Local Government (Rate Support Grants)

– in the House of Commons at 12:00 am on 10th December 1970.

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Photo of Dr Horace King Dr Horace King , Southampton, Itchen 12:00 am, 10th December 1970

It has been suggested to me—if it has the approval of both sides of the House—that we take the first two local government Orders together—one on the rate grant and one on the rate grant increase. Is there any objection, If not, then the Minister will move the first Order and we shall debate both of them. If necessary, at the end of the debate we can divide on each Order separately.

Photo of Mr Stanley McMaster Mr Stanley McMaster , Belfast East

On a point of order. May I express through you, Mr. Speaker, some apprehension about the number of naked lights and paraffin lights that are about, and ask whether a supply of buckets of sand or water may be made available? Will you also urge hon. Members who may not be used to handling these articles that they are dangerous, and that some precautions should be taken because of all the papers that are about, and the fabric of the building?

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I thank the hon. Member for his anxiety. We must carry on under difficulties. I said yesterday that for centuries the House has carried on under difficulties compared with which these are nothing. I still hope that in spite of what the hon. Member has said we may have a greater number of lights. I understood that there was to be an attempt to hang some from the Lobbies—[Laughter.]—I mean, from the galleries. I am grateful to the House for its forbearance in relation to supplementary questions. I found it difficult to see those hon. Members who were in the remote corners.

5.7 p.m.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I beg to move, That the Rate Support Grant Order, 1970, dated 20th November, 1970, a copy of which was laid before this House on 26th November, be approved. The subject of rate support grants and their technicalities is a topic that would tend to send the House to sleep without its being in darkness. I apologise to the House for the technicality of this topic. This is the third rate support grant Order to be made by this House since the new system of rate supports came in about six years ago. I want to make one or two general remarks about the system of rate support and the way in which it has operated, especially in the last year.

First, it is vital that we should recognise the enormous dimensions of the expenditure that we are involved in in local government. If we take both current expenditure and capital expenditure of local government, local government now administers about £480 a year for every family of four. Therefore, local government is responsible for the administration of about £9 a week for every such family. Thus, it is an enormous sphere of expenditure, and it is vital that every precaution is taken to see that the money so spent is spent efficiently and effectively, and is administered well. Of this total current expenditure, the central Government are currently providing 57 per cent., which, as a result of these Orders, will rise to 58 per cent. over the two-year period. Thus, the taxpayer has a considerable payment to make for all the expenditure of local authorities.

I am concerned about the myth which tends to be built up that the rate support grant is a sort of benevolent act on the part of the Government, irrespective of the fact that the money has to be found. When we are talking about the proportion that should be met by the central Government, we are really talking about the proportion that should be met by the taxpayer as opposed to the ratepayer. The proposals made here are designed to increase that proportion, as indeed the proportions have been increased since these Orders first came in.

Another part of the machinery of rate support is the increase Order, one of which I am moving—and it is a substantial increase Order at that.

This concerns the increases that take place primarily in terms of costs and wages on those matters which are agreed as being appropriate for grant. In looking back over the six years, I hope that the House will recognise that on one occasion this procedure was broken. That was in 1968, when the then Government told local authorities that they would not move an increase Order, although local government was fully entitled to have one moved under these procedures.

Perhaps in considering the total pattern of rate support grants in the six years during which they have been in operation, and the request that I have made to local authorities this year to reduce the total agreed expenditure by £10 million in the first year and £25 million in the second year, it will be borne in mind that the single act in 1968 of refusing an increase Order had a total effect of £100 million over that period, of which local authorities managed to save, by various methods, £50 million, though they had to pass on £50 million to the ratepayers at that time.

I believe that that is the wrong way to apply a Government decision—to try to squeeze local authorities—because it puts them in a position of impossible uncertainty about the future. We have, therefore, accepted, under the normal formula, the increase Orders that have to be made, and now local authorities are clear for the coming two years about the type of savings that they should make within the total amount specified here.

There are three basic elements to this Order: the domestic element, the resources element and the need element. In coming to our consideration of the total, the Government have three major matters to take into account. The first is the position on present expenditure and the general forecast. The second is any change or changes in demand and population changes that are likely to take place.

For example, on the question of demand, there is the likely increase in the size of the population in the schools or the likely increase in the number of elderly people needing welfare services. There are, of course, in addition, the various changes in population that take place in different parts of the country.

The third consideration is the general economic situation, and the total of the grant is always made within that context.

One of the most fundamental points is the agreeing of the figures. All sides in the consultations this year are agreed that there was a better method of agreeing the figures than there has ever been before. There was agreement on the figures, and officials of both the local authority associations and of my Department put in a new system for examining the position, and this covers a long period. On behalf of both sides of the House, I wish to pay tribute to those who took part in these talks and the manner in which they reached detailed agreement on this difficult and complicated matter.

Officials of the local authority associations and my Department spent many hours and put in a great deal of work trying to reach a settled agreement about the exact nature of the figures. All agree that the system adopted this year was beter than that adopted ever before. However, they have agreed to try to find even better ways of tackling the problem, and I am sure that the parties concerned will achieve their aim in this respect.

As to the domestic element, traditionally up to now there has been an increase in this element of 5d. per year to the benefit of the domestic ratepayer. The proposals for the coming year are to reduce this to 2·8d. in old terms. I prefer to stick to the old rather than go in for the new pence in this matter, mainly because this method is better comprehended at this time in our history.

This is still, however, within the general theme of the original White Paper on the system of giving this particular form of advantage to the domestic element. It was suggested that over the years there was a need for this, so that the total increase should not fall on the domestic sector. Hence, the alleviation that look place. It was originally envisaged that about one-half should be met by this domestic element. In the past few years more than one-half has been met by the domestic element, and these proposals will tend to bring it more in line with the original intention of the White Paper. There will still, as a result of the increase in the total percentage, be enough to meet the whole of the suggested increase in the domestic element. There will also be a surplus on top which will go to the benefit of the general ratepayer.

As for the progression of the increase, which, in the past, has been by 1 per cent, per annum, we are suggesting here that for the next two years it should be one-half of 1 per cent. per annum. In this connection when considering the original intentions, it is interesting to note that in debating the Second Reading of the legislation that brought the present system into operation, the then Minister was asked whether the increase of 1 per cent. per annum would go on for ever.

He replied that it clearly could not and that it could go on only for a period. There must obviously come a time when the 1 per cent. increase must slow down, and it is for this reason that we have considered it right, instead of eliminating the 1 per cent. increase, to reduce the rate of increase by one-half of 1 per cent., and that is the proposal made in this Order.

I will put to hon. Members the basic consideration which we took into account in reaching this decision. I compare these with the altitude of the previous Government when they last increased an Order of this description, which was, of course, in the Order of 1968. First, as for the general view that local authority expenditure must have some relationship in its increase to the general increase in the gross national product and the strength of the economy, in 1968 the Government of the day said in their White Paper: 'Taking local authority expenditure as a whole, the Government expects that in 1969–70 local authorities as a whole will restrain the level of their expenditure so that it does not in total exceed a figure in the region of 3 per cent, in real terms above what has already. been agreed for purposes of the Exchequer contribution in 1968–69, and the Government will propose rate support grant for 1969–70 on this, basis when the time comes'". Thus the Government clearly stated that due to the lack of growth in the economy and due to the fact that local authority expenditure had consistently risen faster than the rate of growth, there was a need to put some sort of curb on the rate of increase of local government expenditure.

The White Paper went on: Expenditure by local authorities is therefore a very important factor in the management of the economy. In the past, moreover, local authority revenue expenditure has grown at an annual rate of 6 per cent. or more a year in real terms and much faster than the growth of the economy as a whole. Divergence on this scale cannot be allowed to continue, and the Government foresee the need for continuing restraint in the growth of local authority revenue expenditure over the years immediately ahead". Therefore, the then Government considered that due to the rate of economic growth and the need to relate the increase in local government expenditure to that growth, there was need to fix the rate support grant in that year on the basis of an increase in real terms of 3 per cent. in the first year and 5 per cent. in the second year. What I am proposing now is what for two years will be a faster rate of growth than was envisaged in the previous White Paper and, once again, in real terms at constant prices.

There is also need for the House to consider the individual elements which have gone into making up the total picture, and which are discussed in both White Papers item by item. Perhaps I may bring the attention of the House once again to comparisons of the two White Papers. In 1968 the previous Government said on the subject of education: The expenditure envisaged in education allows in full for the expected increases in the numbers of pupils in primary and secondary schools and for the likely growth of further and higher education. It takes account of the increase in loan charges as a result of the growth of the educational building programmes, and of the expected increase in the numbers of teachers in primary and secondary schools, which should make possible some improvement in staffing standards. There will however be room for only a limited improvement in other standards. That was the view which the then Government had for expenditure on education over the two years in question.

On this occasion my right hon. Friend the Secretary of State for Education and Science has already announced proposals which affect the position, particularly in regard to primary schools, and, therefore, in the passage on education, although once again we had to suggest that there was need for a certain degree of restraint, we have taken account of the increases proposed by my right hon. Friend. Perhaps I can give the House the comparison in respect of education. This Order provides for a growth rate in 1971–72, the first year, of the order of 5·1 per cent. and in the second year of 4·9 per cent., in real terms, compared with the provision in the previous White Paper of 3·8 per cent. and 3·9 per cent. for the two years there concerned. So, on education, this rate support grant in real terms provides for an improvement in the education services at a faster rate of growth than that envisaged in the White Paper introduced in 1968.

On local health and welfare services my right hon. Friend the Secretary of State for Social Services has made a pronouncement that part of the total Government measures in this sphere is to carry out greater activity in certain aspects of health provision, particularly in respect of expenditure on services for the mentally handicapped, the mentally ill and the elderly. As a result, the rate support grant provides for a substantial rate of growth in those services. In the two years covered by it the welfare estimates give a growth rate in 1971–72 of 16·9 per cent, and in 1972–73 of 12·3 per cent. In the previous Government's White Paper there were substantial movements in the first year and a slowing down in the second, the figures being 16 per cent, and 7·3 per cent.

Total police expenditure includes expenditure on traffic wardens. The 1968 White Paper provided for quite a substantial increase in growth expenditure for the purpose of recruiting more traffic wardens then. The increase expected in this expenditure for the coming year will not need, in the view of those concerned with the estimates, as much growth on the traffic warden side but a faster rate of growth in the police force itself. Those figures are included in the provisions.

Another important item is sewerage. I am sure that the right hon. Gentleman the Member for Grimsby (Mr. Crosland) would agree that it would be very nice if someone could invent a very cheap way of handling sewage. The Jeger Report said that there was need for a substantial increase in expenditure on sewerage. This is a world-wide problem. One must confess to a slight sadness as one goes round the country opening various sewerage works to replace former works built in the 1890s to see a remarkable similarity between the two. One would have hoped that the advance of technology and chemical engineering might have done something to provide a less expensive method of dealing with this enormous problem. We now envisage considerable increases of Government and local government expenditure on sewerage. For the two years within this present Order we envisage increases of 7·7 per cent, and 7·2 per cent, in real terms. This current expenditure will be accompanied by very substantial capital expenditure in this direction.

Perhaps I can now compare the position of highways and roads as dealt with in the two White Papers. In the 1968 White Paper the then Government stated: The standard of maintenance of roads of lesser importance in this country has generally been on a high level, but given the country's economic situation, and in view of the limited amount of resources that can be spared for roads as a whole, including the national road system, the Government's view is that no serious risk is involved in continuing to impose severe restriction on maintenance expenditure on minor roads in 1969–70 and 1970–71. This year we are having a level of expenditure on non-principal roads which reflects the restrictions announced by my right hon. Friend the Chancellor of the Exchequer and the allocation of capital expenditure by local authorities. Where the general standard is considered to be good an allowance has been made for a reasonable increase of expenditure, so in the total estimates it is envisaged that some maintenance work will be contemplated.

We see a growth of expenditure on these various items which are a consistent reflection of Government policy. There is a substantial increase in education, although there is a reduction, once again as a result of Government policies, in expenditure on school meals and milk. This, as I say, is part of the policy proposals announced by the Government.

Photo of Dennis Skinner Dennis Skinner , Bolsover

With regard to expenditure on education and, in particular, with regard to the amount of money being spent on the reallocation of primary schools, has the right hon. Gentleman taken notice of the plight in Derbyshire? Having been a member of the education committee there prior to coming to this House, I know that we were rather concerned about the allocation made by the previous Government, which was then set at 3·6 per cent. of the total allocation. When I went to my constituency last weekend I found that a Press statement had been issued by the county council, Tory controlled as it is—by the Tory chairman of the education committee—saying that the allocation had fallen from the 4·1 and 3·6 of the previous two years to 0·4 per cent, in this allocation—a drastic reduction of 89 per cent. What has the Minister to say about that?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

It is certainly not as a result of what we are discussing now. We are discussing the rate support grant in respect of education for the coming two years, and there is a substantial increase in real terms in the rate of growth in education for the coming two years as opposed to the amounts in the previous two years which were designated by the previous Government. I cannot make a detailed comment on the primary school building position in Derbyshire without prior notice of the facts, but for primary schools in general announcements have been made of a substantial step up on the programme previously envisaged by the previous Government.

Photo of Dennis Skinner Dennis Skinner , Bolsover

Will the Secretary of State accept that whilst this is not a matter of dealing with specific capital expenditure in 1972–73, he referred a few minutes ago very briefly to the growth of capital expenditure?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I do not deny that I mentioned capital expenditure, but we are here dealing with the rate support grant. As to capital expenditure on primary schools, my right hon. Friend the Secretary of State for Education and Science has announced a considerable stepping up of the primary school programme, and that is a fact.

I come now to what is, perhaps, the most controversial question from the point of view of the local authorities; that is to say, my decision that, after having agreed the estimates and the total figures with them, I would ask them to make an additional cut in their total expenditure of £10 million in the first year and of £25 million in the second year.

I recognise that the local authorities, having sat down with us and discussed their estimates and figures, are, naturally, disappointed to receive a general request of that nature when they have many things on which they would like to go ahead. However, I think that to make a general request to them for efficiency and a cutting back is a much better method than the one used by the previous Government when they refused an increase in 1968. I consider that there is still considerable scope for making general savings over the whole sphere of local government expenditure.

Photo of Mr Julius Silverman Mr Julius Silverman , Birmingham Aston

The reductions of £10 million and £25 million are to encourage efficiency. Is not this cut applied equally to local authorities which are inefficient and to those which are already efficient? Is not that the consequence of the method which the Minister proposes?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Yes, but one could argue that as a defect in the system as such since we do not do a separate negotiation with each of the 1,600 local authorities. As the system stands, there is one financial negotiation in which the Government can exercise a certain overall influence. As I say, the last Government acted by refusing to give £100 million in an increase Order, saying that local authorities were expected to make this up by improvements in efficiency and savings elsewhere.

We are making a graduated request which, in terms of the total expenditure, is of relatively small proportions. I believe that it works out at ¼ per cent, in the first year and ⅔ per cent, in the second year. I do not use those figures as statistics to be strongly defended because I recognise that there is a large section of local government expenditure which cannot be varied; on items such as teachers' salaries and so forth one cannot show any overall saving. Therefore, in referring to percentages of that sort, I recognise that local authorities cannot make savings throughout, but there is, nevertheless, a massive area of expenditure in which one can work for the relatively limited saving which I have requested.

There are two ways in which local authorities generally could be more active than they have been in securing higher standards of efficiency. First, I refer to their own organisation, L.A.M.S.A.C. the Local Authorities Management Services and Computer Committee, an advisory organisation for management consultancy on the use of computers and the like. Those local authorities which have used this service—about half of them—have found considerable benefit. What I find depressing, however, is that, although many of the major towns and cities have used the service, less than 40 per cent, of the smaller authorities have contacted the organisation with a view to taking advantage of its services. I should expect the smaller authorities to gain more benefit from them. L.A.M.S.A.C. set up a small consultancy service for work study six months ago, and it has just decided to double its service by providing further officers for this purpose.

A charge is made for the service, but I understand that the fees are much lower than those charged by private consultants, and I believe that in this way the local authority associations collectively, by supporting L.A.M.S.A.C., are trying to bring to the attention of local government a very useful service. I believe that, used to a much greater extent, it could greatly help.

The other way in which savings could be made is through purchasing methods. Local authorities purchase about £1,000 million worth of goods a year. They are very big buyers indeed. Recent legislation passed by the previous Government gave them powers to collaborate with neighbouring authorities in purchasing schemes. They can, therefore, have the benefit of greater bulk purchasing by getting together. I am sure that in this way, bearing in mind the tremendous level of local authority purchasing, authorities could find ways of reducing their costs and helping to make the savings for which we are asking, savings which, as I have said, are relatively small in terms of the total.

Although there is this criticism made by the local authorities at the additional imposition, at the end of the negotiations, asking for a degree of increased efficiency, I believe that they will not only recognise overall that we have operated the rate support grant system more efficiently than ever before as a result of the detailed negotiations which took place, but also, in view of the general economic position and the lack of growth over the past few years, they will recognise that, in asking them to go ahead with a rate of growth much faster than the rate of growth in expenditure by the central Government, we are being fair and reasonable.

On that basis, I commend the Orders to the House.

5.35 p.m.

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

The Secretary of State said that this was a subject which might send the House to sleep. That is certainly not true of the content of the subject, which is of the greatest importance to every citizen. It might be said to be true of the right hon. Gentleman's rather soporific speech. I can think of no greater contrast than that between the speech which the right hon. Gentleman made today and the one which he made in the equivalent debate on the previous rate support grant Order two years ago. He was then very polemical, party-political and irresponsible in the line which he took. He accused the Government, above all, of concealing the consequences of what they were doing, both for the standard of local authority services and for what would happen to the rates.

Here are one or two typical sentences from the right hon. Gentleman's speech on 9th December, 1968. He said: I assure him "— the then Ministerthat if, in our judgment, the economic situation was very bad—for example, as bad as we were told it was a fortnight ago—then, obviously, we should have to be as tough as this and perhaps even tougher". The present Government have been not merely as tough as that; they have been even tougher. He went on: … but we would tell the country precisely what the position was and what we were doing ". That we certainly did not hear this afternoon. He said, a little later: I urge them "— that is, the then Government, two years ago— to be honest with the country and to tell the people that there will be a need for an increase in rates or a cutting down of services."—[OFFICIAL REPORT, 9th December, 1968; Vol. 775. c. 50-59.] We certainly have not been told that bluntly or frankly this afternoon.

Two years ago, a large part of the right hon. Gentleman's speech and that of his hon. Friend the Member for Crosby (Mr. Graham Page), whom we have with us on the Front Bench this evening, was concerned also with the lack of information both in the Order and in the speeches of Ministers at the time. There is an almost total lack of information given to the House today. We have not been told how the increase in estimated expenditure in these two years compares with the average, for example, of the last five years or the last 10 years. We were told nothing about what the consequences would be either for rates in general or for the domestic ratepayer in particular. I can remember no similar debate of this kind when the House was given less information.

