Local Government (General Grant)

Civil Estimates, Supplementary Estimates, 1963–64 – in the House of Commons at 12:00 am on 4th December 1963.

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10.13 p.m.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I beg to move,

That the General Grant (Increase) Order 1963. dated 26th November 1963, a copy of which was laid before this House on 28th November, be approved.

The Order is accompanied by an Explanatory Report, House of Commons Paper No. 14 of this Session, which I hope the House has found helpful in explaining the details of the Order. Many hon. Members will probably begin to feel themselves on familiar ground when they see this Order coming before them for consideration. Nevertheless, perhaps I should briefly try to recapitulate the circumstances under which it arises.

As the House will recall, general grants are payable to county councils, county borough councils and the Council of the Isles of Stilly. The principal Orders are made in advance of the grant period which comprises not less than two years under the Act, and are made on the basis of estimates of expenditure which local authorities are expected to incur in the grant period on the assumption of a constant level of prices at current levels.

The current grant period comprises the two years, 1963–64 and 1964–65, and the House will recollect the principal Order being approved by the House on 19th December last year. That was based on estimates of expenditure of £1,034.34 million for 1963–64 and £1,083-45 million for 1964-65, and it provided for grants of £562 million and £589 million respectively. That Order also was accompanied by a Report.

Perhaps I should remind the House that it is not permissible under the Act to take into account in the General Grant Order itself the possibility that the level of prices, costs or remuneration of staff may change. I think that it would be almost impossible to do that. In other words, as I have tried to emphasise, the estimates have to be based on the current costs ruling at the time of the introduction of the General Grant Order itself. But where there is such an increase in the level of costs which affects the services covered by general grants and the effect seems to my right hon. Friend to be so large that the burden ought not to fall entirely on the local authorities, my right hon. Friend is empowered by Section 2(4) of the 1958 Act to increase the aggregate amount of grants. It is under this provision that I bring this present Order before the House.

Since the last Order was made in November, 1962, the cost of providing the general grant services during the current year has risen by over £45 million. Section 61 of the Children and Young Persons Act, 1963, received the Royal Assent on 31st July this year and hon. Members may recollect that this was raised when we discussed the General Grant Order. It was then pointed out that that Act itself, then a Bill, contained provisions so that any expenditure could be brought into account under an increase Order, and this has been done in the Order now before us.

The estimates of the additional expenditure which authorities are expected to incur as a consequence of that Act and as a result of increases in the level of costs, prices and remuneration affecting all the general grant services, are shown in the Appendix to the Report on the present Order. The Appendix also shows the apportionment of additional costs to services.

I should perhaps draw the attention of hon. Members to paragraph 6 of the Report. This paragraph rests on the view that in considering what additional grants should be paid because of an increase in prices, costs or remuneration it is right to take into account also any saving due to a fall in other prices, costs or remuneration. In other words, in deciding on an increase in grant, the Government should have regard to the net increase in costs and not to the gross increase in costs. There is no question under the Act of an Order coming before the House solely based on a decrease in costs. There is no power for that, but when an Order comes before the House for increases the practice has been to base it on net increases rather than on gross increases.

In the second grant period, increase Orders took into account, amongst a number of items, the additional costs due to increase in interest rates affecting that period. On this occasion the level of interest rates falling on local authorities has fallen since the original Order was made and therefore that factor has been taken into account in this Order.

Photo of Mr John Temple Mr John Temple , City of Chester

Would my hon. Friend care to say whether the proposals with regard to short-term borrowing by local authorities have been taken into account, as this would cause an increase in the cost of loan charges to local authorities?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

That is a generalisation with which I cannot entirely agree. It will cause an increase to some local authorities, but that is by no means necessarily the case over the whole field. As I have tried to explain, the Act does not allow a forecast of increase, so to speak. The grant Orders, both the principal and the increase Orders, are based on the costs ruling at the time of their introduction, and any substantial increase resulting from the funding that will have to take place will fall to take place in any future increase Order. It by no means follows that over the whole field there will be an increase in costs.

Photo of Mr Ernest Popplewell Mr Ernest Popplewell , Newcastle upon Tyne West

On the question of increased interest charges, is the Minister basing his figure on the national average of the interest charges, or does he take into account the rate at which a local authority individually may have had to borrow money in the open market?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

The basis of the calculation is the difference in the interest rate in the markets in which the local authorities borrow—I understand that there are three sections of the market which mainly affect them in this context—the difference between the rates ruling at the time of the principal Order and the rates ruling at the time of the introduction of the increase Order. There is no power in the Act to forecast increases in cost which may or may not arise in the future. The costs have to have arisen at the date of the increase Order.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

The Minister has to consult with the local authority associations bat surely his is the final decision. There are certain things laid down which he has to consider. Having considered those things and having consulted the organisations which he has to consult, surely the Minister will decide how much he asks the House to approve.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

Yes. The point I am making is that under the Act there is no power to take into account increases in cost which may or may not arise in the future. This is the only limitation that I am trying to impress on the House. I am advised that the Act does not allow this. The local authority associations accept this interpretation of the Act. There is no dispute upon this at all.

The total amounts by which the Order increases the general grant are £25 million for the current year and £30 million for 1964-65. I am able to say to the House that, with the exception of some dispute with regard to taking into account the relatively small figure attributable to interest rates, there has been complete agreement with the local authority associations.

The other provisions of the Order to which I should draw the attention of the House are contained in paragraph 8 of the Report and refer to the distribution of the aggregate amount of the grant for each year to the recipient authorities. The principle here is to reassess the factors so that the aggregate sum is divided in the same proportion as was the case with the principle Order when that was calculated a year ago.

10.25 p.m.

Photo of Mr Arthur Skeffington Mr Arthur Skeffington , Hayes and Harlington

I think it is right, even at this hour, that when so many millions of pounds are involved, hon. Members should give some consideration to the very important General Grant Order the approval of which the Joint Parliamentary Secretary has moved. After all, he is talking about additional sums from the general revenue to local authorities of £25 million and £30 million in the years involved.

I sometimes think how we spend many hours considering matters of far less financial importance than this one. Indeed, so important is this matter, that although we are always grateful to have the attendance of the Joint Parliamentary Secretary, who is most helpful. I think this is a debate in which even the Minister might have considered taking part. Possibly he is rather tired after his exertions at a somewhat exciting meeting which I understand he addressed quite recently in St. Marylebone.

At any rate, it is no exaggeration to say that this Order affects every ratepayer and householder in the country. We know that while the general increase has been estimated to rise by £45 million as a result of the services which have been mentioned for 1963–64, and by a sum of £55 million for 1964–65, the Government's proposals of £25 million for the first year and £30 million for the second year still leave a pretty big gap to be financed from the revenue of local authorities.

I make one passing comment on this, and it may be developed by others on these benches. The Government are now showing a great concern for the ratepayers. We have even got an inquiry to see where the hardship of the rate burden falls. I should have thought that the Government might have known that without an inquiry. Nevertheless, here would be a grand opportunity for the Government to do something specific for the ratepayers, instead of setting up an inquiry which is always a sovereign excuse for doing nothing at all.

