Bill Presented – in the House of Commons at 12:00 am on 14th December 1978.
I find this year's rate support grant settlement somewhat easier than last year's and considerably easier than the one before—and so of course does local government. This basically reflects the continued improvement in the economic situation—most notably in the past 12 months when GDP has increased by 3–4 per cent. and unemployment has fallen by over 100,000, while public expenditure is broadly in line with expectations and the public sector borrowing requirement is within target.
Against this background I am able to pursue four main objectives. The first is a modest growth in the essential services that local authorities provide for the community. Secondly, we wish to continue to identify the areas of need and to direct resources to them. Thirdly, we must maintain a reasonable stability and continuity in local government finance. Fourthly, we must introduce a major and overdue reform—the pay- ment of needs element direct to district councils in the shire counties. I shall say more about this later.
The first of the increase orders essentially tidies up the 1977–78 settlement. That settlement was originally determined at November 1976 prices and was updated last year to take account of changes in costs since then. As the House will recall, that increase order did not exhaust the cash limits as they then stood. The cash limit on rate support grant, however, had to be revised downwards to take account of changes in the variable items and now stands at an amount below the amount of grant already approved by this House. That being so, the Government do not propose to make any further increase in rate support grant or national parks supplementary grants. The order now before the House simply increases transport supplementary grant by a further £2·4 million.
The right hon. Gentleman said that there would be no further increase, but what will be the position if the manual workers settle at 5 per cent., but if the agreement is dated from this November? Will the extra cost of that be taken into account in further increase orders?
The hon. Member is not listening with his usual attention. I am talking about the rate support grant increase order for 1977–78. That is behind us, and I am therefore dealing with a historical matter, not a hypothetical event which may occur in this coming year.
As the House will appreciate, the breach of cash limits that has occurred is purely technical and is in no way the fault of local authorities. But, obviously, it is important to avoid a repetition. The Government will therefore be discussing with the local authority associations how we should modify our procedures.
I turn now to 1978–79. The settlement for that year, approved by the House last December, was at November 1977 prices and now needs to be updated to take account of changes in local authority costs. The cash limit on rate support grant has been adjusted to take account of the decision not to increase the school meal charge, the national insurance surcharge, and the police and firemen's pay settlements. It has been abated to take account of the chief executives' and related groups' pay awards. Adjustments have also been made to take account of the variable items. The effect of all these changes is that the cash limit has now been increased by £92 million and now stands at £541 million. For transport supplementary grant the cash limit has been adjusted in respect of the national insurance surcharge and now stands at £22·1 million. Grant at 61 per cent. on the grant increases on local authority costs and full reimbursement on school meal charges will not exhaust the cash limit on rate support grant, though the limit on transport supplementary grant and national parks supplementary grant will be exhausted.
The increase order will accordingly increase rate support grant by £534 million, transport supplementary grant by £22·1 million and national parks supplementary grant by £300,000. The Government have carefully reviewed the cash limit on grant in 1978–79 but do not propose to make any further adjustments except for the variable items which are principally loan charges.
I now turn to the main Rate Support Grant Order for 1979–80—the meat and substance of today's debate. First I shall deal with expenditure. I am proposing a level of relevant expenditure of £14,109 million. This figure is at November 1978 prices and will need to be updated in due course in the usual way. It accords with the Government's expenditure plans. It includes current expenditure of £12,036 million. This is 1·6 per cent. above the level of expenditure which we have estimated authorities are undertaking in 1978–79; therefore the settlement provides for local authority expenditure to grow broadly at the same rate as public expenditure as a whole. This is obviously helpful to local authorities. More important, improved services will benefit the public and there will be some small increase in employment. Certainly the period of national manpower cuts in local government is over.
I propose to hold the grant at 61 per cent. for the third year. This will, of course, assist to provide a substantial measure of stability and continuity in local government finance. Related to this are the decisions on domestic rate relief which will again be held at 18½p in the pound in England and 36p in the pound in Wales. The ratio of resources element to the needs element will also be maintained at 32½ per cent. to 67½ per cent. I have received no representations against these two proposals. I have also taken the advice of the local authority associations and set the national standard rateable value at £175.
The amount of grant provided in these orders must be looked at together with the cash limits for 1979–80. These reflect the Government's pay and anti-inflation policies and assume that pay settlements in this round will be made in accordance with our pay policy and the forecast general rate of inflation based upon it. These are equivalent to a year-on-year inflation rate affecting local authority current expenditure of about 7½ per cent.
The cash limit on rate support grant will be £417 million, the limit on transport supplementary grant £25·9 million, and the limit on national parks supplementary grant £3 million. Specific grants are not, of course, cash limited.
As in previous years, the cash limit on rate support grant will be adjusted for the effects of certain variations in costs which are particularly uncertain. These are loan charges and certain elements in the housing revenue account which affect the rate fund contribution.
The cash limits will also, as in previous years, be reviewed if new legislation is enacted or brought into operation, or if changes are made in Government policy which entail changes in local authority expenditure. The Government would also be prepared to review the position in the light of all the circumstances of the time if the pace of pay and price increases generally or of those which affect local authority expenditure were substantially higher, taken as a whole, than those implied in the cash limits.
In considering pay settlements which are in accordance with the pay policy, our objective in the past has been to achieve the fair balance between what costs should be borne by the ratepayer and what by the taxpayer: hence our action in respect of the police and firemen's settlement. That objective will continue to be pursued.
In formulating my proposals for the settlement I have inevitably considered the national average domestic rate increase with which it is compatible. I have looked at our previous record in forecasting 15 per cent. for 1977–78, single figures for 1978–79 and again at the actual outturn of 14·9 per cent. and 9·7 per cent. I am tempted, in the light of this extraordinary result, to try for precision again. But I confess to the House that many variables have contributed to the outturn in ways that I had not estimated and so the result has a rather spurious accuracy.
The Secretary of State has constantly talked, in advance of this debate, about single figures. Is he aware that the vast majority of the counties will have very large double figures?
No, I am not aware of that. I am aware that year after year treasurers in the counties and elsewhere take one look at the rate support grant settlement and say "Oh, God, it's going to be 20 per cent. or more." I would advise the hon. Gentleman and, indeed, all hon. Members to compare what their treasurers and senior officials have said in the past with the actual rate struck several months later when calmer thoughts have prevailed and more mature consideration has been given.
I must emphasise that it is not the Government who decide rate increases: it is the individual local authorities. They must allow for the amount of grant which they will receive, the level of expenditure which they think it right to undertake, their expectations as to inflation, and the amount which they are prepared to draw from balances. It is not a simple question.
My right hon. Friend refers to the level of expenditure which it is felt it is right to make. Many district councils, such as Bristol, have rightly had a number of responsibilities placed upon them, but this House has not provided them with the financial resources needed to support those responsibilities.
I shall be coming to a change that could be of some relevance for great cities and districts such as Bristol. That concerns the direct payment of needs element to them in respect of their services. I hope that my hon. Friend will be patient when I say that I shall reach this issue later in my speech.
I am coming to a conclusion in the matters I have just put before the House. I have decided to be more tentative in my forecasts this time. I say to the House, as I said to the consultative council, that it would be unwelcome indeed if average domestic rate increases—I have to talk in averages—were significantly greater than the rate of inflation, which the Government are determined to keep within single figures.