One thing is absolutely clear, however. The Order accurately reflects the Government's basic philosophy. This is an Order hostile to essential public expenditure. It is an Order which shifts the burden of essential local services from national taxation, which is broadly progressive, to the local rates, which are socially regressive. Taken in conjunction with the Chancellor's mini-budget of a few weeks ago, the Order continues a deliberate process of redistributing income from the less well off to the better off. I shall substantiate each of those points one by one.

First, I say that the Order is hostile to essential public spending. There can be no doubt about how essential this local spending is. These debates are, for natural reasons, usually not very well attended, but the subject is nevertheless of direct relevance to basic standards in education, in the health services and personal social services, in the police service, in the fire service, in the sewage treatment and refuse disposal services, and the rest.

The Government show hostility to essential public spending because they set out their philosophy clearly, although not for the first time, in the report on the Order. I quote paragraphs 8 and 9: In view of the Government, the continuing growth of public expenditure … has a harmful effect on the economy and must therefore be restrained … This new approach"— that is, the new approach of the Government— is expected to result in the rate of increase in public expenditure over the next four years being substantially less than had previously been envisaged. Whatever the Secretary of State said this afternoon, his own report makes it cleat that this is also to apply to local expenditure, because it goes on: …the rate of growth of local authority expenditure will in future be brought more into line with the general rate of growth of the economy. This reflects the Government's general hostility to public spending, their general view that this and the taxation involved are harmful to the growth of the economy.

They go on saying that despite the evidence from O.E.C.D. and other bodies that other countries with a higher rate of of taxation compared with g.n.p. nevertheless have a higher rate of growth than we have, and other countries with a higher rate of public expenditure in relation to the g.n.p. nevertheless have a higher rate of growth than we have. Indeed, they ignore the striking recent finding of the O.E.C.D. that countries in which public expenditure has risen most rapidly are also those countries with the highest rate of growth. But hon. Members opposite are so ideological on this subject as to be almost completely blind to any rational argument.

The hostility shows not merely in the philosophy given in paragraphs 8 and 9 of the report, but in terms of the actual estimated increase in local authority expenditure over the next two years. The rate of increase in estimated expenditure—that is, relevant expenditure—is to be 4·2 per cent. in the next two years. This is significantly less than what it was during the years of the Labour Government. I agree that there is an argument, which we had two years ago, about one single year, but as I understand the position—and these figures should be in the report—the increase in local authority expenditure in the years of the Labour Government from 1965–66, when we were moving to the new system, were, broadly, 6¾ per cent., 5¾ per cent., 4 per cent., 4½ per cent. and 5 per cent. So we are to have a decrease in the next two years compared with the average of those years of Labour Government.

The hostility also shows in a point mentioned by the right hon. Gentleman and about which my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) asked a question; namely, the so-called efficiency cut—that is to say, the cut of £10 million this year and £25 million next year due to greater efficiency. There is a just comment on this from the local authority associations, which, as the House will know, made a joint statement setting out the matter very well and very accurately. They said: The local authority associations have been willing, indeed anxious, to co-operate with the Government in seeking increased efficiency and the curtailment of unnecessary increases in expenditure. It was in this spirit that, even before the Chancellor's statement"— that is some weeks back— the associations conducted their negotiations with the government departments concerned, and accepted reductions in departmental forecasts which can only be achieved by operational economies.They are therefore extremely concerned at the Government's proposed further reduction of the forecasts in relevant expenditure by £10 million in 1971–72 and £25 million in 1972–73 … The associations believe that, bearing in mind the present relatively high standards of efficiency, the departmental cuts, and the economies already achieved during the recent years of restraint, it will be difficult for local authorities to bear this double cut in grant without a significant increase in the rates or some curtailment in the planned development of services, or both. We did not have any serious comment this afternoon on that possibility.

Everyone must be in favour of greater efficiency in local government, but it is particularly hard to achieve because local government is the most labour-intensive of all our services, our professions, our industries, whatever it may be called. It is extremely hard to make rapid increases in efficiency. To me this sounds like a cut which is basically arbitrary and basically capricious and basically designed to show how tough the Government can be with local authorities and how able they are to chastise them when they choose.

My second point is that what we have in the Order is a shift in the burden of local spending from national taxation to local rates, and especially to the domestic ratepayer. As the House well knows, the Labour Government sought to protect the ratepayer, especially the domestic ratepayer, from what would otherwise have been an intolerable burden due to the rising cost of local services.

We did this in two ways. The first was by an increase of 1 per cent. per year in the proportion of relevant expenditure which was covered by the rate support grant. As a consequence, that proportion rose in four years from 54 per cent. to the present 57 per cent., with a corresponding reduction in the proportion borne by local sources. Secondly, we introduced the domestic rate element which was designed to protect the domestic ratepayer in particular and which amounted to a subsidy rising by 5 per cent. a year. This in the last four years has been brought to the present level of 1s. 8d., which is the amount by which the burden on the domestic ratepayer has been reduced from what it would otherwise have been.

Now the Government have halved both increases. The proportion of local expenditure to be matched by Government grant is to go up by only ½ per cent. instead of 1 per cent. The domestic rate element is to go up not by 5d. a year but by 2·8d. and 2·4d. in the next two years. What will be the effect of that? We heard very little about the consequences from the Secretary of State. Clearly, the consequences for local authority finance will be most painful. This was made clear in the statement of the associations, and I repeat one crucial sentence: … it will be difficult for local authorities to bear this double cut in grant without a significant increase in the rates or some curtailment in the planned development of services, or both. That is the final comment of the associations.

The matter was also summed up very well in an article in this month's Municipal Review—I am anxious not to quote party sources. The Municipal Review said: So long as the rating system remains unreformed, but yet the major course of local finance, local authorities are at a severe disadvantage. The Government's cut will be particularly burdensome at a time of almost unprecedented inflation when swingeing increases in rates are in any event forecast for the next financial year, but this is apparently what has been decided upon. It now remains for Parliament to exercise its judgment. I hope that Parliament will exercise some judgment today, and I look forward to hearing speeches from a number of hon. Members opposite in the light of the speeches which they made when we discussed the more generous rate support grant order two years ago. I am glad to see that the hon. Member for the City of Chester (Mr. Temple) and the hon. Member for Poole (Mr. Murton) are present. They and others described the then rate support grant order as disgraceful, scandalous, inevitably involving either a large increase in the rates or a substantial reduction in the standard of services, or both.

I am not surprised that the Secretary of State did not choose to quote any passages from his speech, perhaps the most party political of all, in the debate two years ago. I hope that any hon. Members who spoke two years ago and who are thinking of speaking on this subject today will take the precaution of going to the Library to refresh their memories about what they said two years ago.

I am particularly concerned with the effect on the domestic ratepayer of the cut of 50 per cent. in the increment in the domestic rate element. It is not denied by anyone that rates are an extremely regressive tax. They are a tax that bears very little relation to anyone's capacity to pay. Probably many of us remember the figures quoted by the Allen Committee some time ago which took five income groups and found that the poorest group paid 8·2 per cent. of their disposable income in rates and the richest group paid 2·2 per cent. of their disposable income. There can hardly be any tax we know of in this country which is more socially regressive.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

Does the right hon. Gentleman not recognise that the difficulties over regression were added to by the fact that the Socialist Administration would not allow revaluation to take place as intended? This would have substantially relieved the problem.

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

A revaluation was also postponed by the previous Government. In both cases it was done for good, clear and well-understood technical reasons. What the Labour Government did was slightly to minimise the regressive nature of the rating system by rate rebates, under which last year 800,000 domestic ratepayers were receiving partial or total relief, 80 per cent. of that number being retired persons. Over the four years of the scheme £52 million—and 75 per cent. of that figure comes from the taxpayer—has been paid out in rate rebates. This was a direct measure of social justice. The fact remained that even after these improvements, rates remained an extremely unsatisfactory tax.

That was why the Labour Government introduced the domestic rate element, to put more of the burden of local expenditure on national taxation and less of the burden of that local expenditure on, in particular, the domestic ratepayer. This policy of protecting the domestic ratepayer was in practice very successful. The average domestic rate poundage over the last four years has gone up by 0·5 per cent., 0·6 per cent., 3·8 per cent., and 4·5 per cent. respectively. As the right hon. Gentleman observed, this was less than half the amount by which it would have gone up but for the domestic rate element.

Now, tragically, although I am afraid typically, this policy is to be reversed and the protection is to be halved. In other words, what we have here is a direct shift in the relative burden between the national taxpayer and the domestic ratepayer. I spoke of the speech made by the hon. Member for Poole two years ago. I look forward very much to a speech from him tonight. Two years ago he said: It is utterly wrong that the rates should be treated by the Government as a substitute for taxes."—[OFFICIAL REPORT, 9th December, 1968; Vol. 775, c. 74.] We shall have some extremely interesting questions to ask him. [Interruption.] Oh, I did not know that he is a P.P.S. now—a very wise move on his part. Nevertheless, I look forward to an article by the hon. Gentleman in some suitably public place in which he will explain this marked shift of attitude, unless meanwhile, as honour would suggest, he has resigned his position.

One of the many questions to which we have had no answer is: What will be, the effect of this policy on the rates in the next two years? We have had no estimate of any kind as to the likely increase in rate poundage as a whole and, in particular, in the domestic rate poundage. I calculate that this halving of the domestic rate element combined with the halving of the increased support given by central Government to local government will cost the ratepayer at least £19 million is 1971–72 and £39 million in the second year 1972–73. It should be a perfectly easy calculation for the Minister to make, with all the resources at his disposal, in order to discover what the effect of it is likely to be on the rate poundage generally and on the domestic rate poundage in particular.

We have had estimates in the Press. The Financial Times has suggested a minimum of 11 per cent.; local authority papers have talked of something between 12 per cent. and 15 per cent. Let us have an answer in the House today. The hon. Member for Crosby, who is to wind up, is a great expert in these matters, a mathematician of long standing. Let him be so good, with the help if necessary of his officials, as to give the House a rough estimate of what the effect will be of this new policy on the domestic ratepayer.

Thirdly, we have to see this Rate Support Grant Order against the background of general Government financial and economic policy. That general policy is to transfer incomes from the less well off to the better off. We started with the Chancellor's mini-budget on 27th October, which took 6d. off income tax, involving £350 million in a full year. The Chancellor also announced a number of increases in charges, amounting to cuts in the social services—free milk, school meals, health charges, commuter fares and the rest of it. I estimate that, even after making allowance for some increase in the hospital and school-building programme, announced simultaneously, this amounts to a reduction in the social services of something like £170 million in a full year.

That is the second part of the total package. We still have the statement on housing to come from the right hon. Gentleman following his introductory statement on 3rd November. This will certainly involve a large increase in rents. It will also involve a further increase in rates if, as I understand it to be the case, the local authorities are to pay part of the cost of any scheme for rebates to the private rented tenant.

In addition to these three items, all having a profound effect on the distribution of income—the cut in income tax, the increase in social charges and the effect of the housing policy yet to come—we now have an increase in rates and a shift from the taxpayer to the ratepayer amounting in 1972–73 to nearly £40 million.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

The right hon. Gentleman seems to equate cuts in total expenditure on the social services with giving less help to the community. He ignores the fact that many beneficiaries of the social services are not the needy. He referred to my right hon. Friend's statement on housing. The most needy people in the housing sector are in the privately-rented sector and for the first time they will receive help under the new policy. The facts are the reverse of the generalisations which the right hon. Gentleman has made.

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

The facts are nowhere near the reverse of the generalisations which I am making. I have estimated that the increase in charges on all counts what is really a cut in the social services—will cost £170 million. I can assure the lion. Gentleman that the Secretary of State has no intention of finding £170 million more with which to assist the privately-rented tenant. All these cuts—school meals, milk and prescription charges—naturally bear more heavily on the less well off. This is not in serious dispute.

I now turn to one or two detailed points.

Dealing with the increase Order, do I understand that it fully compensates for the wage settlement with the manual workers?

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

I am glad to learn that. There had been distasteful hints and rumours, including the Prime Minister's television broadcast, suggesting that the local authorities might have been penalised for their wage settlement.

Dealing next with the distribution of estimated expenditure, the right hon. Gentleman indicated certain priority areas of spending where the growth rate will be higher than the average 4·2 per cent. He has mentioned housing improvements, mental health, home help, family planning, sewage and refuse disposal. I am delighted to hear that those are going up faster than the average, although under the present system of general rather than specific grants we cannot of course, enforce those priorities. If those are going above the 4·2 per cent rate, what will go up below that rate?

The report mentions parks, sport and minor roads, and the right hon. Gentleman spoke at some length about minor roads. Well and good, but sewerage is to go up by 7½ per cent.; house improvements are to go up, according to my figures, by 12 per cent. The right hon Gentleman said this afternoon that education was coming out very well, and that the personal social services were coming very well out of this. In that case, some of the field of local spending must do very much worse than 4·2 per cent. to keep the total figure down to that level. It will not be enough to cut out a few parks or sports grounds or something like that. We shall have to have much more substantial cuts in some of the services if the total is to be held to 4·2 per cent.

I should be grateful if the Minister could give us a rather more specific answer on this when he winds up. If some of the tables in the report were given in percentage terms we might be able to follow it more easily. Incidentally, I found the report extraordinarily inadequate and hard to understand. I cannot make a party point of this. Having re-read our report of 1968, I found that equally hard to comprehend. As a joint inter-party venture next time, we might try to set these matters out in a more easily understood way.

My next point is very important, and again it is in no sense a party point. It concerns the distribution formula. The report says that the right hon. Gentleman has considered this with the authorities and decided to make no change now. That is what we said two years ago, and I do not criticise him for that. But there is an aspect of the distribution formula that is becoming increasingly disturbing and that affects the centres of our large cities. We all know what is happening. Each year the better-off classes are tending to move out to the suburbs or even beyond. This causes for the inner boroughs a loss of rating revenue. Moreover, under the present formula, because they lose population, therefore their amount of Exchequer grant also goes down. So we have a position in which the boroughs that are poorest are also those with by far the most difficult social problems. Because of the loss of revenue, both rating and Exchequer grant revenue, they become, as we can see in instances we all know, desperately anxious to hang on to the whole of their remaining population.

The question is whether this exerts a dangerous pressure in the direction of what we have had in the past few years, high-rise building often inadequately planned and of an inadequate standard, certainly in terms of space, very often almost tenement blocks, as some of them are becoming. I wonder whether the pressure to build in this way, which we find more and more socially unsatisfactory, is not partly due to the distribution formula behind the rate support grant. I think that in one or two cases we are beginning to see the difficulties which some of the great American cities have had. Increasingly we see in the inner neighbourhoods a lack of resources going with the greatest social problems, instead of the other way round. This is something we should debate between now and the next rate support grant Order.

I have one general comment about local government finance. Every year we have almost the same discussion, which goes roughly as follows. Rates are a horrible tax. They are very regressive, very unpopular and very inflexible, and generally a bad thing. The problem is especially acute, we point out to ourselves each year, because the demand in real terms for local authority services is constantly rising, and, on the other hand, as I suggested just now, it is exceptionally difficult for local authorities to increase their productivity because of the extent to which they are labour-intensive. Therefore, successive Governments—the last one generously; this one meanly and miserably—try to meet this problem of local government by increasing the percentage of local expenditure paid for out of general taxation. When we do that there is a terrible outcry in the local authority Press and other parts of the Press, with people saying that there is less and less discipline in respect of local spending because the local authorities do not have to answer for levying a large part of the revenue which they propose to spend. Therefore, it is said, the Government are tempted into more and more detailed supervision and this is bad for the independence of local authorities.

We should not get hysterical about this situation. Circular 2/70, following exactly the lines of our February White Paper, pointed out quite correctly that much of local expenditure is on … key services for which Ministers have special responsibilities in determining standards or co-ordinating developments on a national basis. I believe that that implies as a matter of logic a large element of national financing, since it is we in Parliament who are laying down these national standards.

On top of that, if we look ahead and consider particularly the urban problem that I discussed, the likelihood is of greater, not less, pressure for help from the central Government to particularly hard-pressed local authorities. Moreover, even with 57 per cent. coming from the Exchequer it is perfectly possible, as Circular 2/70, following our White Paper, has recently shown, to relax detailed controls of local spending.

Let us by all means search for new methods of taxation; let us go on, as the Government are obviously doing, with the familiar arguments about local income tax, local sales taxes, and motor taxation, which is coming to the top of the popularity poll. I hope that the Government will also accept what we said in our White Paper about the ultra vires rule, so that the local authorities may indulge in profit-making enterprises if they wish. Let us do all this. Above all, let us seek to improve the rates. I think both Governments agreed that rates are likely to remain the principal local tax, as the Royal Commission pointed out. But let us concentrate on making rates more equitable and less regressive. I wish the Government good luck in their search, and we look forward to what the Green Paper says when it is published in the New Year. But I hope that we do not conduct this search in a mood of impending disaster or alternatively of expectation that we shall find in our search a marvellous simple panacea which at one stroke will solve the whole problem of local authority finance, because I do not believe that we shall do so.

But we should not be too distracted by these general questions of alternative local taxes. I want to return to the Order. It is unacceptable because it will mean both a curtailment of services and certainly the biggest rise in rates we have had for many years. It is unacceptable because it represents a straight transfer from the national taxpayer to the local ratepayer, and because it is part of a general Government policy of transferring resources from those less well off to those better off.

We shall not vote against it, because there is some increase in help, but the increase is both miserable in amount and inequitable in distribution.

6.8 p.m.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

I am pleased to follow the right hon. Member for Grimsby (Mr. Crosland), and I am also pleased that I can agree with some of his speech. I hope that I shall be able to point out the error of his ways in other things that he said.

I intervened in the right hon. Gentleman's speech on the question of rates and revaluation after he had criticised the rating system for being regressive. Yet at the close of his speech the right hon. Gentleman was saying that there was really no alternative. Surely that strengthens the point that we need regular revaluations to distribute the collection of revenue from rates as equitably among ratepayers as possible? Clearly there is some common ground between us, but just to plead that, whilst the right hon. Gentleman's Government did not apply revaluation, neither did the previous Government, is rather a thin reply to my intervention.

Photo of Mr Arthur Blenkinsop Mr Arthur Blenkinsop , South Shields

Surely the hon. Gentleman will agree that the main problem for any Government is simply the practical matter of availability of trained valuers?

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

It may be, if a Government waste their time on schemes like the Land Commission.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

I will not give way because we have a limited time for the debate.

I agree with the right hon. Gentleman about the form of the Increase Order and the Order itself. It is very confusing, and I hope that it can be elaborated. The last time this matter was discussed the Government spokesman admitted that he did not understand certain comments in the Order.

I am in complete agreement with the right hon. Gentleman on the selectivity of assistance. I know all the complications of the rate support grant arrangements and the three categories under which they come, but we should be helping the great cities and giving greater weight to their problems.

