hon. Friend's comments. I do not want to mislead them. I make no promises tonight that we can change the level. But I understand the concern in London about it and, with the development of this grant, this is a matter that we shall want to take into account.The Minister has said that the ILEA would have got £70 million this year if it had kept its expenditure to certain levels. Does he agree that the grant-related expenditure for ILEA, as set out in the settlement, is £468 million and that that is £130 million less than the figure which would have attracted the £70 million grant? Is he not therefore deceiving the House and the country in suggesting that ILEA could ever have got near the GRE? Is he not also deceiving the House because the £70 million that he said ILEA could have got is itself £60 million less than it would have got under the old system if it had applied this year?
The hon. Member had better do his homework a little more carefully. He has confirmed to the House how far above the rest of the country is ILEA's expenditure compared with that of any other education authority. He is saying that, because ILEA's expenditure is so much higher, even allowing, as the formula does, for the full consequences of London weighting, ILEA should therefore have that much more grant, and that that extra grant should come from every other education authority. I am not prepared to defend that system.
The new system, for the first time, makes assessments on a comparable basis. If the hon. Member does his homework, he will find in the report and in the Blue Book the basis of the education assessment. He will find that that is how the assessment has been done. That puts the expenditure by ILEA into a different context.It just will not work out.
I enjoyed the advice of the right hon. Member for Ardwick on how to he a Minister. I thought that his speech today might be the prelude to a lesson in how not to be a Shadow spokesman. This is a complicated subject to master, and he is more impressive on housing. The right hon. Gentleman said that I had misled the House in saying that the money which came from the transitional clawback from certain authorities, which I said would not come back to the Government, would be available in the pool for other authorities. He said that I had misled the House because we had then announced a £200 million clawback on the main increase order.
I did not mislead the House. What I said was correct. The right hon. Gentleman is unfortunately confusing two different items. If he wants clarification he can check with his right hon. Friend the Member for Stepney and Poplar, who clawed back £50 million in 1976–77 under exactly the same arrangement that my right hon. Friend has used. The right hon. Gentleman was also under a misunderstanding about revised budgets. He will find that the inflation provisions were not taken into account. The new RSG system that we have put before the House,in its visibility and the opportunity that it offers to hon. Members for the first time to debate the ingredients, is a major step forward in methods of seeing how fairly the money can be distributed among local authorities. That visibility and opportunity for discussion are important ingredients in establishing the fairest basis on which public grant is distributed. The allegation by a number of hon. Members that it somehow interferes with the autonomy or freedom of local government is rubbish. The Government must be concerned about the fairest distribution of grant, but, once it is distributed, the basic freedom of local authorities remains unimpaired to determine the priority of their services and to fix their own locally raised rates contribution. The threat to local government comes not from the introduction of an improved system, but from those who do not care about the people they represent and who are more concerned with political dogma, events in certain local authorities and the determination to spend regardless of the impact on their areas. Ratepayers and employers will have to pay a very high price for that. The settlement is fair but tough. On that basis, I commend it to the House.Question put:—
The House divided: Ayes 304, Noes 240
Division No. 40
| [11.10 pm
|
AYES
| |
| Abse, Leo | Banks, Robert |
| Adley, Robert | Bell, Sir Ronald |
| Aitken, Jonathan | Bendall, Vivian |
| Alexander, Richard | Benyon, Thomas (A'don) |
| Amery, Rt Hon Julian | Benyon, W. (Buckingham) |
| Ancram, Michael | Best, Keith |
| Arnold, Tom | Bevan, David Gilroy |
| Aspinwall, Jack | Biffen, Rt Hon John |
| Atkins, Rt Hon H.(S'thorne) | Biggs-Davison, John |
| Atkins, Robert(Preston N) | Blackburn, John |
| Atkinson, David (B'm'th,E) | Blaker, Peter |
| Baker, Kenneth(St.M'bone) | Body, Richard |
| Baker, Nicholas (N Dorset) | Bonsor, Sir Nicholas |
| Boscawen, Hon Robert | Gray, Hamish |
| Bowden, Andrew | Greenway, Harry |
| Boyson, Dr Rhodes | Grieve, Percy |
| Braine, Sir Bernard | Griffiths, E.(B'y St. Edm'ds) |
| Bright, Graham | Griffiths, Peter Portsm'th N) |
| Brinton, Tim | Grist, Ian |
| Brittan, Leon | Grylls, Michael |
| Brooke, Hon Peter | Gummer, John Selwyn |
| Brotherton, Michael | Hamilton, Hon A. |
| Brown, M.(Brigg and Scun) | Hamilton, Michael (Salisbury) |
| Browne, John (Winchester) | Hampson, Dr Keith |
| Bruce-Gardyne, John | Hannam, John |
| Bryan, Sir Paul | Haselhurst, Alan |
| Buchanan-Smith, Hon Alick | Hastings, Stephen |
| Buck, Antony | Havers, Rt Hon Sir Michael |
| Budgen, Nick | Hawksley, Warren |
| Bulmer, Esmond | Hayhoe, Barney |
| Burden, Sir Frederick | Heddle, John |
| Butcher, John | Henderson, Barry |
| Butler, Hon Adam | Heseltine, Rt Hon Michael |
| Carlisle, John (Luton West) | Hicks, Robert |
| Carlisle, Rt Hon M. (R'c'n) | Higgins, Rt Hon Terence L. |
| Chalker, Mrs. Lynda | Hill, James |
| Channon, Rt. Hon. Paul | Hogg, Hon Douglas (Gr'th'm) |
| Chapman, Sydney | Holland, Philip (Carlton) |
| Churchill, W. S. | Hooson, Tom |
| Clark, Hon A. (Plym'th, S'n) | Hordern, Peter |
| Clark, Sir W. (Croydon S) | Howe, Rt Hon Sir Geoffrey |
| Clarke, Kenneth (Rushcliffe) | Howell, Rt Hon D. (G'Idf'd) |
| Clegg, Sir Walter | Howell, Ralph (N Norfolk) |
| Cockeram, Eric | Hunt, David (Wirral) |
| Colvin, Michael | Hurd, Hon Douglas |
| Cope, John | Irving, Charles (Cheltenham) |
| Cormack, Patrick | Jenkin, Rt Hon Patrick |
| Corrie, John | Jessel, Toby |
| Costain, Sir Albert. | Johnson Smith, Geoffrey |
| Cranborne, Viscount | Jopling, Rt Hon Michael |
| Critchley, Julian | Joseph, Rt Hon Sir Keith |
| Crouch, David | Kaberry, Sir Donald |
| Dickens, Geoffrey | Kershaw, Anthony |
| Douglas-Hamilton, Lord J. | Kimball, Marcus |
| Dover, Denshore | King, Rt Hon Tom |
| du Cann, Rt Hon Edward | Kitson, Sir Timothy |
| Dunn, Robert (Dartford) | Knight, Mrs Jill |
| Durant, Tony | Knox, David |
| Dykes, Hugh | Lamont, Norman |
| Eden, Rt Hon Sir John | Lang, Ian |
| Edwards, Rt Hon N. (P'broke) | Langford-Holt, Sir John |
| Eggar, Tim | Latham, Michael |
| Elliott, Sir William | Lawrence, Ivan |
| Emery, Peter | Lee, John |
| Eyre, Reginald | Lennox-Boyd, Hon Mark |
| Fairbairn, Nicholas | Lester Jim (Beeston) |
| Fairgrieve, Russell | Lewis, Kenneth (Rutland) |
| Faith, Mrs Sheila | Lloyd, Ian (Havant & W'loo) |
| Fell, Anthony | Lloyd, Peter (Fareham) |
| Fenner, Mrs Peggy | Loveridge, John |
| Finsberg, Geoffrey | Luce, Richard |
| Fisher, Sir Nigel | Lyell, Nicholas |
| Fletcher, A. (Ed'nb'gh N) | McCrindle, Robert |
| Fletcher-Cooke, Charles | Macfarlane, Neil |
| Fookes, Miss Janet | MacGregor, John |
| Forman, Nigel | MacKay, John (Argyll) |
| Fowler, Rt Hon Norman | Macmillan, Rt Hon M. |
| Fox, Marcus | McNair-Wilson, M. (N'bury) |
| Fraser, Rt Hon Sir Hugh | McNair-Wilson, P. (New F'st) |
| Fraser, Peter (South Angus) | McQuarrie, Albert |
| Fry, Peter | Madel, David |
| Galbraith, Hon T. G. D. | Major, John |
| Gardner, Edward (S Fylde) | Marland, Paul |
| Garel-Jones, Tristan | Marlow, Tony |
| Gilmour, Rt Hon Sir Ian | Marshall Michael (Arundel) |
| Glyn, Dr Alan | Marten, Neil (Banbury) |
| Goodhart, Philip | Mates, Michael |
| Goodhew, Victor | Maude, Rt Hon Angus |
| Goodlad, Alastair | Mawby, Ray |
| Gorst, John | Mawhinney, Dr Brian |
| Gow, Ian | Mayhew, Patrick |
| Gower, Sir Raymond | Meyer, Sir Anthony |
| Grant, Anthony (Harrow C) | Miller, Hal (B'grove) |
| Mills, Iain (Meriden) | Shelton, William (Streatham) |
| Mills, Peter (West Devon) | Shepherd, Colin (Hereford) |
| Miscampbell, Norman | Shepherd, Richard |
| Mitchell, David (Basingstoke) | Shersby, Michael |
| Moate, Roger | Silvester, Fred |
| Monro, Hector | Sims, Roger |
| Montgomery, Fergus | Skeet, T. H. H. |
| Moore, John | Speed, Keith |
| Morgan, Geraint | Speller, Tony |
| Morris, M. (N'hampton S) | Spence, John |
| Morrison, Hon P. (Chester) | Spicer, Jim (West Dorset) |
| Mudd, David | Spicer, Michael (S Worcs) |
| Murphy, Christopher | Sproat, Ian |
| Myles, David | Stanbrook, Ivor |
| Neale, Gerrard | Stanley, John |
| Needham, Richard | Steen, Anthony |
| Nelson, Anthony | Stevens, Martin |
| Neubert, Michael | Stewart, Ian (Hitchin) |
| Newton, Tony | Stewart, J.(E Renfrewshire) |
| Normanton, Tom | Stokes, John |
| Non, Rt Hon John | Stradling Thomas, J. |
| Onslow, Cranley | Tapsell, Peter |
| Osborn, John | Taylor, Teddy (S'end E) |
| Page, John (Harrow, West) | Tebbit, Norman |
| Page, Rt Hon Sir G. (Crosby) | Temple-Morris, Peter |
| Page, Richard (SW Herts) | Thatcher, Rt Hon Mrs M. |
| Parkinson, Cecil | Thomas, Rt Hon Peter |
| Parris, Matthew | Thompson, Donald |
| Patten, Christopher (Bath) | Thorne, Neil (Ilford South) |
| Pattie, Geoffrey | Thornton, Malcolm |
| Pawsey, James | Townend, John (Bridlington) |
| Percival, Sir Ian | Townsend, Cyril D, (B'heath) |
| Peyton, Rt Hon John | Trippier, David |
| Pink, R. Bonner | Trotter, Neville |
| Pollock, Alexander | van Straubenzee, W. R. |
| Porter, Barry | Vaughan, Dr Gerard |
| Prentice, Rt Hon Reg | Viggers, Peter |
| Price, Sir David (Eastleigh) | Waddington, David |
| Prior, Rt Hon James | Wakeham, John |
| Proctor, K. Harvey | aldegrave, Hon William |
| Pym, Rt Hon Francis | Walker, Rt Hon P.(W'cester) |
| Raison, Timothy | Walker, B. (Perth) |
| Rathbone, Tim | Waller, Gary |
| Rees, Peter (Dover and Deal) | Walters, Dennis |
| Rees-Davies, W. R. | Ward, John |
| Renton, Tim | Warren, Kenneth |
| Rhodes James, Robert | Watson, John |
| Rhys Williams, Sir Brandon | Wells, John (Maidstone) |
| Ridley, Hon Nicholas | Whitelaw, Rt Hon William |
| Ridsdale, Julian | Whitney, Raymond |
| Rifkind, Malcolm | Wickenden, Keith |
| Roberts, M. (Cardiff NW) | Wiggin, Jerry |
| Roberts, Wyn (Conway) | Wilkinson, John |
| Rossi, Hugh | Williams, D.(Montgomery) |
| Rost, Peter | Winterton, Nicholas |
| Royle, Sir Anthony | Wolfson, Mark |
| Sainsbury, Hon Timothy | Young, Sir George (Acton) |
| St. John-Stevas, Rt Hon N. | Younger, Rt Hon George |
| Scott, Nicholas | Tellers for the Ayes: |
| Shaw, Giles (Pudsey) | Mr. Spencer Le Marchant |
| Shaw, Michael (Scarborough) | and Mr. Carol Mather. |
NOES
| |
| Adams, Allen | Bradley, Tom |
| Allaun, Frank | Bray, Dr Jeremy |
| Alton, David | Brown, Hugh D. (Provan) |
| Anderson, Donald | Brown, R. C. (N'castle W) |
| Archer, Rt Hon Peter | Brown, Ron (E'burgh, Leith) |
| Armstrong, Rt Hon Ernest | Brown, Ronald W. (H'ckn'y S) |
| Ashley, Rt Hon Jack | Buchan, Norman |
| Ashton, Joe | Callaghan, Jim (Midd't'n & P) |
| Atkinson, N.(H'gey,) | Campbell, Ian |
| Bagier, Gordon A.T. | Campbell-Savours, Dale |
| Barnett, Guy (Greenwich) | Canavan, Dennis |
| Barnett, Rt Hon Joel (H'wd) | Cant, R. B. |
| Beith, A. J. | Carmichael, Neil |
| Bidwell, Sydney | Carter-Jones, Lewis |
| Booth, Rt Hon Albert | Cartwright, John |
| Boothroyd, Miss Betty | Clark, Dr David (S Shields) |
| Bottomley, Rt Hon A.(M'b'ro) | Cocks, Rt Hon M. (B'stol S) |
| Cohen, Stanley | Jay, Rt Hon Douglas |
| Coleman, Donald | John, Brynmor |
| Concannon, Rt Hon J. D. | Johnson, James (Hull West) |
| Conlan, Bernard | Jones, Rt Hon Alec (Rh'dda) |
| Gook, Robin F. | Jones, Barry (East Flint) |
| Cowans, Harry | Jones, Dan (Burnley) |
| Craigen, J. M. | Kaufman, Rt Hon Gerald |
| Crowther, J. S. | Kerr, Russell |
| Cryer, Bob | Kilfedder, James A. |
| Cunliffe, Lawrence | Kilroy-Silk, Robert |
| Cunningham, G. (Islington S) | Kinnock, Neil |
| Cunningham, Dr J. (W'h'n) | Lambie, David |