After the debates of today and yesterday, I need hardly remind the House of the grave implications for growth and employment in the economy as a whole if inflation were allowed to take off. I must assume, therefore, that local authorities will act with their accustomed responsibility to help us bring about this result. This means that they will have to think hard before rating for contingency allowances for inflation above the assumptions made in the cash limits. It means also that they would be prepared to hold down rate increases by planning to draw down from balances in the way that they planned to do this year. I shall simply conclude by saying that the settlement on these assumptions is compatible with the national average domestic rate increase remaining in single figures.
Will the right hon. Gentleman accept that some counties are baffled by the basis on which he has reached some of his decisions? Will he go this far, and accept that, where there is genuine bewilderment, there may be a case for him or his Minister of State receiving deputations from those county councils, with their Members of Parliament, if only to explain what has happened?
That is a fair and reasonable suggestion. A number of the changes that we propose in the orders are not easy for all local government officials to absorb. We deal directly with the local authority associations, and that is not the same as dealing with all the town clerks and chief executives. I should be very willing, as I have been in the past, to see deputations and groups with my colleagues wherever that is reasonable and helpful. This year we are introducing this change between the counties and the shire districts, so I understand that there is a special need for explanation.
If the hon. Lady will forgive me, I might be able to help the House if I turn now to distribution—a subject which I know whets the appetites and sharpens the knives and the wits of all right hon. and hon. Members. So let me begin by saying that I am able to reassure the House that the distribution of needs element will once again be based on a regression analysis of local authorities' expenditure; I am continuing to follow the wise course charted by the right hon. and learned Member for Hex-ham (Mr. Rippon). I wanted to quote him, but I shall refrain from doing so because I cannot see him in the House. He had a favourite phrase about "picking up the cards" that he found lying on his table when he became a Minister. I am merely picking up the cards that he has left behind in the Department of the Environment.
The case for using regression analysis has been somewhat strengthened this year, both by a practical demonstration of the lack of political bias in this method of distribution—[HON. MEMBERS: "Oh."]— and by an extensive and fruitless search for alternatives.
First, let me deal with the question of bias—and I hope that the House will listen to what I have to say.
If the hon. Lady will contain herself for a moment, she might consider whether my argument has any substance. But she cannot judge that until she has heard me.
In the past, it has been possible to argue—however unjustly—that it was only possible to maintain the system of distribution based on regression analysis be- cause the predominantly Labour local authority associations representing the urban areas—the AMA, the LBA and the GLC—were willing to lend it their support against the views and advice of the predominantly Conservative associations, the ACC and the ADC. But if this were the case we would have expected since May, when all the associations passed into Conservative control—the AMA and LBA as well—to see a massive and united campaign developed by the associations to put an end to regression analysis. Not so. Despite the changes in political control, the urban associations—the Conservative-dominated AMA, the LBA and the GLC —still favoured the use of regression analysis as against other possibilities available. Whatever the reasons for disagreement about regression analysis might be, it is no longer possible to claim that it is a party political issue. It reflects genuine differences in judgment and of interest.
The grants working party, which includes Government and local authority officials, undertook, with my strong encouragement, an exhaustive search this year for alternative methods, not involving regression analysis, of making objective assessments of authorities' expenditure needs. It has drawn a blank. I confess that this was not unexpected, although I am, as always, open-minded about improvements to the needs assessment methods. I believe that that is true of everyone who is serious about this. Regression analysis is still the best known and best established of the relatively few statistical techniques available. It would have been surprising if another candidate with better claims had emerged, in spite of all our searches.
What many of the critics of the system object to, some of them consciously, some of them without fully realising the implications of their argument, is not the method of assessing needs by regression analysis but the whole principle of basing the grant distribution on assessed expenditure needs. I am not prepared to accept that we should distribute needs grant on any basis other than the best possible objective assessment of expenditure needs. Without such objective assessments, needs element would be pointless. We should have no way of knowing that the grant was distributed according to need, and authorities' entitlements would have to be based at best on unprovable value judgments or at worst on the pork barrel or the lottery.
Does not this basis for the grant mean that the spendthrift authority does best while the most economical authority does worst?
That is a familiar criticism of the method of regression analysis based upon actual expenditure of local authorities. I understand the criticism but do not take the point that, if the actual expenditure of authorities is looked at across the country as a whole, we can see that we are simply reflecting the whims and caprices of a few spendthrift authorities. We are taking the aggregate expenditure of local government. Unless we are to say that the whole of local government is irresponsible, I do not believe that such criticism can stand up.
The right hon. Gentleman should not delude himself into thinking that he had dealt fairly with areas of need. Coventry, Dudley, Sandwell, Walsall—all of these have lost out, as have Calderdale and Kirk lees in West Yorkshire, Stockport and Trafford in Greater Manchester. So have Knowsley on Merseyside and Sheffield in South Yorkshire. This shows that there is something seriously wrong with the system.
The hon. Gentleman has failed to make the point that the city of Birmingham, with all of its problems, has not lost out. The city of Liverpool has not lost out. I could give a roll call far more impressive than that of the hon. Gentleman in terms of actual measured expenditure need. I shall take up his point in a moment.
I appreciate the importance of the point my right hon. Friend is making. It is of great interest to English local authorities. Will he take into account the fact that we have a short debate of four hours, and allow for the fact that there is great interest in this issue in Scotland, too?
Order. I was going to make an appeal. I know that there are over 40 hon. Members who are hoping to participate in this four-hour debate. They will all have to be extremely brief if their wish is to be fulfilled.
I take your point, Mr. Speaker. I accept the implied rebuke of my hon. Friend the Member for Aberdeen, North (Mr. Hughes). I must ask the House to be a little more indulgent towards me. I know how the House loves to debate the rate support grant order. As the House knows, I am generally equally willing to give way. However, we are circumscribed tonight. I wish to proceed as I have some important points to make that may cover many of the questions of hon. Members.
I accept that a regression-based distribution formula of general application will not necessarily pick up the special circumstances of every individual authority. I readily accept that some of the data could be better. I am seeking ways of improving them. I accept, too, that there are problems of intelligibility with a complicated system of assessment. However, all these difficulties would apply to any system which seriously set out to measure expenditure needs. They would not apply with anything like the same force to the ACC simple system. However, that is not a needs-assessment system. It is a device for securing whatever distribution it is wished to achieve by means of arbitary judgments based on the choice of needs factors and their weight.
Setting aside these weighty technical considerations, let us consider the results of the 1979–80 settlement against some broad criteria. The detailed results are not controllable. That would be incompatible with using a form of general application. However, by and large, considering the overall pattern, the overall results of the distribution allow me to claim that the settlement is fair and reasonable. Thanks in part to the £95 million real increase in the needs element, it has been possible to continue concentrating resources in the areas with the most pressing social and economic problems without putting undue pressure on other authorities.
Help to the inner cities continues. All the partnership authorities gain on average by the equivalent of a 1·7p rate. All the programme authorities, except, unhappily, Sheffield, gain. The average gain for them is 1·4p. At the same time it has been possible to ease the effects for the more prosperous areas by extending damping to five years and by using a 2p safety net. Overall, of the 116 London boroughs, shire counties and metropolitan districts, only a quarter will lose. As a result of the safety net, none of them will lose more in real terms than the equivalent of a 2p rate, subject to what I say about needs element payment to the districts and the shire counties.
In 1979–80, London's position, like that of all other authorities, will reflect changes in its assessed expenditure needs. It is not being singled out for special treatment. The 1979–80 needs assessment implies that London should get a real £41 million increase in needs element by comparison with 1978–79. The clawback of London's needs element for the benefit of other authorities is being adjusted to achieve that result. That does little more than consolidate the recent real improvement in London's relative position; and any complainers that London still does too well would do well to remember that average London rate bills are still £40, or 31 per cent., higher than elsewhere.