The Rate Support Grant (Increase) Order, 1969, introduced by the Socialist Administration raised the estimates on the 1968 Order by £155 million for the last financial year and by £201 million for 1970–71. These were what the then Government in paragraph 5 of the 1969 Report called unforeseen increases in costs since the 1968 Order. Of these figures, 56 per cent. and 57 per cent., respectively, were financed by Exchequer grants; that is, a further £84 million in 1969–70 and £111 million for the current financial year, thus leaving the residue of £71 million and £90 million, respectively, to be borne by the ratepayers. The right hon. Gentleman said that our proposals are hostile to ratepayers, but the previous Government, because of their under-estimates, loaded the ratepayer with these substantial amounts.

That was not the end of the story. Since last year's Rate Support Grant (Increase) Order further escalation of costs has led yet again to a revision of the estimates, giving further increases of £13 million last year and the tremendously large sum of £243 million for the current year. This has led to another £6 million for last year and £114 million for the current year being borne by the ratepayer.

Although, as the right hon. Gentleman says, rates may escalate, this will be as a deliberate act of policy. In the past two years rates escalated more than on any previous occasion because of maladministration by the Labour Government and this is a complete negation of many points which the right hon. Gentleman made against the Order. The nature of the protection of the domestic ratepayer is thus revealed as nothing more than an attempt to soften the impact of disastrous economic policies leading to constant cost increases. I hesitate to challenge the right hon. Gentleman on this point, but I have gone carefully into that figure and I do not think that my figures are open to challenge. The previous Administration, by mis-assessment, misjudgment and by allowing the inflationary situation to continue hammered the ratepayer by the rate increase orders year by year.

A policy of sound economic management, coupled with a policy to bring local authority expenditure under a controlled rate of increase are the best forms of protection for the domestic ratepayer. The Government have inherited a frightening rate of inflation which arose from the 16 per cent. award to the refuse collectors in London in 1969. That was one of the great failures of the previous Administration's wage policy.

The most important document before us is the Report on the Rate Support Grant Order for the years 1971–72 and 1972–73, H.C. 172. The present Administration can have only minimum influence over the two previous years and the only course open to them is to find their share of resources to deal with the inherited inflationary situation. Paragraph 9 of the Report says: Local authority expenditure represents a substantial part of total public expenditure but, more significantly, it accounts for over half of the growth. I welcome the assurance of my right hon. Friend the Secretary of State that local government expenditure is to be brought under firmer control. To this end local authorities should be required to look for savings in improved efficiency and to pass work which does not have to be undertaken by public authorities to other authorities.

The target for relevant expenditure for 1971–72 is £3,795 million and for 1972–73, £3,970 million, a rate growth of 4·2 per cent. for the current year. The reduction of ½ per cent. in the annual growth rate which is to be permitted to local authorities is a fair one. The fundamental difference between the Government and the Opposition is the determination on the part of the Government to limit expenditure in the public sector which has to be met by ever-increasing taxation. The Government have asked local authorities specifically to consider improved efficiency, elimination of work which is unnecessary or could be undertaken by other bodies, greater use of management services and the L.A.M.S.A.C. facilities and the introduction and extension of a scheme of pooled purchasing arrangements and bulk purchasing.

The high standards of our local authority services have been built up on the excellence of the professional institutions. Our standard is higher than anywhere else in the world. But these professions are isolated. There is the clerk's department, the treasurer's department, education, welfare, estates, all in separate departments. As was recommended in the Maud Report, we should be working towards management discipline across the professions, and I welcome the recommendations which my right hon. Friend made on this. This will achieve a more effective use of resources, which is a subject which the right hon. Member for Grimsby omitted from his speech. We need greater efficiency and greater discipline of management across the professions. To this end I welcome the introduction of an increased efficiency factor. This has been found to be useful in the farming industry and I am sure it will be equally useful in local government services. The saving of £10 million a year for 1971–72 and £25 million for the subsequent year is by no means unreasonable. I welcome this philosophy and realism in financial terms which lies behind this year's rate support grant order.

6.20 p.m.

Photo of Mr Julius Silverman Mr Julius Silverman , Birmingham Aston

I will not follow the hon. Member for Northants, South (Mr. Arthur Jones) except perhaps to comment on one or two of his observations. He referred to the efficiency cut. The efficiency cut has nothing to do with efficiency. The larger local authority which is already efficient, which uses L.A.M.S.A.C. and which uses bulk purchasing methods get the same cut as the inefficient authority. What has this to do with efficiency?

This is a mean little cut introduced by the present Government in respect of local authorities after the completion of negotiations. The Municipal Journal has commented on this matter as follows: One wonders how relevant reductions of this sort are, or whether they should not be made more a justification for central Government to appear to be chastising local government. The cut has nothing to do with efficiency since it affects the efficient and inefficient alike, and the £10 million and £25 million are distributed throughout the whole of the local authorities.

I read the speech that was made by the hon. Member for Northants, South during the debate on the last Order. It was entirely different in tone from the one he made today. One would almost imagine that a lesser burden was being imposed on the local authorities this year than last. He mentioned how much the local authorities would have to pay. I think he said that after the increase Order was made the local authority would have to pay £65 million—was that the figure?

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

No. The figure was £114 million.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. Hon. Members must address each other through the Chair.

Photo of Mr Julius Silverman Mr Julius Silverman , Birmingham Aston

This time they will have to pay at least that much. It is contemplated in most places that there will be an increase in rates of anywhere between 2s. and 2s. 6d. in the £ in almost all local authorities and in some an even greater amount as a result of this order.

I noticed during the last debate to which I referred that the hon. Member for Crosby (Mr. Graham Page) made certain zoological references. He then said: The Government were in one of their craziest moods when they devised this procedure in 1966. I think that the present Government are adopting the same procedure, except that they are cutting down on the domestic element and making other cuts. The hon. Gentleman went on: The great bulk of local government expenditure plods relentlessly, rather like a huge elephant, and periodically the Minister mounts it waving an increase order, but facing the tail of the elephant instead of the trunk, and looking at what has been trampled by this elephant in the past rather than what is likely in future." —[OFFICIAL REPORT, 15th December, 1969; Vol. 793, c. 1069.] I do not know on what side of the elephant the hon. Gentleman is sitting today, or whether he is waving his increase Order at the tail or at the trunk, but the net consequence is that when both the 1970 Order and the increase Order are put into effect the ratepayer will be so much the poorer.

It is all very well to talk about economy, but there is not that much scope for economy for local authorities. They, of course, have certain tasks in regard to education and in providing increasing numbers of teachers to deal with large classes. Local authorities will have to continue to incur such expenditure since education is the main spender. Nor can there be any economy on the police force or in public health. Once we get into the area of cuts by local authorities they are not carried out through major economies but in cheese-paring ways which save a penny or two-pence on the rates and inflict hardship and lose amenities for the community totally out of proportion to what is saved. The sort of economies we see are cuts in night classes, adult education, by saving a certain amount of lighting here with danger to the population, by leaving a road in disrepair there with similar dangers. These are the odds and ends, the "small change", of public expenditure where cuts inflict hardship quite out of relationship to any benefit which they bestow on the ratepayer. These cuts will only be intensified by this Order.

We are discussing today not so much the matter of public expenditure, but the matter of who is to pay. My right hon. Friend the Member for Grimsby (Mr. Crosland) said that local authority taxation is regressive. It may not be possible for many years to come to find a practical alternative, but in the meantime certain measures can be taken to make them less regressive. The Minister has mentioned a most important matter, the domestic element. We are very sorry that this has been cut. There will be hardship not only on the ratepayers as a whole, but a relatively greater hardship on the domestic ratepayer who will now have to pay a greater proportion than he otherwise would have borne.

Other things can be done to relieve the regressive nature of the rates, one of which is the rebate scheme. I know that this Order does not deal with that matter and that I should be out of order if I were to pursue it at length. If we want to deal with the regressive nature of the rates, I feel that an extension of the rebates order is now necessary to increase the level at which people can get rebates. I am sure that in saying that I have the support of many hon. Members in all parts of the House.

This measure will bring hardship to many ratepapers, and particularly to the poor ratepayers. This comes at a time when the Government propose a reduction of sixpence in the income tax. I suggest that some of that money might much more suitably have been applied in reducing the burden borne by ratepayers, many of whom will get little benefit from income tax reductions but will find their burdens increasing, at the same time as the wealthier income taxpayer and high surtax payers will benefit from the next Budget.

The hon. Member for Northants, South also mentioned revaluation, which I do not see securing any benefit for the ratepayer. It may redistribute the burden sometimes one way, and sometimes another. Certainly the last revaluation made very little difference in redistribution. In some local authorities, such as Birmingham, the domestic hereditament benefited, but for many it went the other way and imposed an additional burden on the domestic ratepayer. Therefore, this is no solution to the problem. The only assistance which can now be given is by the Exchequer.

A major part of the Order relates to the increase in labour costs and wages. Whilst we may deplore inflationary wage claims and increases in wages for general economic reasons, there is no doubt that the Government are the beneficiary. They probably derive benefit from excise duty, purchase tax, and the rest, on goods consumed by people with higher incomes which is more in proportion than the amount of the increase in wages.

But what happens? Consider, for instance, local authority wage increases. The Government get the benefit from increased taxation; the local authority gets nothing. The local authority pays out and the Government get the benefit. I should think that this is an added reason for a greater amount of Exchequer assistance to relieve the burden on the rates generally and particularly on the domestic ratepayer. I consider the Order inadequate, because there remains an immense burden which, during the next financial year, will certainly be resented by the poorer ratepayers throughout the country.

6.32 p.m.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

The hon. Member for Birmingham, Aston (Mr. Julius Silverman) couched his criticisms of the Orders at least in moderate terms. The hon. Gentleman did not fly off into areas of greater contention, as did his right hon. Friend the Member for Grimsby (Mr. Crosland).

Photo of Mr Julius Silverman Mr Julius Silverman , Birmingham Aston

I did not wish to emulate the terms in which hon. Gentlemen opposite couched their speeches a year or two years ago. They were quite extravagant and ridiculous.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

I am sorry to be rebuked for congratulating the hon. Gentleman on his moderation.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

I do not withdraw. I will allow the hon. Gentleman to interrupt me later, if he wishes, to accuse me of lack of the moderation of which, no doubt, he will assume that I was guilty before.

In considering these Orders we must start from the economic position in which the country as a whole finds itself—that is one way of putting it—or, as I prefer to put it, in which every person finds himself as a result of the policies of the previous Government which led, during the last 12 months of their term of office, to the galloping inflation from which we are now suffering—[Interruption.] The hon. Gentleman does not seem to agree. But I do not see how anybody could disagree that we have inherited a situation of galloping inflation as a result of the policies—or the failure of the policies —of the previous Government.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. The hon. Gentleman must not widen the debate. He can, however, make a remark en passant.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

I will not tempt the hon. Gentleman to draw me further. I will continue on the Order.

The position in which we find ourselves is one which requires local authorities to be encouraged to economise. If it is merely a few candle ends, that is not to be despised. I expect that most hon. Members have had to economise from time to time in either a public or private capacity. Useful total savings are usually achieved by adding together a lot of candle ends.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

The hon. Gentleman makes a fair point, which one can accept without any party political undertones, about difficult economic circumstances. He says, or implies, that because of these it is necessary for local authorities to rein back their expenditure and that this is the Government's policy. But how can the hon. Gentleman reconcile that, which is a logical policy on its own, with the Government handing out more than £300 million in income tax reductions at a time when there is a necessity—

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. We must not widen the debate too far.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

I shall not follow the hon. Gentleman, except to say that expenditure is one thing; taxation is another.

We must encourage economies in expenditure. We must not despise them because they are small. Small economies made over a wide area can add up to a substantial total. That is where we start.

No pressure operates so effectively upon local authorities to economise as the feelings of the ratepayers. If the result of the Order is to shift the balance towards the ratepayer from the central Government, that may be no bad thing in increasing the sense of reality in the local authority finance committees and debating chambers.

I should like to contradict the right hon. Member for Grimsby on the line which he took, entirely contrary to that of his right hon. Friend the Member for Coventry, East (Mr. Crossman), now the editor of the New Statesman, who deplored rates as a hopeless tax and wanted to see them ended. I thought that the right hon. Member for Grimsby rather praised rates and was satisfied to leave the situation very much as it is.

That is not my position. I think that the rating system has many weaknesses. It is carrying a burden which it is not really effectively and fairly able to bear. So I look forward with lively anticipation—not that it will be a sudden salvation from all our problems—to the Green Paper in the hope that from it and the discussions on it new sources of finance for local government may be found.

That is relevant to the Order because we are now, in my opinion, at the beginning of a transitional period. We must look upon what we are doing in the rating sphere as the beginning of a transitional period. We must not do too much calculating and extrapolating what is being done today to 1975 or 1978, because I hope that substantial changes will be made in local government finance before that time.

The right hon. Member for Grimsby said that local authorities have to carry out what are, in effect, services to national standards laid down by Parliament and that, therefore, it is for the central Government taxpayer to finance them. The right hon. Gentleman implied that that was a proper system. I entirely disagree.

Parliament lays down all kinds of standards. About 10 years ago Parliament laid down standards for heating, lighting, and so on, for office accommodation. Parliament did not say that the taxpayer would pay for commercial firms to bring their offices up to those standards. Of course not. We lay down standards, but that does not mean that we have an automatic necessity to finance the implementation of those standards.

I strongly believe in the need for determined, independent, efficient and strong local government. I believe that that will not be maintained for long when the rate grant support from the central Government reaches into the more than 60 per cent. bracket, which it will shortly do on present trends. I believe that such a situation will eat into the independence and, therefore, the effectiveness of local government. In so far as the Orders slow down that trend, they are to be welcomed. They do not reduce the domestic element but increase it, but not as fast as has been done in the past. In so far as that is so and it brings into sharper focus the responsibilities of local authorities to their ratepayers, that again must be welcomed.

We must consider these Orders in the context of many changes in local government, its structure and finance, which will come before many years have passed and which will be known and decided within the two years covered by the Orders. In that context, and in the context of the national economic situation we have inherited, I do not hesitate to support these Orders—indeed, I give them extravagant support if that is what the hon. Gentleman wishes to hear from me.

I end with a small local point in connection with the county of East Sussex, which contains my constituency. I do so to underline the points I have made. In terms of grant per head of population, East Sussex gets the lowest of all the counties of England and Wales, so I am not arguing from the point of where my county of East Sussex is treated extra favourably. The fact that East Sussex has the lowest grant per head of any administrative county results from the formula in relation to education units, and no doubt discussions between the county and the Ministry will continue on that point.

Nevertheless, having said that, my judgment of the Orders is that they will help in the creation of economies and in the generation of responsibility in local authorities, and that they will prove consistent with the trends we want to encourage and bring about in the reform of local government which we shall be considering before too long.

6.42 p.m.

Photo of Mr Arthur Blenkinsop Mr Arthur Blenkinsop , South Shields

I pay tribute to the hon. Member for Hove (Mr. Maddan) in that he is right in saying that the Orders shift some of the burden from the centre to the local ratepayers. That is precisely what my right hon. Friend the Member for Grimsby (Mr. Crosland) pointed out. What the hon. Gentleman did not go on to say—I will say it for him, and I hope I have his full approval—is that this in itself is a highly inflationary action. What could be more inflationary at this time than to cause, and openly to cause, one of the heaviest increases in rate burden that we have faced for some years? I do not think that that fact can be challenged. This, taken together with the considerable rent increases we have been promised, is bound to inflate demands for wage increases in order to cover the inevitably increased costs involved to the great bulk of the ordinary workers.

I have not had any rebuttal on this matter from the hon. Gentleman, so I assume that he must accept this situation. I find this quite extraordinary. He pointed out that we were in an inflationary situation. It is at least agreed on this side of the House that almost every action the Government have taken so far has fed the fires of inflation and made it infinitely worse. This is another example. These Orders are bound to be further inflationary in their effect.

Quite often, there is a certain unreality about these debates because we talk of global figures, rarely being able to bring them down to local terms. But I want to quote the example of my own constituency by relating what was said by the chairman of the finance committee of South Shields Council. I may add that he is a supporter of the present Government, since South Shields is not a Labour-controlled authority. He says: The future is indeed very black and we must exercise stricter control than ever in the past … and … expunge some of the figures … We are now on the slippery slope. There is no ray of hope for the foreseeable future. Those warnings are only too likely to be accurate and they confirm my view that the whole effect of the Orders is severely inflationary. An hon. Member opposite welcomed the Orders because, he said, they would encourage local authorities to hive off—that is the fashionable phrase nowadays—some of their activities to other bodies. I want to put the facts which a local authority has to face.

The North-East is an area where it is urgently important to provide fresh employment and fresh facilities for new employment through the provision of sites for new industries. As long as the support and grants given by the last Government persist, there remain opportunities for industries to come into the area, although those opportunities are being rapidly taken away by the present Government.

But these prospective industries have to have adequate sites for development, and this is essentially and inevitably the responsibility of central and local government. The whole problem of the clearance of derelict sites and the development of new sites, by reclamation from the river and from old industrial sites, is for the local authority to tackle and it wants to accept its responsibilities. I give it great credit for wanting to do so. But heavy expenditure is involved, even with the support that the central Government have been able to offer in the past and which we hope and pray may continue for some short while yet. But that we do not know, although we have heard many threats.

Who else is going to do this job, involving, as it does, all kinds of expenditure in trying to provide new industrial sites? No one else will do it. We have to rely on ourselves, and that is what my local authority wants to do. It accepts that it has a local responsibility, with support from the central Government. It does not want to hive off this problem and, indeed, there is no one to hive it off to. We are involved at the moment in very heavy expenditure on a joint project with other authorities for a major new incinerator linked with the redevelopment of an important area of land. Can anybody suggest to me that that is a project which can be hived off and undertaken by somebody else? Of course it cannot. Another major project which has been urgently needed for many years is the cleaning of the River Tyne, for which there has come a gradual acceptance. It could bring great benefits, both in terms of the living standards and recreational facilities of people in the neighbourhood and prospects of bringing in new employment. Is that a project which can be hived off to someone else? Of course it is not. The only people who will carry it out are central and local government combined. Indeed, it is unlikely that there will be much contribution from central government in that case. I like to believe that there might be, but a large proportion of this great expenditure is bound to fall upon the local authority.