| Dalyell, Tam | Lamborn, Harry |
| Davies, Rt Hon Denzil (L'lli) | Lamond, James |
| Davies, Ifor (Gower) | Leadbitter, Ted |
| Davis, Clinton (Hackney C) | Leighton, Ronald |
| Davis, T. (B'ham, Stechf'd) | Lestor, Miss Joan |
| Dean, Joseph (Leeds West) | Lewis, Arthur (N'ham NW) |
| Dewar, Donald | Lewis, Ron (Carlisle) |
| Dixon, Donald | Litherland, Robert |
| Dobson, Frank | Lofthouse, Geoffrey |
| Dormand, Jack | Lyons, Edward (Bradf'd W) |
| Douglas, Dick | Mabon, Rt Hon Dr J. Dickson |
| Douglas-Mann, Bruce | McDonald, Dr Oonagh |
| Dubs, Alfred | McElhone, Frank |
| Dunlop, John | McGuire, Michael (Ince) |
| Dunn, James A. | McKay, Allen (Penistone) |
| Dunnett, Jack | MacKenzie, Rt Hon Gregor |
| Dunwoody, Hon Mrs G. | McNally, Thomas |
| Eadie, Alex | McNamara, Kevin |
| Eastham, Ken | McTaggart, Robert |
| Edwards, R. (W'hampt'n S E) | McWilliam, John |
| Ellis, R. (NE D'bysh're) | Magee, Bryan |
| Ellis, Tom (Wrexham) | Marshall, Dr Edmund (Goole) |
| English, Michael | Marshall, Jim (Leicester S) |
| Ennals, Rt Hon David | Martin, M(G'gow S'burn) |
| Evans, loan (Aberdare) | Mason, Rt Hon Roy |
| Evans, John (Newton) | Maxton, John |
| Ewing, Harry | Maynard, Miss Joan |
| Faulds, Andrew | Meacher, Michael |
| Field, Frank | Mellish, Rt Hon Robert |
| Fitch, Alan | Mikardo, Ian |
| Flannery, Martin | Millan, Rt Hon Bruce |
| Fletcher, Ted (Darlington) | Miller, Dr M. S. (E Kilbride) |
| Foot, Rt Hon Michael | Mitchell, Austin (Grimsby) |
| Ford, Ben | Mitchell, R. C. (Soton Itchen) |
| Forrester, John | Morris, Rt Hon C. (O'shaw) |
| Foster, Derek | Morris, Rt Hon J. (Aberavon) |
| Foulkes, George | Moyle, Rt Hon Roland |
| Fraser, J. (Lamb'th, N'w'd) | Mulley, Rt Hon Frederick |
| Freeson, Rt Hon Reginald | Newens, Stanley |
| Freud, Clement | Oakes, Rt Hon Gordon |
| Garrett, John (Norwich S) | Ogden, Eric |
| Garrett, W. E. (Wallsend) | O'Halloran, Michael |
| George, Bruce | O'Neill, Martin |
| Gilbert, Rt Hon Dr John | Orme, Rt Hon Stanley |
| Ginsburg, David | Owen, Rt Hon Dr David |
| Golding, John | Palmer, Arthur |
| Gourlay, Harry | Park, George |
| Graham, Ted | Parker, John |
| Grant, George (Morpeth) | Parry, Robert |
| Grant, John (Islington C) | Pavitt, Laurie |
| Hamilton, W. W. (C'tral Fife) | Pendry, Tom |
| Harrison, Rt Hon Walter | Penhaligon, David |
| Hart, Rt Hon Dame Judith | Powell, Raymond (Ogmore) |
| Hattersley, Rt Hon Roy | Prescott, John |
| Haynes, Frank | Price, C. (Lewisham W) |
| Healey, Rt Hon Denis | Race, Reg |
| Heifer, Eric S. | Radice, Giles |
| Hogg, N. (E Dunb't'nshire) | Rees, Rt Hon M (Leeds S) |
| Holland, S. (L'b'th, Vauxh'll) | Richardson, Jo |
| Home Robertson, John | Roberts, Allan (Bootle) |
| Homewood, William | Roberts, Ernest (Hackney N) |
| Hooley, Frank | Roberts, Gwilym (Cannock) |
| Howell, Rt Hon D. | Robertson, George |
| Howells, Geraint | Robinson, G. (Coventry NW) |
| Huckfield, Les | Rooker, J. W. |
| Hughes, Mark (Durham) | Roper, John |
| Hughes, Robert (Aberdeen N) | Ross, Ernest (Dundee West) |
| Hughes, Roy (Newport) | Rowlands, Ted |
| Ryman, John | Tilley, John |
| Sandelson, Neville | Tinn, James |
| Sever, John | Torney, Tom |
| Sheldon, Rt Hon R. | Varley, Rt Hon Eric G. |
| Shore, Rt Hon Peter | Wainwright, E.(Dearne V) |
| Silkin, Rt Hon J. (Deptford) | Walker, Rt Hon H.(D'caster) |
| Silkin, Rt Hon S. C. (Dulwich) | Watkins, David |
| Silverman, Julius | Weetch, Ken |
| Skinner, Dennis | Welsh, Michael |
| Snape, Peter | White, Frank R. |
| Soley, Clive | White, J. (G'gow Pollok) |
| Spearing, Nigel | Whitehead, Phillip |
| Spriggs, Leslie | Whitlock, William |
| Stallard, A. W. | Wigley, Dafydd |
| Steel, Rt Hon David | Willey, Rt Hon Frederick |
| Stoddart, David | Williams, Rt Hon A.(S'sea W) |
| Stott, Roger | Wilson, Rt Hon Sir H.(H'ton) |
| Straw, Jack | Winnick, David |
| Summerskill, Hon Dr Shirley | Woolmer, Kenneth |
| Taylor, Mrs Ann (Bolton W) | Wrigglesworth, Ian |
| Thomas, Dafydd (Merioneth) | Young, David (Bolton E) |
| Thomas, Jeffrey (Abertillery) | Tellers for the Noes: |
| Thomas, Mike (Newcastle E) | Mr. James Hamilton and |
| Thomas, Dr R.(Carmarthen) | Mr. Hugh McCartney. |
| Thorne, Stan (Preston South) |
Question accordingly agreed to.
Resolved,
That the Rate Support Grant Report (England) 1980 (H.C., 1980–81, No. 56), a copy of which was laid before this House on 16th December, be approved.
Resolved,
That the Rate Support Grant (Increase) Order 1980, a copy of which was laid before this House on 16th December, be approved.
That the Rate Support Grant (Increase) (No. 2) Order 1980, a copy of which was laid before this House on 16th December, be approved.
That the Rate Support Grant (Principles for Multipliers) Order 1980, a copy of which was laid before this House on 16th December, be approved.—[Mr. Heseltine.]
Rate Support Grant (Wales)
11·24 pm
I beg to move,
This is an important occasion. It is the first time that there has been a separate rate support grant for Wales, and this transfer of functions is a further significant advance in the evolution of the responsibilities of the Secretary of State for Wales. The rate support grant settlement each year is bound to be of major importance not just for the local authorities but for the Government and the country as a whole, The expenditure figures are huge, with a corresponding impact on public borrowing and taxation. The settlement is the main means of influencing the spending decisions of local authorities and ensuring that their expenditure is kept at a level that the taxpayer and the ratepayer can afford. At a time when we are seeking to reduce the burdens on productive industry and determined to ensure that the levels of inflation and interest rates continue to fall, it is especially important that local government plays its part in reducing total public expenditure. The settlement, then, must be considered from two points of view: how it contributes to overall economic objectives, and how fairly and effectively it distributes the rate support grant to the individual authorities. In initiating the new and separate RSG system in Wales I have been as anxious as the local authorities to ensure that there should be no disadvantage to Welsh authorities from the separation from England. Indeed, the object is to ensure that we can deal more sensitively with Welsh conditions. In the event, a number of features in the settlement are different in Wales, and these largely accord with views that have been expressed to me by the Welsh local authorities. One separate feature at present is that which allows for adjustment halfway through the financial year to take account of major changes in industrial rateable values, such as those caused by the closure of steel making at Shotton. However, that change did not affect the position in the current financial year, and so, as my right hon. Friend announced earlier today, arrangements are now being discussed with the local authority with a view to compensating Alyn and Deeside for the loss of rateable value this year. I explained in my earlier statement to the House that, in determining the total amount of Exchequer grant, we had to establish a separate relevant expenditure share for Wales—that is, the share qualifying for Government grant. This has involved a comprehensive review of expenditure programmes with other Departments, and I am satisfied that the results provide a fair basis for the start of the separate Welsh RSG system. What we have done is to base the aggregate Exchequer grant for Wales on the average level of grant received by Welsh local authorities as a whole in recent years. This was a fair way in which to allocate the overall grant for England and Wales between the two countries this year. In percentage terms, the amount of relevant expenditure allocated to Wales is 6·05 per cent. There is, of course, a reduction in relevant expenditure levels as part of the Government's plan to reduce local authority current expenditure. The 6·05 per cent. reflects a slightly smaller reduction in Wales than in England and is confirmation of my assertion that Welsh local authorities have been fairly treated. The Welsh share of grant amounts to 7·4 per cent.That the Welsh Rate Support Grant Report 1980 (H.C., 1980–81, No. 52), a copy of which was laid before this House on 16th December, be approved.
Will the Secretary of Stale confirm the figure which has been quoted in the Welsh press, from authoritative sources in the Welsh Office, that the sum total of the impact is to take away £54 million in one form or another from Welsh local authorities?
I shall be coming precisely to that point later in my speech.
My earlier statement gave the detailed figures for the Welsh settlement and I do not propose to review them tonight, except to mention that the domestic rate relief grant has been maintained at the existing level of 36p in the pound. I know that the decision to maintain the high level of domestic rate relief has been widely welcomed. Here I must correct various misleading interpretations of the effect of the settlement which I announced on 16 December, one of which has just been referred to by the hon. Member for Merthyr Tydfil (Mr. Rowlands). First, the level of aggregate Exchequer grants support for Welsh local authorities has not, as was reported, been reduced by more than the reduction in England. The fact is that grant for England and Wales as a whole has been reduced by 1 per cent., from 61 per cent. to 60 per cent., and the 73·4 per cent. grant for Wales is entirely consistent with this and exactly the same as the effective level would have been under the old, combined settlement. Secondly, the effect of this reduction amounts to a cut in the cash amount of grant of approximately £14 million on the volume of expenditure provided for in the settlement and not, as some have suggested, a cut of £50 million in cash support, or the figure just given to the House of £54 million. This reduction in the grant percentage has, I think, been confused with the quite different request by the Government to local authorities to reduce the volume of their total current expenditure in 1981–82. It must be clearly understood that no grant will be paid on expenditure in excess of the volume provided for in the settlement. It is vital that there should be no misunderstanding about these figures and what the Government expect local authorities to achieve. I shall spell it out for the hon. Member for Merthyr Tydfil. The Government's target for local authority current expenditure in Great Britain as a whole in 1981–82 is 3 per cent. below the target we set for 1980–81. To the extent that authorities do not reach the 1980–81 target, of course, a greater reduction will be needed in 1981–82. I am glad to say that Welsh authorities have made considerable efforts to achieve the target for 1980–81. I hope that these will continue. In this respect they are in a somewhat better position than their English counterparts. In real terms their target for 1981–82 is about 4½ per cent. below their revised budgets for 1980–81. I make no attempt to deny that it is not easy to secure reductions, but I do not believe that we are setting an unreasonable target. What we are seeking to do is to bring the volume of local authority current expenditure back to the level which authorities were spending about five years ago during the time of the Labour Government. I remind hon. Members that in the period 1971–72 to 1975–76 total local authority spending in England and Wales increased by around 27 per cent. Against that background, when we are dealing with a total reduction over three years of under 5 per cent. it is quite absurd to suggest, as some have, that we are about to see the complete destruction or devastation of local government services. Inevitably, since about 70 per cent. of all local government expenditure is accounted for by salaries and wages, it follows that, in securing the necessary savings, manpower levels will have to be reduced.May I return to the point I originally raised with the right hon. Gentleman? I understand the difference here. The whole point was not about the extent of the 14 million but about the impact of the withdrawal of the support of the Government grant and the cut in local government services. Is the £50 million-plus a figment of everyone's imagination or not?