Be that as it may, apparently the Government are not going to take the opportunity of making an even greater financial contribution, which certainly they might, particularly when one realises that a heavy part of the additional burden will be the salary award to teachers. We are all delighted that teachers are getting some recognition for the remarkably fine work that they do, but if ever there was a case for a national cash contribution I would certainly have thought it would apply in respect of teachers' salaries and, indeed, in respect of the education service in general.

I am glad that the Joint Parliamentary Secretary referred to paragraph 6 of the Report because this is a little mystifying to some of us. I noticed, when his hon. Friend the Member for the City of Chester (Mr. Temple) intervened on the question of short-term borrowing, that he said that was a generalisation. Surely the whole paragraph is a generalisation, and it is a generalisation with which many local authority members do not agree. It may be that the local authority associations are not in a position to arrive at more accurate figures than those in this Report, but it is a remarkable operation at all to have tried to estimate in the period under review what has been the effect, if any, of the decrease in interest rates.

Undoubtedly, as the hon. Member for the City of Chester pointed out, a good deal of the money involved is short-term borrowing with fluctuating rates of interest in widely differing conditions, and I should have thought that it was almost impossible to have arrived at an estimate, particularly when the total sum is so very small. Nor do I think it right to suggest, as the Parliamentary Secretary did, that the local authorities were in agreement on the figures. I am told that that is not so. Certainly, there was no unanimity amongst the members of the local authority associations. However, perhaps the Parliamentary Secretarywill be able to give us some indication of how this astonishing calculation was achieved. I find it difficult indeed to understand, in what I must call the generalised statement that he made, how the calculation was performed.

There is, however, a more substantial point about paragraph 6. Even assuming that it is possible to prove that there has been a benefit to the local authorities as a result of what the Parliamentary Secreary has suggested as a result of the fall in interest rates, it seems extraordinary that the Government are taking this very small saving into consideration in their calculations of the general grant in total. There are all kinds of costs to be met by local councils which are not covered by the existing formula and cannot be. Indeed, some cannot even be foreseen.

In the new year, we are threatened with various price increases, including bread and petrol, both of which affect local authority services. The fair thing would have been to ignore in calculation these probably mythical savings—at any rate, very small savings even on the Government's own showing.

It seems at this time of good will to all men that the Ministry—or is it the Treasury?—has taken a Scrooge-like attitude and it is resented by the local authorities. At a meeting of the local authority associations recently with the Parliamentary Secretary, they expressed concern that these calculations should be made to offset some of the gain they are to receive in general under their revised grant.

I think it is right that protest should be made. It is a typically mean action which the Minister really need not have taken. We know that there will be unforeseen contingencies—this is almost inevitable with rising costs—and to try to get a small financial advantage like this the Minister will be sacrificing a great deal of good will. I am sorry that this paragraph is included and I hope that it is still not too late for the Minister to reconsider it.

10.32 p.m.

Photo of Mr John Temple Mr John Temple , City of Chester

I thank my hon. Friend the Joint Parliamentary Secretary for his explanation and for the fact that the Minister has produced an explanatory Report. The hon. Member for Widnes (Mr. MacColl) mentioned during our Debate on 19th December last year that more information on a grant Order of this nature was desirable, and I feel that my right hon. Friend and my hon. Member have reasonably complied with the wishes expressed from both sides of the House on that occasion.

It is extremely difficult at this time of night for hon. Members on either side to discuss a grant Order of this nature. It would be much more suitable if we could take off our jackets, roll up our sleeves, put on green eye shades and have the use of a slide-rule to deal with these difficult calculations at 10.30 in the morning rather than at 10.30 at night. Nevertheless, under the rules of the House, this is the time when this Order must come forward. I am not protesting against the Order but merely against the procedure which brings it before us in away which means that we have to debate it in an unsuitable atmosphere at an unsuitable hour.

Last year my noble Friend the Member for Hertford (Lord Balniel)—and I supported him—strongly criticised the proposals for the variation of the rate deficiency grant. After six months' gestation, the Treasury appeared to crumple up and the proposals were withdrawn. It was indeed a significant victory for ratepayers.

Tonight I am once more on the warpath on their behalf. I am not criticising that action of the local authority associations, who have acted wholly correctly in their consultations which have, quite rightly, taken place, under the Statute, with the Government. However, I know that there was a slight difference of opinion over paragraph 6 in respect of loan charges.

The hon. Member for Hayes and Harlington (Mr. Skeffington) has said that this is a comparatively minor matter, but in general I understand that the local authority associations have agreed to this supplemental point and have carried out their task as they should. It is not the task, however, of the local authority associations particularly to look after the interests or welfare of the ratepayers. I believe, however, that it is the task of hon. Members of this House.

On 19th December last my noble Friend the Member for Hertford described the Government as attempting to welsh on their responsibilities. I did not go as far as that but I said that the Treasury was using a certain amount of sleight-of-hand. This evening I shall give two examples connected with this Order of what I regard as Treasury sleight-of-hand. On the last occasion when I spoke I asked for a Treasury Minister to be present. Regrettably, one was not present. Tonight I did not ask for one to be present and there is no Treasury Minister present. But I hope that the Parliamentary Secretary, as he did last year, will convey my strictures to the Treasury because this is not intended to be a criticism of my right hon. Friend the Minister of Housing and Local Government or my hon. Friend the Parliamentary Secretary.

This Order increases, for the year 1963–64, the amount of grant by £25 million, or 4½ per cent. It is significant that the basic grant for 1962–63 was £472 million and for 1963–64 it was £562 million, which is a basic uplift of 19 per cent. Tonight we are discussing a further increase of 4£per cent, on a grant which is already 19 per cent, above the basic grant figure of the preceding year.

The Report by the Minister says that most of the increase is the result of pay awards, and I accept that. I noticed that my hon. Friend the Parliamentary Secretary did not say much about the minor formula adjustments which have been made under this Order; but I believe that there are formula adjustments of a much more fundamental character which ought to be made. I would remind the House of the basic relativity of the grants to rates referred to by my right hon. Friend the Minister of Housing and Local Government when speaking on the Order last year, which was 56-5 per cent, for grants and the balance for rates. I shall assume that there has been no basic change as a result of this supplemental Order.

On 19th December last year I asked the Parliamentary Secretary to justify the sanctity of this relativity of 56.5 per cent. He said that he found these figures confusing, and I am sure that we all share his sense of confusion. He went on to say: I should hate to try to justify the sanctity of any of these figures He also said: … the result arises from the proportions which existed under the specific grants."—[Official Report, 19th December, 1962; Vol. 669, c. 1330.] My hon. Friend was, of course, perfectly right, but as I have a continuing interest in this subject, on 30th January of this year I asked a Parliamentary Question and elicited information about the exact proportion which existed under the specific grants in the base year. The Answer was that education under the specific grants was getting 58 per cent., and all other services 50 per cent, or less. I understand that the Treasury indicated originally that it was anticipated that the health and child welfare services would grow at a faster rate than the rest of the growth rates within the services which are dealt with in this Order.