These are the realities one has to face. We are bound to be involved in great educational expenditure. We have the heritage of bad, old buildings for schools and hospitals, health service centres and so on. We want to change all these because we know that it is essential in providing a new appearance for the whole area. We are eager to tackle the job. To whom can that be hived off? Other than the local authorities, who on earth will undertake it? No one will. The only projects that no doubt could be hived off are those which might possibly bring a profit, and those are precisely the things on which I want some assurance that the Government will encourage local authorities to retain. This is the hope for our local community. We have these empty, windy words from the other side of the Chamber and when one analyses the words they mean nothing when considering the conditions of the kind of area for which I speak

The likely effect of these Orders in an area like that which I represent is bound to be inflationary. I have quoted what the chairman of the finance committee said about it. The treasurer's estimate and that of others who have done their best to work out what the effect is likely to be, is that we are almost bound to be involved in a rate increase of half a crown in the £ in an area like ours, without tackling any new developments which we wish to carry out. The treasurer is assuming that there may well be an increase of about 20 per cent. in revenue expenditure over 1970–71. Whatever the local authority does in trying to hold things back to some extent, it will still have this kind of increase. We did not hear this kind of reality from the right hon. Gentleman who opened the debate. I felt that we were in a sort of cloud-cuckoo-land while the Minister was speaking, because what he said seemed not to relate to the situation as we see it in our areas.

The Order states: Nothing is included for possible future increases but in the event of an unforeseen increase taking place in the level of prices, costs and remuneration which has a substantial effect on the relevant expenditure of local authorities, the Secretary of State may by order increase the amounts of the rate support grants. We appreciate that this is a fairly common form which statements come in. I ask for one modest assurance that there will be no delay in introducing what almost inevitably will need to be an increase order and that it will be done well before December of next year. We can already see that we shall be bound to face increases which will have to be paid by the local authority in April or thereabouts of next year, and they will have to meet that out of their own revenues. Therefore, we should have some assurance from the Minister when he replies that there will be an effort to meet this need quickly because of the very difficult circumstances with which we are all faced?

The serious point we must all face is the danger of the inflationary movements. In heaven's name, why should we add further to the inflationary forces? Why should we, in these Orders, be doing our best, in effect, to make matters worse and not better? I ask the Minister to pay some attention to this matter which is not one merely coming from those of us who have every party political reason to see evil motives in such Orders but from his own supporters, such of them as there are—there do not seem to be many at the moment.

There were some who were regular spokesmen on this subject in past debates. I particularly remember the vigour and determination of the hon. Member for Harwich (Mr. Ridsdale) who used to appear in the House, whatever the time of day or night, to castigate the previous Government and to demand further increases in the domestic element in particular, of the rate support grants. Where is he today? Gone, alas, are these voices which used to be so much concerned.

I therefore appeal very strongly to the Minister to see what further assurance he can give to authorities like those which we represent. Those authorities are committed properly and rightly to essential expenditure which cannot be met without an unfair addition to the rate burden, in the terms of the Orders he is now presenting.

6.58 p.m.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

Local authorities will be extremely cynical about the speech we heard this afternoon from the right hon. Gentleman the Member for Grimsby (Mr. Crosland). As someone who has been in local government for 21 years, I should describe it as crocodile tears and a complete reverse from everything that was said from the Dispatch Box when his party was in power. I, of course, was not here then, but having read the debates then with great care, I do not believe that there was much substance in what he had to say today. The Orders clearly encourage the extra expenditure needed on health, welfare, and education services, and the basic programmes which our local authority associations have put forward have been substantially met.

It is right to remind the House that the right hon. Member for Grimsby was far from accurate in many of his statements. It was not, as he said, in one year that the local authorities lost out on relevant expenditure but in fact in two years, in 1967–68 and 1968–69, when they lost £73 million, and not the figures mentioned by the right hon. Member for Grimsby. But in percentage terms 52·8 per cent. instead of 54 per cent. and 53·5 per cent. instead of 55 per cent. represent cuts of 1·2 and 1·5 per cent., which are more than double the reduction which my right hon. Friend has offered this year of a growth in this percentage of half of 1 per cent. Let us be clear that the right hon. Gentleman had not got his facts right.

He went on to say that, in the coming year, we were likely to face the biggest rate rise experienced for many years. That is true. But one of the clear reasons for it which most ratepayers understand is that the cost of money is very high and that local authorities have been forced to borrow at exceedingly high rates due to the actions of right hon. and hon. Gentlemen opposite when they were in office. The hon. Member for South Shields (Mr. Blenkinsop) said that the Government were feeding the fires of inflation. Let me remind the hon. Gentleman that at least we have had a clear admission of who started the original act of arson. Right hon. and hon. Gentlemen opposite began all the trouble when they were in power, and it is interesting to see how they are now all too anxious to magnify the estimated rises in rates.

As a former leader of the fourth wealthiest local authority in England in terms of rateable resources and as one who took over from an extremely spendthrift Labour-controlled council, I know that it is impossible to stop overnight a process which has been put in train by three or four years of Labour administration. It is virtually impossible to halt rising rates overnight when one's capital programmes are committed so far ahead and one has to borrow money at the sort of rates that we were offered under the last Administration. It cannot be done overnight. It cannot be done even in 12 months.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

That is getting to be quoted so much out of context that it is not worthy of comment.

It was also interesting to hear the quotation by the right hon. Member for Grimsby from the Municipal Review. Clearly it suited him on this occasion. He would not have quoted from that journal two years ago, because it made many scathing remarks about the deceit practised by his Government on the local authority associations.

I come now to my observations on the Order, and I begin by paying tribute to my right hon. Friend the Secretary of State for his very lucid explanation and the highly competent manner in which he conducted the formal R.S.C. negotiations. I was one of the local authority representatives round that table, and in my view it would be difficult to find any- one other than my right hon. Friend who could have mastered such a difficult brief in so short a time. Local government is fortunate to have a Minister at its head who has such a grasp of the real essentials.

I hope that my right hon. Friend will persuade his colleagues not to follow the example of the previous Administration whereby his Department issued Circulars instructing local authorities not to spend any more money, and other Ministers issued circulars exhorting local authorities to spend on more services, without willing the means. That is the important point. Exhortation by other Departments is all very well provided that they are prepared to shell out when the time comes and provide the necessary cash to carry out their programmes. If they do not, they are being quite unfair and merely indulging in propaganda exercises for their Departments, since the rate payers will have to foot the bill without help from them.

The first point that I wish to make on the Order concerns the difficult administrative problems that will be caused to local authorities by the decision to increase the domestic element by 2.8 old pence, bringing it to a total of 9½p in 1971–72, and by 2.4 old pence or 1p, making a total of 10p in 1972–73, instead of expressing these sums in whole new pence terms from the start. In view of the difficult accounting problems of local authorities which use computers to levy a rate in two half-yearly equal instalments, it would have been much more helpful and more in keeping with the modern image of efficiency which local government has if these items could have been expressed in whole new pence and if the domestic element could have been a total of 10p in 1971–72, 11p in 1972–73, and so on.

My second point relates to the decision to reduce the forecast totals for the two years by a total of £35 million, with no reason given other than on the ground of improved efficiency on the part of local authorities. That clearly penalises local authorities which are efficient, which have already spent considerable sums on management consultants and putting in new schemes, and which have supported such orgaisations as L.A.M.S.A.C. Although I do not give unqualified support to that organisation since, in my view, it is going outside its proper work and starting to arrange seminars and conferences, impinging on the operations of far better organisations such as the R.I.P.A., I hope that L.A.M.S.A.C. will confine itself to computers and management consultancy and not start going into matters which are far better covered by the Industrial Society and R.I.P.A.

It will be difficult for local authorities to find the extra savings called for by this £10 million and £25 million.

As one who was engaged in the final formal negotiations, I pay tribute to the officials of the Ministries and local authorities who conducted the detailed negotiations over many months in such harmony and with such useful results.

In the detailed meetings at official level, the process of working out the trend covered items such as central purchasing. But that is nothing new to local government. All the matters had already been covered, and it is perhaps a pity that my right hon. Friend has decided to ask for them a second time. Either it is a case of my right hon. Friend having his cake and eating it, or of having his cake and taking one of our slices as well. If the Secretary of State was not my right hon. Friend but the right hon. Member for Grimsby, one might legitimately suspect on excellent past precedents that the cuts amounting to £35 million were based upon nothing other than the Minister's desire, having looked at the totality, to have a bit more of the total share of the local authority cake. It is a pity that this has been found necessary. It smacks too much of the cold hand of the Treasury creeping in at the last minute.

My hon. Friend the Member for Northants, South (Mr. Arthur Jones) spoke of the separate teams in local government—the town clerks, the housing managers, the welfare officers, now superseded by directors of social service, and the like. He asked for management disciplines much along the lines of the first Maud Report. It is not much encouragement to those efficient, progressive local authorities who carried out this process a year or two ago to be exhorted by this £35 million efficiency cut to try to do it now to help bring down the overall costs of local government.

In recent times there has been much greater and better co-operation between Ministry officials and local government officials than was ever experienced during the five years when the Labour Party was the Government, so let hon. Gentlemen opposite not be happy about what is being said. Hon. Gentlemen opposite were deceitful when they were in power. They put over a story which could not be substantiated. At least my right hon. Friend has been open from the start, which is what hon. Gentlemen opposite were not, so let them get no comfort from what I am saying. There is no comfort for them either, in the expressions of views by representatives of local authorities all over the country. It is sad that this rather small sum should remain between the local authorities and the Government. I hope that the Minister will think again on the next occasion about whether some of this efficiency cut ought to be restored.

My hon. Friend the Member for Hove (Mr. Maddan) said he was "getting unhappy that the percentage grant of relevant expenditure was getting near 60 per cent.". He thought that this would not be a good thing for local government. I think that my hon. Friend is completely wrong about this. I do not think that any particular percentage means a loss of independence for local government. If the spirit of local government is there, if co-operation between central Government and local government is there, the percentage is immaterial.

At a recent International Union of Local Authorities Conference, an excellent paper was presented by Dr. Marshall, the former Treasurer of Coventry. It showed conclusively that in many countries local authorities receive payments from their national exchequers far in excess of the 60 per cent. about which my hon. Friend was talking. I do not believe that there is any magic figure above which local government will lose its independence.

Speaking as the Deputy Chairman of the Association of Municipal Corporations, I can say to the right hon. Member for Grimsby and his hon. Friends that the total finally emerging from the negotiations is not regarded as inadequate for the expenditure that is likely to be necessary on continuing and developing the various services which were accepted by the Government and by local authorities. I believe that there are two things that need to be done before the next Rate Support Order comes before the House. First, there must be an examination of the Green Paper, which I hope will throw up some new ideas. It is pretty clear that there is unlikely to be any method of financing local government other than by the rating system, but there are other ideas which I should support. One is to have a local lottery, which would be an element in the Order, because one could then say that a particular figure could be reduced slightly. Another idea is to provide a certain amount from local commercial radio.

I do not accept the argument put forward by previous Governments that because of a shortage of qualified staff it was not possible to proceed with revaluation. I remind the House that at the first major revaluation after the war, when valuation was filched from local authorities—the first of the acts to lessen local authority responsibility by the Socialist Administration of 1945 to 1950—to get an early revaluation district valuers called in outside firms of surveyors and valuers. Having been on a valuation court, I know that the work done by the outside surveyors was extremely good, and well up to the standard of the district valuer. There is therefore no reason why the previous Government should have funked the issue of revaluation.

I am grateful to the Minister for the way in which he put his arguments to the House but, like the right hon. Member for Grimsby, I believe that the layout of the document leaves much to be desired. Apart from those hon. Members in the Chamber now who are fascinated by the esoteric subject of local government finance, few people outside will get past even the first page, not even with the 12½p on the front as the alternative price. I hope that a method can be found of putting the Order into better language.

I conclude with an apology to the House. I have a long-standing engagement at 7.30 with a professional association. I fear, therefore, that I may not be here to hear the whole of the debate, but I hope I have made my points as succinctly as possible.

7.16 p.m.

Photo of Mr Arthur Probert Mr Arthur Probert , Aberdare

I shall not follow the hon. Member for Hampstead (Mr. Geoffrey Finsberg), because if I do I shall find myself wandering into realms with which I do not want to deal, but I suggest to the hon. Gentleman that it would have a salutary effect on his thinking if he were to read what was said by his right hon. Friends on this subject when they were on this side of the House.

I find myself in some disagreement with my right hon. Friend the Member for Grimsby (Mr. Crosland) and the Minister in their oblique references to Circular 2/70. From 1st April next year this circular will have an effect on the rate support grant, which in turn will have an effect upon rating generally.

I believe that this innovation will seriously curtail local authority projects such as those to which my hon. Friend the Member for South Shields (Mr. Blenkinsop) referred—land clearance schemes, and so on. Apart from that I think that there will be a greater increase in rates than there has been for many years, solely as a result of the Government's policy. I think, too, that the rate support grant itself will be under-estimated.

On 27th November the Prime Minister made a speech at Manchester, and The Times of 28th November reported him as saying: At the same time we propose more extensive assistance towards the cost of improving basic services and clearing dereliction in the development areas. I have no doubt that the Prime Minister was sincere in expressing that view. His right hon. Friend the Secretary of State for Social Services did some fantastic work when he was Minister of Housing in a previous Tory Administration in attempting to persuade local authorities to go ahead with derelict land schemes. He did all he could to encourage them in this matter and gave grants of up to 75 per cent. or 80 per cent.

I am sure that both he and the Prime Minister are sincere. Local authorities were very lethargic about this. They seemed to do nothing, despite the generous grants. It was the unfortunate episode at Aberfan that acted as a spur to them, and encouraged schemes for the clearance of derelict land to go ahead in many parts of the North-East and South Wales. I feel that the Prime Minister is not fully aware how the new procedures which will come into effect from 1st April next year will affect derelict land schemes of local authorities. I intend to write to him personally on the matter.

From next April derelict land schemes will not be included in the key sectors; they will come under locally-determined schemes. The Rate Support Grant Order provides for the expenditure of £1 million and £1·1 million on open space, derelict land and clean air in 1972–73. I suggest that this is in no way sufficient to cope with the schemes that are already planned in South Wales and, no doubt, the North-East and elsewhere. When these schemes are taken out of the key sector local authorities will be inhibited. I suggest that one way out would be to deal with the matter on a regional basis. In cases where local authorities have severe problems the Government should see that the schemes for derelict land are covered by the locally-determined schemes and placed in the key sector.

But there is a far more serious effect, and I am afraid that many of my right hon. and hon. Friends, and hon. Members opposite, have not realised it. The circular to which I have referred states that: All capital payments made during the year on locally determined schemes (including any part financed from Government grants) will count against the allocation. The effect of this will be quite dramatic. Urban districts and non-county boroughs will have to charge to their annually locally-determined schemes allocations the gross cost of those schemes. This means that they will come nowhere near the total expenditure that would be incurred. I hope that my right hon. Friend—who will soon be sitting on the other side of the House—will realise this deficiency in Circular 2/70. I appeal to the Minister of State who, as everybody would agree, has greater knowledge of the matter than any of his hon. and right hon. Friends—

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

I must claim slightly greater credit for the Labour Government for the level of grants in respect of the clearance of derelict land than my hon. Friend has done. Is it not the case that special grants in almost every case have been made under a succession of Distribution of Industry Acts? They would not be affected by Circular 2/70.

Photo of Mr Arthur Probert Mr Arthur Probert , Aberdare

I do not accept that. Circular 2/70 is clear. Derelict land is included in the schemes for which urban districts and non-county boroughs will have freedom to operate and the gross expenditure on those schemes will be charged against their annual allocation from the county areas concerned. I shall be glad if I am proved to be wrong about that, but I should like the position clarified.

In accordance with the Prime Minister's intentions and the intentions of my own party when in Government, local authorities have already been persuaded to embark on these schemes. I would have thought that they would therefore be placed in a very difficult situation. Circular 2/70 is a civil servant's circular. Civil servants would say, "It is a matter for local authorities. The local authorities must decide their priorities". After a closer examination I am sure that the Prime Minister and the right hon. Gentleman would not accept such a facile answer.

The Government naturally want to control the global expenditure of local government. The new arrangement is considered to be a way of doing this. But all grant-aid schemes will remain under the direct control of the Government. If what I suggest came about the Government would still have direct control. They would have to approve the derelict land schemes that were proposed.

There are two ways of remedying the situation. Derelict land schemes can be placed in the key sector. I think that that is the better solution. Alternatively, the net cost of the approved schemes only could be charged to the allocation to urban districts or non-county boroughs from county councils. In both cases the Government could discriminate in the case of development areas or areas where derelict land is a serious problem, so avoiding a blanket acceptance of my suggestions.

There are many aspects of the new financial scheme which take effect from 1st April. I conclude by touching upon only one. Everybody who has any experience of local government will appreciate that towards the end of the financial year the money in the kitty should be spent quickly. The new set-up may have a serious effect in defining what the rate support grant must be. We shall have a rate support grant increase order next year, and fantastic problems will arise if we are not careful. It will mean that towards the end of the financial year non-county boroughs and urban districts will have to go cap in hand to their big brother, the county council, to see what they can get out of the pool. My hon. Friends have not been aware of what is in the circular. Even more ignominious and more frustrating—local authorities will be quarrelling with each other as to who shall have what out of the county council pool. This is a fantastic way to deal with the matter.

At one time we had what was called a rate equalisation grant which the rate support grant has to some extent supplanted. The former grant was allocated in the first place to county councils and they dished it out to the various urban districts, similar to what is now to happen on a larger scale. Things almost broke down and then we got the Jenkins Report, which proposed that the matter be dealt with via urban districts and non-county boroughs. This remedied the difficulty overnight. Unfortunately, the new system will take us back in time, and I hope that because of these serious defects the new set-up will be reviewed by the Government.

What will be the position of housing schemes for urban districts and non-county boroughs? If they want to produce a cycle of, say, 300 houses, I understand that the money required for the house erection aspect will come out of the key sector, though the ancillary services such as street lighting, heating, sewerage and so on will be allocated in gross from the annual allocation of the local authority, urban district or non-county borough within the county district. This will put this type of allocation beyond the means of such authorities—and this for essential services. This inadequacy needs further consideration.

I have tried not to be partisan tonight. I appreciate the sympathy which the Prime Minister and the Secretary of State for Social Services have in this matter. I feel emboldened to ask the Prime Minister to see whether the question of derelict land can be placed in the key sector, certainly for areas with special problems. I have particularly in mind areas like South Wales and the North-East. They will be grateful to the end of their days for the sort of sympathetic act for which I have asked.

7.33 p.m.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

I regret that the hon. Member for South Shields (Mr. Blenkinsop) is no longer in his place. He claimed that the speeches made by my hon. Friends bore no relation to the problems he was facing in his constituency. He might have found the same fault in the speech of his hon. Friend the Member for Aberdare (Mr. Probert), since the problems of derelict land do not apply any more in South Shields than they do in the attractive part of East Sussex which I represent.

The right hon. Member for Grimsby (Mr. Crosland) seemed to think that there was some great merit in claiming that some of my hon. Friends should read the speeches which we made two years ago. I cannot recall whether I had the privilege of catching your eye in that debate, Mr. Speaker, but certainly on the occasions when I have addressed the House on the subject of rates in recent years the case I have put has not varied. What I hope will vary is that tonight I will receive a more satisfactory answer, because we now have a Minister who is well versed in these problems about which I have spoken, and on which I must comment again tonight.