We are not talking about the same thing. Withdrawal of support and the reduction of volume are not one and the same thing. Clearly, if we reduce volume and there is a percentage of volume provided by Government grant, there will be a reduction in the total of support. What I am saying is that the percentage reduction we are calling for produces £14 million and that, furthermore, we are calling for a total volume reduction of about 4½ per cent. over the period.
What I was moving on to—and I must press on because this is a short debate—is that, inevitably, since about 70 per cent. of all local government expenditure is accounted for by salaries and wages, it follows that, in securing the necessary savings, manpower levels will have to be reduced. Welsh local authorities have made a useful start to this process, and the latest figures published by the joint manpower watch group show that from the time we came into office until September 1980 they achieved a reduction of 4·2 per cent. in full-time employees. This is encouraging, but further and continuing progress will be needed on this front. I do not believe there are many people who seriously imagine that further substantial economies and improvements in efficiency are not possible, and, clearly, authorities have an obligation to improve efficiency where that is possible rather than reduce services.The right hon. Gentleman has spoken about increasing efficiency. What he means, in plain terms, is increasing unemployment and adding to the already considerable unemployment in the Principality. Can he say roughly what increase in unemployment will flow directly from the settlement?
I am not saying that. What creates unemployment is manning local government wastefully and therefore placing an unnecessary rate burden on local industry and commerce. That is the most destructive thing that one can do for employment in Wales.
I now turn to the way in which block grant has been distributed among local authorities in Wales. Hon. Members will by now, I hope, be familiar with the basic principles involved, full details of which are set out in the report. The underlying philosophy of block grant is, of course, the same in both England and Wales, but there are some differences in the detailed arrangements for Wales to take account of our particular circumstances and of views expressed to me during the last 12 months by the Welsh local authority associations. I think there are one or two points that we need to get absolutely clear. Block grant is a finite amount of money in support of local authority spending. It is, of course, provided wholly by the Government—in other words, by the taxpayer. Nevertheless, under the new system it still remains the responsibility of individual local authorities to determine their own spending decisions. This is their responsibility and they are, of course, fully accountable to their own electors for such decisions. I should like to correct the mistaken idea which seems to be held by some that the needs assessment system that I have introduced in Wales is not sensitive to local needs. In fact, the system that I have adopted to assess the grant-related expenditure—in other words, the spending needs of individual authorities—has been based on a great deal of work, discussion and co-operation over the last four years between the Welsh Office and local authority associations in Wales. Reports setting out the methodology that I have adopted have been published and are in the Library of the House. A large number of economic and social factors have been considered and incorporated in the system. The formula applied for assessing grant-related expenditure in 1981–82 are those endorsed by the Welsh Counties Committee and the Council for the Principality. The indicators that have been selected, in fact, reflect local needs and circumstances. Of course, any formula is capable of refinement, and I have agreed with the Welsh consultative council on local government finance that the formulae should be reviewed in advance of the 1982–83 settlement. As my right hon. Friend said when winding up the debate on the previous order, we now have a system in which the factors are clearly set out and therefore we can examine and debate them in a way that has never been possible before. I have also seen some speculation about whether the settlement that I have announced will result in substantial rate increases, and some alarming figures have been quoted. I think everyone knows that predictions of that kind, particularly before authorities make their rating decisions, happen every year and are pretty meaningless. But this settlement cannot be used as justification for very large rate increases. It is, of course, true that the Government's decision to reduce the grant percentage means that the share of relevant expenditure to be met by ratepayers will increase. In Wales the amount involved is about £14 million on the 1981–82 volume of expenditure. That, in relation to total grant of £871 million, is not justification for more than a very marginal increase. [Interruption.] The crucial factors—this is the point that hon. Members ignore—will be the determination with which the authorities seek to achieve the volume reduction that we are asking for—[interruption]—of about £50 million, and the assumption they make about cost increases together with their actual success in holding down their total wage bill. [Interruption.] If the hon. Member for Merthyr Tydfil spent less time in shouting from a sedentary position, he might hear the figures that I am giving to the House.Order. I must protect the hon. Member for Merthyr Tydfil (Mr. Rowlands) from himself. If he wishes to intervene, he must stand up and seek to do so.
rose—
Order. The Minister is not giving way. The hon. Gentleman will have an opportunity to make his point later.
I have given way more than once to the hon. Gentleman and he has not bothered to listen. I have set out figures. I dare say that, if he turns to one or two of his hon. Friends who have been listening to the debate, he will be able to get the answer.
As I was saying, none of these things provides justification for large rate increases. Any local authority that is determined to reduce the volume of its expenditure in line with our targets has it within its power not just to benefit its own ratepayers but, even more important, to assist the recovery of industry and of employment. Some local authorities are complaining that they are unable to spend the money that they would like to spend on various infrastructure improvements to attract industry, but by far the biggest service they could render industry and the unemployed would be to hold down their rate bills. Any local authority that decides to take the alternative course to the one based on economy that I am proposing, and instead decides to place unnecessarily heavy burdens on the ratepayers, will, within its own area, be taking a deliberate decision that it is prepared to risk driving away industry and damaging the job prospects of those it represents. There may be some local councillors who believe that they can put up rates—The Financial Secretary to the Treasury, speaking in Geneva today—I think he was giving a progress report on "Thatcherism" — is reported as having said that money supply is under control, that we shall have a tough Budget, and so on, but is it not a fact that there will inevitably be increases in the rates, and that if there are not increases in the rates, there will be massive cuts in the local authority services? Will the Secretary of State come clean and admit that this is the position that has been imposed on the people of Wales by the measures brought forward by the Government?
The hon. Gentleman is another hon. Member who clearly has not been listening to the debate. It has been made perfectly clear that we are calling for reductions in the volume of expenditure. I am suggesting that local authorities should bear in mind that, if they do not follow that course and instead decide to put up their rates, that will have damaging consequences for industry in their own areas. [Interruption.] If there are local councillors who believe that they can put up rates without incurring an electoral penalty and are encouraged in that view by the knowledge that their largest ratepayers—the industrial and commercial sector—have no votes, they will face that inevitable consequence.
I find it impossible to believe that any local authority in Wales will not recognise the paramount importance of minimising the rate burden on every business in its area. I have every hope that authorities will take full account of their responsibility in this matter and in framing their budgets will also take account of the fact that the level of interest rates and inflation is falling steadily. If Welsh authorities act responsibly in that way and reduce their expenditure in line with the Government's expenditure targets and cash limits, the average increase in domestic rates should be very modest indeed. Certainly it should be very much lower than the rate increases last April. In moving to the new system—indeed, to any new system—it is inevitable that some local authorities will gain and others lose grant relative to their position under the previous system. In some cases these changes are substantial, and for that reason I thought it right this year to introduce a ceiling on gains and a safety net on losses to mitigate their effect. The safety nets will not protect ratepayers from suspending decisions that local authorities may themselves take or from the reduction in grant percentage. This first RSG settlement for Wales is clearly one of exceptional importance. I am satisfied that in its allocation between England and Wales it is fair and it is necessary if we are to achieve our economic objectives. The new block grant system provides a fairer distribution of grant and takes account of all the most important factors that affect expenditure on local authority services. It is sensitive to local need, and, unlike the old system, it is not simply based on past patterns of expenditure, repeating them whether or not they are justified. at the expense of other local authorities. It is now up to every local authority in Wales to make a contribution to our efforts to reduce public sector spending. These reductions are essential if we are to secure lasting improvements in the productive capacity of the economy. I urge local authorities in setting their budgets to give top priority to keeping the rate increases down to the irreducible minimum which will not only help domestic ratepayers but, more importantly, industry and commerce, which provide employment and create the wealth without which there can be no services at all.11.47 pm
As an early advocate of a separate Welsh rate support grant settlement, I was at first sorry that I was not able to be present on 16 December. However, on reflection, I do not believe that I missed a great deal. On the first Welsh rate support grant settlement, instead of its being an occasion for celebration and joy, we see a Government who have missed a glorious opportunity and delivered a further blow to the quality of life in Wales and employment.
The settlement and the statements that the Secretary of State made on 16 December will result in considerable rate increases, no matter what he says. They will be increases that domestic ratepayers are being asked to bear at a time when the Government are expecting workers to accept lower wage increases and consequently a reduction in their living standards. Similarly, when industry is reeling from the effects of other Government policies, the reduction in rate level will inevitably push up rates, and industry will again have to bear its share of the burden. Secondly, as a consequence of the rate support grant settlement, council rents will considerably increase. Council tenants will have to meet large increases in rents and rates. Thirdly, in passing, let me mention that, on 16 December, the Secretary of State ensured that, by reducing the amount of money for local government capital expenditure, house building would virtually come to a stop in Wales in the next year or so. All in all, the new Welsh rate support grant did not get off to a good start, but that is what most of us expected from the Government. Most domestic and industrial ratepayers want to know what size of rate increase they are likely to face next year. The Secretary of State said that if, all councils followed the Government's rules, there would be a very modest increase. Those who are more experienced than the right hon. Gentleman in local government in Wales express contrary views. The leader of the West Glamorgan county council predicts rate increases of 26 or 27 per cent. The leader of Mid-Glamorgan predicts increases well above 20 per cent. The chairman of the Cardiff city finance committee has talked of hefty rate increases and the financial adviser to the Welsh counties committee envisages domestic rate increases of 30 per cent. and non-domestic rate increases of 22 per cent. I do not believe that the Secretary of State's estimate of a very modest increase can bear much examination in the light of the views of those people, who have devoted years of their lives to local government. I accept that the estimates are early estimates, made while local authorities are wrestling with what I regard as the impossible task of seeking to preserve services in order to protect their people while containing rate increases. At the same time, the Government are cutting even further their support of local government services.The right hon. Gentleman mentioned West Glamorgan, Mid-Glamorgan and Cardiff, all of which are Labour-controlled authorities. Does he think that they are being unduly pessimistic? At a time when all private industry is having a desperate battle and has to bear considerable burdens, does the right hon. Gentleman believe that local government should be the only section that is exempt from any economies?
I do not know where the hon. Gentleman has been for the past two years. Since the Government have been in power, local government has suffered from blow after blow delivered by them. The increase in rates that the RSG settlement brings about will add a burden to industry in Wales.
My hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) challenged the Secretary of State to justify the figure of £54 million, which has been widely quoted. All we got from the Secretary of State in a rather coy reply was a percentage figure, though he put a cash figure on the effect of the reduction of grant of £14 million. But it is not only the reduction in grant and the cut in the income of local government of £14 million which matter to local authorities. They are also desperately concerned with the cut in expenditure which, according to the best estimates, will be about £40 million. Local authorities are having to reduce services or increase rates to meet not only the £14 million, but an additional sum of about £40 million. It is not easy for the Opposition to put exact figures on the cuts. It is not always easy for a Government to do so, but I hope that the Under-Secretary will put cash figures on the effect of the loss of rate support grant and the reductions in expenditure that directly affect the services provided by local government and the quality of life of the people of Wales.The right hon. Gentleman is acting as an effective loudspeaker for the concern that has been expressed by local authorities in many quarters, but I hope that he will tell the House his policies and will state precisely what rate support grant he would have effected if he had been in office. If he says that it would be more than my right hon. Friend has delivered, I hope that he will say where he would have got the money. Would it have come from increased taxation, with its consequent effects on industry and the low paid?
The Government have been most wasteful with money, especially in relation to Wales. Since they came to power, 50,000 more people in Wales have become unemployed. That has added £250 million to the public sector borrowing requirement. In the last 12 months of the Labour Government, unemployment fell month after month. Many people would like to return to the level of unemployment that prevailed when we left office. For the Government and the Seceretary of State to express the view that the cuts inherent in the measure can be implemented by cutting services or increasing rates is living in cloud-cuckoo-land. It might have been possible to have dealt with it that way if we were talking of cuts for one year only, but we are talking about cuts being imposed year after year. According to the Secretary of State this afternoon, further reductions are envisaged between 1982 and 1984.