But, given this, I have had to make a change from earlier years in not being able to accept the advice of the London Boroughs Association on the London rate equalisation scheme. I have thought it necessary to alter the balance of the scheme in favour of the inner London boroughs. The aim of the rate equalisation scheme is to ensure that rate burdens across London are broadly comparable. This is a separate principle from the one on which the main needs element distribution is based—though the scheme is largely incorporated in the RSG order—and recognises that there are respects in which it is right to think of the conurbation as a whole, even though it is made up of many separate authorities.
A recent study—which I suspect many hon. Members on each side of the House have noticed—by the North-East London polytechnic, which received some publicity in the middle of last month, suggested that the RSG arrangements had worked to the benefit of the suburban areas rather than the inner areas of our cities. This is emphatically not true of the national needs element distribution as it affects either our major provincial cities or London itself, but there is an element of truth in it so far as the effects of the London rate equalisation scheme are concerned. By mixing up the national needs element distribution and the London rate equalisation scheme, this study has somewhat muddied the waters.
It was, in fact, the effects of the rate equalisation scheme—and not, as he supposed, the national needs element distribution arrangements—that the hon. Member for Barkston Ash (Mr. Alison) had in mind when he referred in his speech of 27th October to the favourable treatment accorded to the
lush outer boroughs of London ".
I could not, of course, go along with all that he said on that occasion, but on this one issue at least he was not wholly wide of the mark.
In the past three years, the equalisation scheme has worked in such a way that outer London's rate burdens have gone up very much more slowly than those of inner London—by 7 per cent. as against 30 per cent. I am, therefore, setting the London rate equalisation arrangements for 1979–80 so as to go some way towards restoring the balance. As a result, £28½ million of London's real gain in grant of £41 million will go to inner London and £12½ million to outer London.
May I say to my right hon. Friend that we still resent that each year London is losing in real terms hundreds of millions of pounds to which it is entitled, even on his own analysis? It is quite wrong that we keep having this money taken away from us to be redistributed in other areas of the country where people pay far less in rates.
I well understand the sentiments that underlie that authentic voice of London which we have just heard. I think my hon. Friend will recognise, however, that the settlement is still helpful to London, although admittedly not as helpful as the settlements we have been able to make in the past.
I turn now to the major innovation for 1979–80—the payment of needs element to the non-metropolitan districts. Up to now, districts have not been compensated for the need to incur higher than average expenditure on their own services. The burden of financing higher expenditure needs has therefore fallen entirely on the ratepayers of the districts where they arise and has resulted in significantly higher rate poundages. In some shire counties the rate on district services in the more urban areas is over twice as high as in other areas. For example, in Leicestershire, Leicester's rates for district services, at 18p, are 9p higher than those of Rutland, all within the same county.
It would obviously be unfair to allow this to drag on. The 1974 Act made provision for direct payment of needs element to non-metropolitan districts, the Layfield committee recommended that we should make the change, and the Association of District Councils—notwithstanding a certain amount of opposition from the Association of County Councils—unanimously favoured direct payment of needs element to the districts. I am, therefore, taking advantage of the relatively favourable situation this year to put an end to this long-standing inequity.
The method of implementing the change, which is supported by the ADC, as well as the principle, is designed to keep changes in the distribution of rate burdens within a county within tolerable limits. Broadly, ratepayers in the more urban areas with more pressing social and economic problems, and high rate pound-ages, will gain and other districts will lose. But the losses will be limited by, first, distributing three-quarters of the grant wholly on the basis of population and, secondly, by applying a second 2p safety net—separately from the national arrangements—so that the effects of the redistribution of rate burdens within a county do not lead to losses in excess of 2p.
I should like to emphasise that the purpose of this change is to encourage a fairer pattern of rate burdens, not to affect the provision of services. Shire counties will, of course, need to make a once-and-for-all increase in their precepts to compensate them for their loss in needs element. No blame should attach itself to them for that. But I also expect the advantage of the new needs element allocations to the districts to be fully passed on to their ratepayers. The balance between higher county precepts and the new entitlement to needs element will vary between districts. But, overall, in every county the effect should be neutral, with losses for some districts balanced by gains for districts with higher needs and higher rates.
To sum up, this year's settlement is a carefully judged easement and improvement for local government generally. It is a reinforcement of priorities in needs assessment, and brings about a rectification of a major anomaly and injustice. I know that the settlement is generally acceptable to local government, and I believe that it will be to the House.
As the Government quite clearly understand in Cmnd. 7049, the rate support grant has to be seen in the context of their overall economic strategy. As the Secretary of State fairly repeated in his speech, they have there put forward the broad purposes of that strategy as containing inflation, reducing unemployment and promoting industrial efficiency. But I do not believe that the rate support grant settlement which the right hon. Gentleman has introduced is compatible with any one of those three objectives.
First, there is the objective of containing inflation. In that case, the rate increases should not stimulate wage claims over and above what the level of the Government's forecasts are claimed to be. Secondly, the rate support should be at a level which does not lead to large public sector borrowing. Thirdly, it should be seen to be fair across the country at large. Those are the three conditions that I believe to be necessary if it is not to have an effect upon inflationary pressures.
I first take the effect of the rate support grant on Government policy as expressed in the 5 per cent. wage target. The rate increases are an average, as the Secretary of State pointed out. In his White Paper he talked of just under double-figure inflation—presumably between 7 per cent. and 9 per cent. But the first fallacy of a rate support grant in line with the target of a 7 per cent. to 9 per cent. national inflation rate and a pay policy of 5 per cent. is that he is dealing with averages. The effects of the rate support grant are very different in different parts of the country.
Secondly, the component of rate support grant increases in the increased cost of living, which we must take into account when judging the Government's overall policy, will be very much higher than the single-figure inflationary pressures about which the Secretary of State is talking, because rates have to be paid out of net income. In order to encompass rate increases of the order of 7 per cent. to 9 per cent., someone will have to earn at a standard tax rate of about an extra 13 per cent., and to increase one's earnings by 13 per cent. is in no way compatible with a 5 per cent. increase in wages, such as the Government have suggested.
The third fallacy is that the whole basis of the Secretary of State's argument is that the average of rate increases will be within the figures that he has put forward. But the reality is that those who are negotiating the wage claims will not ask what the average increase in rates has been; they will ask what their increase in rates has been.
As dotted around all over the country there will be areas where rate increases are way beyond the average figures mentioned by the Secretary of State, those higher levels will be built into wage claims, which will be substantially over 5 per cent. In some areas there will be rate increases of about 20 per cent. and they will be quoted when negotiators put in for higher wages. That is not compatible with the Government's concept of a 5 per cent. ceiling. In those three considerations, the rate support grant will stimulate inflationary pressures over the 5 per cent. that the Government have in mind.
The grant is also bound to be inflationary because it is part of a pattern of public spending that includes a public sector borrowing requirement on a scale which the Government should not have introduced and which the economy patently cannot afford. The levels of public sector borrowing are on a scale that will undoubtedly help to maintain interest rates at the present crisis levels and makes them incompatible with the Government's third objective of improving industrial efficiency. As long as interest rates are at present levels, the Government will not get the investment they require and productivity will not increase. The rate support grant is part of a package that maintains an economic climate that is incompatible with industrial improvement.