I have previously told hon. Members that the constituency which I have the honour to represent has at least as high a percentage, if not the highest of any constituency in the country, of retired people living on fixed incomes. That means that many of my constituents are gravely concerned about the incidence of inflation. I need hardly remind hon. Gentlemen opposite that at the time of the General Election this matter was uppermost in their minds. Inflation was worrying them gravely then, and it is worrying them now.

They are worried, too, about the amount of rates that they must pay. I frequently come across examples of people who retired on what they thought was an adequate income, but after a few years in retirement they are finding that not only is inflation making life difficult for them but that increases in rates are in some cases making it impossible for them to continue to live in the houses which they thought would be suitable for them for the rest of their lives.

When the hon. Member for South Shields said that there were "slight differences" in the problems which were exercising our minds, I thought how right he was. For example, he wanted to know what would happen to the local authority in his constituency which was busy arranging for new industries to be developed. In my constituency we have virtually no industry. Such industry as we have is largely concerned with services, and they were not encouraged by the last Government.

This means that there are no places in which people in my constituency can go to get an additional slice of the cake which increases in size for those who are geared to the industrial life of the nation. Even those who work in industry in my area are receiving wages well below the national average for similar industries. I therefore ask the Minister to comment on the problems of those living on fixed incomes and particularly worried not only about inflation but about rates increases. His remarks will be eagerly awaited by the people I have the privilege to represent.

I come to the wider picture of how rates affect East Sussex. My hon. Friend the Member for Hove (Mr. Maddan) referred to this problem. My county treasurer has worked out some figures, and I will give a short summary of the results at which he has arrived. When one looks at the amount collected in rates East Sussex, one sees that we come fifth in the league table of 58 counties in terms of the amounts collected per head of the population. By collecting £35·67 per head of the population, we come fifth.

On the question of grants, we are at the bottom of the league table, No. 58. We get £32·65d. per head. When the two are put together, we come No. 53 out of 58 in the league table, with a total of £68·32 per head as the total of rates plus grants. I may have been wrong, but I thought I heard the hon. Member for Aberdare refer to Brecon.

Photo of Mr Arthur Probert Mr Arthur Probert , Aberdare

Mr. Probert indicated dissent.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

In any event Brecon comes No. 54 in the list. It charges £21·23 per head of the population as against £35·67 in East Sussex. In rate grants Brecon gets £73·44d. as against our £32·65d., which puts Brecon fifth in the table for grants. It ends up by being fifth overall, with the addition of rates, with £94·65 per head of the population to spend as against £68·32 in East Sussex.

My county treasurer expresses grave anxiety about the way in which the educational unit will be weighted in future. He calculates that it will be a sum in excess of £300,000 which East Sussex will be losing. I hope that the Minister will pay attention to the position of my constituency and give careful consideration to the points I have put forward on behalf of my county.

I commiserate with my right hon. Friend on his having to open various sewerage plants. I, too, have seen some of these plants, and I agree that some of them do not look very different from some of the older ones. But there is one ray of hope. I commend to him some of the plants to be seen in places like Denmark and Switzerland, which successfully recover a great deal of the material which is collected in refuse, put the remainder into a drum, add the remaining sewage to it, and produce a compost which is sold largely to local authorities. The result makes a very considerable financial contribution to the local authority resources. These plants are much more attractive places, and it would do my right hon. Friend no harm to pay them a visit and see whether such a system might not be of benefit here.

7.40 p.m.

Photo of Mrs Doris Fisher Mrs Doris Fisher , Birmingham, Ladywood

When discussing the Order we need to take into consideration the fact that the domestic relief given is being given in a year in which local authorities are facing very severe financial problems and rates will be rising substantially regardless of what is laid down in the Order. I should like to emphasise some of the things which will be applicable to a city such as Birmingham, which is perhaps our largest local authority and may well bear one of the largest burdens.

The effect of the domestic element of the rate support grant is, as a rough estimate, that it will cost the city's domestic ratepayers £196,000 in the first year and practically £250,000 in the year following. That, with the efficiency cut of £200,000 proposed for 1971–72 will result in a rate increase of about 2½d. being placed on Birmingham householders by the Tory Government, regardless of any cuts or financial savings which the city may itself make.

The Order speaks of a saving of £10 million from increased efficiency, and that saving has to be borne pro rata by all local authorities. Birmingham, being the largest local authority, is responsible for one-fiftieth of that amount, so the result is that we are penalising efficient local authorities. For many years I have been a member of the Birmingham City Council and have prided myself on ours being an efficient local authority. I am sorry that the Secretary of State has just left the Chamber, because he would probably agree with me that the chairman of the City Council, not a member of my party, is not a very efficient chairman of the finance committee.

Birmingham has had its management consultant teams at work. It has had its organisations and methods survey. It has increased its productivity bonus schemes to its manual workers in order to get increased efficiency. We have had bulk purchase for many years. We have co-ordination of departments and services. That being so, where can a local authority which prides itself on being efficient save the amount asked for in the Order? The reduction for increased efficiency means that in the first year Birmingham is being penalised to the extent of £200,000 for being efficient, and to the tune of £250,000 in the following year. A loss of such magnitude to a city which prides itself on being a good local authority can be made up only by increasing the domestic householders' rates or lowering the services provided.

When looking at efficiency we must also look at the direction in which cuts can be made. I listened with interest to my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman), and I, too, would like to know where we can make cuts. No less than 17·3 per cent. of total local authority expenditure goes on salaries to teachers, and I sincerely hope that the Government are not suggesting a cut in either the salaries or the numbers of teachers. Another 52 per cent. is accounted for by wages, salaries, superannuation and National Insurance. I do not think that Birmingham is different from any other local authority in these percentages of what has to be paid out.

Another big item of expenditure is 13·7 per cent. interest on and redemption of debt. I do not know whether the Government will suggest ways in which rates of interest will fall rapidly so that we can economise in that respect. We find that 65·7 per cent. of the total expenditure of a large local authority goes on these two last items. I ask, as my hon. Friend the Member for Aston asked: where do we make the efficiency cuts? Where do local authorities make their penny-pinching?

The Government speak of savings by eliminating work which does not have to be done by public authorities. I would be very interested to hear the Government name the work which someone else could do much more efficiently or more cheaply. We have here a kind of bandying of words which has no meaning at all to local authorities. It is completely confusing, and seems to show a complete lack of understanding between local authorities and central Government.

It is fully accepted by practically everyone that private enterprise will take part only in undertakings which show a profit. What are the profitable services that are operated by local authorities? What is the work which they could eliminate by saying that it could be batter done by private enterprise? It will obviously not be the personal services, because those are the expensive services: the educational services, the services for the aged and the handicapped are not services that private enterprise will want to take over. I am sure that it will not want to take over sewerage. Will it want to take over the swimming baths, the water undertaking or the burial grounds? It is important that the Government should let local authorities know where lie the savings from eliminating work that ought to be undertaken by people other than local authorities.

In paragraph 8, page 2, I read something with which I disagree entirely. It says that the continuing growth of public expenditure causes a "discouragement of personal effort". Anyone who knows anything about the work of local authorities knows that in the main it is the expensive services that they have to undertake because no one else will do them. Can it be said, for example, that the growth of public expenditure has discouraged children from staying on at school after the age of 15? In fact, it is doing exactly the opposite, encouraging personal effort.

I am often worried by the present Government's attitude to what is called public expenditure. Since I have been a Member, I have sensed that the expression "public expenditure" has come to be regarded almost as a banned word, like words in some of the famous books which have been banned. It seems almost that public expenditure ought not to take place at all. In truth, we know that many Acts of Parliament increase local government spending. One of the criticisms which local authorities sometimes make is that legislation is passed but the finance is not forthcoming to put the schemes into operation. As has been said, the burden is being shifted from taxation to the ratepayer. It is easy to pass legislation, but if the necessary finance is not forthcoming, local authorities have no alternative but to disregard the legislation, putting off its local operation, or to increase their rates.

Many extensions of services to the aged, the infirm and the handicapped are not fully implemented by local authorities for the simple reason that adequate finance does not come from the Government, and they feel that they cannot raise their rates to provide for those extensions.

On the one hand, the Order asks for developing services and, on the other, it asks for continuing restraint. The two cannot go together. If there is to be continuing restraint, there will have to be a discontinuance of services.

It is of great personal concern to me in my constituency that there is little or no increase in the amount of money going to what are called parks. Birmingham has gone ahead rapidly with slum clearance. We are developing the city centre with fine new housing, but so many of our schemes are blighted by the open spaces left derelict, just left for one, two or three years, where fly-tipping takes place and where the general landscape, if one can call it that, presents an abject outlook. The local authority is finding money for its houses because the tenants are having to pay for that facility, but the general landscaping is bad. Open spaces are left bare and derelict, so that the overall appearance of local authority developments in slum clearance areas is appalling. It is most unfortunate that better provision in this respect cannot be made straight away for the people who live there.

I plead with the Minister to give special consideration to local authorities which embark on substantial slum clearance schemes. Let him be far more generous in the allocation in respect of parks. They are not parks as such; they are just public open spaces planted with grass and trees in places where such things were not known before.

The folly of the Orders before us is that in a year when ratepayers will face unprecedented rate increases the Government are making arbitrary efficiency reductions which cannot be sustained and are reducing the relief to the domestic ratepayer. The only consequence will be a substantial curtailment of local authority services or substantial rate increases. At the same time, many of my constituents know that they will have to face higher rents because of future Government policy. With all these increases coming about, and with food prices rising at the same time as a direct result of Government policy, life looks bleak for the average household. Yet, at the same time, the mini-budget gives benefits to those already better off.

7.55 p.m.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

We have as a guest in this country just now Professor Galbraith. It is a pity that he cannot be here to listen to our debate, for were he to be present he would be able to listen to a Government pursuing a policy which is turning into reality in Britain, after the six years during which we tried to go the other way, his concept of public squalor in the midst of private affluence. That is what the Order will inevitably produce.

My hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) and my right hon. Friend the Member for Grimsby (Mr. Crosland) both referred to the cut in income tax which the Chancellor announced on 27th October. The hon. Member for Hove (Mr. Maddan) said very honestly that the Order shifts the balance towards the ratepayer. In fact, the two can be put together as part of an obvious strategy on the part of the Government. On the one hand certain people have reductions in taxation while on the other—the hon. Gentleman put it fairly—the householder will have to pay more. He will have another counter-balance to what he fails to gain from the income tax reduction.

There is one way in which the householder will not be asked to pay more, that is, if the local authority services are reduced. But this brings the Galbraithian distortion into greater prominence, because local authority services are services which those who are worst off require most. A man living in a nice house in an outer suburb with a big garden in which his children can play and no derelict areas round about in which they can be contaminated or have accidents does not think much about local authority services. The basic elements are required, but, apart from them, he can carry on pretty well. If, on the other hand, he lives in the inner part of a large city, such as the constituency which I have the privilege to represent, the services which the local authority can provide are essential for all kinds of amenity. A good environment—how laughable it is that the right hon. Gentleman is Secretary of State for the Environment—can be a reality for him only through the services which the local authority gives.

It is all very well for the hon. Member for Hove to say, in his enthusiasm, that he wants the Government to go ahead with shifting the balance towards the ratepayer, with the inevitable corollary of reduced services if the ratepayer is not to be asked to pay more. He sits for Hove, a nice seaside resort, where there are amenities of every kind. In my constituency, however, for very many of the people whom I represent amenity is minimal, and the Order can only reduce the standard still further.

To the great misfortune of the citizens, the city council of Manchester has for the last three and a half years been controlled by the Conservative Party.

From the moment it took over, the Conservative Party showed a mean mindedness completely against the great civic traditions of the City of Manchester. Over these three and a half years, the Conservatives have continued with their mean mindedness and linked with it inefficiency. They are reducing services, reducing standards and creating misery for the people whom I have been sent here to represent. The policy which the Order embodies will inevitably add to the inefficiency and increase that mean mindedness.

My hon. Friend the Member for Aberdare (Mr. Probert) referred to derelict land and to the speech which the Prime Minister made when he came to Manchester a fortnight ago. It was my misfortune to be present and to listen to that deplorable speech. In the course of it, the Prime Minister spoke both about derelict land and slum clearance. It would have been far more appropriate if instead of making that speech he had come to my constituency, in my company if he so wished, and had seen areas which the Order will make more difficult and more unpleasant to live in.

Since my election to Parliament six months ago, I have been in correspondence with various civic departments about the problems of derelict land in my constituency, derelict land which is a health hazard, on which children hurt themselves, on which rubbish is tipped. Over the course of six months I have got almost nowhere in my efforts to get that derelict land cleared. I have got nowhere in getting the council to do something about it. I do not even have answers to my letters.

Photo of Mr Paul Rose Mr Paul Rose , Manchester, Blackley

Is it my hon. Friend's experience that not only does he not receive letters from the city council and not only is there this health hazard, but there is often the terrible hazard of rodent infestation? The Manchester Corporation displays remarkable complacency about this serious problem.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

The problem of rodent infestation is encountered in my constituency. It is one of the most abominable things that families with children have to put up with in certain parts of my constituency. It takes quite an effort to get Manchester Corporation to do something about it.

My hon. Friend the Member for Birmingham, Ladywood (Mrs. Doris Fisher) spoke about amenities around new housing developments. We have growing housing developments in my constituency. One is near a railway viaduct, Rostron Close. Over the past two months I have twice written to the council asking it to do something about the rubbish which is tipped on this land making an eyesore in front of what should be a great new amenity. So far I have not even had a reply to my letters. Nearby there is a railway arch which has been left open and children can run through it into the traffic.

My correspondance with the council about other sites has reached the stage when I have had a letter from the city planning officer to tell me with some satisfaction that a public spirited organisation in my consituency the Rusholme and Fallowfield Civic Society is taking over one of these derelict sites itself and turning it into a playground. It is utterly deplorable that a great city like Manchester should rely on the civic sense of a voluntary body to do a job which the council is there to do, although I pay tribute to the civic society, which is a fine body. I have had a letter from the city planning officer to tell me about other sites, for instance the Beresford Road site, about which he says that the council cannot do too much, because the cleansing department has only a limited amount of capital and labour to undertake the work. Yet the Government are reducing the resources which will be available to deal with this kind of problem.

The document refers to housing improvements. There are two blocks of flats in my constituency, Heywood House and Brook House, which are some 30 or 40 years old and which are in some need of improvement, but where hundreds of people live. The flats are deteriorating rapidly into derelict civic slums. The tenants are growing disheartened at living there. Whenever I go to these blocks of flats I am certain to be met by complaints about broken glass, mess, lack of amenity and all the rest of it. After a great deal of pushing and after first saying that it could do nothing, Manchester Corporation is to do something about one of the blocks. Far from having increased expenditure on housing improvements to help such blocks of flats, we shall get nowhere with the Government's policy of reducing the amount of help available.

Photo of Mr Martin Maddan Mr Martin Maddan , Hove

The hon. Gentleman has selectively quoted various aspects of Government policy. Will he refer to that aspect which proposes to change the method of housing subsidy and thus create unprecedented amounts of resources which will be available for rebuilding houses in the sorts of areas and in the big city centres of which the hon. Gentleman is speaking?

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

Government policy will put unprecedented amounts on the rents in the constituency. The Manchester Evening News has estimated that the Government's policy will add nearly £1 a week to rents for my constituents, many thousands of whom live in corporation dwellings, and a spokesman for the corporation has described that estimate as realistic. I would welcome the hon. Gentleman to Manchester at any time to tell that to the people who live in corporation dwellings and whose rent was increased months ago, but not until after the General Election and the municipal election.

The Order will have harmful effects in other respects. My hon. Friend the Member for Ladywood mentioned the necessity of providing amenites for new estates. New estates are being built in my constituency. People complain to me that there are no libraries to service people in the new estates and, worse still, libraries are being closed down in other parts of my constituency where they have been a great boon to old people whom the sheer meanness of the Conservative controlled Manchester Council has deprived. We cannot expect any expansion under the policy which the Order embodies.

Part of the perimeter of my constituency is on the Mancunian Way. It was a great misfortune a little time ago that the child of one of my constituents was killed while playing over the Mancunian Way. At the inquest her father made the point that there were limited play areas available to children in the area. I am in correspondence with the council about this and in this respect the council is actually trying to do something, and some action is being taken. But play areas require money and resources and the Order will not make that kind of provision possible, even though it is so necessary for the children of the people I represent.

This Order tells us about the elimination of unnecessary work. The hon. Member for Hampstead (Mr. Geoffrey Finsberg) in a scathing speech—scathing in terms of the sycophancy with which hon. Members on the other side of the House greet anything which the Government put to this House—spoke about this part of the White Paper. If corporations are being called upon to eliminate tin-necessary work, and heaven knows the Manchester Corporation is not doing anything unnecessary—it is not doing things which are necessary—how on earth can they expand amenities greatly required by constituents? For example, the Manchester Corporation is promoting a Private Bill which will, among other things, compensate people whose domestic amenities are disturbed by the noise from Ringway Airport. I have asked the corporation to consider giving the same compensation to my constituents who live near the freight liner depot in Ardwick and Longsight and whose homes are being made uninhabitable by the freight traffic.

The corporation will not put this into the Bill, it has not got the money. The policy embodied in the Order scarcely makes it possible for the corporation to do anything about it. There is a great debate going on in Manchester about the need for a place where people can make open-air speeches, an extension of democracy. The city council wanted to do something about it, it was actually considering it—it has been considering it ever since April. After passing a resolution in April saying that it was desirable, it decided in November to take no further action because of the expense.

The Chairman of the City Planning Committee said that such a Speakers' Corner would cost half a million pounds, I would be the last to advocate spending that sum on a Speakers' Corner when it could rehouse hundreds of people in my constituency, who badly need housing, However, as the Manchester Evening News said in a leading editorial on 26th November: Such estimates are sometimes to be taken with a grain of salt. They are made because the Corporation are not willing to do it and are looking for an excuse.

This is something which the people of Manchester want very badly, as is shown by my correspondence, but it is highly unlikely that we will get it at half a million pounds or even £500 under the skinflint policy embodied in the Order.

All of these matters are burdens which will be passed on to a Labour-controlled council in Manchester just as similar burdens will be passed on to other Labour-controlled authorities when we gain control of hundreds of seats next May, as we obviously will. In the country as a whole and in Manchester in particular, it will then be for the Labour Party to revive the civic services and civic pride. Our cities must be well run or the social problems inherent in them will worsen. We have the experience of the United States to show us what happens to great cities, especially the inner parts of great cities, when they are neglected and when private affluence is put ahead of dealing thoroughly with this problem. The philosophy behind the policy the Government are putting forward is one of neglecting our large cities and neglecting our urban problems. This is a philosophy which is wrong and the longer the Government continue with it and the policy embodied in the Order the sooner will the country come to realise how wrong it is.