The Secretary of State indicated that local authorities had made a useful start in reducing their staff levels. The returns show that from September 1979 to September 1980 local government staff were reduced by 4,500 full-time or full-time equivalents. That is about 3·8 per cent. But the education service staff were cut by 11·1 per cent. and social services by 4·9 per cent. Those services are heavily dependent upon manpower for the quality of service that they provide. Anyone who discusses these matters with local authorities, local authority associations, or even travels around Wales, knows that the standard of service is bound to decline under the provisions of the order. We all know that in many parts of Wales house building will be at a standstill. Letters from county councils received by our constituents show that social services are being reduced throughout Wales. As we drive around Wales we see that street lighting is turned off, our roads are unswept, and many of them need attention. If anyone believes that the rate support grant settlement can help to solve those problems, he is most certainly wrong. The Secretary of State said that the savings could be made by pruning administration and improving efficiency. If he genuinely believes that, I suggest that he spells out in detail to local authorities in Wales how they can improve their efficiency and what part of their administration can be pruned. He should not hide behind the vague concept of improved efficiency. If he cannot tell them precisely how to make savings without reducing services or increasing rates, he should issue a press statement in the form of a public confession to the people of Wales that he accepts responsibility for the reduction in services on which so many people in Wales depend. An important element in the rate support grant is the level of housing subsidies. On 10 December the Secretary of State told the Welsh Grand Committee that he was consulting local authority associations before deciding the level at which to pitch the local authority contribution of between £2.50 and £3 per week. He has gone as close to the maximum as possible. It is a euphemism to call it a local authority contribution. It is a 40 per cent. rent increase for council tenants. Next year they will pay the weekly rent increase of £3.25 and, on average, an increase in rates of 46p, making £3·71. That is an excessive jump for council tenants to pay at the same time that the Government are asking them to accept lower levels of wage settlements. On 16 December the Secretary of State referred to domestic relief. He said that it was right to maintain the 36p domestic relief this year. I agree with him. It is right to maintain it this year, but it will be even more important to do so next year. The Government have decided to make no new orders under the Water Charges Equalisation Act, which is another way of saying that Welsh ratepayers will lose £3 million per annum. That is equivalent to a 10 per cent. increase in water bills. If there are to be no new orders under the Act and no new system is to replace it, that is an additional reason not merely for preserving the Welsh domestic relief differential, but for restoring it to its original value. My main criticism of the order concerns the size of the cake, the extent of the settlement. The distribution seems at the moment to be attracting far less criticism. We shall certainly need to examine the distribution authority by authority in cash terms before we can come to a sensible conclusion on it. I understand that the Secretary of State for the Environment is publishing figures for each local authority in England, and I hope that when that has been done the Secretary of State for Wales will publish his corresponding figures. Hon. Members would then see the cash impact on the authorities in their constituencies. I recall the criticisms of the old regression analysis system. As a Minister I was told that it was too complicated, that it was difficult to understand and that everyone was looking forward to a new and simple system. Whatever the qualities of the new system, no one can say that they include great simplicity. It is almost as complicated as its predecessor, if that is possible. I welcome the concept of the safety net, but the levels pitched will not give the necessary protection in the first year of transfer to the new block grant system. If provision has been made in the order to give protection through the safety nets for 21 out of the 37 district councils and for three out of the eight county councils, does that not suggest that the formula for devising the grant related expenditure is inadequately devised, certainly to meet the needs of district councils? I adopt the same approach to the threshold as do my right hon. and hon. Friends representing English seats. It is a method of penalising big spenders. However, it is a blow to the whole concept of local democracy. As the Government claim that they have a mandate, so do local councils and councillors have a mandate to protect the interests of the people who elected them. This rate support grant will make that task not only more difficult but, in many cases, impossible. The Secretary of State for the Environment said this afternoon that the Government, through their rate support grant system, were extending the local authorities' discretion beyond their wildest dreams. I do not know what sort of dreams the Secretary of State has, but in Wales the local authorities' dreams are turning into nightmares. The Secretary of State for Wales is responsible for this miserable and miserly rate support grant order. Since he bears that responsibility, I ask my right hon. and hon. Friends to vote against it tonight.12.4 am
I am terribly disappointed. A moment ago I gave the right hon. Member for Rhondda (Mr. Jones) an opportunity to say at the Dispatch Box what he and his right hon. and hon. Friends would have done if they had been in power. One would have thought that the right hon. Gentleman would leap at such a marvellous opportunity to bring forward the panacea for local government that we are waiting to fall from his lips. We have not heard it, however, and I suspect that we shall not hear it from Labour Members in this debate, because they do not know what they would have done had they been in Government. It is a great shame that the right hon. Gentleman has not been a little more generous and helpful, as he usually is. He has been particularly miserly this evening in not giving some credit to my right hon. Friend for having introduced a system that is designed to simplify the concept of rate support grant.
We may argue, with the benefit of hindsight, once the system has been given an opportunity to work, whether it has simplified the matter. The right hon. Gentleman and I talked about that in the Tea Room shortly before this debate. I shall not be diverted by my disappointment in the fact that the right hon. Gentleman did not buy me the tea. We were both equally bemused by some aspects of the system, and I am sure we shall have to examine it carefully. I was sad about the clamour from the untainted virgins on the Labour Benches when they acted as the sounding board for the concern that has been expressed by local authorities. I suspect that they should have allowed us to understand that they have a little more knowledge in these matters than they would purport to show in their exclamations. They have only to look into the history of the Labour Government to realise that this Government have not been doing anything new. This system is more comprehensible to local authorities, and they will be in a better position to judge their future. I welcome this new system cautiously for two reasons. First, it has to be seen to work in the light of experience. Secondly, I was greatly encouraged in the previous debate by the comments of my right hon. Friend the Minister, who seemed to be on the verge of satisfying the aspirations of many Conservative Members, in that we thought we were to have an announcement that the whole of the existing rating system was to be scrapped and that the domestic rate would be abolished. He did not quite reach that point, but I was encouraged because obviously that matter is being actively considered. This debate may be largely academic, because perhaps in a year or 18 months we shall see this system swept away, abolition of the domestic rating system, and a far more equitable system in its place. I turn now to whether sparsity has been adequately catered for within this framework. I say that with reference to my county of Gwynedd. There is no doubt that there was great need to remedy the problems and inequities of the previous system, particularly in rural areas such as Gwynedd. Over the years from 1974–75 to 1979–80 there was a reduction in the rate support grant for rural areas of about 10 per cent. Even within Wales as a whole, we can see that same prejudice against rural areas. I have with me figures that show the increase in grant between 1974–75 and 1979–80. Dyfed had an increase of 45 per cent.; Gwynedd, 68 per cent.; Powys, 59 per cent.; West Glamorgan, 63 per cent.; Clwyd, 64 per cent.; Gwent, 66 per cent.; South Glamorgan, 69 per cent.; and Mid-Glamorgan, 84 per cent. Those figures appeared in a memorandum produced by a very much respected former chief executive of Gwynedd, Mr. Alan Jones, who is now the Local Government Commissioner for Wales. Those who knew him in his former capacity will all pay tribute to his excellent work in Gwynedd. The memorandum was an enclosure to a letter dated 11 September 1979, and the opening sentence reads:I am encouraged, from Mr. Jones's point of view, to discover that one aspect found its way into that memorandum, which was the difficulty of the emphasis placed upon single-parent families, which was quite disproportionate to the burden that they were on local authorities. That has found its way into page 40 of my right hon. Friend's publication "Local Government Finance", and I am glad that that idea has been taken on board. The aspect of sparsity has still to be looked at very carefully. After reorganisation of local government in 1972, there was a welcome introduction into the formula in that a calculation was made for population in a rural area where there were more than three acres per head of the population. But, alas, that was changed. It was changed not by this Government but by those Opposition Members who are now whiter than the driven snow. It was they who in 1976–77 changed the system, one might say immediately to the benefit of all because sparsity was made an element in the calculation but, unfortunately, for all local authorities in Wales so that everyone benefited from it; in other words, it might have been forgotten about altogether. That was a retrograde step. In this new system, one sees certain factors which encourage one to believe that sparsity is being taken into account. I refer to the population density factor, the coastline factor, the hectares per person factor and the weighted road length factor. I stress again, however, that I shall want to see this in operation before commenting finally upon it. I shall be interested to know why a hectarage per person is not included for people who are aged over 65. My impression is that that will militate against rural areas into which people of retirement age come to live out the afternoon and evening of their lives. I hope that my hon. Friend can assure me about that. I regret that the present system does not include other factors that should be taken into account, especially in rural areas such as Gwynedd. Tourism is one of them, with all its additional burdens upon local authority services. Bilingual education is another, and I do not see that featured in the White Paper, especially in an area where 70 per cent. of the people are Welsh speaking. The final factor is that of low average household incomes. There is some concession made to that in the social factor, but I hope that my right hon. Friend will take all these matters into account. I hope that my fears are unjustified and that all will come right. I hope also that my right hon. Friend will pay heed to these comments, at the same time dismissing the comments of the Opposition, who have shown themselves strangers to the truth. I trust that they will not adopt that stance in the future."In recent years, Gwynedd County Area has suffered a significant reduction in its share of the needs element of the Rate Support Grant distributed in England and Wales."
12.14 am
I am pleased that for the first time Wales is being treated separately under the new system. I recognise that, overall, Wales has come out of the spending cuts better than England, but it is still being forced to accept cuts of nearly 2 per cent., and we ask ourselves why we should. The main reason for the cuts is that the Government have failed to control their own spending. Their borrowing has gone way over target. On the whole, local government has overspent remarkably little, yet the Government are ignoring the beam in their own eye to criticise the mote of local government overspending.
The new system is just as complex and difficult to understand as the old one of regression analysis which it replaces. There are 48 separate pieces of analysis in the computation of the new grant-related expenditure on which the grant is now to be based. Some of the weightings and averages on which the calculations are based seem very arbitrary. Rural counties such as Dyfed, my own county, feel that insufficient account has been taken of the problems of sparsity. With a population of 325,000, we have 400 schools to maintain and 4,500 miles of non-principal roads, as well as all the other services necessary in an area of 2,200 square miles. Because the new grant is still too biased towards population factors, it is badly short in certain areas; for example, the capital allocation. It is also regrettable that councils which have followed the Government's spending guidelines are sometimes being penalised more than those which have overspent because of the population bias in the grant award. What is particularly disturbing is the way in which the Government are using local government to do their own dirty work in cutting public expenditure. Local decision-making is being nullified by central financial controls, and local government is becoming a rubber stamp. The danger is that the good people will no longer see the point of getting involved in local government when giving up their spare time only means being lackeys for London. Devolving power to the people of Wales is long overdue. There is also a need to look once again at local government organisation. Many of the previous reforms can now be seen to been misguided. I hope that the Under-Secretary will assure the Welsh people tonight that the Government will have another look at local government reorganisation. It is particularly galling that the Government should be forcing cuts in housing and services at the same time as so much money is having to be poured into their own brainchild of reformed local government. Tackling these fundamental problems might lessen the impact of the cuts on the short end of local government services. Hon. Members on both sides are responsible for creating the new system, but the ratepayers are worried about the rate demands that they will get later in the year. The Secretary of State has tonight given us an assurance that this year's increase will be less than that of last year, but we listened to the right hon. Member for Rhondda (Mr. Jones), and he said that the increases would be substantially higher this year. Tomorrow morning the people of Wales will be baffled. They will discover that the two leading politicians in Wales have made statements contradicting each other.What about the right hon. Member for Cardiff, West (Mr. Thomas)?
We live in a welfare society, and I hope that at the end of the day the people of Wales will II not be denied services as a result of the Government's policies.
12.20 am
This debate is a notable occasion for Welsh local government, because we are discussing the first decisions to be taken by a Secretary of State for Wales on the amount of grant to be given to Welsh local authorities.