Is the hon. Gentleman telling the House that either the percentage level of the grant is too high and should be lower than 65 per cent., or that he believes that the level of total local government expenditure for which we have allowed is too high? If that is so, what does he propose to cut?
The Government should not have budgeted for the sort of increase in local government expenditure that is built into the plans before the House. I would unhesitatingly be prepared to list specific area after area where reductions in local government public expenditure could take place, although I realise that in doing so I should be extending my speech and I know that many hon. Members wish to speak. However, if Labour Members are willing to forgo their time in the debate, I shall discuss lower public expenditure.
It is extremely important for the House that the hon. Member should make clear the services that he advocates should be cut in all local authority areas so that we may be clear about the policy of the Conservatives. Many of my hon. Friends wish to take part in the debate, but I am sure that they will be grateful if he will list those items. Contrary to what some of the hon. Gentleman's hon. Friends are saying, he believes that the rate support grant is too high.
I shall list many of the areas where there could be reductions and I shall do so with all the enthusiasm with which the hon. Gentleman voted for cuts in those areas when his Government were forced to introduce them only a couple of years ago.
The hon. Gentleman had better start consulting the voting records before he discusses cuts in public expenditure. At times, this Government have been been forced to introduce cuts in public expenditure in local government on a scale that no other Government have been forced to match. They were not criticised for doing so from this side of the House.
The hon. Gentleman and his hon. Friends wanted bigger cuts.
The Government would not be criticised if they had introduced the cuts that we believe to be necessary now.
Mr. Deputy Speaker (Sir Myer Galpem):
Order. I must appeal to the House to give a hearing to each hon. Member who takes part in the debate.
May I say at this early stage that, although we have four hours to debate the rate support grant for England, Wales and Scotland, hon. Members will have to restrict their speeches if we are to get everyone into the debate?
It seems from the list of those wishing to speak that practically the whole population wants to take part. I ask hon. Members to try to restrain themselves as far as possible.
Also at this early stage, perhaps I may say that there is a difficulty confronting the Chair. As the Scottish order is separate, on which the Secretary of State for Scotland hopes to intervene, during my occupancy of the Chair I shall try to arrange a play within a play, and perhaps a few Scottish Members will get rid of the Scottish order and then the English and Welsh Members can have the whole of the rest of the time to themselves.
The third criticism of the rate support—[HON. MEMBERS:" What about the cuts? "] It is coming, but I should like to deal with the matter in sequence in my speech rather than going ahead and then coming back.
My third criticism of the rate support grant arises because patently this is not regarded in local government terms as a fair settlement. I would be the first to say that there are those local authorities that do well. But, quite clearly, to judge from all the representations that had been made to hon. Members on both sides of the House, there are, equally, authorities that have done extremely badly. The only conclusion that one can draw from that is that the decisions made by the Secretary of State are, this year, as they have been in earlier years, arbitrary. They are arbitrary with one purpose in mind. That is to shift resources from the shire counties to the urban areas. That he has done in a consistent pattern year after year after year, quite regardless of any genuine and objective measurement of the real problems of the growth areas, which are largely to be found in the shire county areas.
Whilst I am the first—as I have said many times from the Dispatch Box—to agree that there are genuine and real problems in the urban areas, my own deeply held conviction is that the Secretary of State is not helping to solve those problems by merely pouring more and more public money into the areas where in so many cases it is an overreliance on public money and public authorities that has actually created many of the problems in the first place.
This year that shift has continued. But, in addition to that shift, the Secretary of State, in moving part of the needs element direct to the districts, and in the method by which he has done that, has actually continued the drift of accentuating resources on the urban areas as opposed to the county areas. I believe that this is a practice not based upon an objective assessment of the sort that would remove a great deal of the heat and controversy from the annual RSG settlement.
Perhaps not all hon. Members have had the opportunity—indeed, the privilege—which I have had of consulting the factors that the Secretary of State takes into account. They are to be found listed in schedule F of the White Paper "Local Authority Finance ", which actually accompanies the whole introduction of the RSG. There is a list here of all the factors that are introduced year after year. If these factors were broadly the same, or if they reflected the reality of the logical extension of the economic trends as they were going, one could understand that there was a consistency. But what the Secretary of State actually does is to reach a conclusion and then instruct his civil servants to go on feeding factor after factor into the calculation until they come out with the conclusion that is exactly what he told them to find.
Perhaps the House will bear with me. One can just take these factors and look at what has been done by this Secretary of State and this Government in choosing which factors in which particular year. There are about 20 factors. There are things such as persons to the acre, acres to the person, housing starts, elderly people living alone, persons lacking basic amenities in their homes, overcrowding, single-parent families, unemployment, schoolchildren, and all those sorts of things—exactly what one would expect to find. Then, every year, one can see whether those factors were included.
Perhaps I may take just two factors to show the House what actually happens year by year. I take, first, housing starts. One would understand that that is a legitimate method of understanding what the pressures are in each particular area. How can any objective assessment lead to the following particular set of decisions over five years? When there were housing starts of 124,000, this factor was not included. Housing starts rose to 154,000, and it was included. They remained roughly the same, 156,000, the next year, and it was not included. They went down to where they had been before, and it was not included. Then they slumped to 84,000, and it was included again. By what conceivable objective standard can one justify that?
Next, perhaps we might consider the Government's one area of great success—unemployment. In 1974, we had 2·7 per cent. unemployment, and the factor was not even tested. In 1975, after 18 months of Labour Government, the figure had leapt to 4·9 per cent., and the factor was not even tested. The following year, another year of Labour Government, saw unemployment up to 5·8 per cent., and it was not only tested but included. In the following year, it was up again to 6·4 per cent, but it was not tested and not included. In the following year, unemployment was still 6 per cent., and it was included.
What conceivable objective test is that, other than the one test that the Secretary of State, like an organ player, just pulled the stops in and out to reach the fundamental decision which he bad made before the calculation even started?
I come from Sheffield, and I am deeply worried about this, as my right hon. Friend knows. Will the hon. Member for Henley (Mr. Heseltine) please tell us the cuts which he would make? He has promised to do so. His hon. Friends do not want him to do so. They are terrified that he will.
The hon. Member is only forestalling the eager moment when I reach the point in my speech where I give those details.
I am concerned that the Secretary of State should not be able to produce any rational explanation of how these factors go in and out. I believe that the only way to achieve an objective understanding of what goes on is for all these factors to be considered by a Select Committee in the process of reaching the rate support grant in the first place. But that is a decision that the Secretary of State will not be able to make next year. We shall have to consider it ourselves.
But by no stretch of the imagination can the Secretary of State say that the system is fair, because no one can explain away the factors that I have put before the House.
The rate support grant has become an annual piece of chicanery. It has become a series of political manipulations at the whim of the Secretary of State for the Environment. Anyone who thinks that the rates bill, which has soared under this Government, has anything to do with the reorganisation of local government in 1973, which is the old, weary accusation, ought to look at one other set of figures which my hon. Friend the Member for Northampton, South (Mr. Morris) happened to get from the Secretary of State.
Between 1974 and 1977, the number of employees in local government, largely under Conservative control, increased by 4·6 per cent. The wages bill of local authorities, upon which rates effectively are based, increased in those four years by 66·7 per cent. That is why rates have soared, and it is due to the economic mismanagement of this Government and in no way because of the reorganisation of local government in 1973.