As a matter of fact, that did not turn out to be the case. Education, which was allowed the highest rate of specific grant, has been about the fastest growing service. So I submit that the weighting under this Order needs looking at again. What has happened is that the service which had the highest rate of specific grant has been about the fastest growing service and therefore the relativities under which the formula works require re-weighting. I believe that there is a powerful case for this, and I suggest that if the formula were re-weighted, 57½ per cent, of the relative expenditure might be paid in the form of grants. As this expenditure for 1963–64 is £1,034 million, if this re-weighting took place, the sum involved would amount to £10 million, a not insignificant assistance to ratepayers.

My second point relates to the major part of the expenditure referred to in the appendix. As I have said already, the Minister's Report makes clear that the major part of this increase in expenditure is in respect of salaries, and the bulk of the salary increases are for teachers. The amount of the increase for 1963–64—and now I am dealing entirely in terms of 1963–64—is £46 million. However, the same strictures would apply to 1964–65, roughly in proportion. The Treasury superficially has been generous—this is where I bring in the sleight-of-hand—in contributing £25 million. That is the figure given in this Order as the increase for 1963–64 as opposed to the original amount put in the Order which we debated on 19th December last year. The ratepayers will contribute the balance of £21 million, being the balance of the increase making up the total of £46 million.

On 10th April this year, I asked my right hon. Friend the Chancellor of the Exchequer—I paraphrase the Question—what was the best estimate he could give of the amount which he would get back as a result of an award to teachers of £21 million. My right hon. Friend replied that he expected to get back in direct taxation £5 million and in indirect taxation between £1 million and £2 million. I take the figure of £1½ million for this purpose, and, adding that to the £5 million, I find that the Chancellor expects to get back £6½ million as a result of an award of £21 million to teachers. In fact, he expects to get back 31 per cent, in direct and indirect taxation as a result of that particular award.

I have applied the same percentages to the amount in this particular increase Order, because this increase is mainly in respect of salaries, the bulk relating to teachers. In order to treat this matter in broad terms, I have used a proportion of 30 per cent, instead of the actual 31 per cent, which emerged from the reply to ray Question.

The result of my arithmetic is this. Of the sum of £45.6 million, the Treasury will expect to get back £13.7 million in direct and indirect taxation. It will pay out under the Order £25 million, but its net pay-out will be only £11.3 million. The ratepayers, on the other hand, are expected to pay a further £21 million, so that although superficially the Order says that the Treasury is to provide £25 million and the ratepayers £21 million, in fact, the Treasury will pay a net £11.3 million and the ratepayers will be asked to find £25 million.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

Is my hon. Friend taking into account the proportion of the rates to be provided by industry now paying full rates which will not be there for taxation purposes?

Photo of Mr John Temple Mr John Temple , City of Chester

I expected that question. I think that I got it from the other side of the House last year. I have not specifically taken that into account. My answer is that, if industry were not contributing that amount in rates, the profits of the undertakings would be that much larger. My right hon. Friend the Chancellor has about a 51 per cent, interest in the profits of industry, so he has that direct interest in profits as well. It seems to me that he looks after himself both ways.

I hope that my hon. Friend the Parliamentary Secretary will stand up to the Treasury in this matter. I have a feeling that there are happy smiles in the Treasury as a result of an increase Order like this. Quite frankly, the Treasury is "getting away" with it. I want someone to go to the Treasury—I will volunteer to go with my right hon. Friend the Minister of Housing and Local Government, hold his hand if necessary, if he does not feel strong enough himself—to expound the whole argument which I have now put before the House. I believe that it is clear, from the figures which I have given, that the Treasury is getting an extraordinarily good deal and the ratepayers are getting an extraordinarily poor deal.

To sum up on these two points, I started by saying that there had been a basic uplift of 19 per cent, as between the expenditures of 1962–63 and 1963–64. An increase of this nature, followed by an increase such as is proposed in this Order, is far in excess of the rate of growth postulated in any of the guiding lights set forth by the N.I.C., or the N.E.D.C., or any other form of guidance we have at present. Rateable values are going up at roughly a rate of 2½ per cent, per annum, using the figures given in "Rates and Rateable Values", so that the rate of increase of local government expenditure is running at a rate far in excess of any of the growth figures with which we are commonly dealing. If this goes on, the only result will be a substantial increase in rate poundages.

I suggest that the Treasury should measure up to its responsibilities in this matter. We require this formula adjustment to which I have referred, and I hope that my right hon. Friend will see that both he and his hon. Friend the Parliamentary Secretary get exceedingly tough with the Treasury.

10.46 p.m

Photo of Mr James Boyden Mr James Boyden , Bishop Auckland

I wish to refer to three matters, and the first relates to the North-East. I know that a good many of the local government expenditures in the North-East plan have been known for some time, but the plan, which has been available for only a few days, must include local authority expenditures that have not so far been discussed. Is the sum required by the North-East plan now identifiable? Presumably, some of it is covered in 1963–64. Can that be identifiable as regards each local authority and the area as a whole? Can any estimate be made of what it is likely to be in 1964–65, and will it be possible later to have some indication of how the burden being put on local authorities compares with the burden on the central Government?

The other two items relate to the salary award to teachers. This was the upsetting of the Burnham Committee which caused such an uproar in the teaching profession and which, presumably, has had some effect on teacher recruitment. Is it possible to identify in this increase the amounts of money required by those areas where the numbers of teachers are below the quota, so that these areas can, by one means or another, bring their numbers up? Some authorities adopt a kind of "flying squad" of supply teachers; others will do their best to recruit married women and part-time teachers rather more vigorously. Is it possible for these sums to show how local authorities are dealing with this, and how the Government are making their contribution?

That brings me to something that, I suppose, cannot yet be considered, although it may possibly be considered for 1964–65. I refer to the recommendation in Appendix 3 of the Newsom Report that there should be a small differential arranged in the next scale awards for teachers who, as it were, become part of a permanent "flying squad" to go to areas where there is a deficiency of teachers.

That is connected with my second question. These things are going on, and are part of the revised salary awards. If the Newsom Report and that recommendation are adopted, is it possible to include that in these salary awards?

10.49 p.m.

Photo of Mr John Eden Mr John Eden , Bournemouth West

I cannot hope to emulate the technical excellence of the speeches which have been made in this short debate, and I must admit, what will be readily apparent to the House, that this is somewhat unfamiliar ground to me. However, I hope to be acquitted in advance of deliberately wasting the time of the House should it be found that I have completely the wrong end of the stick. There are one or two points which I wish to make, and I will be as brief as possible.