8.13 p.m.

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

I am grateful to my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) for having, in such a detailed way, dealt with the problems which affect constituencies in the great cities of this country. Since his constituency is next to mine and the next area for clearance straddles both our constituencies I can say a profound "Hear, hear" to all that he has said. The words "public expenditure" are dirty words in Conservative circles. Over the past three years in this House I have listened to speeches from hon. and right hon. Gentlemen opposite attacking the growth in public expenditure which took place under the previous Government.

As a glutton for punishment I watched the Conservative Party conference on television and heard the roars of disapproval every time public expenditure was mentioned. We are now in a situation where public expenditure will not and cannot be cut because the jobs which have to be done are too important and they are more important than a great deal of the spending which takes place in the private sphere. This Order will not in itself reduce public expenditure but it will force a heavy increase in rates which bear heavily on the less well-off, so that the Government can cut the taxes which will most benefit the wealthy. This is part of the package which the Chancellor brought to the House some weeks ago. It will have the same purpose as that package—increasing the burden on the average householder and holding up the growth of essential services.

Now we can see what the Conservative Party manifesto meant when it said: We will increase the independence of local authorities. What it really means is that it will see to it that the ratepayer gets a big increase. During the next few months the citizens of my city and a great many other places will see what a combination of a Tory central Government and Tory-controlled councils can produce. To hear hon. Members opposite one would think that all had been sweetness and light in the discussions between the local authorities and the Government. One might almost expect that to be the case since nearly all the local authorities are Conservative-controlled.

I want to draw the attention of the House to what Alderman Kathleen Ollerenshaw of Manchester City Council said at the end of the discussions. She is the chairman of the education committee of the Association of Municipal Corporations. Until this year she was chairman of the Manchester Education Committee and is a highly respected figure in Conservative education circles. The Times Educational Supplement of 27th November reported this: Internal squabbles between members of Conservative groups on Conservative-controlled councils will be caused by the result of this week's rate-support grant negotiations, Dr. Kathleen Ollerenshaw … said on Wednesday. The negotiations, she told The Times Educational Supplement, had played right into the hands of the opposition groups. Conservative councils would be faced with either a drastic increase in the rates or a drastic cut in their expansion programmes. They would probably do both, fall between two stools, and would in some cases lose the next local government elections, she said. I can assure her that the Manchester City Council will be one of the places where her prophecy will come true.

What are the points on which the local authorities felt strongly in these negotiations? First, there was the reduction in the rate of increase of the percentage assistance given to authorities from 1 per cent. to ½ per cent. The 1966 White Paper proposed steady increases so long as the local authorities were reliant upon rates for the majority of their revenue. The local authority associations in the negotiations stressed at the meeting with the Minister the need to continue this steady increase in aid but the Minister refused to accept this argument because he argued that the increase had in the past been used to shield domestic ratepayers unnecessarily from the financial effects of local decisions. The unfortunate timing of the decision meant that there will be considerable rises in rates this year because of increasing costs alone. This was the one year when there was this cut in help from the Government.

The second point was that, relevant expenditure having been broadly agreed, deductions were made of £10 million from the 1971–72 figure and £25 million for improvements in efficiency. "Efficiency", in the Government's view, apparently means making extra charges for local services. Perhaps the Minister will suggest what charges should be made when he replies. Certainly the city of Manchester, at any rate in its officials, has a very high reputation for efficiency. I am sure that the City Treasurer, who has a high reputation in municipal financial circles, could give the Government a hint or two on efficiency. But, efficient or not, the same cut will apply to all authorities.

The authorities' third point relates to the real growth represented by the levels of relevant expenditure referred to in the Order. The City Treasurer pointed out that this does not represent an improvement in the standard of service. A considerable proportion of this new money will be necessary simply to maintain standards in the face of increasing numbers of schoolchildren and elderly people, increases in the volume of sewage, and so on. In the face of this built-in or natural growth, the local authority associations felt that the proposed growth rate would allow little in the way of improvements.

The City Treasurer has, incidentally, made an estimate—he insists that it is only an estimate—of the grants that would be available to Manchester under the rate support grant. This shows that last year the domestic element had a 35·8 per cent. increase. In the coming year it will have a 9·9 per cent. increase. The resources element last year increased by 7·9 per cent. and next year it will be 4·9 per cent. The needs element increased by 12·6 per cent. last year and it will increase by 9·7 per cent. in the coming year. According to my calculations, these differences are less than in the country as a whole, since the Manchester needs element is very considerable.

I turn to education. In House of Commons Paper No. 172 the Government claim that: Provision is made for a significant improvement in the level of non-teaching costs per pupil in primary, secondary and special schools and in further education establishments and account is taken of the higher loan charges which will result from the Government's decision to increase the school building programme. I hope to hear more detail from the Minister when he replies.

The Educational Publishers Council and the Educational Equipment Association brought to our notice recently the relative decline in expenditure on books and equipment. These bodies have vested interests, of course. They want to sell more hooks and equipment, as those of us who have been in the teaching profession and at the receiving end of the salesmanship know. Nevertheless, it is time that those of us who are especially interested in the development of education added our voices to the points they make. One point is that eight years ago, in 1961–62, 3 per cent. of local education authority spending was devoted to books, equipment and stationery. It is now 2½ per cent. on the last available figures for 1968–69. The amount spent on textbooks and library books for primary children was just over £1 a year per child. If we count a 40-week year and not a 52-week year, that is only 6d. per week, probably less than the amount the children spend on comics.

It is no use our building fine primary schools if we do not spend enough money each year to equip the teachers and the children to do their respective jobs. I am against the purchase of large numbers of sets of textbooks. I have unearthed in cupboards in schools textbooks that were years old, out-of-date and often inaccurate. But in the coming years there will be a need for the purchase of many textbooks. Decimalisation may have some disadvantages, but at least it will have the advantage of getting rid of a vast amount of old-fashioned books based on the old currency.

The level of expenditure on books and equipment, particularly in primary schools, is hopelessly inadequate. Inflation has been especially felt here, because I understand that the cost of paper has increased in the past four years by 40 per cent. and the cost of printing and binding by about 34 per cent.

Purchase tax, too, has a considerable effect, not on books but on stationery and equipment—what we call the bread and butter items of school expenditure. Local education authorities must pay purchase tax on much of their educational purchases, about 16 to 20 per cent., so that of the money they spend at least one-fifth returns to the Government. Government Departments do not pay purchase tax and do not realise the expenditure involved here. I hope that the Chancellor of the Exchequer will take note of this and as part of the next package give local education authorities exemption from purchase tax at least on items of educational equipment which they purchase.

The capitation allowance which some local authorities make available for the purchase of books and equipment is woefully inadequate. I hope that the Secretary of State for Education and Science will use the powers which she has, and which she should use, to direct local authorities to spend a larger proportion on them.

Why is all this important in the context of the rate support grant? It is because when local authorities are looking for areas in which they can cut, this is one that they choose. They cannot do much about teachers' pay, because that is fixed nationally. They cannot interfere with the school building programme, because it is long term. So they come down to a pretty narrow field.

My hon. Friend the Member for Ardwick mentioned that Manchester has had a Conservative Council for 3½ years. Before coming to the House in 1967, I was head of a school in Manchester, and the last meeting I attended took place shortly after the Conservative Council took office. That was in May, and in September we were called to a meeting to be told that the council had decided in that calendar year to make a cut of 2½ per cent. in education expediture. In the middle of the year the range was very narrow, and it was money for books, equipment and stationery which had not been spent during the current year which caught it. I urge the Government to encourage local authorities to spend money on equipment, books and stationery in schools.

The difference between the attitude of the two main parties is to be seen in public expenditure. Money spent on education, the social services and the whole range of local government services is more important than private spending. I understand that around the offices in Whitehall the Secretary of State for Trade and Industry is called the Minister for Private Affluence, and the Secretary of State for the Environment is called the Minister for Public Squalor. I hope that the right hon. Gentleman does not live up to that title, but the rate support grant Order does not encourage me to think that my hope will be realised.

8.29 p.m.

Photo of Mr Raymond Carter Mr Raymond Carter , Birmingham, Northfield

I rise principally to address myself to a constituency matter on the rate support grant.

Before doing so, I will address myself to some of the bizarre comments that have come from the Government side today. They remind me of an incident which occurred during a by-election I fought at Warwick and Leamington in 1968, when the Prime Minister, then the Leader of the Opposition, was pulling every punch to win a series of by-elections. During the second week of my campaign he issued a Press statement saying that Conservative councils had been extremely successful in holding back rate increases and, in some cases, reducing the rates. I could not believe this, because I knew that the Labour Government had introduced rates subsidy legislation, and at that time the central Government was subsidising local authorities to the tune of 10d. in the £. I said to a journalist, "Surely he knows of the existence of this, and knows that what he is saying is not true." The journalist said, "Oh, no, he probably does not know at all." Having heard some of the comments from the Government side today I am quite prepared to believe that the journalist was right.

At that time I was a member of a Tory-controlled local authority in Berkshire which was able to increase expenditure whilst at the same time reducing the rate burden—probably because of rate subsidies. I have found it strange that Conservative-controlled local authorities should criticise the Labour Government for not giving them enough help when I have asked them to take a certain action to improve local services. I wonder what these Conservative-controlled councils will say to the ratepayers now that a Conservative Government have taken the reverse action and reduced the contribution from the central Government?

From my experience as a councillor, I am convinced that rates are the best form of taxation. I have doubts about the way rates are levied, and I think that the system is rather iniquitous. Nevertheless, ratepayers can see what the local authorities provide for them, whereas they cannot see what general taxation provides. Local people can also see what needs to be done and raise their voices in support of a particular cause. When a rate increase has to be made to raise money for that cause they are often quite prepared to pay the increase.

This cut in the rate support grant is disastrous. It represents a cut of 46 per cent. It is bound to increase the burden on the ratepayers, and it is bound to be inflationary. Already my own Conservative-controlled City of Birmingham is talking in terms of a 2s. 6d. in the £ increase. This comes on top of two previous years when increases have exceeded 2s.

I come now to the point that is of concern to my constituency. It is an issue of life and death. It is a matter with which I was concerned as a candidate for 18 months in trying to get the Conservative council to take action. It refused, it lied, and I was subjected to a great deal of evasion on the part of the chairman of the public works committee. Twice I called on him to resign. He lacked the wisdom to do so and is still there.

This whole matter concerns a road called Longbridge Lane which runs from the biggest car works in Europe, British Leyland. That road carries articulated lorries which contain six to eight cars; it carries a great deal of the traffic going to and from the works delivering vehicles and the people who work there. It is probably the worst road in Britain. As a result of this cut in the rate subsidy, it stands no chance in the future of being improved or remodelled. The accident figures for this road are staggering. In the past three years there have been over 130 accidents; more than 50 have resulted in some form of hospital treatment, five have ended in death.

I initially took up this case when a man was killed in an area along the road where there is no light. I immediately asked the Conservative chairman of the public works committee to take action to get the road improved. He wrote back to say that this was impossible because the Government, then the Labour Government, would not produce the necessary finance to carry out the improvements. I wrote to the Ministry to ask why it refused to grant this finance to the Birmingham City Council. The Ministry told me that it was not a road which could qualify for Government assistance; all that was required was that the Birmingham City Council should ask the Minister for loan consent. I went back to the chairman of the public works committee. He admitted that he was wrong. I then asked him to carry out some form of inquiry to establish the relative prioriy of this road vis-à-vis the other roads in the city. He refused.

All this was published in the local Press. I sent the chairman of the public works committee 3,000 names of people who were vitally concerned with this road and who wanted to see it reach a state where death and blood was removed from the scene. I was implored by residents in the road who, week in and week out, had to go into the road to lift mangled bodies from cars to urge the Conservative council in Birmingham to carry out the necessary road improvements. All kinds of people got in touch with me, but I was unsuccessful.

Since coming to the House I have asked the Conservative-controlled council in Birmingham to take action, but it has said it cannot do so. However, I wonder what that council will do now that a Conservative Government will allow it to have even less money in the kitty.

What am I to tell my constituents of Longbridge Lane who have witnessed over 130 accidents in three years in which five people have been killed and 40 have been taken to hospital? I can only tell them that this Government are heartless; that they have their priorities totally wrong.

I hope that even at this late stage Birmingham City Council, which has not so far shown a great deal of compassion, will urge the Government to rethink their proposals. Obviously it is too late in the day. I shall have to go back to my constituents and tell them that I have tried extremely hard to get improvements made in this road but that the chances in future are even slimmer because of the cut in the rate support grant. I think that the council, even though it is politically partisan, should be honest and come clean and admit that the Government are not interested in improving the environment in which people live.

I sincerely hope that some extra thought will be given to our road problems in cities—problems which are increasing day by day, and certainly increasing in my constituency, which has this tremendous factory right in the middle of it. If the Government have second thoughts I am sure that the people of Longbridge Lane, even though they have waited three years for improvements to that road, will be grateful. I therefore appeal to the Government to think again.

8.42 p.m.

Photo of Mr Peter Rost Mr Peter Rost , Derbyshire South East

As a ratepayer, I wish to make a brief contribution to the debate. I speak on behalf of long-suffering ratepayers, particularly in south-east Derbyshire.

I should like to pose two questions for the consideration of my right hon. Friend the Secretary of State for the Environment who so ably opened the debate.

Despite the substantial help which the Government are providing in the Order, rates will again go up substantially. I should like to know, first, whether we really are sure that the additional expenditure being undertaken by local authorities is necessary; and, secondly, whether the whole question of reforming the system of local government taxation will be considered?

On the first point—whether the extra expenditure is necessary—I do not suggest that there can be any substantial reductions in, for example, education. On the contrary, we are obliged, and we intend, to increase expenditure in such important spheres. But I maintain that there are substantial areas where we could produce more efficiency than is at present being achieved.

I should like to be reassured that local authorities all over the country are effectively employing bulk purchasing policies to create greater economies. I should like an assurance that local authorities throughout the country are getting sufficient guidance whether they are perhaps undertaking too much paper work.

I should like an assurance that local authorities are not employing more personnel than they really need, because this is a major item of expenditure. I have particularly in mind direct building departments. I am convinced—and I would like to be proved wrong—that certain direct works departments are not running as efficiently as perhaps they could be and are not able, in some cases, to do the work as economically as outside private enterprise firms could do it.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

It is all very well for the hon. Gentleman to cast such aspertions at large about direct building operations carried on by local authorities, but it is quite another thing to substantiate his case. Will he produce cogent evidence instead of making these bare assertions?

Photo of Mr Peter Rost Mr Peter Rost , Derbyshire South East

I am grateful to the hon. Gentleman for that intervention. It is not my purpose now to give chapter and verse of individual cases. I have merely posed the point that I believe that the Government and we in this House should ensure that there are no cases of inefficiency and that the whole question should be looked at again. In the past, such cases have come to light. The whole thing needs looking at if we are to control the ever-rising increase in rates.

Another example of where perhaps we are employing more people in local government than we need came to light during the recent dustmen's strike. One local authority decided to contract the work out and found that private enterprise was able to do it not only more cheaply to the ratepayers but more efficiently because it doubled the number of collections, making them weekly instead of fortnightly. In addition, the employees in the private contracting firm were earning substantially more than the dustmen employed by the local authority. I merely suggest that perhaps we have not looked deply enough into the whole question of whether functions now performed by local authorities could be more economically carried out by outside contracting on a more competitive basis.

My third example is that of road maintenance. The activity could well be looked into. Perhaps private contractors could do the work far more efficiently and cheaply than those employed at the moment by the local authorities. These are some of the activities my right hon. Friend could look at and advise the local authorities accordingly, in order to achieve economies.

Rating reform has been mentioned in the debate. There are great inequities in the present system. There is one aspect which causes more distress and annoyance perhaps than any other. I have a petition already signed by several thousand of my constituents on this matter. It affects primarily owner-occupiers but also some tenants who spend their own money on improving their houses—particularly in the installation of central heating—and then find that they are re-rated as a result. Quite rightly, this causes considerable annoyance. People who have spent their own money on improving their houses regard it as unfair that they should be subject to increased taxatian as a result. I should be obliged if my right hon. Friend would look into this aspect of local government rating as an example of an unfair system.

A second matter with regard to the unfairness of the rating system is that in many cases the nationalised industries do not pay their fair whack of rates. This causes an unbalance in many local authorities where there are large nationaised industry headquarters or properties which do not contribute towards the rates, and an extra burden is placed on the rest of the community. To spread the burden more evenly, I should be obliged if that matter could be looked into.

But that is only a quibble, because it is the overall problem of local taxation which must be examined. The present system is most unsatisfactory. Over the next year or two, the whole matter must be subjected to reform. Naturally, I am not this evening making any suggestions along these lines, as this is not the time to do so. But I emphasise that we have to restructure not only local government boundaries and the administration of local government, to achieve greater efficiency, but at the same time we have to completely restructure the finance of local government, so that the burden at least falls more evenly on the taxpayer according to his ability to pay.

I give wholehearted support to the Order because I regard it as an interim measure until we can tackle the fundamental problems of local government reform, involving boundary structure, administration and finance.

8.52 p.m.

Photo of Mr David Stoddart Mr David Stoddart , Swindon

I wish first to emphasise and re-emphasise that rates are a regressive form of tax. They tall more harshly on the poorer sections of the community than on the richer sections. It is all the more reprehensible, therefore, that the Order will tend to push the burden further on to the ratepayers, making an already regressive tax even more so. The decision having been taken to swing more of public expenditure on to local authorities, it is extremely urgent that the Government should do something tangible about the reorganisation of local government finance, if possible at the same time as there is a reorganisation of local government boundaries.

The Order concerns me very much on behalf of my constituency. The Swindon authority has already announced a supplementary rate increase this year of 6d. in the £ from 1st January. It has also indicated that this increase will be followed by a further increase of 3s. in the £ from 1st April next. It is absolutely no use telling this local authority that it has to contribute to overall efficiency, because apparently as a Conservative controlled council, it says that it has already made this contribution by a reorganisation of its internal management structure.

The people of Swindon will be concerned that the present Order may very well put on them greater burdens than they bear already and expect to bear from the 1st April next.

The services which are likely to suffer when the cuts come to be made—and cuts are inevitable—are those in the hands of local authorities. I have in mind, for example, the meals-on-wheels service, the home help service, the maintenance and repair of roads, and facilities in our towns. As a Member representing an expanding town, I am extremely concerned about the lack of facilities for those who have been induced to come there to live and work. Only a week ago I met a deputation of young people who complained bitterly that there was nothing for them to do and nothing provided for them in Swindon. For their leisure activities they have to go as far as Bristol. It is services of this sort that the local authorities will cut. As one of my hon. Friends said, they are part of the environment and of the society in which we live. Unless we are prepared to spend more public money in these directions, our environment will suffer.