I now deal with the question put to me very fairly by Government supporters. There is a fundamental difference between the two sides of the House about it. The Opposition believe that the critical need today is to get resources into productive manufacturing industry and into the wealth-creating sectors of the economy. That must result in some areas having to forgo expansion, and, if the words of the Prime Minister about getting Britain back on to a sound basis mean anything at all, they must mean placing less reliance on the growth of public spending of the sort that the Secretary of State loves so dearly.
I give seven example of areas where I think there could be a change of approach. The first concerns the use of regression analysis. In local government today, regression analysis means that the more that is spent, the more that will be got next year. I can think of no incentive to any management team in the world less likely to result in a cut in costs than to tell it that the more that it cuts, the less it will get next year, and the less that other people cut, the more they will get as a consequence. That is what regression analysis means, and it is not right or relevant in the present economic climate.
Let us carry that to the practical realities. We find officials in the regional offices of the Department of the Environment ringing up local authorities towards the end of the year asking whether any schemes are available to keep the budgets up. They know that if the budgets are cut one year, they will never get the money back the next. That is the attitude which underlies the rate support grant.
Secondly, there should be a different approach to the realisation of assets presently hoarded in the public sector. By that I mean local authority land, land in new town centres, council house sales, and all areas where the public sector can contribute to the solving of the national economic crisis.
Next comes the repeal of the Community Land Act and the reduction of development land tax which is having a dramatic effect—
The right hon. Gentleman gives the game away when he says that it has nothing to do with RSG. I shall tell him what it has to do with RSG. If only the development of our cities could proceed, there would be a larger rateable basis and a wider spread upon which rates could be levied. It is because the Community Land Act is preventing that that it must go at the earliest opportunity.
The next area for improvement is directly within the responsibility of the Secretary of State. If he would spend more time running his Department and taking decisions, emptying the filing trays which are full of pending applications—a whole range of one sort or another from local government—representing decisions on what it wants to do but which are being held up by the great bureaucracies of Whitehall, additional jobs would be created in the towns concerned.
Next, central Government would have a bonfire of the detailed controls they have over local government, controls which absorb innumerable people in the checking process and which by the very delay they imply mean that the country operates more slowly than it should and impose an overhead cost on manufacturing industry.
The final improvement would be equally important in speeding up the momentum of local government and reducing its cost. The right hon. Gentleman should not now be giving local government the impression that another major reorganisation is coming along, with all the diversion of management expertise that this implies, when he knows that it is an electoral stunt and that no legislation will come before the House in this Parliament. He is hoping to pick up a few votes, regardless of the effect on local government objectives and morale.
So in all these ways there is a discretion in the hands of the Secretary of State which could be used to counter the national economic crisis but which is not used because of the right hon. Gentleman's preoccupation with other matters. It would be a major reason to praise him if he continued the process over which he once presided, which is to try to contain the levels of local authority expenditure. This year the rate support grant has given a wholly spurious impression that the crisis is over and that the old upward spiral can once again get under way. We reject that concept and therefore we shall vote against the order tonight.
I remember that the feature of last year's debate on rate support grant was a prolonged and orchestrated attack upon my right hon. Friend's treatment of Greater London. The attack was stimulated by the fact that my right hon. Friend had begun harshly to correct a long-standing injustice in the treatment of Greater London under the grant.
The same sort of reactions are becoming evident in this debate. The Opposition seem to suggest that the whole calculation of RSG is a politically motivated exercise—" chicanery" was the word used by the hon. Member for Henley (Mr. Heseltine). I find that hard to understand, because, like other hon. Members, I have received a number of briefs from local authority associations on the settlement.
I have received one from the Association of Metropolitan Authorities, which is Conservative controlled. It does not lay that charge against my right hon. Friend. It is broadly satisfied with the settlement. I have had one from the London Boroughs Association, which, again, is Conservative controlled. It does not make the charge, either. Finally, I have heard from the Greater London Council, which is also Conservative controlled. I find this last brief a little unusual.
The hon. Gentleman has quoted almost every association, but he has totally omitted the Association of County Councils, of which Dorset and all the other shire counties are members. Those counties have the greatest grievance of all, and the most justifiable grievance.
I knew that I was unwise to give way before I had finished developing the argument. I was coming on to the county councils' position.
If it is really the case of Conservative Members that this is a politically motivated settlement to benefit the Labour Party, it is surprising that three major local authority bodies, all Conservative-controlled, do not make that charge. I find the brief from the Greater London Council particularly interesting. It is not the usual official GLC brief but a personal brief, which comes from Richard M. Brew, member of the GLC for Chingford, deputy leader of the council and leader of the policy and resources committee. He says:
Criticism is likely to be expressed of the alleged poor treatment of the shire counties under the rate support grant settlements of
the last five years and a settlement urged which is more favourable to the shires in 1979–80.
My Council is particularly concerned that London's position under the RSG system should not be misunderstood and has prepared the attached paper which I hope will be of use to you.
I found the paper of considerable use. I am surprised to see a rather small number of Conservative hon. Members from Greater London taking advantage of it.
The basic case made in the document is that which a number of us have made over the years—that London has never received its fair share of the needs element of the rate support grant—[Horn. MEMBERS: "Oh."] If hon. Members look at the calculations they will see that under the terms of the regression analysis London has never had the sums which that analysis proved it needed to meet its needs.
I can understand the hon. Gentleman's support for the Government's distribution of the needs element this year. Is it not right that in his constituency of Greenwich each ratepayer will benefit as a result to the tune of £27 a year?
My constituency is not Greenwich ; it is Woolwich, East. Within the Woolwich borough there will certainly be an improvement this year, partly as a result of the RSG settlement but largely as a result of the alterations in the proposed London equalisation scheme.
The reason why London does not receive its fair share, as calculated under the terms of the regression analysis, is the operation of what used to be called claw-back but is now rather delicately described as the "London resources adjustment ". The case for denying London its fair share is that London has high rateable values, that it has high rateable resources because of the rateable values in the city. That means that Londoners have to make higher rate payments and that they are hit twice. First, they pay higher rates than those charged in the rest of the country. Secondly, because they have higher rates to pay, they receive less Government help through the rate support grant.
The London Boroughs Association has produced some calculations which show that rates paid in London on a standard house in 1978–79 will work out at £204. The rates paid on that standard house in the rest of England and Wales will average out at £141. So there is a tremendous gap there on the same sort of property between what is paid in London and what is paid outside London. That dubious advantage of £63 in actual rates paid is the reason for denying London the share of the rate support grant which it should have.
The Greater London Council has done some similar calculations. It takes the average annual domestic rate bill paid in Greater London, which for the current year is £169. For the shire counties in England it is £127, for the shire counties in Wales it is £76, and for the metropolitan counties it is £115. Over the whole of the rest of England and Wales it is £120. So on that calculation Londoners again are paying substantially more in rates than is being paid in the rest of the country.
The argument which some hon. Members advance in support of that state of affairs is that London has a much higher average income per head and therefore we can afford to pay higher rates in London. There is, of course, some truth in that. [HON. MEMBERS: "Some? "] Yes, there is some truth, but those hon. Members who try to paint a picture of every London street paved with gold are also trying similarly to paint a picture of all Londoners as company directors, polytechnic lecturers or computer programmers, when manifestly they are not. There are a great many Londoners who are unskilled. One of our problems in the city has been the departure of industry and, in particular, the departure of skilled workers. As my hon. Friends who represent London constituencies will agree, we have a great many unskilled workers in service and similar trades in which rates of pay are certainly not as high as are paid in other parts of the country.