I have several reasons for taking a particular interest in the debate. First, in response to my written question my right hon. Friend the Secretary of State announced the important decision on local government expenditure and its transfer to the Welsh Office in 1979. Secondly, I represent a widespread and varied constituency, and I have some basis on which to compare the effects of these decisions on both industrial and rural areas. There may be an hon. Member who can surpass the count of three county councils and five district councils in his constituency, but I doubt it. The county of Powys—the main county council in my constituency—is well recognised as being a county that throws out the most freakish results when the local authority's needs element is analysed by multiple regression analysis. When our needs were assessed on the basis of England and Wales, the other freak was the Isle of Wight. At least that district is compact. My right hon. Friend is to be congratulated on maintaining the special recognition of distinctive Welsh needs, and that is reflected in the substantially lower rateable values in Wales compared with England. We cannot reasonably escape the need for Government economy in the present circumstances, but the Welsh block grant amounts to 73·4 per cent., compared with 59·1 per cent. for England. Anyone who studies the report of the distribution subgroup of the Welsh Consultative Council will pay tribute to the scale of the study that has been made to establish the distinctive criteria for distributing the grant to both districts and counties. In the first year, one result of the work has been a classification of the Welsh councils into a cluster of districts ranging from those, for example, with densely populated areas and a high level of social deprivation to those with sparsely populated areas. It is right that the first group should include councils such as Blaenau Gwent, Merthyr Tydfil and Cynon Valley. I refer to three district councils as I am familiar with their problems because my constituency extends into them. I am dismayed that our hopes that a separate Welsh analysis would highlight the financial problems of sparsely populated areas have not been realised. I agree with my hon. Friend the Member for Anglesey (Mr. Best) and the hon. Member for Cardigan (Mr. Howells) on that point. We must be grateful that the safety net concept continues to protect rural areas from the computer's analysis. Are the Government satisfied that analytical techniques are reliable, given that they must considerably modify the effects on sparsely populated areas? Do we in Mid-Wales imagine a problem that does not exist? That is hard to credit, since my right hon. Friend has acted to protect us from the computer's findings. He appears to have the sympathy of all the Welsh local authorities. My right hon. Friend said:I infer from those remarks a recognition that we have not yet got the formula right. I cannot look for simplicity in whatever formula we adopt. We must balance the needs of many varied areas. It is clear that we have not got the solution right. Hon. Members from Dyfed and Gwynedd have made their voices heard, and I add my voice on behalf of Powys. Our problem is that of sparsity of population. The county has the lowest density of population of any county in England and Wales. Only 100,000 people live in 1¼ million acres—that is 16 times the area of a typical authority with 100,000 people. The costs of many services are increased in such an area. Examples are school transport, roads, and the siting of fire engines. It is no wonder that the county is providing below average services in public transport, refuse collection, leisure centres and subject choice in secondary schools. Those are a few from a long list. At both county and district level we have an excellent level of manpower watch statistics. Prudent councillors found it deeply irritating that their councils suffered with the profligate councils when the old system forced sudden savings on the overspenders and the prudent alike. That is a transitional problem which cannot occur again now that a reformed system is operating. The rural areas contain careful spenders of their own and public money. We ask for criteria that reflect the costs of sparse population. I hope that my right hon. Friend the Under-Secretary of State will ensure that our plea on the sparsity factor will be met when the next debate on this matter occurs in a year's time."the local authorities feel that there may be room for further refinement to deal with the particular problems of Powys, and they have asked us to examine the whole matter again during the coming year. We shall be consulting the local authorities generally about Powys then."—[Official Report, 16 December 1980; Vol. 996 c. 245].
12.28 am
In view of the time, I shall curtail my remarks. I put on record my fundamental disagreement with the Government's approach to public expenditure. Their idea is that by cutting local government expenditure savings will be made for the central Exchequer and the public sector borrowing requirement, but all the evidence points in the other direction. By cutting local expenditure there will be an increase in the PSBR. It costs an average of £6,000 to keep a man on an average wage and with a wife and two children in the first year that he is out of work. That represents an increase of £6,000 for the Exchequer.
Only last week figures showed that about 500 teachers' jobs had been lost in three or four Welsh counties. That means a loss of the 60 per cent. support grant, which amounts to £4,000. That means that the Government face an increase in their own expenditure because of redundancies in local government. That is fundamental, and the Government should take it on board. I deal next with the implications of local government expenditure cuts on the county of Gwynedd. I have been asked to do so by my local authority, which is extremely disturbed. In Gwynedd, for a mixture of geographic, economic and historic reasons, public expenditure plays a major role on the local economy. About 40 per cent. of jobs in Gwynedd are directly or indirectly in the public sector. That compares with an average of about 25 per cent. in Britain in general. The reasons for that preponderance of public sector jobs include the existence in Gwynedd of major institutions of education, such as the university college in Bangor, the normal training college, Coleg Harlech and similar institutions, the major stake in electricity generation, with two nuclear power stations and pump storage schemes, the importance of the tourist industry, which has to be manned well in excess of the needs of the base population, the railway and port links with Holyhead and the military bases. They all lead to high public expenditure. Inevitably, any cuts in public expenditure have a disproportionate effect. In Gwynedd, between 1976 and 1980 there was a reduction in real terms in the rate support grant from £28.5 million to £23.9 million—over £4 million. That has already taken place. It was a greater percentage reduction than that suffered by any other county in Wales over that period. The net effect of having to absorb those real costs over five years is that there is little fat or waste left that can be cut out. The county council is facing the reality of having to cut services or have a substantial rate increase. Any cuts in 1981–82 will be real and will not be absorbed by administrative trimmings of overheads. Inevitably, they will impinge upon services that are enjoyed by the public. Only a few months ago, in anticipation of the Government's demands for cuts, Gwynedd county council set up a study team to ascertain the implications. It came to the conclusion that the sort of cuts that would be needed to achieve a £3 million or £4 million reduction in expenditure might involve closing down old people's homes, closing a college of further education, drastically reducing services such as home helps, and the possibility of losing up to 300 jobs, many of them being road workers' jobs. That is in an area where unemployment is ranging between 13 and 20 per cent. The alternative is to seek an extra £3 million to £4 million from the rates. That would involve a 40 per cent. rate increase instead of the 20 per cent. increase that would cover inflation alone. It is as unacceptable to the ratepayers to have 40 per cent. rate increases as it is to the old, the weak, the very young and the infirm to find that their services are being cut. I turn to the detail of the rate support grant settlement for 1981–82 that is proposed in the White Paper of 16 December. Obviously we welcome the new structure, which should gear itself more accurately to the Welsh context. I hope that there will be an opportunity to review the structure in greater detail next year. Perhaps we shall have a debate in the Welsh Grand Committee as well as debates of this sort on the detail of the formula. We welcome the change from the rigid approach embodied in the old structure. However, many factors have not been taken into account, such as bilingualism, the cost of tourism and the fact that weighting is given to the population aged over 65 years and not to the population aged over 75. In the English formula, people over 75 are taken into account. That age group is much more relevant to the costs of social services than is the over–65 age group. I ask the Secretary of State to take that on board and to consider it. The level of the population in Gwynedd aged over 65 is 20 per cent. higher than the average for Wales, and for those over 75 it is 25 per cent. higher. There is also the question whether the TPP or the TSG should be considered in the global distribution now that we have a formula for Wales. I suggest that for items such as transport services and the police there should be a secondary indicator relating to enhanced population, including the elements that arise in the summer, apart from the base population. An enhanced population entails increased costs. I deal next with the detailed allocation of grant between local authorities within Wales. I regard the total allocation to Wales as inadequate. We have a £696.7 million block grant for 1981–82, and the manner in which that grant has been distributed must be questioned. It is clearly the belief of the Welsh Office that the new formula for the determination of the grant-related expenditure that is outlined in appendix 8 to the White Paper is a logical and scientific basis on which to distribute the grant. On the basis of the formula, £897 million is identified as grant-related expenditure for county councils, and £188.5 million is the corresponding figure for district councils. That makes a total of £1,085·5 million, and provides a distribution of 82.63 per cent. to counties and 17.37 per cent. to to districts. However, the breakdown of the actual expenditure that has been accepted by the Welsh Office of £696·7 million reveals not the £576 million that will be expected by the counties, but £566 million. There has been a reduction in allocation to the counties of about £10 million. I shall be grateful to the Under-Secretary of State if he will explain why that has been done if we have a logical and acceptable system. Secondly, in relation to the use of the grant-related expenditure formula in the report, there follows from what I have said that table 8.4 indicates that Gwynedd requires a grant-related expenditure of £77·87 million out of a total of £897 million for Wales, or 8·68 per cent. of the total county allocation. In fact, what we are to have in Gwynedd is less than that. Applying those percentages, we find that Gwynedd comes out, instead of the £50 million that we should expect on the basis of the Government's logic, at £47·3 million. We see that from table 10·1. That is £2½ million less than the Government's formula would justify. On what basis do the Government feel that Gwynedd should be cut back by £2½ million, against the logic of their own formula? The result is that the ratepayers in Gwynedd will have to face a much more substantial increase or—and this is what I fear—the basic services to which I have referred, services for the aged, the sick, the infirm and the very young, will be cut. Those are detailed points, and there are others that I should have wished to put. On page 9 of the White Paper the Secretary of State says that there is no upward cut-off for the counties. It beats me, therefore, to understand why we now have the prospect of losing this money in Gwynedd. The formula has justified £50 million, but we are to have substantially less. I hope that we shall have a detailed explanation of that. If a mistake has been made in the calculations at the Welsh Office, I ask the Under-Secretary to give an undertaking that he will look again at the matter and ensure that Gwynedd has a fair deal out of the settlement.12.36 am
The Government are running scared of the local authority elections this coming May. They fear that certain English and some Welsh counties— the shires, as they are affectionately called—will be Labour dominated, and this despite the fact that the 1974 local government reorganisation, at least in Wales, had been so arranged that such a catastrophe was as impossible as snow in the Congo delta.
My experience as an elected member of a county council has made me realise—and realise above all during the existence of the present Administration—that our Labour-controlled councils take political decisions and make absolutely sure that officer and managerial decisions are given less dominance than hitherto requested. Unless Labour-controlled councils are prepared more and more to defend our decisions, we shall have to bear the consequences of more and more decisions taken by faceless and non-accountable men who are managers, who in many quarters have developed a technique to be extremely mindful of their own instead of involving themselves in the true duties of being custodians for the community, be that in education, welfare, transportation or the varying forms and demands of housing. The Secretary of State for Employment said that, on average, local authority employees were being reduced by 15,000 a quarter, and these reductions were natural wastage. But no—some of them were just adding steadily to the ever-climbing graph towards the 3 million unemployment mark. The people left in local government, particularly those in high positions—this certainly applies to county and borough treasurers—are being left with almost unparalleled headaches after the announcement on 16 December. But soon the figures will be worked out. There will have to be X million cuts in education, Y million cuts in provision for social services for the less fortunate, and Z million cuts in what is spent on highways, with a far greater load, both numerically and in gross tonnage, on many dangerous stretches of road such as we have particularly in the western part of Wales. Whatever ingenuity the county and borough treasurers use, as their computers whirr and their calculators click away to add to the variations and imponderables, there will be the fact that wage increases cannot possibly be contained to 6 per cent., as more and more fiscal pundits plump for an inflation rate of at least 13 per cent. rather than an increase in living costs in single figures. Unless standards are to be decimated and the less fortunate made to suffer, there will have to be substantial rate increases, far more penalising than the figures that the Minister envisaged today. It has been truly astounding recently to listen to Conservative Ministers castigating their Labour predecessors, saying that we have far too many public sector houses in Wales. Yet waiting lists grow longer and longer. Families are now made doubly miserable as so many of their young fathers are out of work and these families are forced to live in one room—or perhaps two rooms, with the two small children sharing not just a bedroom, but actual sleeping accomodation, with the parents, and possibly the two elder children having to share a bedroom with the grandparents. Dr. Cronin, who died last week in Lausanne, wrote about conditions in Wales 50 years ago in his famous book "The Citadel". Things have not changed very much since then. Elderly people are struggling to make ends meet in one or two-roomed local authority bungalows and ground floor flats. They cannot look after themselves. Family life is no longer the backbone of Welsh society. Men and women are queuing up for part 3 accommodation in old people's homes. When young couples have private accommodation, the fair rent officer is a very busy individual indeed, certainly in West Wales. Getting landlords to carry out essential repairs amounts to getting blood from a stone. Some families are allowed to use only the front door. It is a very poor state of affairs and very poor hygiene when clean under-clothing for untrained infants has to be carried through the very front door through which the coal is also carried in. There is no privacy. This means that for the slightest bad behaviour, in soccer terms the yellow card is shown, then the red card and finally, if the transgression continues, people are thrown out. Absenteeism among small children at school is very high and educationally these young children suffer for the rest of their lives. There are more chesty, wheezy, children in the valleys of South-West Wales than practically anywhere else. If hon. Members want evidence of these figures the pharmaceutical firm of Parke-Davis will provide it. In his recent speech to the Welsh Grand Committee the Under-Secretary called for the building of special houses for those whose physical condition makes it impossible for them to gain any worthy degree of independence. But what better day is there to come? Matters will deteriorate. Although the number of elderly persons over the age of 65 will, in 10 years, still be around 9·75 million, the number over the age of 75 will have increased by nearly half a million. We are ignoring the vast problems that lie ahead. Yet, in building work alone—to house the future elderly—we could be keeping thousands of unemployed building workers occupied. The Government are still committed—at least, they were until this time on Monday evening—to the early abolition of the whole rating system. Since that change was first mooted we have noticed very little in the way of detail associated with the proposed replacement. Democratically elected representatives of local authorities—Labour, Conservative, Liberal and independents—elected fairly and impartially on local manifestos dealing with what were the most acceptable priorities in those areas are being frustrated. They are even being hustled by a Government who failed to get the support of even one third of the electorate of this country in May 1979. The Government now have recourse to severe and restrictive penalties if local authorities provide for the general need that they see all around them. The clash is there for all to see and to witness. In the end it is the Government who are the master—or the mistress as the case may be. When it is said, as we heard earlier today, that the choice is for the local authority to make, surely that is cowardice on the part of the Government. Local authorities are forced to choose from a whole list of priorities. They are forced to choose from a whole catalogue of essentials, the needs of which have been made apparent in the life of the community for decades. Whatever choice one makes one is bound to alienate certain sections of the community, and the Government have been too afraid to make that choice. They have even been too afraid to give a certain sense of relevant direction. The Government are, in reality, giving no choice at all. It is the choice of the gallows or the guillotine.12.45 pm
I have listened with great interest, as I am sure we all have, to this brief but historic debate. It is clear from the reactions of Labour Members to the settlement that there is still a good deal of confusion and misunderstanding about our intentions and about the effect of the settlement on local authorities in Wales.