I want to refer to paragraph 8 of the White Paper which accompanies the Order and which says, The weightings have been revised in such a way as to ensure, as far as this is possible, that proportionately the same amounts are distributed through the basic and supplementary grants as before. I am rather disappointed that this is so. I confess that I had a certain amount of sympathy with the hon. Member for Hayes and Harlington (Mr. Skeffington) in anticipating interim measures of relief for ratepayers and in anticipating further extended changes which might come as a result of the general review of local government by the committee set up by the Government. I am sorry that on this occasion, if by legislation it is possible to do so, the opportunity has not been taken to make a change in the weighting of the factors which comprise the formulae.

I had hoped otherwise; I had hoped that the change would take place, and I was encouraged in this hope by the speech of my right hon. Friend the Chief Secretary to the Treasury at the Conservative Party Conference at Black pool. I quote an extract from a report in The Times of 11th October. My right hon. Friend was reported as saying, The general grant formula, though complex, is not sacred. I think we probably could help some areas if we did something to take into account rather more than at present the numbers of old people in areas in assessing the general grant … Another line of thought was to take account of areas which benefited least from the provisions of the central Government. The formula now used seemed adversely to hurt some of them". This quotation raises two points: first, that there are areas which have benefited less than others from the provisions of the central Government and, secondly, that more account should have been taken of the number of old people in areas, My constituency is affected in both cases and I want to say a few words on each point.

First, by way of preamble, it is well known that Bournemouth has long been regarded as the wealthiest town in Britain, but it is only so regarded when measured in terms of its rating resources. I will not go into other aspects, but that is the point which I wish to make for the purpose of the debate. This wealth in terms of its rating resources is due primarily to the high quality and high rental value of the predominantly detached houses in the town. In 1956 there were, for example, as high as 72.5 per cent, of domestic assessments in county boroughs in England which did not exceed £25 rateable value. The comparable figure for Bournemouth was only 17.2 per cent, which came in that group. This indicates the high standard of property values in Bournemouth.

This high total rateable value led to a comparatively low rate poundage, but this has not meant a low rate contribution from householders. The 1963 revaluation has made matters worse, because it has resulted in Bournemouth being subjected to a higher increase than any other county borough in the country. In Bournemouth the average domestic rate per head of the population is £14 13s. lid., an increase of no less than 47 per cent over the 1962–63 figure. In the country as a whole the figure is less than 1 per cent, more than the 1962–63 figure.

The major proportion of the rate charge in the county borough of Bournemouth is devoted to services of national importance such as are in fact listed in the White Paper in the Appendix under "Apportionment". These include education, health, welfare, the police and civil defence. Bournemouth's ratepayers and residents have not had very substantial assistance from the central Government towards these national services. I have already explained what the domestic rate payment per head of the population is in Bournemouth; it is £14 13s. lid. For purposes of comparison, in Bradford it is only £6 19s. 2d., yet Bradford receives 30 per cent, deficiency grant and Bournemouth receives none. I hope, if it is possible, that at an early stage there is a review of the rate deficiency grant system.

The second point raised in the extract which I quoted from the speech by my right hon. Friend concerns the numbers of old people in areas. Hon. Members will know that on a number of occasions I have taken the opportunity of stressing the figures which Bournemouth has to consider in this respect. I hope that they will bear with me if I repeat them once more. In 1961 Bournemouth had 31,000 out of a total population of 150,000 in the age group 65 and over. That is a formidable proportion. It is well in excess of the national average.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

From the point of view of the hon. Gentleman's majority, it is valuable.

Photo of Mr John Eden Mr John Eden , Bournemouth West

I have no doubt that it is probably the case that I am glad of my majority, but it is not due to the fact that there is a high proportion of elderly people. It happens to be the fact that a greater degree of wisdom collects in Bournemouth than in some other areas.

But there is this very high proportion of elderly people. It is fair to say that the authority has endeavoured to live up to its responsibilities in this regard. There is a very substantial provision of special purpose-built homes for elderly people. On the whole, the general welfare and domiciliary services of the county borough are second to none. There is, of course, still much to be done in this direction. The chief executives in the health, housing and welfare departments all co-operate very closely. I know that council members, regardless of party convictions or anything else, take these duties extremely seriously. All are anxious that Bournemouth shall continue to fulfil its obligations to its elderly citizens, most of whom have come to retire in Bournemouth having spent their working life in other areas.

In a sense, therefore, this is an obligation which Bournemouth undertakes on behalf of the nation. Everyone hopes and intends that this shall continue. We have already outlined a very impressive and imaginative programme of action to achieve this. I think that the rest of the nation must come to recognise the financial implications of such a programme on Bournemouth's resources.

With the weighting as detailed in paragraph 8 and the distribution as outlined in the Appendix, an extra £1,000 will come to Bournemouth to help it to meet its obligations to children under 5 and old people over 65. This is not a very substantial sum. I hope that the weighting given to this factor will be increased. It could be done without increasing the total sum involved. That is what I should like to see happen.

The way in which it might happen—I do not know whether it is possible—is for the figure of £805 per head of population, which is proposed to make up the basic grant, to be reduced, and the supplementary grants for young children and old people increased. The effect of this would be to produce a small but none the less welcome increase for the category of people for whom I have been speaking.

Other local authorities placed in similar circumstances, with like responsibilities and in like conditions, would probably welcome this, but I appreciate that this would not be universally welcome, because if this were to be repeated throughout the country those who did not have these important duties would obviously lose rather than gain. But they do not have the same costs as those which Bournemouth has to face.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

The hon. Member has referred to the costs which old people have to face. I appreciate that problem, but would it not be true to say—I am sure that he has the figures—that if Bournemouth has a very much higher proportion of old people it almost certainly has a rather lower proportion of school children than the average over the whole country. If Bournemouth is above the national average in terms of its old people and also in terms of its young people, there must be a very small number of parents. Therefore, I do not know where all the children come from.

Photo of Mr John Eden Mr John Eden , Bournemouth West

That is not so. To be honest I do not know whether it is at the national average in terms of young children, or just above it or just below it. It is, I think, pretty well about the same as the national average. But because we have a larger proportion of old people it does not follow that we have a smaller proportion of young people.

Photo of Mr John Eden Mr John Eden , Bournemouth West

No, it does not. We probably have a smaller proportion of parents, because we have a higher proportion of retired people who are no longer parents of young children.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

Therefore, unless the average size of the family in Bournemouth is higher than the average size of the family in other parts of the country, Bournemouth must have a smaller proportion of children.

Photo of Mr John Eden Mr John Eden , Bournemouth West

We still have a substantial number of children coming in for educational purposes, and we provide a high standard of education for them.

If something cannot be done through the vehicle of this Order, perhaps, with the interim measure on rating, whenever they come, before Christmas, a step will be taken in this direction. I hope that whenever those measures come before the House they will be simple and clear-cut. Nothing would be worse than for them to be complex and involved.

In any case, I am sure that with the increased earnings in industry today, and with the greater prosperity in young families, still more consideration should be given, at a national level, to the financial consequences of fulfilling our duty to the elderly people. This is the point that I have been trying to make. I hope that at some time we shall see a recognition of this fact, and of the obligation placed upon the County Borough of Bournemouth in trying to meet this need.