Again, the GLC's calculations show that London's average post-tax income, on the latest available figures, was 13 per cent. higher than in the rest of the country averaged out, but, to take the shire counties which are complaining, London's average post-tax income is lower than in Hertfordshire, Berkshire or Buckinghamshire. That to some extent sets in perspective the argument about wealthy Londoners who can afford to pay these higher rates.
The impact of clawback last year was £270 million. That was £270 million which Londoners forwent in respect of rate support grant. This year, a further £70 million will be added in clawback, so the total sum Londoners will not receive is £340 million. On the other hand, as my right hon. Friend said, there will be an increase in the needs allocation, so that London will get an extra £41 million in real terms, which means that London's share of rate support grant in the total settlement will go up from roughly 21·6 per cent. to just over 22 per cent. But it is not likely—I think that everyone accepts this—to narrow the gap between rate bills paid in London and those paid in the rest of the country, because London needs those extra resources to meet the problems with which it is now grappling.
For one thing, rateable values are falling in London because of the departure of industry. I challenge any hon. Member to deny that the industrial decline has been much sharper and more catastrophic in London than it has in any other part of the country. Second, rateable values are declining because of the revaluation of commercial properties, which were originally valued at the peak of the property boom in the middle 1970s.
Moreover, many of the social problems we face in London are of a more marked character and on a much larger scale than they are in other parts of the country. The problems of urban decay, homelessness, crime and vandalism, deprivation and inner urban problems generally apply in many other parts of the country, but I believe that many hon. Member will accept that, on all the straightforward comparisons, those problems are a great deal worse in London than they are elsewhere in the country.
I should have thought that the House of Commons, having passed the Inner Urban Areas Act and said that it wanted to see greater resources directed towards the inner urban areas to tackle those problems, would agree that the rate support grant ought to be balanced in such a way that there was a particular sum going to meet such problems in the inner urban areas, and in Greater London in particular.
I come now to the London equalisation scheme. The Secretary of State, as he said, has altered the recommendation made by the London Boroughs Association. I think that it is the first time that this has ever occurred. The LBA understandably feels somewhat aggrieved that its recommendations have been interfered with. I understand the difficulties that exist in trying to get agreement among 32 London boroughs, particularly inner boroughs and outer boroughs. As a former chief whip of the LBA, I know the problems involved in that process.
Nevertheless, I think that many of us have been puzzled and somewhat dismayed by recent equalisation schemes which have seen boroughs like Tower Hamlets, Hackney and Islington paying out resources across to boroughs like Richmond, Kingston and Barnet, which, on any assessment, do not need additional resources. In that sense, I much welcome what my right hon. Friend has done in reweighting the equalisation scheme so that it benefits inner London rather more that the LBA's recommendations would have done.
May I briefly say a word about the regression analysis? [HON. MEMBERS: "No."] Well, other hon. Members have mentioned it and I think it only fair that I should say something, and it will be very quickly. I accept that the regression analysis formula is not simple, but it seems to me that it is the only objective measurement of need based on past spending patterns. All the efforts that have been made over the years by local authorities and the Government to come up with a viable alternative have not succeeded. I notice that no one on the Opposition Benches has so far tonight suggested a workable alternative.
The Association of County Councils' system—the so-called simple system—is certainly not simple and it is not fair. It is based on subjective judgment which is bound to lead to disputes; it is based on an idea of what ought to be local government spending, and that, in my view, is a total attack on local government autonomy.
The hon. Gentleman says that no one has come up with an agreeable alternative. Frankly, some of us are fed up with the existing system. We believe that we have made sufficient criticism to ask the Government—they have had plenty of time—to come up with something better. I give a specific example, East Sussex—indeed, Sussex as a whole. Some people, amusingly at times, but it tells a fact, refer to the south coast of Sussex, or parts of it, as the "Costa Geriatrica" of England. Under the regression analysis, so far as East Sussex is concerned, the number of people in retirement living alone—
Order. I hope that hon. Members are not going to use interventions for the purpose of making speeches. If each Member does that, an intervention will get nowhere during this debate.
I apologise, Mr. Deputy Speaker. May I put this to the hon. Member for Woolwich, East (Mr. Cartwright)? The fact that the number of people living alone no longer features as part of the regression analysis makes people in Sussex pretty sick with this formula.
I agree that one can make individual criticisms of the regression analysis. I have done it myself when I was in local government, and I am sure that it is possible to do it now. What I am saying is that local government itself, and local government in partnership with the Government, has not yet been able to come up with a system which would do the job better, and that is the basic objection.
I support strongly the recommendations being made by my right hon. Friend, even though there is no real improvement in the situation for London, even though there will be no narrowing of the gap between rate bills paid in London and those paid outside, and even though London ratepayers will still be surrendering £340 million to those elsewhere who are paying small rate bills. That point should be borne in mind by those who are complaining about the recommendations before the House.
I will be fairly brief. Although I had prepared a speech that could run for several hours, I propose to reduce it to magical proportions.
First, I must thank the Secretary of State on behalf, I believe, of all the Staffordshire Members for having listened to some of our pleas and having increased our rate support grant by about £1 million. For that we are duly grateful.
I turn now to the speech of the hon. Member for Woolwich, East (Mr. Cartwright), just delivered over the last 15 or 16 minutes. The fact is that in terms of the rate support grant available to Staffordshire in 1974 we are now £11 million worse off, and that is why we reject and regret the general approach of the Government—indeed, of all past Governments—as this thing has piled up, running now into thousands of millions of pounds, a great deal of which is ill spent.
In Staffordshire we have, like everyone else, special problems, especially with the numbers of schoolchildren who are coming in under formula 4. We are not getting sufficient money and so forth. We have talked to the Secretary of State about this a number of times. I hope that some of these discussions can be kept private rather than that these local points should have to be made.
I want to make three main points tonight. I am sure that there is a movement equivalent to proposition 13 in the United States and that will grow and affect all Governments. The people are fed up with paying local property taxes. People feel passionately about these matters.
I come to the second point I wish to make to the right hon. Gentleman and to my right hon. Friends who will shortly inherit the high offices of running the Home Department, and so forth. I believe that the patching money which is transferred from the shire counties to try to patch up the real problems of urban squalor are not appropriate and that there must be a totally different approach. Decisions must be made about what is to be done in areas such as Liverpool. It should not be just a question of patching up from current expenditure. In Glasgow, for instance, major capital investment and reintegration are required. At present, money is being wasted. The money Staffordshire is paying out to Greenwich is wasted money.
Thirdly, we must recognise what has happened in the United States. We have seen what has happened with the funding of municipal authorities there. We in Britain are not far off that problem today. Tonight the Secretary of State told the municipal authorities "You can keep your rates down if you are prepared to spend your balances." I hope that the Minister will tell the House tonight what is the level of municipal government indebtedness—in yearling bonds, in foreign borrowing. Local government balances should be devoted to reducing that debt and not to making up a subsidy to keep rates down elsewhere so that they are politicaly acceptable and the movement towards proposition 13 does not gain strength.
There is a grave danger that any Government nowadays will run into thousands of millions of pounds of local government expenditure, accompanied by untold borrowing, and then tell local authorities "Use your balances to keep the people quiet. Use the money you have saved to keep the pressure down "; and, before the Government know where they are, they will be bust, just as New York was nearly bust a few years ago.
I suppose a debate such as this is bound to be fairly parochial. It is proper that Back Bench Members should support their constituencies. I totally support the Government's policy of diverting rate support grant to the inner city areas. I hope that this will come as a welcome surprise to him, because I am a representative of a shire county and of the borough of Northampton. I regard it as perfectly proper that the dereliction of our inner cities should have the special help that the Labour Government wish to provide for them.