Before I deal with matters of detail I must again emphasise, as my right hon. Friend did in his opening speech, that the settlement is entirely consistent with our economic policy. It reflects the essential contribution that local government has to make to the reductions in public sector spending that must be made to meet our overall economic objectives. To judge from some of the views that we have heard from Labour Members, it would appear that they still have not grasped the simple fact that we cannot go on spending at levels that the country cannot afford, and I assure the hon. Members for Cardigan (Mr. Howells) and for Caernarvon (Mr. Wigley) that that applies as much to local authorities as to Government. I fully understand the anxiety of hon. Members on both sides of the House that the introduction of a separate rate support grant for Wales should not result in any disadvantage for Welsh authorities, and my right hon. Friend has explained how the split of expenditure totals among England and Wales was achieved. The determination of separate relevant expenditure involved a great deal of lengthy and detailed work among many departments in order to arrive at the correct figures. The only fair way to determine the grant share for the introduction of the new system was to base the Welsh grant on the average share over recent years. That is what we have done, and I cannot think of a fairer method. The right hon. Member for Rhondda (Mr. Jones) referred to the complexity of the new system. It is not possible fairly to distribute the huge amounts involved without a detailed set of ground rules, but the essential concept that excessive spenders receive less Government grant on their high level spending is easy to understand. Under the system, local authorities will be more accountable to their ratepayers, since rate increases arising directly from the authority's spending decisions will be clearly visible. That is what is really important, not the details of grant calculation. Grant-related expenditure assessments for counties and districts in Wales have been based on formulae devised in close consultation with the Welsh local authority associations, and these formulae have been enforced by the associations. They take full account of factors that were considered to have a causal relationship with the need to incur expenditure. We are satisfied that the formulae are the best available this year, but we are prepared to consider suggestions that will lead to improvements. The whole aim of the new system is to distribute resources in as equitable a way as possible within the finite total of block grant that the country can afford. The methodology on which the GRE formulae have been based is set out in a report that is in the Library, and it has been published to allow a full discussion of the methodology and the factors used. I assure my hon. Friends the Members for Anglesey (Mr. Best) and for Brecon and Radnor (Mr. Hooson) that full account is taken of sparsity, that tourism is also covered, and that the elderly are taken into account among the social factors. The hon. Member for Caernarvon brought in the issue of what factors were being taken into account, and following that he raised some points of detail. I assure him that there is an explanation for his figure of £10 million, but, on the whole, as it is a fairly detailed matter, I think it better to write to him rather than give him the answer now. Unemployment was considered very carefully during the RSG negotiations, and an unemployment factor is again included in the composite social indicator for counties, but the Welsh Counties Committee and the Council for the Principality have since submitted a report setting out their views on the ways in which unemployment affects their spending, and that report is now under consideration. The report, together with any other suggestions for improvement in the formulae, will be taken into account when the GRE formulae are reviewed during the coming year. Hon. Members referred to the cut in the grant percentage. At a time of reducing total expenditure, it is right that grant percentage should also be reduced. This is entirely in line with our overall policies. Hon. Members have referred to the position of various authorities and the reductions that they are making in particular services. I am not prepared to comment on the ways in which local authorities propose to achieve the reductions necessary to meet the Government's expenditure targets. As my right hon. Friend and I have made clear on many occasions—and this was also the attitude of the previous Labour Administration—the way in which local authorities manage their own affairs is their business and is not a matter for the Government. We have, of course, a perfectly legitimate concern about local authority expenditure in aggregate, but the way in which local authorities run their own services and, indeed, secure any improvements in efficiency, reduce waste, slim down manpower, and so on is their concern. I understand the difficulty facing them, but, as my right hon. Friend has pointed out, we must get this matter of future expenditure reductions into perspective. The target that we are setting for next year simply brings expenditure in real terms back to what it was about five years ago. There was no massive breakdown in services at that time, and it really is nonsense to claim that the required reductions will have terrible effects next year. In total, the target that we have set is reasonable and attainable. The precise manner in which it is achieved is for the authorities themselves to determine. This is part of their responsibility and they must determine how best to manage their own affairs. The settlement has been based upon the expenditure targets set by the Government and we are determined that these will be achieved. Incidentally, I am sorry that the right hon. Member for Rhondda and his colleagues—It being one and a half hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
The House divided: Ayes 287, Noes 221.
Division No. 41]
| [12.54 am
|
AYES
| |
| Adley, Robert | Budgen, Nick |
| Aitken, Jonathan | Bulmer, Esmond |
| Alexander, Richard | Burden, Sir Frederick |
| Ancram, Michael | Butcher, John |
| Arnold, Tom | Butler, Hon Adam |
| Aspinwall, Jack | Carlisle, John (Luton West) |
| Atkins, Robert(Preston N) | Carlisle, Rt Hon M. (R'c'n) |
| Atkinson, David (B'm'th,E) | Chalker, Mrs. Lynda |
| Baker, Kenneth(St.M'bone) | Channon, Rt. Hon. Paul |
| Baker, Nicholas (N Dorset) | Chapman, Sydney |
| Banks, Robert | Churchill, W. S. |
| Bell, Sir Ronald | Clark, Hon A. (Plym'th, S'n) |
| Bendall, Vivian | Clark, Sir W. (Croydon S) |
| Benyon, Thomas (A don) | Clarke, Kenneth (Rushcliffe) |
| Benyon, W. (Buckingham) | Clegg, Sir Walter |
| Best, Keith | Cockeram, Eric |
| Bevan, David Gilroy | Colvin, Michael |
| Biffen, Rt Hon John | Cope, John |
| Biggs-Davison, John | Cormack, Patrick |
| Blackburn, John | Corrie, John |
| Blaker, Peter | Costain, Sir Albert |
| Body, Richard | Cranborne, Viscount |
| Bonsor, Sir Nicholas | Critchley, Julian |
| Boscawen, Hon Robert | Crouch, David |
| Bowden, Andrew | Dickens, Geoffrey |
| Boyson, Dr Rhodes | Douglas-Hamilton, Lord J. |
| Braine, Sir Bernard | Dover, Denshore |
| Bright, Graham | du Cann, Rt Hon Edward |
| Brinton, Tim | Dunn, Robert (Dartford) |
| Brittan, Leon | Durant, Tony |
| Brotherton, Michael | Dykes, Hugh |
| Brown, M.(Brigg and Scun) | Eden, Rt Hon Sir John |
| Browne, John (Winchester) | Edwards, Rt Hon N. (P'broke) |
| Bruce-Gardyne, John | Eggar, Tim |
| Bryan, Sir Paul | Elliott, Sir William |
| Buchanan-Smith, Hon Alick | Emery, Peter |
| Buck, Antony | Eyre, Reginald |
| Fairbairn, Nicholas | Macfarlane, Neil |
| Fairgrieve, Russell | MacGregor, John |
| Faith, Mrs Sheila | MacKay, John (Argyll) |
| Fell, Anthony | McNair-Wilson, M. (N'bury) |
| Fenner, Mrs Peggy | McNair-Wilson, P. (New F'st) |
| Finsberg, Geoffrey | McQuarrie, Albert |
| Fisher, Sir Nigel | Madel, David |
| Fletcher, A. (Ed'nb'gh N) | Major, John |
| Fletcher-Cooke, Charles | Marland, Paul |
| Fookes, Miss Janet | Marlow, Tony |
| Forman, Nigel | Marshall Michael (Arundel) |
| Fowler, Rt Hon Norman | Marten, Neil (Banbury) |
| Fox, Marcus | Mates, Michael |
| Fraser, Peter (South Angus) | Maude, Rt Hon Angus |
| Fry, Peter | Mawby, Ray |
| Gardner, Edward (S Fylde) | Mawhinney, Dr Brian |
| Gilmour, Rt Hon Sir Ian | Maxwell-Hyslop, Robin |
| Glyn, Dr Alan | Mayhew, Patrick |
| Goodhart, Philip | Mellor, David |
| Goodlad, Alastair | Meyer, Sir Anthony |
| Gorst, John | Miller, Hal (B'grove) |
| Gow, Ian | Mills, lain (Meriden) |
| Gower, Sir Raymond | Mills, Peter (West Devon) |
| Grant, Anthony (Harrow C) | Miscampbell, Norman |
| Gray, Hamish | Mitchell, David (Basingstoke) |
| Greenway, Harry | Moate, Roger |
| Grieve, Percy | Monro, Hector |
| Griffiths, E.(B'y St.,Edm'ds) | Montgomery, Fergus |
| Griffiths, Peter Port sm'th N) | Moore, John |
| Grist, Ian | Morris, M. (N'hampton S) |
| Grylls, Michael | Morrison, Hon P. (Chester) |
| Gummer, John Selwyn | Mudd, David |
| Hamilton, Hon A. | Murphy, Christopher |
| Hamilton, Michael (Salisbury) | Myles, David |
| Hampson, Dr Keith | Neale, Gerrard |
| Haselhurst, Alan | Needham, Richard |
| Havers, Rt Hon Sir Michael | Nelson, Anthony |
| Hawksley, Warren | Neubert, Michael |
| Heddle, John | Newton, Tony |
| Henderson, Barry | Normanton, Tom |
| Heseltine, Rt Hon Michael | Onslow, Cranley |
