Local Government Finance

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 9th March 1965.

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Photo of Mr Ian Gilmour Mr Ian Gilmour , Norfolk Central 12:00 am, 9th March 1965

asked the Chancellor of the Exchequer if he will make a statement about his plans for transferring a larger part of the burden of public expenditure from the local authorities to the Exchequer.

Photo of Mr Geoffrey Rhodes Mr Geoffrey Rhodes , Newcastle upon Tyne East

asked the Chancellor of the Exchequer whether he is satisfied with the present system of financing local government services; and whether he will now make a statement about his plans for transferring more of the growing burden of local government costs to new sources of finance.

Photo of Mr John Biggs-Davison Mr John Biggs-Davison , Chigwell

asked the Chancellor of the Exchequer what are now Her Majesty's Government's plans for transferring part of the rate burden, particularly for education, to the taxpayer.

Photo of Mr Dudley Smith Mr Dudley Smith , Brentford and Chiswick

asked the Chancellor of the Exchequer if, in view of the considerable increase in rate demands this year, he will now reconsider his policy and transfer more of the cost of education to the National Exchequer.

Photo of Mrs Margaret Thatcher Mrs Margaret Thatcher , Finchley

asked the Chancellor of the Exchequer when he will have completed his review of the rating system; and whether he will make a statement about that part of the review which has been considering what steps to take to overcome the disparity between rating valuations for houses and flats of similar accommodation.

Photo of Mrs Renée Short Mrs Renée Short , Wolverhampton North East

asked the Chancellor of the Exchequer if he will announce his plans for transferring a greater part of local government expenditure from the ratepayers to the Exchequer.

Photo of Mr Richard Buchanan Mr Richard Buchanan , Glasgow Springburn

asked the Chancellor of the Exchequer when he will make a statement on his plans for transferring the major portion of the burden of public expenditure from the local authorities to the Exchequer.

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

As my hon. Friend the Financial Secretary to the Treasury stated in answer to the hon. Member for Southampton, Test (Sir J. Fletcher-Cooke) on 5th February, we have taken steps to intensify work on the review of local government finance. This is a complex subject and I cannot yet give a completion date.

Photo of Mr Ian Gilmour Mr Ian Gilmour , Norfolk Central

A study of local government finance is very different from what the right hon. Gentleman's party promised at the General Election. Is he aware that, so far from diminishing the rate burden, the measures which he has taken have already increased it, and will he undertake at least to undo the damage which he himself has done?

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I do not think that local authorities generally share the hon. Gentleman's view. I find that they are being extremely co-operative, because they recognise the complexities of a review of this kind covering not only grants but the sharing of the burden between central and local government and the means of raising revenue. These are complex matters and the local authorities are helping us to investigate them very thoroughly.

Photo of Mr Geoffrey Rhodes Mr Geoffrey Rhodes , Newcastle upon Tyne East

Is my right hon. Friend aware that between 1955 and 1963 the rate burden in this country actually doubled and that this highly regressive and unfair form of taxation is now our most steeply rising form of taxation? Will he act with urgency in this matter, particularly as it has been reliably calculated that the rate burden in, for example, the city of Newcastle-upon-Tyne will double in the next nine years?

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

It has been evident to the House and the country for some time that the level of the rate burden will continue to rise as a result of the burdens which are imposed upon local authorities and the duties which they have to carry out. Although I cannot check in my head the figures which my hon. Friend gave, I must add that, in considering this question, we have to remember that ratepayers are also taxpayers. [HON. MEMBERS: "Are they."] Sometimes they are the same people and sometimes they are not. Therefore, in reaching a conclusion on this problem, one has to consider where the burdens should rightly fall.

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

Will my right hon. Friend remind hon. Members opposite that, in urging the transfer of the burden from the ratepayer to the taxpayer, they must keep carefully in mind that it always happens that he who pays the piper calls the tune?

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

That is a consideration in the minds of many local authorities which are now deriving more than half their revenue from the central Government.

Photo of Mrs Renée Short Mrs Renée Short , Wolverhampton North East

Is my right hon. Friend aware that a good deal of the concern among local authorities about the rate burden is directed against the general grant introduced by the previous Administration, which penalises progressive local authorities which want to expand their services and those which have experienced an increase in their population? Will he, therefore, see that this burden is removed from local authorities after he has completed his review?

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

My right hon. Friend the Minister of Housing and Local Government has already said in this connection that he will be reviewing the whole subject of the general grant.

Photo of Sir Albert Costain Sir Albert Costain , Folkestone and Hythe

The Allen Report shows injustice to elderly people on the question of the rate burden. Will the Chancellor give further consideration to overcoming this difficulty at the earliest possible moment?

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

This is one of the aspects of the rating problem which must be considered very seriously and sympathetically, because there is a great deal of feeling about the more elderly people in our population. But we must be allowed to take time to examine the question properly and reach sound conclusions about it.

Photo of Mr Trevor Park Mr Trevor Park , Derbyshire South East

Does not my right hon. Friend agree that both local and national taxation ought to be related to income and that the present rating system needs very much to be changed and improved in this respect?

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

As a general principle, I accept that taxation is best when it is related to capacity to pay.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Is the right hon. Gentleman aware that the answers he is giving, careful and considered as they are, imply that he and the Government are examining this problem entirely afresh, whereas he and his party gave a clear undertaking at the election that they would make early transfer of expenditure from the local authorities to the central Government? Would it not have been more honest to the electorate if the party opposite had said that they would make an inquiry instead of giving a definite pledge?

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I think that the right hon. Gentleman would have equally complained if, having got the evidence which is becoming available, we did not examine it before reaching conclusions.