11.3 p.m.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

I was horrified when I found myself in complete agreement with the first part of the speech of the hon. Member for Bournemouth, West (Sir J. Eden). I was wondering where I must be wrong; but I am still convinced that I am right. In the second half of his speech the hon. Member said that he wanted more money for Bournemouth by taking away money from every other local authority. That is basically what he said. I want to see authorities like Bournemouth, with more old people, receiving more out of the general grant, but I do not want to see it taken away from other local authorities. It should be met in the right and proper way, by making an increased amount of money available in the general grant. The hon. Member is being less than fair to other local authorities in proposing that ratepayers in other areas should pay more so that ratepayers in Bournemouth can pay less. That is what the hon. Gentleman is asking for.

Photo of Mr John Eden Mr John Eden , Bournemouth West

Let me emphasise the point I made, which is that many of the people now residing in Bournemouth have come from other rateable areas outside of Bournemouth itself and have thus taken the obligation away from those areas and placed it on Bournemouth.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

I do not dispute that. But a large number of people when they retire go not only to Bournemouth but to many other places on the coast, places stretching into Kent in the South and to places in the West. In rating, however, we cannot look back to where people resided years ago. We do sometimes in connection with old people's homes, and argue which local authority should pay for them. We cannot do that in the matter of rates; we must take the situation as it is.

For some completely unexplainable reason, areas which have a greater number of old people are, on the whole, the areas in which the ratepayers seem to have been rather harder hit than those in other areas. We are now, perhaps, going to have the explanation that the valuation officers have made a mess of the job, that perhaps the valuation officer in the. West Country has over-estimated the percentage and that it is going to be put right. But it still appears that areas where there are old people are the areas where the ratepayers have suffered.

Photo of Mr John Eden Mr John Eden , Bournemouth West

As the hon. Gentleman knows, it is because there is virtually no industry in those areas. Although the average increase is below the figure mentioned in the original White Paper, which does not require my right hon. Friend to act, in individual cases it has gone up to 80 per cent, or more, and these are very high percentages.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

That is perfectly true.T have the good fortune to be the chairman of a finance committee of a borough in Middlesex where a large proportion of the rateable value comes from industrial properties and where some 98 per cent, of the ratepayers have had a reduction in rates this year as compared with last year, but nevertheless the problem exists to a great extent in my constituency.

For the reasons which the hon. Gentleman stated, it is the predominantly residential areas which have suffered more than the mixed areas. We have been told that some time this Session we shall have legislation which will enable action to be taken to deal in some way or another with this problem. It will, I presume, take time to be got through. A lot of explanation will have to be given to local authorities and ratepayers once the Measure has been passed.

I think that such legislation is completely unnecessary in order to do something for the ratepayer, and for the residential ratepayer in particular. It could be done without any legislation—by a straightforward increase in the grant. The Minister indicated—and I do not accept this argument—that he could only increase the general grant by such amounts as are required to cover increases in the relevant expenditure as laid down in the Act, Quite frankly, I do not accept that. The Act states that the Minister shall look at relevant matters. It provides also that he must consult with the local authority associations before coming to a decision, and, having once come to a decision, he must lay before the House the specific amounts involved.

There is nothing in the Act which, as far as I can see, prevents the Minister from saying to himself that in addition to the relevant expenditure he will, with the consent of the Treasury, place an Order before the House making an increase in the general grant not only to cover relevant expenditure but to give assistance in respect of the general expenditure.

I can see nothing in the Act which says that the right hon. Gentleman cannot do that. Section 2(1,a) lays down that the Minister shall consider the latest information available to him of the rate of relevant expenditure (excluding, except in so far as the Minister with the consent of the Treasury otherwise determines, any expenditure of a description in respect of which no grant has been paid for years before the year 1959–60) … I would interpret that as meaning that with the consent of the Treasury the Minister can look at what had happened with expenditure other than relevant expenditure. I maintain that there is no absolute prohibition in the Act and that if he wants to do so, with the consent of the Treasury, the Minister can look at the global expenditure of local authorities. The Act says that he must pay particular attention to relevant expenditure on services under grants now stopped and replaced by the block grant, but I cannot see that the Act stops him from looking at the other expenditure as well.

The "get-out" is there. It enables the Minister, with the consent of the Treasury, to look at the other expenditure if he thinks it is desirable and there is a case for it. We ought therefore to be not just asking for such an amount as is necessary to meet increased expenditure, such as wages, on the relevant services, minus minute amounts for interest and things of that kind. If the Government are genuinely interested in helping the ratepayers, we ought to be providing in this Order not merely the amount necessary to restore the real value of the present grant already fixed but an additional amount which would give financial assistance to the ratepayer from 1st April next.

I maintain that we could be doing this tonight. We do not need an Act of Parliament. We could ask the Minister and the Treasury to pay an additional £50 million to local authorities throughout the country. There is no reason why it could not be done. If the Minister is convinced that it cannot, I hope that we shall have it placed on record in this debate which Act of Parliament or which Section of the Local Government Act, 1958, makes it impossible. I understand that the Minister can lay one of these Statutory Instruments at any time and, if we approve it, he can pay additional amounts to local authorities by way of general grant.

In this respect I rather like the idea of the general grant, because it makes it possible for any Government that really wants to help local government to find the money suddenly. I am absolutely convinced that a Government who want to assist the ratepayers at any time can do so by taking a couple of hours of Parliamentary time after 10 o'clock, whereas under the old system it would have required legislation. Why do not the Government take advantage of this alteration in the present Order, which must be made because of changes in relevant expenditure, to give general financial assistance to local authorities as a whole? We have had speeches from the Chief Secretary to the Treasury at the Conservative Party Conference and by the Minister of Housing and Local Government to the effect that the Government want to help ratepayers. If they really want to do so, they can do it tonight.

It is said that legislation which we are to have in due course will make it possible for local authorities to adjust the burden as between ratepayers in their area in some way not so far known to the House. I would argue that we ought to be discussing having more money now. At the same time, I follow the argument of the hon. Member for Bournemouth, West that if we have more money to distribute, then, because most of the areas hit by revaluation are areas where a large number of old people happen to live, a large proportion of that money ought to be paid out in that part of the distribution scheme which applies to people over 60 and 65 year, of age in any particular area. I think that can be done quite easily. It would save the time of this House and would be an easy method of dealing with the problem.

I suggest that the Minister does not press this Order, but that he should have a word with the Chief Secretary about it and try to persuade him that there is an easier way of dealing with the problem. The Chief Secretary wanted to do something in the matter; he told the Conservative Party Conference that he wanted to do something. I hope that it will involve the Exchequer's money going to help the ratepayers, and not something which will help one ratepayer at the expense of another. If the Minister really wants to help the ratepayers he should persuade his colleagues that the best way to do so is to increase the general grant and arrange the formula so that a considerable proportion of the increased grant goes to those local authorities with a large number of old people.