Too little attention is given to the transport services provided in many of our towns. In many cases the nonexistence of them is becoming a disgrace. Before long we shall find vast tracts of our towns laid to waste for the provision of roads which will never accommodate the cars that will be attracted by them. At the same time, large sections of our communities will be denied the opportunity to travel from home to work or to the town centre.

Far from reducing the rate support grant and asking local authorities to economise, the Government should be honouring their pledge to set local authorities free and give them the opportunity and wherewithal to improve their environments and the local services without which the country cannot exist.

8.58 p.m.

Photo of Mr Peter Fry Mr Peter Fry , Wellingborough

Mercifully, my intervention will be brief. I support these two Orders with some misgiving. I regard them as being, in the end, a bitter pill for many domestic ratepayers. Unlike my hon. Friend the Member for Northants, South (Mr. Arthur Jones), I do not set great store on revaluation. I remember the last revaluation. I suggest that it created almost as many difficulties as it solved, especially amongst owner-occupiers.

The problem of rating reform is germane to this whole debate. I agree with the right hon. Member for Grimsby (Mr. Crosland) that there is no quick and easy panacea. In the years that I spent in local government studying this problem, I became convinced that the eventual answer must be a combination of measures. Obviously some degree of the present rating structure must remain. I have in mind those parts of it which apply to business and commercial premises. In addition, help must be given to domestic ratepayers, especially those on small incomes. Assistance must also be given to our great cities with their denuded central areas.

The time has come to be much more realistic. All those who benefit from the rates should contribute if they are in full-time employment. It is ludicrous that there can be two adjoining houses paying the same rates, one occupied by a widow whose income is just above the level at which she can gain some support and the other occupied by six or seven people who are all in full-time employment.

I believe that, after constant revaluations, as the level of the rates increase people will become increasingly dissatisfied with the present system, and, therefore, I am looking forward eagerly to the Green Paper which we expect after the Christmas Recess giving the Government's conclusions on the reform of local government finance.

I appreciate that one of the Government's purposes in presenting these figures to us is to make local authorities look again at their programmes to see how much they can save. But let us not fool ourselves; the margin that they have is exceedingly small. Anyone who has sat on a county council finance committee knows that very little can be done. I have spent three or four hours on an education committee to save £10,000 on a budget of £1½ million. This is very often the extent of what can be done in local government to cut local expenditure.

On the other hand, I believe that what the Government are doing today is very good for setting an attitude. I remember a couple of years ago being on a governing body and examining the estimates of a school for the coming year. I was horrified to see amongst the projected expenditure one deep freeze and six automatic sewing machines. When I tackled the headmistress about this, she was surprised to think that I considered that expenditure unnecessary. I said that if we were ever to try to get any sense into local government finance we had to start at that level. Each school governing body and each sub-committee of a council has to examine whether its expenditure is essential.

As I say, I believe that the margin for cuts is very narrow indeed, but I regard these two Orders very much as a holding operation, as my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) said. I await eagerly and critically what the Government will have to propose after the recess, and, therefore, though I support both these Orders, I do so with a certain amount of trepidation about the effect that they will have on many domestic ratepayers.

9.3 p.m.

Photo of Dr John Gilbert Dr John Gilbert , Dudley

There are many reasons why one can deplore the cuts involved in these Orders. There are, however, two points which I should like to emphasise. They both relate to matters on which local government spending is inadequate, and where it will have to rise, at least in one case. They are two similar problems, but the principles involved are quite different.

The first involves the Minister for Social Security and the whole question of provision for the disabled. Due largely to the efforts of my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris), there is on the Statute Book an Act which represents the first comprehensive attempt to deal with the problems facing the disabled. That is now the law of the land, but many sections of the Act await Ministerial action before they are brought into effect.

When those sections are brought into effect there will, inevitably, be huge increases in local authority spending on the disabled, and quite rightly so, and I have to be frank and say that many hon. Members, on this side of the House at any rate, are apprehensive that the delay in activating certain sections of the Act is probably due to the fear in the Minister's mind that when local authorities get down to compiling a comprehensive register, as it will be their statutory duty to do, it will be found that the total number of disabled is very much greater than any of us has hitherto suspected. We must hope that is not the case but, if it should prove to be so, it will mean that the total sum of human unhappiness and suffering is also much greater than we have hitherto suspected. When this part of the legislation is implemented the financial burden upon local authorities will inevitably be much greater than at present. I hope that the Government will not merely try continually to delay on this exceedingly important social problem.

My last point concerns concessionary bus fares for the old, the blind and the disabled. Some local authorities have a very good record on this; some have introduced merely token schemes, and some—like my own—have done virtually nothing. Schemes have been negotiated with transport authorities and undertakings but nothing has been done. The local authority has dragged its feet. The schemes have not been implemented. In the case of the blind and the disabled the amount of money involved is often trifling.

This is a social problem of increasing seriousness. We are not talking about luxuries—about such things as television sets; we are talking about the basic problem of the old-age pensioner in getting from his or her home to a shopping centre, or to a local social club, or in visiting neighbours, friends and relatives in different parts of the same borough. If they are really concerned about the social problems of old age the Government should act speedily and with generosity. I have had more correspondence on this than on any other subject since I became a Member.

These schemes do not make a great demand on national resources; they are purely transfer expenditures. The buses are running anyway. Most of the schemes operate in off-peak hours. There is no additional consumption of petrol or oil.

There is no great addition in terms of maintenance. There are no extra wages to be paid to the bus crews. There is no reason why we cannot do something for our old people—something that would mean very much to them.

Not long ago I put down a Question to the Minister asking him if he would ascertain exactly what schemes were in existence, so that we could know what the facts were. He refused to do so, but gave no reason. I hope that he may be induced to change his mind. If we have a survey I am afraid that he may find that the problems are much greater than he suspects. If so, there will be an overwhelming case either for the institution of a national scheme for concessionary bus fares for the old, the blind and the disabled, or for him to make it mandatory on local authorities to introduce their own schemes—not merely token schemes but schemes with minimum acceptable standards.

9.9 p.m.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

I agree with what my hon. Friend has said. I want to stress some of the problems that are being faced by boroughs—especially those in the inner London area. There is likely to be a foaming Niagara of discontent about rates in the inner London area. I hesitate to think what will happen next March. Certain political tactics may be devised because there is to be an election in May, but in my borough the situation has got out of control. The local authority, which has been Conservative since 1968, has introduced schemes based largely on political dogma, which have wasted the resources available in this borough—resources that could have been used in many vital spheres.

One of the first things the council did in trying to deal with the problem of homelessness was to take over an old G.L.C. property of 110 dwellings and herd 110 families into it. I understand that a similar policy is being undertaken in Wandsworth. We on the Labour side of the council described in graphic terms what would happen. We said that it would be a waste of money and that tremendous social problems would be created by herding families together, and that is exactly what has happened.

There is a certain amount of lawlessness there, but the families which are innocent of that lawlessness must carry the stigma. Instead of being able, as we could have done, to buy up properties individually all over the borough and deal with the homeless in a humane way, the council embarked on this policy, and the folly of it is now abundantly plain.

Families in Duncan House, which is what it is called, are living in misery not because of the nature of the block of flats—there are many worse—but because of what the people in the surrounding area believe and because there are some who live in Duncan House who do not conform to the rules. This policy was born out of political prejudice.

The hon. Member for Derbyshire, South-East (Mr. Rost) spoke of direct labour, and, while he did not exactly castigate direct labour schemes, he suggested that there might be something wrong with direct labour forces throughout the country. Time and again I heard in my council from 1968 onwards that sort of allegation. There was no evidence, but just the bare assertion. That will not do.

Since the Conservatives came to power in local government they have suspected and attacked direct labour schemes, notwithstanding the evidence that has always been available. Although there are a few instances where direct labour schemes have not operated properly, in the main they have improved standards, have accepted high standards and have saved substantial sums for local ratepayers.

Photo of Mr Peter Rost Mr Peter Rost , Derbyshire South East

Is the hon. Gentleman suggesting that there is no evidence of inefficiency in direct labour schemes? Whether or not he is, I was making the point that in many cases it is difficult to judge whether there is inefficiency and whether the work could be done more economically by private enterprise contracting outside simply because the opportunity is never afforded for contracting outside.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

That is simply not so. We in Hackney had an independent survey into the direct labour force. The Conservative members of the council believed that it would show direct labour schemes to be inefficient. They were proved to be wrong. This has happened in other parts of the country. We have been engaged in competitive tendering. Indeed, more often than not the direct labour force has won these tenders, and deservedly so. So the hon. Member's intervention will not do. All he has done is to underline his earlier attack on direct labour schemes, which was bereft of any evidence at all.

I cannot think of even one scheme which the Conservatives have innovated. In not one case have they produced a novel idea. When I was chairman of the welfare committee my chief welfare officer was constantly producing new schemes—Continental holidays for the disabled, and the like—but we have seen nothing of that sort since 1968. But we have had cuts in our library and welfare services.

In one respect the Conservatives have been absolutely positive. They introduced a scheme whereby bailiffs distrain on arrears of rent in the sum of £20. This has been a tremendous success. It was introduced last year and as yet not one distress warrant has been issued. But they had to waste money in setting up the scheme. We spent hours debating it, when it was pointed out quite clearly that the whole thing was an extravaganza and could not possibly begin to operate in any positive way.

In one instance my local authority has been obliged to incur expenditure because of the reckless behaviour of another local authority. There is a terrace of houses in Paragon Road which was acquired from the old Hackney Borough Council by the Greater London Council. It comprises 12 properties, and is part of a larger estate which the Greater London Council now has.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. I appreciate what the hon. Gentleman says, but he must link it with the Orders.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

I was seeking to establish, Mr. Speaker, how our health department has been obliged to waste money because of the activities of another local authority.

No fewer than seven public health notices have been served by the London Borough of Hackney's medical officer of health on the Greater London Council

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. With great respect, I am listening to the hon. Gentleman's account of a quarrel between the two local authorities, but he must link this with the Orders.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

This is something on which my local authority has been obliged to waste its resources. The health department employs a large number of people who are vitally required to undertake this sort of work in respect of private landlords, and the resources that have been wasted could usefully have been employed elsewhere. One has only to go to Hackney to see how many private landlords fail to equip their properties properly and allow them to fall into wrack and ruin. It is an absolute scandal that the Greater London Council should behave like a Rachmanite landlord and cause the London Borough of Hackney to deploy its resources in this way—

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. It may be the absolute scandal the hon. Gentleman talks about, but we are discussing the rate grant and an increase of the rate grant and he must link his remarks to the Orders we are discussing.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

Would not my hon. Friend agree that if this Order had not been put forward the householders would have been aided more by the Government, and that, therefore, the resources which the householders are now being called on to provide under the Order would have been available to pursue this quarrel with the G.L.C.?

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I am sure that the hon. Member for Hackney, Central (Mr. Clinton Davis) will be grateful to his hon. Friend for trying to get him in order.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

I am particularly grateful to my hon. Friend for his ingenuity, Mr. Speaker, but the point has been made and I can now pass from it.

What I have been trying to establish is that in a whole variety of ways there has been a poor allocation of resources by the London Borough of Hackney. This is clear in Hackney, as it is clear in a large number of boroughs in inner London which are now controlled by the Conservatives, though, happily, only for a few months more.

9.20 p.m.

Photo of Hon. John Silkin Hon. John Silkin , Deptford

There are debates in the House which excite emotion, anger, even bombast, yet when the smoke of battle has cleared one has learned little of the essential differences which divide the two major parties. I believe that it is, rather, in a quiet debate of the sort on we have had today, a debate in which hon. Members on both sides have related these Orders to their several constituencies, that we can clearly see the differences between the two parties expressed.

Broadly, as my right hon. Friend the Member for Grimsby (Mr. Crosland) pointed out earlier, there is a prejudice even a grudge, in the Tory philosophy against public expenditure. The basis of Labour thinking, on the other hand, is the unashamed approval of public expenditure. I make no apology for that view. It seems to me that civilisation is about public expenditure, and civilisation, like compassion, cannot be had on the cheap. The glories of Greek and Roman antiquity which we can still marvel at today were not the result of a cheeseparing or pennywise philosophy. The greatness of a civilisation is in direct proportion to the ratio of its resources which its devotes to the community as a whole.

It is, therefore, in the light of a desire to increase, not to diminish, public affluence that we on these benches scrutinise the Orders before us. Equally, it is in the light of a desire to cheesepare that hon. Members opposite, or many of them, view the Orders. I thought that the hon. Member for Hampstead (Mr. Geoffrey Finsberg) expressed it most clearly of all. He came here, he flashed across our darkened sky like a comet, and disappeared we know not where—possibly in the direction of Hampstead—and he told us that his condemnation of the Labour administration in Camden which had preceded that of his own party was based on the charge that it was spendthrift, by which he meant, I suppose, that it spent more than he and his colleagues are presently spending.

That is not a matter upon which I should digress now. Rather, I think, we can leave it to the intelligent electors of Camden to make their choice in due course. But, at least, the choice is there, and it has, as I say, been clearly expressed.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The electors have made their choice already.

Photo of Hon. John Silkin Hon. John Silkin , Deptford

No. With respect to the right hon. Gentleman, the choice in this House was made on a false prospectus. The local electors will make their choice in due course, but at least they will make it on the basis of what we know to be the facts regarding public expenditure and the desire for public affluence. My hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman)—who, also, does not seem to be here at the moment—described it as a Galbraithian situation.

I thought that the hon. Member for Hove (Mr. Maddan) duly expressed the spirit of his hon. Friends when he talked about the need for local authorities to deal in candle ends, though he may have been influenced by the state of affairs which we have been experiencing.

Photo of Hon. John Silkin Hon. John Silkin , Deptford

An association of ideas, perhaps, yes.

It is our first criticism of these Orders, therefore, that they go against the whole spirit and the whole philosophy that we have about public expenditure.

It was in the inevitable need, as we saw it, for an increased public expenditure in local government that the 1966 White Paper on local government finance had its origin. It spoke of a steadily rising increase in the percentage of expenditure and it said that this was to be met by the rate support grant wherever possible. Is this the moment to abolish, or at any rate diminish, this steadily rising increase in percentage? It has been for these four years a steady fixed increase of I per cent., and advisedly so.

It may well be that one day hon. and right hon. Gentlemen despite, there will be a change in local government financing; we do not know; but until that happens we must have central Government assistance increasingly brought into the realm of local authority finance, because while rating remains our only local source of taxation it needs the help of the central Government.

I come to my third point. In any event, this seems to me of all times to be the wrong time to be reducing that steadily increasing percentage from 1 to ½ per cent., or any other figure. The very fact that the two years preceding it were years of considerable restraint, as the Secretary of State pointed out, is itself an argument for taking a different attitude today. The two years of hard slog that followed devaluation brought with them great difficulties and hardships and undoubtedly local authorities expected to play their full part in combating these difficulties, and they were right to do so.

Nevertheless, the fact that for two years there was this hard slog and restraint left certain problems. The Minister of Local Government and Development has already been quoted several times, probably because, as I have always suspected, inside him there is a little Fabian bursting to come out, but every time it reaches the conscious area, his right hon. Friend the Chancellor of the Exchequer hits it with a hammer and knocks it back. I quote him in the debate on the Rate Support (Increase) Order a year ago, and very wise words they were: Repair and maintenance of buildings cannot be neglected for more than two years without major expenditure on structures becoming necessary. Repairs on roads cannot be neglected for more than two years without resulting in major expenditure on road foundations. School books and school equipment cannot be left to become worn and out-of-date for more than two years."—[OFFICIAL REPORT, 15th December, 1969; Vol. 793, c. 1071.] Of course he was right.

What would be a reasonable figure of growth, the lowest one could find, to deal purely with the repairs and maintenance of which he spoke? Local authorities are in no doubt: they put the figure at an average of 5 per cent. What we face in these Orders is an average increase over the two years of 4·2 per cent. I do not believe that that will be sufficient, without a considerable increase in rates, to keep repairs and maintenance alive and with us. I applaud the Minister of Local Government and Development. I am sure we will hear him reiterate tonight the words he used so wisely a year ago.

The third point of disagreement we have with these Orders comes in the cut of £10 million for 1971–72 and £25 million for 1972–73, cavalierly described as an "efficiency cut". I cannot help feeling that the Secretary of State plucked the figures out of the air around No. 11 Downing Street. I suspect that there can be little basis for these figures or any concrete basis for them in terms of an efficiency cut. It was noticeable that only one hon. Gentleman opposite mentioned the efficiency cut aspect, apart from the Secretary of State.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

Is it not true that the £35 million represents approximately 1 per cent. of local government expenditure, which is surely a modest figure?

Photo of Hon. John Silkin Hon. John Silkin , Deptford

Before I entered this House I was, for my sins, like the Minister of Local Government and Development, a lawyer. If there is one thing a lawyer trades in it is exactness, and if there is one thing he does not trade in it is percentages.

I am talking in terms of £35 million, a considerable figure. I was also talking about his hon. Friend the Member for Hampstead, the only hon. Friend he has who mentioned the question of efficiency. He said that this was total nonsense and he was agreeing with those of my hon. Friends who have attacked the whole of this efficiency cut basis.

The Secretary of State made the best case he could in the Report, on page 5, paragraph 22. Here he tells us how he proposes to get his £35 million. Local authorities are to get it for him, through the greater use of management services. He mentions L.A.M.S.A.C., but he does not mention, as my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) acutely pointed out, the fact that a large number of local authorities already use these services. He mentions bulk purchasing, calling it "pool purchasing arrangements". Again, he does not mention, as my hon. Friend acutely pointed out, that many local authorities are already using these arrangements. Then he says the introduction or extension of incentive schemes will help. All this will result in the saving of £35 million. He goes on rather modestly to say that the full impact will not be realised immediately. I very much doubt whether it will he realised at all. He may produce a few thousand pounds but I very much doubt that it will be £35 million.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Does the right hon. Gentleman not agree that the previous Government, by refusing to make an increase Order slashed £100 million, and £50 million of that was absorbed? That action shows that £35 million in two years probably will be absorbed.

Photo of Hon. John Silkin Hon. John Silkin , Deptford

I do not think that hon. and right hon. Gentlemen opposite can go on for ever trying to blame their sins on the previous Administration. I am willing to take the right hon. Gentleman's point and say that we were at that time in a crisis year. We had a balance of payments deficit of what were alarming proportions. This has fortunately now been turned into the greatest surplus the country has ever known. I am sure that in assisting their Labour Government to reach this balance of payments surplus even Conservative local authorities were patriotic enough to feel that they had to play their share. My hon. Friend the Member for Birmingham, Aston pointed out that the so-called efficiency cut affects the just and the unjust, those who are efficient as well as those who are inefficient. But, even if it were spread, what scope is there to local authorities to make the cuts?