Of all the files in my office since I became a Member of Parliament, the rate support grant one is the fattest. Of all the problems facing me as an individual constituency Member, the rate support grant, its formula, the needs element, the resources and the domestic element and the delegations arising out of these yearly battles have been ongoing. I take this opportunity of thanking my right hon. Friend for having so courteously and constantly received delegations from Northampton.
One of the abysmal features of the rate support grant is that it is a never-ending battle, similar to going out on Boxing Day to buy next year's Christmas presents. Relentlessly, as soon as this year's grant is settled and the statutory orders are made, the representations appear to begin all over again for the following year.
The rate support grant tends to dominate the process of settling the local rate, and indeed the local rate is affected by the rate support grant. It is not surprising that this situation constantly happens. But this process, since its introduction in 1966, has become yearly more difficult to explain and to contain. It also creates greed in certain local authorities.
I can tell my right hon. Friend that the blame for rate increases and for cuts in student grants, nursery school and library facilities, and fire, police and social services is laid, especially by county councils which are Tory dominated, such as Northamptonshire, on the Labour Government. Although the Government's back is broad enough to contain this blame, it is unsatisfactory that political hypocrisy should emerge from a system that was fundamentally set up to give fair, effective and equitable help, shielding the ratepayer from the worst problems of the present rating system.
The Government act as a ratepayer to make up the local rate deficiency. However, not all the criticism is unjustified. It should be possible to fix the rate support grant for three or five years at a time. I believe that the Layfield committee recommended three years. Perhaps the Secretary of State can say whether he has given any thought to this proposal and whether it could be implemented.
Given the shortage of time, I shall not press my right hon. Friend radically to reform the rating system—a step which every ratepayer wants to see carried out—or to comment specifically on my constituency or the county of Northamptonshire, which has a long history of problems connected with the new town situation, but I remind him of Labour's programme for Britain 1973 which said:
The needs criteria should be strengthened to ensure that the greatest assistance goes to the authorities which have the most pressing problems. When local authorities are required by law to provide new or extended services, for example, in the field of social services, for the elderly, disabled and chronically sick, central Government must will the
means of providing the necessary finance in exchequer grants.
Although I realise that the Government have committed additional support in the needs element from 60·7 per cent in 1976–77 to 79 per cent. in 1978–79, the resources element is down from 29·2 per cent. in 1976–77 to 19·7 per cent in 1978–79 and the domestic element from 10·1 per cent. in 1976–77 to 1·3 per cent. in 1978–79. In 1974, local authorities in England and Wales lost their responsibility for sewerage services and water supply. In Northampton's case, sensible local authority rate accounting is to be replaced by monstrous direct billing by the largely unaccountable and bureaucratic Anglian water authority.
Ratepayers in Northampton will face two rating bills, since there will be an additional one for water and sewerage. The prospect is dearer water, ultimately metered from supply. Every new house built in Northampton is threatened with a £1,000 charge for direct connection to sewerage. Each new baby born in Northampton is threatened with a bottled water supply.
This will be very costly, and I suggest that next year the Government should consider an additional element in the rate support grant—a water element. That is desperately needed if the people of Northampton are to pay their water bills. I ask my right hon. Friend in advance to receive at the double early in the new year a delegation from Northampton.
The hon. Member for Northampton, North (Ms Colquhoun) wants a new element in the scheme. My right hon. Friend the Member for Stafford and Stone (Mr. Fraser) wants a completely new scheme. But the real trouble with the support grant stems from the fact that we have a bad Government. If we had a good Government, the economy would have expanded fast enough to ensure that, while public expenditure as a whole was cut as a proportion of the gross national product, the amount which could he given to local authorities could steadily grow. That is the cause of the trouble.
In his statement on the rate support grant on 24th November, the Secretary of State said:
It would be unwelcome if domestic rate increases were significantly greater than the
rate of inflation, which we are determined to keep within single figures.
I have a great deal of sympathy with his intention, but how does he reconcile that statement with the prospect for my own county of Wiltshire? I make no apology for being insular or domestic.
To be fair to the Government, Wiltshire has some pluses. For example, last year the Government suggested 7 per cent. for inflation; the county rightly assumed that the Government were wrong, and budgeted for 8 per cent. This order now expects a rate of 9 per cent., so there is a gain for the county—but only because of its sensible budgeting.
But the pluses are nothing compared with the minuses this year. The rate support grant order reckons that the average rateable value this year will be £175, as opposed to the figure of £177 assumed by Wiltshire. Therefore, the amount by which the rate is made up by the resources element is that much less than expected and could be a very large sum.
Secondly—this is the most important fact—Wiltshire's share of the total rate support grant has dropped from 0·99 per cent. in 1974–75 to 0·77 per cent. in 1978–79 to 0·74 per cent. for 1979–80. In that period, the county's total loss was £20·5 million—even greater than the figure quoted by my right hon. Friend the Member for Stafford and Stone for his county. After a loss equivalent to at least 9½p in the £ in the current year, and a further loss for next year, how can the Secretary of State reconcile the position in Wiltshire with the quotation which I gave from his statement of 24th November? Worse still, how dare the right hon. Gentleman say:
My message to local government today is certainly not one of retrenchment. It is one of modest growth in the provision of the vital services that local government provides to the community.
How can the right hon. Gentleman say that against the background of a steady loss of grant aid to the county of Wiltshire?
The current estimate by the county for next year's rate increase, excluding the transfer of needs element to districts, is between 18 per cent. and 20 per cent. What is more, the Secretary of State knows very well that in Wiltshire the only district which is likely to gain from the needs element transfer is the district of Thamesdown. Part of that district falls within my constituency and I am glad that there is to be some benefit for it. But the whole of the other district of Kennet, which falls in my constituency, will suffer a disadvantage, as will the other district councils in the county.
The county of Wiltshire does not begrudge the increase in grant to London. Most people in my county would accept the arguments put by the Under-Secretary in support of an increase in grant aid to London. What people in my county begrudge is that, after five years of Socialist government, the county continues to have its grant cut in real terms while at the same time the Secretary of State mouths platitudes about modest growth and inflation. That is totally unacceptable to people in my county and that is why tonight I shall be joining my right hon. and hon. Friends in voting against the order.
In view of the lack of time for debate I shall not attempt to examine in detail the argument we have just heard. I assure you, Mr. Deputy Speaker, that I am not about to be parochial. I have three points to make, one general and two rather more specific. The first that worries me is the concern over the form rather than the content of the subject we are debating. It is a matter for some concern that there is still no sign on the horizon that the Government are even looking seriously any longer at the urgent need for a drastic reform of the whole system of local government finance. It is a great pity that this is now apparently being dropped.
Many of us who were involved in local government at the time took the view that the biggest mistake that Parliament made in 1972—when I was not in this House—was to try to reorganise the structure of local government without at the same time—or even before—putting the financing right. The result is that we now have a financing system which is totally inadequate and inappropriate to carry the burden of what many of us feel is a cumbersome, bureaucratic, wasteful and top-heavy structure.