I should like to ask one more question, relating to calculations which are involved in connection with interest charges. I understand that there will be some changes in the way in which local authorities can borrow money from 1st April next; if the Bill which has been published is made law. Could the Minister tell us what assumption has been made in calculating the figures in the Report relating to the extent to which short-term borrowings of local authorities will change? The Bill will cause a considerable increase in the amount of short-term borrowings by local authorities, because the percentage figure up to which they can borrow is considerably higher than the amount up to which most of them are borrowing, and the Minister has now fixed what is considered to be a respectable figure up to which most local authorities will go. I should like to know what proportion of the total the Minister has assumed will be borrowed, payable over periods of less than 365 days. Some assumption must have been made in working out the calculations, and I should like that information from the Minister.

11.17 p.m.

Photo of Mr James MacColl Mr James MacColl , Widnes

I hope that the Joint Parliamentary Secretary will take very seriously what my hon. Friend the Member for Islington, North (Mr. Reynolds) has said, particularly about the interpretation of the Local Government Act. I was very surprised indeed to hear the Parliamentary Secretary's rigid interpretation of the Act in relation to the power of the Government to anticipate expenditure which is expected during the preceding year. It is an alarming thought.

I well remember the Committee proceedings on the Measure, and, although lawyers do not take any notice of what happens in Committee, I think that Parliamentarians ought to do so. My impression was that there was to be a wide view of what was likely to happen during the two years of the grant period. The interpretation which the Parliamentary Secretary has put on it tonight seems to be much narrower than that, and I should have thought narrower than the Act provides.

I should like to refer the Parliamentary Secretary to what I regard as a notable omission from his speech. How is the computer? Last year it was in rather a roguish mood. It was tossing out some rather odd interpretations of figures and statistics. I hope that in the year which has passed it has begun to mature and has become more solid and reliable. If it has, possibly it could produce some more percentages for us. I am bound to say that I am in complete confusion about this percentage gap. The Parliamentary Secretary was kind enough to write to me about a year ago after the debate which we had demonstrating, I thought, with tremendous fervour that the Government were paying 56 per cent, towards relevant expenditure in grant.

However, in a table printed in column 48 of Written Answers on 3rd April this year, a figure of just over54 per cent, was shown. Which is right? I ask because it is difficult to estimate how full and how comprehensive this grant increase is unless we know how it compares with the percentages of the original general grant. Again, knowing of the existence of the computer, I did not trouble to use my slide rule, but at a rough guess I should think that 55.5 per cent, would be the total cost of the expenditure. It would be very helpful if we could be told.

We might also be told something about the astonishing fertility of the old people of Bournemouth, because I was put completely out of my stride by the remarks of the hon. Gentleman the Member for Bournemouth, West (Sir J. Eden). I found it extremely difficult to believe what he said and I tried to check it quickly with the appendix in the Order. So far as I can see, the hon. Member is quite wrong. Bournemouth appears to be very much below the average when compared with comparable county boroughs of a similar size. I have not the facilities for calculating this, however, and I should be glad if we could be told about it, because it is something which ought to be cleared up. As the representative of a northern constituency I should be sorry to have to think that there is a southern area with people more virile and vigorous than those in the north of a similar age.

The hon. Member for the City of Chester (Mr. Temple) made a stimulating speech as he usually does. His discussion of teachers' salaries and the tax position of teachers seemed to me, at least, to be the beginning of an argument for the development of a local income tax system and I was very sorry that he stopped short in that argument. It might not be in order for me to try to develop it, and I will not go beyond what the hon. Member said but I repeat that I was sorry that he stopped short. It was an interesting speculation.

We are told that the proposals to reduce the rate deficiency grant have been dropped—or that is what I now understand. It may be my sluggishness, but I did not know that. I am prepared now to think that there has been an answer given in the House.

Photo of Mr James MacColl Mr James MacColl , Widnes

I wish that the Parliamentary Secretary had told me. Would it be indiscreet to ask if it is postponed until after the election, or is this the definitive policy of the Government—that there is not going to be any interference with the rate deficiency grant until after the election? Last year we discussed this matter under the shadow of the fact that there was an absolutely firm statement from the Minister that there would be this change. It was absolutely firm. There was no to-ing and fro-ing about it.

Photo of Mr John Temple Mr John Temple , City of Chester

The Minister of Housing and Local Government informed me, in answer to a Written Question in July, that the Government had no proposals for varying the rate deficiency grant.

Photo of Mr James MacColl Mr James MacColl , Widnes

This again makes me a little angry. I am glad in a way that my hon. Friend the Member for Fulham (Mr. M. Stewart) is not here because he would have been even angrier. We have had several quarrels with the Ministry about this habit of making important declarations of policy in a Written Answer to—I hope the hon. Member for the City of Chester will forgive me—a stooge. The hon. Member must have had some reason for putting that Question down. It is very odd that no one on this side knew anything about it or was told about it. It is really very wrong that the Minister should make an important declaration of policy like this, which means that the House is not in a position to examine its implications by question and answer across the Floor.

Another point raised last year and which was touched on tonight was the distribution formula. We were told last year that the Minister then was rather of the view that not much could be done within the existing law to alter the weights in the formula to meet the growing needs of local authorities. He said he was discussing with the associations changes in the statutory structure of the formula with a view to seeing what could be done. Perhaps this has been another Written Answer I have not seen. What has been the result of those discussions? Are we to expect any more drastic changes than are being made here in the weights?

The main point, and the most interesting development apart from teachers' salaries, is the new service to be provided under Section 1 of the Children and Young Persons Act, 1963. I express appreciation to the Joint Under-Secretary of State for being here. He made a meteoric appearance when the Act first appeared and we never saw him again. Now he is here at the winding-up proceedings, as it were, and we are delighted.

But I am a little disappointed by the figures. If they have been agreed with the local authorities, no doubt they know what is and is not possible. But I should have expected an expenditure larger than this, not this year, when the thing is coming into operation, but at least next year. I should have thought that more than £400,000 would have been spent on this preventive work in a year.

The sum sounds a lot but it is not a tremendous amount when spread over all the children's authorities. I believe there are about 150 of them, which means that it will average out at about £3,000 each. That does not seem to be much more than the salaries of a couple of case workers, whose salaries are, in any case, very low. This is not a very substantial contribution to make to this very important work.

This is the only sort of occasion on which we can discuss the financial implications of such important measures because they are wrapped up in relative expenditure now, but the sum for the children's service is certainly much lower than it should be.

The other point raised is the question of the rates of interest. I thought there was great weight in the intervention of my hon. Friend the Member for Bishop Auckland (Mr. Boyden). He asked what the basis of the calculations was. Was it taken on an actual measuring of the changes in loan charges returned by the local authorities? Or was it merely a notional calculation based on observable changes in the rates of interest which could be found in the Financial Times?