I was very impressed with the argument of my hon. Friend the Member for Birmingham, Ladywood (Mrs. Doris Fisher). I cannot quite remember the figures she gave. They were in percentages, and the House will have heard some strictures from me about percentages. Possibly she introduced percentages to save us the frightening financial concrete sums that were in her head. She said that 52 per cent. of the expenditures of the city of Birmingham was by way of salaries, and gave a figure of, I think, 13 or 13·5 per cent. that was interest and loan charges. That does not leave much of a margin for efficiency cuts.

But that is not the end of the story The overwhelming amount of work that a local authority has to do is dictated to it, I would say rightly, by central Government. If, for example, the Secretary of State for Education and Science wishes to give a directive about the size of classes in primary schools, which we hope that she may well do, it is the local authority that will in due course have to meet a large proportion of the cost. Therefore, what room there is for a local authority by itself to make cuts of the sort the Secretary of State talks about, I do not see. I give the right hon. Gentleman the benefit of any doubt. I doubt whether left to himself, he would have introduced that figure. It was probably whispered to him outside or inside No. 11 Downing Street.

I mentioned a moment ago the question of salaries and quoted my hon. Friend's estimate of salaries being 52 per cent. of the expenditure of the city of Birmingham. Yes, but what about the salary claims in the pipeline? I realise that the manual workers' increases in pay is met by the increase Order, but there are further pay settlements in the pipeline. I hope that I am not being, in the sinful expression of today, inflationary when I say that it will not surprise me if teachers, police and firemen, in addition to being required in greater number, will also require bigger salaries in the year or two ahead. In other words, there is needed for local authority expenditure an increased figure for repairs and maintenance merely to keep the situation as it was. I pray in aid the Minister for Local Government and Development, who I am sure will support me on that.

For what is needed is not a cut-back for efficiency but an increase to make the local authorities more efficient, and that is what we are after. Otherwise the local authorities will be left with the dilemma of either not doing anything—letting the situation get worse—or putting the rates up by a considerable amount.

In so far as that additional burden falls upon the individual ratepayer, the Secretary of State has played his part in halving the rate of increase in the domestic rate. He says, quite rightly, "Yes, this had to stop some time". He quotes his predecessor in the 1966 Labour Government as saying, "Of course, it would not go on for ever at 1 per cent.". But his predecessor in 1966 had in mind the possibility that there might be other methods of rating finance and he could not possibly commit himself for all time. He believed that as long as the need was there the domestic ratepayer should be protected. Various estimates have been made of what a domestic ratepayer may have to face in increased rates. One hon. Gentleman suggested that the minimum increase might be as much as 2s. 6d. in the pound. This is a very great increase, if it comes. For these reasons we on this side of the House do not view the Orders with favour.

I started with the philosophy that divided the two major parties. This has ben on honest debate; no attempt has been made to paper over the differences or to try to bring the two philosophies together. There is the philosophy of public expenditure and there is the philosophy spending only what one is obliged to spend. Those are the two philosophies which are in conflict today. Unfortunately this is part of a continuing process, a process that was made evident from the moment the Government were elected. It can be seen in the attitude of the Chancellor of the Exchequer and in the shift of burden from rate to taxation and the other way round in the cutting of income tax and the increase of rates. This can be seen all the way through. It is happening in a dozen areas of which this is only one.

My right hon. Friend has explained the traditional reasons why we on this side of the House cannot divide on the Orders. Unfortunately, our hands are bound but, if we could, I have not the slightest doubt that not only would we divide on the Orders, but the country as a whole would be with us in that Division.

9.42 p.m.

Photo of Mr Graham Page Mr Graham Page , Crosby

The right hon. Member for Deptford (Mr. John Silkin) did me the honour of quoting a number of statements which I made on the previous occasion when we were discussing a rate support grant Order. He quoted me as having said that there had been insufficient money for repair and maintenance for the previous two years. No doubt at that time I was referring to the two years previous to the debate, when there had been neglect of repair and maintenance of buildings or neglect of roads, and my point was that we could not go on with that. The argument of the right hon. Gentleman was that two years ago the Labour Government were in such a mess that they had to be cheese-paring, the implication being that we are doing so well now that we should not call for any restraint.

The debate on the rate support grant Order is bound to range widely over local government affairs, and one cannot therefore give an orderly reply. It is a wide-ranging debate because the subject of the Order is the development of local authorities' services, the increase in Government grant and the proportion of the cost to be borne by the taxpayer and the ratepayer respectively.

My right hon. Friend the Secretary of State in his opening speech called the House's attention to the fact that we face, and must face, the fact that the growth of local auhority expenditure is greater than that of the growth of total public expenditure. I must disagree with the hon. Lady the Member for Birmingham, Ladywood (Mrs. Doris Fisher) that we cannot have development of services and a continuing restraint. Of course we can.

The hon. Lady asked for consideration of assistance for open-space creation in slum clearance areas. Indeed, we would give encouragement, and indeed have done so, to general improvement area orders which solve some of the problems for the hon. Lady. If she would look at the figures for parks, for example, she would see that whereas in 1969–70 there was a minus percentage, not an increase, in 1970–71 there was an increase of 2·9 per cent. In both the years for which this Order now applies the increase is 4 per cent. It represents a very substantial increase on just the type of local government service to which she was referring.

Since I have the figures in front of me, I notice that those relating to refuse might be relevant on the points raised by the hon. Member for Manchester, Ardwick (Mr. Kaufman). In that case in 1970–71 the growth which was then recognised in the relevant expenditure was 3·7 per cent. in the next two years. We are recognising it as 6·5 per cent. for each year, which is a very substantial increase. The hon. Gentleman referred to public health in general. Had he looked carefully at the figures he would have seen that in 1969–70 the figure taken into account was £163 million, and in the next year £176 million. But for the two years with which we are dealing in this Order, the figures respectively are £209 million and £219 million, which finishes up almost a third above the figure in 1969–70.

Since so many subjects are covered, it is easy for the right hon. Member for Grimsby (Mr. Crosland) to complain about lack of information on some subject or another. He mentioned education, as did his hon. Friend the Member for Manchester, Gorton (Mr. Marks). I shall be brave enough, in the presence of my right hon. Friend the Secretary of State for Education and Science, to give the right hon. Gentleman a little information on this subject. The rate support grant negotiations were preceded by a long and careful study of the data available for the forecasting of local authority educational expenditure. That study was carried out jointly by officials of the Department of Education and Science and of the local authorities. The results are set out in detail in a joint report, which is a co-operative effort greatly to be praised. The report recorded almost complete agreement between the Department and the local authorities.

It was therefore possible to say that the forecasts of the educational components of relevant expenditure for rate support grant in 1971–72 of £2,055 million and for 1972–73 of £2,148 million include provision for increases in education proper of 5·1 per cent. in the first year and 4·9 per cent. in the second year. This compares pretty favourably with the previous figures of 3·8 per cent. for 1969–70 and 3·9 per cent. for 1970–71. In regard to non-teaching expenditure the settlement this year allows for substantial improvement factors. Again making a comparison with the years 1969–70 and 1970–71, the figures of increase then were 2½ per cent. and 1 per cent. For the two years which we are now debating we have taken into account increases of 3½ per cent. and 3 per cent. So we are nearly doubling the increase over those years.

The hon. Member for Manchester referred to the Educational Publishers Council and the Educational Equipment Association report and criticised the low provision for the purchase of school books and equipment. It is for the local authorities, in the first instance, to say whether the analysis in the report is sound.

But concerning the rate support grant two points can be brought out. First, the higher improvement factors will allow for an increase in real terms in the area of expenditure covering books and equipment. Secondly, since part of the case for more expenditure is the rapid rise in prices, the rate support grant system is designed to allow for price increases which authorities incur. They have claimed a price increase of about 6 per cent. in the current year for purchases under the heading of equipment and materials, which includes books. The increase Order takes full account of that increase.

The negotiations for the figure for education expenditure are a typical example of one of the main features in the rate support grant exercise this year—the extent of the consultations between central Government and local government leading up to these Orders.

My hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg) confirmed that the local authority programmes have been substantially met in deciding the relevant expenditure figures, and that the figures for relevant expenditure were not now in dispute between the Department and the local authorities.

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

If the hon. Gentleman believes that there is no dispute over the figures, then he is certainly living in a dream world, as was the hon. Member for Hampstead (Mr. Geoffrey Finsberg), whose remarks have been totally contradicted by other distinguished members of his own Association of Municipal Corporations.

The hon. Gentleman is not answering the question which I asked; he constantly quotes things going up even faster than the average of 4·2 per cent. Will the hon. Gentleman tell us what in compensation is going up significantly slower than the average rate of 4·2 per cent., apart from a few parks?

Photo of Mr Graham Page Mr Graham Page , Crosby

Administration is a good example. I do not know whether the right hon. Gentleman is now arguing that there should be any restraint over local authority expenditure. He complained about the statement in the report that we had asked for restraint. Indeed, he quoted a paragraph in the report, which I thought a reasonable paragraph, in which we had merely called attention to the need for restraint in the increase in local government expenditure.

I have turned to the report which the previous Government put before the House in 1968 in support of the grant Order where the words are quoted: Taking local authority expenditure as a whole, the Government expects that in 1969–70 local authorities as a whole will restrain the level of their expenditure. It uses practically the same words as we have used in the report this year.

The previous Government, in paragraph 14 of their report, said: In considering the estimates of expenditure, account has been taken of the need for developing services, of the relative priorities attaching to them and of the necessity for continuing restraint as explained in paragraph 9. Strangely enough, to stress the point, there is a misprint and that line is repeated, them and of the necessity for continuing restraint as explained in paragraph 9. It is perhaps incidental that it was stressed in that way.

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

I must press the Minister. As to restraint, I am objecting to the total contrast between the speeches which the hon. Gentleman and his right hon. Friend were making two years and one year ago with the speeches which they are making today. However, the Minister is not answering the question which I put to him, which is not about the totals. The Minister said that expenditure on education and various other matters is increasing by more than the average rate of 4·2 per cent. If 4·2 per cent. is to be maintained, it must be paid for by other services rising substantially less than 4·2 per cent. Apart from a few parks, I want to know what those other services are.

Photo of Mr Graham Page Mr Graham Page , Crosby

Does the right hon. Gentleman wish me to read out the full list?

Photo of Mr Graham Page Mr Graham Page , Crosby

I have the list here. Among the items where there is a slightly less percentage increase this year are school meals and milk.

Photo of Mr Graham Page Mr Graham Page , Crosby

I hope that the right hon. Gentleman will have patience as I look down the list. There is also a slight reduction in the figure at the moment for the police, which my right hon. Friend explained does not take account of the future increases which one contemplates there.

Photo of Mr Graham Page Mr Graham Page , Crosby

The right hon. Gentleman apparently wishes me to read down a very long list of figures. I have given him one or two examples. I am quite prepared to lend him the list, if he wishes, or to write to him about it, or to put it in the Library.

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

The hon. Gentleman has had since 4 o'clock today to do this.

Photo of Mr Graham Page Mr Graham Page , Crosby

What the right hon. Gentleman is really arguing is that there should not be any restraint at all. That was the burden of his argument when he quoted from the report. He quoted figures of percentage increases over previous years. I have done a little mathematics on this and I find that the average over the years from 1964 to 1970–71 is 4·7 per cent. This compares not unfavourably with the figures of 3·7 and 4·8 per cent. that we have chosen for the next two years.

One would think, from the tenor of the right hon. Gentleman's speech, that the Government's proposals this year are in some way a cut in the grants. In fact, we are proposing to increase both the total of Exchequer grants and the proportion which those grants bear to local authority expenditure. The hon. Member for Birmingham, Northfield (Mr. Carter) also talked about a cut in the rate support grant. There is no such thing. I sincerely sympathise with him about the dangers in Longbridge Lane, but if he examines the figures for highways he will see that we have taken account of increased expenditure and that there is not a cut in any way in highways expenditure.

My hon. Friend the Member for Northants, South (Mr. Arthur Jones) pointed out that the amount of rates paid had escalated more in the last two years than at any other time. Yet the right hon. Gentleman asked us to say by how much the rates might be increased during the next year or two. I am not going to be led into any quotation or estimate or guesswork on that.

Photo of Mr Graham Page Mr Graham Page , Crosby

The right hon. Gentleman suggested that the domestic ratepayers would have to pay a great deal more. They have all benefited from the reductions of the rate poundage over the years, and the increased grants provided have been more than sufficient to cover the cost of the domestic element. Some part of it has thus accrued to the ratepayers generally. It seems to us on this occasion that the effect of the 5d. reduction each year has been to shield the domestic ratepayer from virtually all the increases that have taken place in local authority spending. The Government do not consider it appropriate that the domestic ratepayer should be so insulated from the cost of services. While between 1966–67 and 1970–71 average disposable incomes rose by 21 per cent., the domestic rate poundage increased by only 9·3 per cent., so that accordingly we have decided that the domestic element next year should be not the traditional 5p but somewhat less.

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

Is the hon. Gentleman suggesting that most Conservative councils have not been carrying out the expenditure which they should have carried out, and is he suggesting that they were quite wrong to give the domestic ratepayer the full benefit of this?

Photo of Mr Graham Page Mr Graham Page , Crosby

I do not think that follows. It does not follow from what I was saying.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

Surely the philosophy of the hon. Gentleman's party at the General Election, a philosophy which had great appeal for obvious reasons, was that indirect regressive taxes should be cut back, because these were a burden on the cost of living. As my right hon. Friend the Member for Grimsby (Mr. Crosland) has made absolutely clear, one of the most important regressive taxes is the domestic rate. What the hon. Gentleman seems to be telling the House is that the Government have decided, as a deliberate matter of policy, to increase a regressive tax so that those with large incomes can get benefits from the reduction of direct taxes.

Photo of Mr Graham Page Mr Graham Page , Crosby

I will not be led further into that rather philosophical dissertation. I want to deal with some questions raised previously.

My hon. Friend the Member for Derbyshire, South-East (Mr. Rost) asked for assurances about steps being taken for efficiency by local authorities. Many local authorities have employed consultants and have taken steps to make their operations more efficient.

I return to the remarks of the hon. Member for Birmingham, Aston (Mr. Julius Silverman), and the hon. Lady the Member for Ladywood about, as the hon. Lady put it, penny-pinching, and, as the hon. Gentleman put it, about cutting minor useful services. That is not the intention and it should not be read into paragraph 22 of the report. It is the hope that all local authorities will take the example of some of the better local authorities in using management services to improve their efficiency, I doubt whether any local authority, even though it has used management services to improve efficiency, can put its hand on its heart and say that there can be no more savings.

The hon. Member for Aston raised an interesting point when he spoke about the increase in wages and how the Exchequer received a certain amount back in income tax. When the right hon. Member for Grimsby said that he was glad that the Order provided for the payment of grant on the whole of the amount of the manual workers' pay increase, I should have mentioned that although the Government, through grants, will bear 57·5 per cent. of the cost, that part of the costs falling on the rates will place about a 3d. rate on the ratepayers—a significant burden.

Decisions by local authorities on the pay of local authority employees will be reflected in the rate bills, and these increases have nothing to do with Government decisions on the rate support grants.

The hon. Member for South Shields (Mr. Blenkinsop) said that the whole of the Order was inflationary. But there is a growth in expenditure, and it has to be paid either by the taxpayer or by the ratepayer. It is not necessarily more inflationary if one charges it to the ratepayer rather than the taxpayer. There is proper argument as to who should pay, but the hon. Gentleman's inflation argument does not stand up to examination.

Photo of Mr Arthur Blenkinsop Mr Arthur Blenkinsop , South Shields

Surely the hon. Gentleman will agree that the rate increase coupled with the proposed rent increase is bound to lead to further wage demands.

Photo of Mr Graham Page Mr Graham Page , Crosby

It will result in a rent decrease for many in the system that my right hon. Friend has put forward. Let me give the hon. Gentleman one figure. If the grant in 1971–72 was 58 per cent. instead of 57½ per cent., the extra grant would be £18 million. If applied to the relief of rates generally, it would reduce them by less than 2d.

The hon. Gentleman also asked for an assurance that there would be no delay in introducing an increase Order. His Government skipped a whole year in bringing in such an Order. We have no intention of failing to bring in an increase Order in the proper time if the circumstances warrant it, as set out in paragraph 7 of the report which the hon. Gentleman quoted.

The hon. Member for Aberdare (Mr. Probert) asked about derelict land. He was mistaken on one or two points. This receives specific grant which is paid in respect of actual expenditure, and there is nothing in this Order which restricts the amount of the specific grant payable. An estimate of the amount of revenue grants payable is made and it is deducted from the Exchequer grant as part of the process of calculating the rate support grant. Most derelict land grants are capital grants. The Government are not cutting back the progress in reclaiming derelict land. In fact the reclamation programme is increasing, and we wish to ensure that it continues to increase.

Photo of Mr Arthur Probert Mr Arthur Probert , Aberdare

The hon. Gentleman missed the whole point, as did my right hon. Friend the Member for Grimsby (Mr. Crosland) in his intervention. Paragraph 12 of Circular 2/70 says: All capital payments made during the year on locally determined schemes (including any part financed from Government grants) will count against the allocation, except in so far as they are financed by matters which do not concern us now. The local authorities which come under county councils will have their allocation for the year increased by the inclusion of a capital grant and, therefore, will be prevented from going ahead with their schemes.

Photo of Mr Graham Page Mr Graham Page , Crosby

I will study what the hon. Gentleman has said and see whether there is any way in which I can explain the position further to him.

The hon. Member for Dudley (Dr. Gilbert) spoke about the disabled. I agree that this expenditure is likely to increase very substantially. In fact, my right hon. Friend the Secretary of State for Social Services made special provision referred to in paragraph 14 of the report for the specific purpose of the mentally handicapped and the other categories mentioned there.

Towards the end of his speech, the right hon. Member for Grimsby said that rates are a horrible tax. My hon. Friend the Member for Wellingborough (Mr. Fry), the hon. Member for Swindon (Mr. David Stoddart), and my hon. Friend the Member for Derbyshire, South-East all referred to rating reform. I go along with the right hon. Gentleman when he said that we ought to search for new sources of local government revenue. As soon as possible, the Government will be putting before the House a Green Paper for the discussion of possible new forms of revenue for local authorities. But I cannot see at the moment anything to take the place of these, and, therefore, I agree with the right hon. Gentleman that we must concentrate on making rates more equitable. It may be that one would like to switch from rental values to capital values or to a contribution from the earning non-householder. We will discuss those possibilities over the next few months, and I think that we shall have some interesting and constructive debates.

For the moment, we are dealing merely with the rate support grant Order for the next two years. I ask the House to accept it.

Question put and agreed to

Resolved,That the Rate Support Grant Order, 1970, dated 20th November, 1970, a copy of which was laid before this House on 26th November, be approved.

Resolved,That the Rate Support Grant (Increase) Order, 1970, dated 20th November, 1970, a copy of which was laid before this House on 26th November, be approved.—[Mr. Peter Walker.]