| Higgins, Rt Hon Terence L. | Osborn, John |
| Hill, James | Page, John (Harrow, West) |
| Hogg, Hon Douglas (Gr'th'm) | Page, Rt Hon Sir G. (Crosby) |
| Holland, Philip (Carlton) | Page, Richard (SW Herts) |
| Hooson, Tom | Parkinson, Cecil |
| Hordern, Peter | Parris, Matthew |
| Howell, Rt Hon D. (G'Idf'd) | Patten, Christopher (Bath) |
| Howell, Ralph (N Norfolk) | Pattie, Geoffrey |
| Hunt, David (Wirral) | Pawsey, James |
| Hurd, Hon Douglas | Percival, Sir Ian |
| Irving, Charles (Cheltenham) | Pink, R. Bonner |
| Jenkin, Rt Hon Patrick | Pollock, Alexander |
| Jessel, Toby | Porter, Barry |
| Johnson Smith, Geoffrey | Prentice, Rt Hon Reg |
| Jopling, Rt Hon Michael | Price, Sir David (Eastleigh) |
| Joseph, Rt Hon Sir Keith | Prior, Rt Hon James |
| Kaberry, Sir Donald | Proctor, K. Harvey |
| Kershaw, Anthony | Pym, Rt Hon Francis |
| Kimball, Marcus | Raison, Timothy |
| King, Rt Hon Tom | Rathbone, Tim |
| Kitson, Sir Timothy | Rees, Peter (Dover and Deal) |
| Knight, Mrs Jill | Rees-Davies, W. R. |
| Knox, David | Renton, Tim |
| Lamont, Norman | Rhodes James, Robert |
| Lang, lan | Rhys Williams, Sir Brandon |
| Langford-Holt, Sir John | Ridley, Hon Nicholas |
| Latham, Michael | Ridsdale, Julian |
| Lawrence, Ivan | Rifkind, Malcolm |
| Lee, John | Roberts, M. (Cardiff NW) |
| Le Marchant, Spencer | Roberts, Wyn (Conway) |
| Lennox-Boyd, Hon Mark | Rossi, Hugh |
| Lester Jim (Beeston) | Rost, Peter |
| Lewis, Kenneth (Rutland) | Sainsbury, Hon Timothy |
| Lloyd, Ian (Havant & W'loo) | Scott, Nicholas |
| Lloyd, Peter (Fareham) | Shaw, Giles (Pudsey) |
| Loveridge, John | Shaw, Michael (Scarborough) |
| Luce, Richard | Shelton, William (Streatham) |
| Lyell, Nicholas | Shepherd, Colin (Hereford) |
| McCrindle, Robert | Shepherd, Richard |
| Shersby, Michael | Trotter, Neville |
| Silvester, Fred | van Straubenzee, W. R. |
| Sims, Roger | Vaughan, Dr Gerard |
| Skeet, T. H. H. | Viggers, Peter |
| Speed, Keith | Waddington, David |
| Speller, Tony | Wakeham, John |
| Spence, John | Waldegrave, Hon William |
| Spicer, Jim (West Dorset) | Walker, B. (Perth) |
| Spicer, Michael (S Worcs) | Waller, Gary |
| Sproat, Ian | Walters, Dennis |
| Stanbrook, Ivor | Ward, John |
| Stanley, John | Warren, Kenneth |
| Stevens, Martin | Watson, John |
| Stewart, Ian (Hitchin) | Wells, John (Maidstone) |
| Stewart, J.(E Renfrewshire) | Whitelaw, Rt Hon William |
| Stokes, John | Whitney, Raymond |
| Stradling Thomas, J. | Wickenden, Keith |
| Tapsell, Peter | Wiggin, Jerry |
| Taylor, Teddy (S'end E) | Wilkinson, John |
| Tebbit, Norman | Williams, D.(Montgomery) |
| Temple-Morris, Peter | Winterton, Nicholas |
| Thatcher, Rt Hon Mrs M. | Wolfson, Mark |
| Thomas, Rt Hon Peter | Young, Sir George (Acton) |
| Thompson, Donald | Younger, Rt Hon George |
| Thorne, Neil (Ilford South) | |
| Thornton, Malcolm | Tellers for the Ayes: |
| Townend, John (Bridlington) | Mr. Carol Mather and |
| Townsend, Cyril D, (B'heath) | Mr. Peter Brooke |
| Trippier, David |
NOES
| |
| Adams, Allen | Dobson, Frank |
| Allaun, Frank | Dormand, Jack |
| Anderson, Donald | Douglas, Dick |
| Archer, Rt Hon Peter | Douglas-Mann, Bruce |
| Armstrong, Rt Hon Ernest | Dubs, Alfred |
| Ashley, Rt Hon Jack | Dunn, James A. |
| Ashton, Joe | Dunnett, Jack |
| Atkinson, N.(H'gey,) | Dunwoody, Hon Mrs G. |
| Barnett, Guy (Greenwich) | Eadie, Alex |
| Barnett, Rt Hon Joel (H'wd) | Eastham, Ken |
| Beith, A. J. | Ellis, R. (NE D'bysh're) |
| Bidwell, Sydney | Ellis, Tom (Wrexham) |
| Booth, Rt Hon Albert | English, Michael |
| Bradley, Tom | Ennals, Rt Hon David |
| Bray, Dr Jeremy | Evans, loan (Aberdare) |
| Brown, Hugh D. (Provan) | Evans, John (Newton) |
| Brown, R. C. (N'castle W) | Ewing, Harry |
| Brown, Ron (E'burgh, Leith) | Faulds, Andrew |
| Brown, Ronald W. (H'ckn'y S) | Field, Frank |
| Buchan, Norman | Flannery, Martin |
| Callaghan, Jim (Midd't'n & P) | Fletcher, Ted (Darlington) |
| Campbell, Ian | Foot, Rt Hon Michael |
| Campbell-Savours, Dale | Ford, Ben |
| Canavan, Dennis | Forrester, John |
| Cant, R. B. | Foster, Derek |
| Carmichael, Neil | Foulkes, George |
| Carter-Jones, Lewis | Fraser, J. (Lamb'th, N'w'd) |
| Cartwright, John | Freeson, Rt Hon Reginald |
| Clark, Dr David (S Shields) | Garrett, John (Norwich S) |
| Cocks, Rt Hon M. (B'stol S) | George, Bruce |
| Cohen, Stanley | Gilbert, Rt Hon Dr John |
| Concannon, Rt Hon J. D. | Ginsburg, David |
| Conlan, Bernard | Graham, Ted |
| Cook, Robin F. | Grant, George (Morpeth) |
| Cowans, Harry | Grant, John (Islington C) |
| Craigen, J. M. | Hamilton, James (Bothwell) |
| Crowther, J. S. | Hamilton, W. W. (C'tral Fife) |
| Cryer, Bob | Harrison, Rt Hon Walter |
| Cunliffe, Lawrence | Hart, Rt Hon Dame Judith |
| Cunningham, G. (Islington S) | Hattersley, Rt Hon Roy |
| Cunningham, Dr J. (W'h'n) | Haynes, Frank |
| Dalyell, Tam | Healey, Rt Hon Denis |
| Davies, Rt Hon Denzil (L'lli) | Heifer, Eric S. |
| Davies, Ifor (Gower) | Hogg, N. (E Dunb't'nshire) |
| Davis, Clinton (Hackney C) | Holland, S. (L'b'th, Vauxh'll) |
| Davis, T. (B'ham, Stechf'd) | Home Robertson, John |
| Dean, Joseph (Leeds West) | Homewood, William |
| Dewar, Donald | Hooley, Frank |
| Dixon, Donald | Howell, Rt Hon D. |
| Howells, Geraint | Pendry, Tom |
| Huckfield, Les | Penhaligon, David |
| Hughes, Mark (Durham) | Powell, Raymond (Ogmore) |
| Hughes, Robert (Aberdeen N) | Prescott, John |
| Hughes, Roy (Newport) | Price, C. (Lewisham W) |
| Jay, Rt Hon Douglas | Race, Reg |
| John, Brynmor | Radice, Giles |
| Johnson, James (Hull West) | Rees, Rt Hon M (Leeds S) |
| Jones, Rt Hon Alec (Rh'dda) | Richardson, Jo |
| Jones, Barry (East Flint) | Roberts, Allan (Bootle) |
| Jones, Dan (Burnley) | Roberts, Ernest (Hackney N) |
| Kaufman, Rt Hon Gerald | Roberts, Gwilym (Cannock) |
| Kerr, Russell | Robertson, George |
| Kilroy-Silk, Robert | Robinson, G. (Coventry NW) |
| Kinnock, Neil | Rooker, J. W. |
| Lambie, David | Roper, John |
| Lamborn, Harry | Ross, Ernest (Dundee West) |
| Lamond, James | Rowlands, Ted |
| Leadbitter, Ted | Sever, John |
| Lestor, Miss Joan | Sheldon, Rt Hon R. |
| Lewis, Arthur (N'ham NW) | Shore, Rt Hon Peter |
| Lewis, Ron (Carlisle) | Silkin, Rt Hon J. (Deptford) |
| Litherland, Robert | Silkin, Rt Hon S. C. (Dulwich) |
| Lofthouse, Geoffrey | Silverman, Julius |
| Lyons, Edward (Bradf'd W) | Skinner, Dennis |
| McCartney, Hugh | Snape, Peter |
| McDonald, Dr Oonagh | Soley, Clive |
| McElhone, Frank | Spearing, Nigel |
| McGuire, Michael (Ince) | Spriggs, Leslie |
| McKay, Allen (Penistone) | Stallard, A. W. |
| MacKenzie, Rt Hon Gregor | Stoddart, David |
| McNally, Thomas | Stott, Roger |
| McNamara, Kevin | Straw, Jack |
| McTaggart, Robert | Summerskill, Hon Dr Shirley |
| McWilliam, John | Taylor, Mrs Ann (Bolton W) |
| Magee, Bryan | Thomas, Dafydd (Merioneth) |
| Marshall, Dr Edmund (Goole) | Thomas, Jeffrey (Abertillery) |
| Marshall, Jim (Leicester S) | Thomas, Mike (Newcastle E) |
| Martin, M(G'gow S'burn) | Thomas, Dr R.(Carmarthen) |
| Mason, Rt Hon Roy | Thorne, Stan (Preston South) |
| Maxton, John | Tilley, John |
| Maynard, Miss Joan | Torney, Tom |
| Meacher, Michael | Varley, Rt Hon Eric G. |
| Mikardo, Ian | Wainwright, E.(Dearne V) |
| Milian, Rt Hon Bruce | Walker, Rt Hon H.(D'caster) |
| Miller, Dr M. S. (E Kilbride) | Watkins, David |
| Mitchell, Austin (Grimsby) | Weetch, Ken |
| Mitchell, R. C. (Soton lichen) | Welsh, Michael |
| Morris, Rt Hon C. (O'shaw) | White, Frank R. |
| Morris, Rt Hon J. (Aberavon) | White, J. (G'gow Pollok) |
| Moyle, Rt Hon Roland | Whitehead, Phillip |
| Mulley, Rt Hon Frederick | Whitlock, William |
| Newens, Stanley | Wigley, Dafydd |
| Oakes, Rt Hon Gordon | Willey, Rt Hon Frederick |
| Ogden, Eric | Williams, Rt Hon A.(S'sea W) |
| O'Halloran, Michael | Wilson, Rt Hon Sir H.(H'ton) |
| O'Neill, Martin | Winnick, David |
| Orme, Rt Hon Stanley | Woolmer, Kenneth |
| Owen, Rt Hon Dr David | Wrigglesworth, Ian |
| Palmer, Arthur | Young, David (Bolton E) |
| Park, George | Tellers for the Noes: |
| Parry, Robert | Mr. Donald Coleman and |
| Pavitt, Laurie | Mr. James Tinn. |
Question accordingly agreed to.
Resolved,
That the Welsh Rate Support Grant Report 1980 (H.C. 1980–81, No. 52), a copy a which was laid before this House on 16 December be approved.
Privileges
Ordered,
That the standing Order of 27 June 1979 relating to the nomination of the Committee of Privileges be amended, by leaving out Mr. Michael Foot and Mr. Norman St. John-Stevas and inserting Mr. Francis Pym and Mr. john Silkin.—[Mr. John Stradling Thomas.]
House Of Commons (Services)
Ordered,
That the Standing Order of 15 June 1979 relating to the nomination of the Select Committee on House of Commons (Services) be amended, by leaving out Mr. Norman St. John-Stevas and Mr. Phillip Whitehead and inserting Mr. Francis Pym and Mr. John Silkin.—[Mr. John Stradling Thomas.]
Iran (British Detainees)
Motion made, and Question proposed, That this House do now adjourn.— [Mr. Gummer.]
1.6 am
I am grateful for the opportunity offered by this short debate to highlight the problems still faced by the four British prisoners currently held in Iran, two of whom—Dr. and Mrs. Coleman—are the parents of one of my constituents. It is not only I who am concerned about their plight. As hon. Members know, an early-day motion drawn up before Christmas has been signed by 62 right hon. and hon. Members from both sides of the House expressing the concern that many of us feel about the detention of those innocent people.