Those are very different things. A lot depends on the financial policy of the local authority. Quite a bit may depend on the creditworthiness of the authority. It seems a little hard that a local authority in good credit, which has borrowed money with care, should suffer more than one which had not been so skilful. Whether or not a local authority finances itself by loans or borrows, each item of expenditure must have an actual effect as opposed to a notional effect. I agree with my hon. Friends and, I think, the hon. Member for the City of Chester—I do not want to put words in the mouth of the hon. Gentleman, but I thought that he was taking the same view—that this is rather a shoddy performance. Here we have local authorities wrestling with a tremendous financial burden. As was said by the hon. Member for Chester, they are faced with expenditure increases comparable with those falling on other public bodies. They are in the forefront of the development of our social services. It seems absurd that after years of suffering from a policy of high interest rates and having had to go to the open market to borrow, now that there has been a slight change of interest rates in their favour, there should be this sudden cutting down of the grant; and despite the fact that there are likely to be other changes when the new legislation begins to work.

It seems wrong to deal with this matter in a "bitty" way. It should be dealt with when the whole mechanism of borrowing has been surveyed and brought up to date. As soon as local authorities are likely to gain some little advantage the Government start to be mean. They were mean about industrial re-rating which they took substantially into account when reducing the general grant. They threatened to be mean about the rate deficiency grant and were stopped only by the outcry and the likelihood of a General Election. They are taking the same attitude about this matter.

Although this is a debate about finance, we are dealing with the problems of ordinary men and women who are trying to cope with responsible duties and are continually under a tremendous financial worry. The Government attitude is not worthy of a senior partner in this important work. It is a niggling attitude. To put hon. Members out of their misery, because I cannot believe that they are sticking around to listen to me and so it must be because they think there may be a Division, I wish to make it clear that I shall not advise my hon. Friends to divide against the Order. We think that it is a poor thing, but it is better than nothing and so it should go through.

11.35 p.m.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I think that it would be right first to clear up any question about the legal interpretation put upon the Apt. I am told that, if one happens to be a lawyer and also a junior Minister, one must not be one's own legal adviser, but I shall attempt it tonight. If the hon. Member for Islington, North (Mr. Reynolds) will look again at Section 2(1) of the Local Government Act, 1958, he will see that the words are In fixing the annual aggregate amount to be prescribed under the foregoing section … and it is the foregoing Section which deals with the principal Order. I referred in opening to the fact that this particular increase Order was made under Section 2(4) under which it is clear that the order-making powers of the Minister are circumscribed by the need for an increase having regard to rises in costs over and above those current at the time of the principal Order. Those are the only circumstances in which an increase Order can come forward, and, once it is brought forward, it is only that type of increase in costs, remuneration, and so forth since the beginning of the period which could not be foreseen under the general Order which can be considered under this procedure. Anyhow, I am supported by the knowledge that that is the advice of my advisers on the matter. I think that it is clear that what the hon. Gentleman was quoting referred to the General Grant Order.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

I accept what the hon. Gentleman says about that, but I have not noticed that he can provide for only 50 per cent, of the increase in such an Order. It is clear that he could make an Order for the whole of the increase, is it not?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

No. Under the same Section—I think it is subsection (3)—there is a requirement on the Minister to apportion the increase and apportion the formula in the same way as the apportionment for the general grant; and I think that I am right in saying that that automatically must tie the apportionment under the increase Order to the apportionment already settled a year ago.

I now take up the question of costs under the Children and Young Persons Act raised by the hon. Member for Widnes (Mr. MacColl). All these matters, of course, have to be based on estimates submitted by the local authorities and aggregated. As regards this particular estimate, the Government, operating eventually through my right hon. Friend the Home Secretary, took the view that the local authorities had been somewhat less than generous to themselves and aggregated the estimates upwards rather than downwards. Therefore, if there is any error here, it arises solely from the local authority estimates and in no way from any meanness on the part of the Treasury. Perhaps my hon. Friend the Member for the City of Chester (Mr. Temple) will put that in favour of the Treasury and against all the other black marks he has been awarding.

The hon. Member for Hayes and Harlington (Mr. Skeffington) and other hon. Gentlemen raised the question of interest rates. The point here is simply that this is something which has always been taken into account, although on previous occasions it has always represented an increase in the costs rather than a reduction. The calculation is extremely involved. I will gladly write about it to the hon. Member for Widnes and to any other hon. Member who is interested. I have seen it worked out. The calculation covers four pages of foolscap, and I do not think that, even with that documentary assistance and the assistance of a blackboard, I could make it particularly plain.

I assure the House that the basis of the calculation has been exactly the same whether it has operated for or against the local authorities. I know that, on the face of it, it can be argued that this is rather mean, as it is less than £1 million in the first year and only £1 million in the second year—because we aggregate upwards to the nearest £1 million—but this is the consistent practice, and I think that the House will agree that if one makes rules it is as well to keep to them, and that once one starts making exceptions one gets into even greater difficulty.

It is true that the local authority associations brought a delegation to the Ministry. I saw its members, but I must say that they did not seem to me to make a very strong or logical case. They were mainly concerned with the difficulty of estimating, and this is something one can understand. If one looks over the history of the General Grant Orders, it is noticeable that the estimate is further out in the second year of the pair than it is in the first. That is something we shall certainly look into, but whether one takes in the interest figures—and, if one does, whether one does so only when they are favourable and not when they are against—is quite a separate issue. Apart from that, I can assure the House that the local authority associations are in full agreement with the basis of the Order.

As the hon. Member for Widnes has reminded us, the percentage is an involved matter, but I can assure him that the proportion remains the same; I think it is 56.5 per cent. He will probably remember that we had a rather difficult discussion last time, because there is a figure under the heading "Accommodation for the aged and infirm" which is added only to be subtracted again. That is because it is not at present included in the general grant calculation at all but it has been agreed with the local authorities to negotiate it in future.

The figures are, therefore, included, in order to provide a base, so to speak, over the next grant period for calculating what should be the proportion of general grant to expenditure to take account of this service. The expenditure figures relate at the moment to an amount in the grant based on so much per place. We have put them in as a sort of informative feature, but they do not form part of the calculation. We have to takeoff that figure before working out the calculation, and I think that the hon. Gentleman—with or without his slide-rule—will come to the conclusion that the proportion works out at about 56.5 per cent.—

Photo of Mr James MacColl Mr James MacColl , Widnes

I appreciate what the hon. Gentleman says, but when I read the figures in this Written Answer—

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I was about to refer to the Written Answer. We are solely concerned with the proportion of the Government's contribution to the grant-aided services, and I think that I am right in saying that the hon. Member's question was related to a much wider series of services. Clearly, one can get out a different series of percentages according to the particular range one takes. If one talks about housing, highways, and many other things—

Photo of Mr James MacColl Mr James MacColl , Widnes

I get my figures from the Written Answer in column 48 of the Official Report of 3rd April, 1963. The 1963–64 expenditure is there given as £1,036 million, which is as near as may be what is in the Order, and the grant, is given as £562 million which, again, is as near as may be to what is in the Order. Then we have 54.2 as the percentage met by grant. I have not checked whether it is that; I hope that the computer would be less roguish, and would tell us.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I am sure that that is the right answer, but I will check it again and, if it is wrong, I will write to the hon. Gentleman. I checked it before I came into the Chamber, because I noticed particularly that, on the face of it, it was. not 56.5 per cent. However, I am assured that that is the right answer.

My hon. Friend the Member for City of Chester again raised the question of the formula, but he also referred to the question of the increase and suggested that as the increase in education appears to be the greater increase, then the percentage grant on the other services was less than it appears to be. I find that the proportion of local government expenditure under the grant-aided services which is attributable to education has remained remarkably steady; over the three sets of grant periods it has remained within one or two decimal places. That may be surprising, but it is so, so that clearly the very considerable increase in education costs does not alter the percentage attributable to the other services.

Photo of Mr John Temple Mr John Temple , City of Chester

Is it not correct that the percentage for education is 87½ per cent. and that the 1 per cent, or 2 per cent, to which my hon. Friend referred is a substantial factor because the remainder of the services get only 12½ per cent.?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I do not follow that they get only 12½ per cent.

Photo of Mr John Temple Mr John Temple , City of Chester

The figure I got from my hon. Friend's Department is that within the General Grant Order education takes 87½ per cent.—seven-eighths. Therefore, all the other services get 12½ per cent. If there has been an alteration of 1 per cent, or 2 per cent., that has brought the 12½ per cent, down to about 10 per cent, which is a relatively considerable reduction.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I did not say 1 per cent, or 2 per cent. I said ·1 or ·2 per cent. I find my hon. Friend's financial approach—by which we take into account what the Treasury might get back in tax—to say the least a little unorthodox. If we started on this game we should get some odd results, not least in the comparison of hon. Members' salaries with other forms of receipts and expenditure. I do not believe that we can run any set of accounts on such a calculation. I am grateful to my hon. Friend for his offer to hold my hand, but when I get to that stage I hope that I shall have the humility to retire. While I am here I will try to fight my own battles.

Photo of Mr Gerald Reynolds Mr Gerald Reynolds , Islington North

I have a certain sympathy with the Parliamentary Secretary's argument, but his hon. Friend was advancing exactly the argument used by the Ministry in taking away from local authorities a proportion of the money which they gained when industrial derating was reduced. The argument was that the Treasury was losing money because industry would claim relief on the payment, and therefore the Treasury should take money from local authorities. The hon. Member cannot have it both ways.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

But when I put that argument to my hon. Friend he was not so happy to take that side of the account. If one did these sums accurately one might well find that it did not come out quite so beneficially as at first appears, but if we started this kind of thing in the public accounts we should have some odd results and the computer of the hon. Member for Widnes would have to be amended. The hon. Member for Bishop Auckland (Mr. Boyden) referred to the sum required under the North-East plan to meet local authorities additional expenditure. I must emphasise that this Order takes into account only the increased costs and remuneration which affect the services which are already provided for in the main Order. They do not take into account and, I understand, cannot take into account under the Act any increase in the scope of the services but merely increases in the cost of carrying out the services as estimated at the time of the main Order. Most of the extra expenditure falling on local authorities in the North will be of a capital nature, so that any expenditure which would come into the General Grant Order or an increase Order would be only in relation to the loan charges and would probably be very minimal in relation to the total sums, although no doubt of importance to individual local authorities.

With regard to teacher remuneration under both heads mentioned by the hon. Gentleman, we are looking only to costs and remuneration which have actually taken place since the passing of the main Order. It is clear that under the main Order one takes into account not only increases in costs that have occurred but any that can be foreseen, whereas under this Order we are operating from hindsight rather than from estimates or attempted foresight as to what may happen. That probably answers a number of points as to what estimates have been made about the future.

My hon. Friend the Member for Bournemouth, West (Sir J. Eden) raised, quite naturally, the question of the formula in the context of the difficulties facing elderly people, of whom there is a larger proportion in his constituency than in other parts of the country and who, we all know, are facing difficulties. The problem is that we start with the main Order, on which, as a result of the formula published in it, all local authorities will have calculated what they can expect as their share of the total General Grant. If the proportion is altered in any way half way through, the expectation of the local authorities which have made that calculation is clearly altered. That would be wrong. We pass an increase Order. We add the increase on to the relative total for the appropriate years, and then adjust the formula to get the same result, as near as may be.

Obviously, if the money is increased the various factors have fractionally to be increased in order to get the distribution at the same proportion. This is all we have done here. Although technically I do not think there is anything in the Act to prevent one altering the proportions, it clearly would completely upset people's expectations, budgeting, and everything else and it would be wrong. If it were worked out on a basis that a particular area—we will take Bournemouth as an example—received the same amount of money, only differently distributed, one would almost inevitably find that the result was wholly different when applied to a different town. This would be quite wrong in the middle of a period.

Nevertheless, as the hon. Member for Widnes pointed out, a study is going on at the moment. It will go into the whole question of the formula for the purpose of future general grant periods. I am sure that my hon. Friend the Member for Bournemouth, West will advise his constituents and the Bournemouth Town Council to put their case before that working party. This examination, unlike the examination which under the Act automatically takes place before every General Grant Order is introduced, is spreading much wider and is considering the whole question irrespective of what is in the Act. As the House knows, the factors which have to be taken into account are laid down in the Act. The actual multipliers can be altered at each General Grant Order. But the actual factors are in the Act and cannot be altered, with one minor exception of a transitional nature. They must be there, and no new ones can be added. Obviously we can get across the problem of leaving out any of these factors, technically, by putting a very nominal figure against it, but we cannot put in any more, so we are looking at this problem in the widest way, and it will be open to local authorities or their associations to consider matters whether or not they are covered by the Act.

Photo of Mr John Eden Mr John Eden , Bournemouth West

Does that mean that there will be no change in the weighting, or in the consideration given, for example, to elderly people, before the period 1965–66 and 1966–67?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

That is true, within the scope of the General Grant Order.

Photo of Mr James Allason Mr James Allason , Hemel Hempstead

Can my hon. Friend say whether, when he finds that there is a genuine factor which is not at present in the Act, the working party will be allowed to deal with it and make recommendations, even if it means an amendment to the law? I am thinking in terms of a factor of expanding population.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

That is the point I was making. We are deliberately widening the inquiry beyond what is in the Act. If a strong case is made for including a factor which is not there, we have not closed our minds to legislation.

The hon. Member for Widnes also raised the question of percentages. I have touched on that. I can assure him that the sum comes out the way I have done it, but I will look at it again to see if I have taken into account the points that he mentioned.

I hope that I have answered most questions. I will write to the hon. Member for Hayes and Harlington and the hon. Member for Widnes as to the complex calculation about interest rates, but once again I assure the House that the same basis is used both ways, and that we are not doing anything more beastly to the local authorities than the local authorities did to us when it went the other way.

Question put and agreed to.

Resolved, That the General Grant (Increase) Order 1963, dated 26th November 1963, a copy of which was laid before this House on 28th November, be approved.