It might be for the benefit of the House if I concentrate on the background to the detention of Dr. and Mrs. Coleman and allow my hon. Friend the Member for South Angus (Mr. Fraser), who has spoken about this subject on more than one occasion, to come in behind me. Before they were taken into custody, Dr. Coleman ran a medical clinic at Yadz, 400 miles south of Tehran, under the direction of the Anglican Church. He and his wife went missing after reporting for questioning in Tehran on 10 August. Shortly afterwards Iran admitted, for the first time, that the Colemans were under arrest and were being interrogated. In response to a stiff diplomatic note from our embassy in Tehran the Iranians then revealed that a third British missionary held in detention, Miss Jean Waddell, was facing espionage charges, for which the punishment could be execution. A fourth Briton—a business man, Mr. Andrew Pyke, an employee of the Dutch firm Helicopter Aviation Services—was also being held prisoner. In the case of all three missionaries the prosecutors of the revolutionary courts had refused to permit any visit by a British consul, in violation of the Vienna convention on consular relations and the international convention on civil and political rights. Nor did the Iranian authorities reveal the charges facing the Colemans. Dr. and Mrs. Coleman and Miss Waddell were further denied the basic right under the Vienna convention of having a consul or lawyer present while undergoing judicial interrogation. The position of the Anglican community in Iran had troubled the Archbishop of Canterbury for some considerable time and he had already made an appeal to President Bani-Sadr on behalf of all religious minorities in the country. Attacks on the 2,000 or so Anglicans in Iran began with the revolution in 1979. The revolutionary Iranian Muslims unfortunately saw the Anglican message as a threat—in their eyes, converts to Christianity had done much more than desert their faith: to choose the Anglican Church was to deny their cultural inheritance. A recent article in The Guardian reminded us that in October 1979 the Bishop of the Anglican church in Iran was detained by revolutionary guards and an attempt was made to kill him. Guards later shot and wounded Miss Waddell, the diocesan secretary, during a raid on an apartment block used by other British missionaries. Nearly a week later the Bishop's 24-year old son was ambushed and murdered in Tehran. My constituent, Nigel Coleman, wrote to me in November indicating that it had been three months since his parents had first been detained, and that it had not been possible for him, or anyone else, to make any sort of contact with them. He knew, as I was later assured, that the Foreign Office was doing all that it could for their release as well as for that of the other three Britons who were being held. He mentioned that his family had approached the Iranian embassy in London and had handed in a petition with 4,600 signatories on 15 November. It is fair to say that Mr. Coleman, like myself, fully understands the difficulties that the Government face in dealing with the Iranians when externally Iran is involved in a war and internally a post-revolutionary State prevails. I have absolute confidence in the assurances of my hon. Friend the Minister of State to my constituent of the persistent efforts of the Foreign Office to try to obtain his parents' release and gain access to them. The Foreign Office has made numerous representations to the Iranian embassy in London, and our consul in Tehran and the Swedish ambassador, who protects our interests there, have also made frequent approaches to various senior figures. I know that the Government have reminded the Iranians of their obligations under various international conventions. I raised the matter of the Colemans' continuing imprisonment with my hon. Friend the Minister of State on the Floor of the House on 3 December. In answer to the question by my hon. Friend the Member for South Angus he stated that the Government believed that the accusations of spying made against the British prisoners were ludicrous and unfounded and were based to some extent on documents that anyone with any knowledge of the English language would at once see were forged. That was the position with regard to Nigel Coleman's parents until the latter part of December. I know that the House will want to pay tribute to the efforts of His Grace the Archbishop of Canterbury and his personal emissary, Mr. Terence Waite, for the developments that occurred next, culminating in a recorded message from Dr. John Coleman being heard on the first radio news bulletin of the new year. As a result, Dr. Coleman and his wife were also able to telephone their family on Christmas Day. They said that they were in good health and had shared a Christmas service with others. No one who heard the brief message recorded by Dr. Coleman could have failed to be moved. As The Times reported on 2 January, they had, Dr. Coleman said,.been well treated. They had made many friends among their captors. During their isolation they had come to look on some of the young revolutionary soldiers rather like sons. He had had a vivid sense of the governance of God and of God's care for his Church. He looked forward to his liberty and to being reunited with his family. Above all, he hoped to resume his work among the people whom he served and loved at Yazd. I know that the Archbishop and his emissary Mr. Waite would wish me to stress to the House that the British Government had taken no part whatever in the arrangements for the visit by Mr. Waite to see the Colemans. The House will understand how sensitive the visit was. It was very much a personal plea from one religious leader to another. Dr. Runcie's emissary was given VIP treatment when he arrived in Tehran. He was met at the airport by the deputy chief of protocol at the Foreign Ministry and was driven to a first-class hotel in Tehran. Dr. Runcie was rightly delighted with the generosity and cordiality of the welcome that the Iranians gave Mr. Waite. He has written to the Ayatollah Khomeini expressing his personal thanks for the generous response that he and the Iranian Government made to the Archbishop's urgent request that a pastoral visit might be paid to members of the Anglican Church awaiting their trial. The House should know that Mr. Waite was able to carry many hundreds of Christmas card greetings to the Colemans from all their Christian friends in Britain and around the world. On his return home Mr. Waite confirmed that the Colemans and Miss Waddell were all well and in good spirits. He had not managed to meet Mr. Andrew Pyke, the business man who was also detained, without charges or consular visits since last August, but he is also said to be well. We still do not know—my constituent does not—where the Colemans are being held in detention. We know that Mr. Pyke and Miss Waddell are being held in prison in Tehran. Obviously, the most important single piece of information to come out of Mr. Waite's visit was his reporting on his return home that he had eventually met the prosecutor in charge of the three missionaries. The prosecutor told Mr. Waite that the charges made against the Colemans and Miss Waddell had been madeMr. Waite was told that it was hoped that they could be released soon. In the conditions now prevailing in Iran and the post-revolutionary fervour that has gripped the country it is possible that misunderstandings have been created in the turmoil of events. It is conceivable that false accusations have come to be made. I could understand how a number of those currently in control in Iran, many of whom suffered several years in gaol, detained without trial, might well regard the matter of some five months or so as being almost of no consequence. There is no question about it now but that there are responsible Iranian authorities whose belief is that these charges are a fiction of the revolutionary imagination. Dr. Runcie has expressed his sympathy with the Iranian people in their present trials and tribulations. That is a self-evident Christian attitude to adopt, and one with which I concur. The sympathy of this House tonight must go out towards the four Britons who are still incarcerated in Iran, and towards their families and friends who await the relief of their anguish. Their captivity is an international violation of civil and political rights. Christian, as well as Muslim justice, demands that they be released."by someone who was either mad or malicious or both, and were false."
1.16 am
I am grateful to my hon. Friend the Member for Hornchurch (Mr. Squire) for permitting me to intervene briefly in his Adjournment debate on the British prisoners who have been detained in Iran for at least five months without charge or trial.
I have raised this issue on a number of occasions in the House in recent months, when virtually nothing was known of the whereabouts or well-being not only of Dr. and Mrs. Coleman, but of my constituent Miss Jean Waddell. Mr. Pyke, of course, was in a similar postition. Over the recess, dramatic and hopeful advances have been made in their cause, but their fate remains a matter of the greatest concern, not only to many hon. Members, but to their families, the Church they have served, and the whole of the country. It is notable of that concern that my hon. Friend the Member for Saffron Walden (Mr. Haselhurst), in whose constituency one of the nieces of Jean Waddell lives, has taken the trouble at this late hour to be present for this debate. I join my hon. Friend in applauding the outstanding efforts that were made by Mr. Terry Waite, the personal envoy of the Archbishop of Canterbury, during his mission to Iran. That mission was undoubtedly fraught with difficulties, but he overcame the obstacles that were obviously there, with what must be a rare diplomatic skill. I have no doubt that in no small measure that was due to his deep personal sincerity. We should do nothing to imperil the successful initiatives that were taken by the envoy of the Archbishop of Canterbury. It is acknowledged that the Iranian authorities seem to be prepared to understand that none of the missionaries is a spy, and we must continue to demand their immediate release from prison. No proper charges have ever been made against them, and the documents on which the wild allegations of CIA activity were based have been seen to be nothing but the crudest of forgeries. Hopes are still high that my constituent, Jean Waddell, and Dr. and Mrs. Coleman will be released in the near future, but until they are allowed to return home in safety it is vital that we demonstrate—as we are doing in this debate—that our concern is for them and that we express the wholehearted support for the Anglican Church in its efforts to get these fine people home.1.19 am
I congratulate my hon. Friends the Members for Hornchurch (Mr. Squire) and for South Angus (Mr. Fraser) on initiating this Adjournment debate, and on the well-chosen words with which they have presented their case and feelings on the matter. They have both brought out the harrowing experience of the three missionaries, and of Mr. Pyke, detained in Iran during these months. I confirm the facts that my hon. Friends have given to the House.
Since the arrest of those four people in August last year we have had no access to them, despite the obligations of Iran under international law, and there has been no formal indication of charges, except, as my hon. Friends have said, the most general and wild accusations against the Anglican Church of spying and counter-revolutionary activities. Her Majesty's Government have a fundamental responsibility to protect as best we can the interests of British nationals abroad. Therefore, we have tried in every way open to us, in circumstances that are difficult, to see that the four people who are held are treated properly and given their legal and humanitarian rights. We have made constant representations to the Iranian Government, and I was present when my noble Friend the Foreign and Commonwealth Secretary received a delegation from Iran on 28 November. He expressed very strongly to the members of that delegation our views on this matter, on the lines set out by my hon. Friend. The visiting Iranians took the point, and they then held out some hope of an early resolution of the problem. The Swedish embassy in Tehran now represents our interests, with the help of Mr. Ned Barrett, a British consular official who is there continuing the work that he undertook before. They have been continuously active in the same cause, and we are grateful to the Swedish Government for what they have done, which has been strenuous. We have also made approaches to intermediaries and leading figures in Iran and elsewhere. My hon. Friend will understand if I do not go into details of that. Obviously, if these efforts are to have any hope of success, one has to be a bit reticent about the details. An example of that, which reached the newspapers, was the effort to persuade Archbishop Capucci, who has some experience in these matters, to intervene. That and other approaches have not yet borne fruit, but obviously we must continue to try. We cannot in any way be satisfied with the result of these efforts up till now. It has been possible for Mr. Barrett to pass over letters and parcels to some of those held, but we have not secured proper access, and we have to wrestle with the problems of divided authority in Iran and with the difficulty that sometimes it is difficult to know who has authority in a matter that we are trying to elucidate and improve. The normal channels are often blocked or confused. We were greatly cheered by the progress reported by Mr. Waite during his visit to Tehran. and I pay tribute to the energy and zeal which he showed in a cause which everyone in this country, especially over Christmas, but I hope throughout, will recognise was a worthy and necessary one for the Church to take up. It was taken up in a thoroughly energetic and helpful spirit. As Mr. Waite told the nation when he returned, he brought back the good news that the three Anglicans were well. We had been particularly worried about the Colemans, because there had been no firm news about their position until Mr. Waite returned. We were given fresh hope by the report that he brought back that charges against the three Anglicans had been dropped and that they might soon be released. But, of course, neither Mr. Waite nor any of us can be satisfied until they are released, and we all have to continue in our own different ways our best efforts to bring that about. I should add that, even if and when the three Anglicans are released, our efforts on behalf of Mr. Pyke must continue unabated. 1 am sure that my hon. Friend will agree that it would be wrong if, because three of the detained are closely connected with the Anglican Church, the plight of Mr. Pyke were in some way to be forgotten. I make two concluding remarks that are quite important. Sometimes in the press these four Britons held in Iran are referred to as "hostages". One can understand the reason for that. It is because of the natural connection in the popular mind with the plight of the American hostages being held in the same country at the same time. But it is not an accurate description, and the members of the Iranian delegation to whom I have referred made this clear themselves when they were talking to my noble Friend. A hostage, as I understand it, is someone held against a specific demand, and, when that demand is met, he or she might be released That is not the position in this case. There have been no demands. Occasionally I have seen speculation that demands might be made as regards Iranians here who have been sentenced or charged before British courts. We, the Government, cannot enter into bargains of that kind. It simply is not possible for the British Government to interfere with the course of justice in the British courts. In particular, to be more precise, a connection is sometimes made with the Iranian students who, unfortunately, were involved last summer in a fracas outside the United States embassy in Grosvenor Square. In these cases there was a series of charges and there were complications. There were difficulties in getting personal details, such as the names of those concerned. There were threats of a hunger strike, and so on. In these cases, which have faded from the public eye, the courts have just about completed the task before them. No Iranian student involved in that affair now remains in prison. One has absconded. One is on bail. His hearing was deferred at his own request, I think because he wanted to be able to present fresh evidence on his own behalf. In any case, that student faces a minor charge. The last student who was sentenced and was in prison was released this week and has been sent back to Iran on the recommendation of the court. I have gone into some detail on this matter because I want to underline the fact, which is helpful to my hon. Friend's case, that the problem of the Iranian students involved in that affair has now been virtually resolved. I hope that that is clearly understood. Finally, I underline and emphasise on the Government's behalf the wise point made by my hon. Friend the Member for Hornchurch. We have no quarrel with the Iranian revolution and no desire to interfere in their affairs or influence how they run their affairs or who they choose to govern them. When I say "we" in that respect I am certainly speaking for the Government, but I think also for everybody else in this country, including, of course, Britons who go to Iran, whether for purposes of the Church, or on business, like Mr. Pyke, or anybody else. Whatever may have happened in the past, whatever may have been the past nature of our involvement with Iran, its present nature is clear: we have no desire to intervene in matters which the Iranians rightly regard as entirely their own affair. I go further than that: Iran is an important country in the Middle East, an important country in our eyes, and we would wish to return to our traditional friendship with it. But it is necessary to say, soberly and, I hope, in a constructive spirit, that it is not possible to return to the kind of friendship that we would like to have while certain things are happening. The House has often debated the issue of the American hostages. As the House recognised when it enacted the sanctions last summer, that is one obstacle. It is not possible to return to full friendship with Iran while four Britons are detained in the circumstances that my hon. Friend has described. We now have some experience of cases in which British subjects are held in circumstances in which their rights are not recognised and in conditions that everyone in this country would regard as wrong. The last time that I spoke in an Adjournment debate it had been raised by my hon. Friend the Member for Wokingham (Mr. van Straubenzee), who is here tonight. He raised a constituency matter concerning a British subject who had been imprisoned in Iraq. Although Mr. Sparkes's circumstances were different, I am sure that my hon. Friend will agree that that there were points of similarity. We had to keep pegging away. We used all sorts of methods, over a lengthy period during which those concerned, and Mr. Sparkes's relatives, naturally became despondent and anxious. We all did. In the end, that British subject was released and he is now back in this country and has been restored to his family. That is an example of how these matters can be resolved. We shall continue—I am sure that others will, too—to try to secure the release of the four involved. We shall not do so in a spirit of abuse; nor shall we pick quarrels. We shall continue as best we can, and we shall use every legitimate and hopeful method open to us to secure their release. We shall not be satisfied, nor shall we close the file or rest, until we know that all four have been released and restored to their families.Question put and agreed to.
Adjourned accordingly at twenty-nine minutes to Two o'clock.