What is necessary is a more rational, simple and comprehensible system of financing in local government. I suggest that it might even be in the interests of democracy if we had a system which consumers could understand. I realise that what I am saying will be thought to be revolutionary and will be regarded as out-outrageous by the experts, whose status would be diminished if the aura of mystery were swept away and we had a system which could be understood by the man in the street, the man in the council chamber and hon. Members. We do not spend a great deal of time in the pubs and clubs of Rotherham talking about regression analysis
My hon. Friend the Member for Woolwich, East (Mr. Cartwright) said that he felt that there was not a more acceptable system. There should be, and I am sure there is if we give the matter proper consideration. One of the basic problems of the present system is that the Government decide need. I admit that that is decided after protracted negotiations, but in the end the Government make their assessment of need. They dispense the money on the basis of their assessment and they leave it to the local authorities to please themselves whether they spend it in accordance with the need that the Government have assessed or whether they spend it at all. Some authorities merely use it to reduce the rates.
The former system of specific percentage grants meant that the authorities that were spending on services received assistance in the provision of those services That is no longer so. It is no longer true that the system benefits the so-called spendthrift authorities. Only by means of a specific grant can we ensure that the authority that makes a proper priority decision on where it needs to spend its resources will be grant-aided in proportion to what it is spending. That system, unfortunately, has long since been abolished. My hon. Friend the Member for Woolwich, East was in local government, as I was, 20 years ago. We fought strongly against the abolition of specific grants.
I am worried about pay increases. I appreciate that my right hon. Friend said what he had to say in the light of Government policy. He said that cash limits have been calculated so as to reflect the Government's pay and inflation policies. He developed his theme by saying that it is the Government's assumption that pay settlements will be in accordance with pay policy. That is some assumption. My right hon. Friend is a realist. I do not think that he believes that local government manual workers, who include some of the worst paid employees in the country, will settle within 5 per cent. I am convinced that they will not.
My right hon. Friend said that there is provision for a review of cash limits. They will be reviewed with pay and price increases generally. A review is not the same as an assurance. I hope that before much longer my right hon. Friend will assure local authorities that if settlements are way beyond 5 per cent., or even slightly beyond, the Government will accept their proportionate share and pay the extra money. If he does not, either rate increases far beyond what he has forecast will be levied or significant cuts will take place in services and in manpower. The latter measures might be accepted in some quarters, but they would not in the town that I represent. I hope that we shall have an assurance along the lines that I have indicated.
If we are seriously to accept what my right hon. Friend the Chancellor of the Exchequer told my hon. Friend the Member for Chester-le-Street (Mr. Radice) on 15th November—that the Government are anxious to ensure that those in the public service receive comparable pay for comparable work—public sector comparability with the private sector will not allow settlements inside 5 per cent. That must be accepted.
I should like to deal very quickly, Mr. Deputy Speaker, with the subject that we are discussing tonight, so that other hon. Members may be able to get into the debate.
I am sick to death of hearing pleas for London every time. Some of my constituents would very much like to have the free concessionary fares that are available in London. They would like to have the same standard of provision for the elderly. There are people from London who have come to live in my constituency and we know that the provision made by the GLC is far superior to that which is available to natives of the Isle of Wight.
If our rates are to go up by between 20 per cent. and 30 per cent., and if the earnings in London are, as reported, 13 per cent. above those in the rest of the country, this year we shall probably be paying more in rates than people in London.
I do not disagree at all with the points made by the hon. Member for Henley (Mr. Heseltine) or about the cuts he suggested, but I wonder how he would propose to deal with the wage bill for local authorities. The way in which the chief officers received their recent rise was disgraceful, and it was quite right for the Government to impose an abatement in the rate support grant for that. It was a very bad example and will make things much more difficult. As one who was in local government when the reorganisation took place and the wage levels were fixed, I am afraid that we are on fixed scales now and it will be very difficult to get off them. That applies to those on both sides of the House, and I do not see how we are to deal with it.
The Secretary of State has now left the Chamber but he will not be surprised to learn that I am very disappointed with the settlement for my own constituency. I can assure him that there will be no more deputations coming to see him—he can feel relieved on that account—because we have proved our case. The Minister who is now on the Front Bench heard one of our deputations and we were very grateful to him for that. He will know that we proved our case to the Department of the Environment.
I accept that the Secretary of State went to the meeting of the local authority associations last July quite willing to feed in a special factor for the Isle of Wight. He was rebuffed by all the local authority associations, which are now all Conservative-controlled. Our case was referred to by the hon. Member for Henley in his speech here just a year ago, when he said that his party would favour some special treatment for the Isle of Wight. I can tell him we feel aggrieved that it was Conservative-controlled local authority associations that prevented it.
Now we are in real trouble because we do not have any real balances left. We have balances of only £200,000, and that is the product of a penny rate. To restore what we need there would have to be a 3p increase and a further 1 p to deal with future commitments. Our ratepayers are now faced with about a 30 per cent. increase. This takes in the element that is going to the districts. It means that county rates are likely to go up from 72½p to 95½p.
Many hon. Members come to the Isle of Wight and they will know that our cultural and recreational facilities are fairly abysmal. Most people complain about the disgraceful state of Cowes during Cowes week—in particular, about the way we deal with drainage. We are behind and we need help. It is very sad that we have not been able to achieve something on this occasion, because we are trying.
The county council is not of my political persuasion but I give it credit for trying desperately to improve standards and to deal with the enormous backlog. It goes back many years and that is its inheritance. If we are to maintain services at anything like a respectable level —especially with our population going up every year, and expected to go up to 130,000 in the next 10 years—we have real problems.
A quarter of my constituents are retired people, and this factor will create additional problems in the years ahead, although I fully accept that most of them are well able to look after themselves. Nevertheless, when people are living longer, added problems arise.
The continuing absence of any special factor relating to our increased costs, which arise from a unique situation, that is, severance by sea, is indeed a cruel blow.
The regression analysis formula continues to produce erratic results, as anyone can see from the table which has been presented. The position has been made tolerable only by the fact that the damping has been extended a further year. We can see from the table that Hampshire is losing £5 million. How on earth is Hampshire to budget with that coming upon it? We can see also that Powys—the most sparsely populated area of the country—is in real trouble. It has put forward a very good case to the Department. I am speaking now on behalf of my hon. and learned Friend the Member for Montgomery (Mr. Hooson). I believe that Powys has a case which must be looked at. The Secretary of State said that he hopes to get the local authority associations together in the new year to discuss problems such as that of the Isle of Wight and the sparsity factor in Powys and other counties in Wales. I very much hope that that meeting will take place and that the local authority associations will co-operate, because these are matters which need to be dealt with quickly.
This continual shift of resources away from the non-metropolitan counties presents a growing problem for such counties. It is time that authorities in the South of England pointed out to the Government that it is they who are facing most of the problems today. It is to the South and West of England where the population growth is going, not to the inner or outer boroughs of London. Yet these areas get none of the assistance which the development and intermediate areas receive.
We in the Isle of Wight want to do something for the tourist industry, yet we get none of the regional aid grants from the EEC or the Government, because we are not an approved development area. We do not even merit intermediate status. It really hurts me when I find that Aberdeen still qualifies for intermediate status.
It is in the South where a lot of these problems arise, particularly in housing the homeless and in the provision for the elderly. The new proposals to pay the needs element to the non-metropolitan districts will mean that those districts are bound to spend more. Under my Housing (Homeless Persons) Act the whole idea was that responsibility for the homeless would be moved from social services to housing, and that there would be no increase in expenditure. But that just did not happen. It will not happen this time, because the officials are only human beings. They will spend this bonus when it comes in, and the county councils will have to take the rap.
I hope that the provisional discussions will deal quickly with some of the problems in the counties which are worst affected by this settlement. I urge the Secretary of State to try to bring forward some further assistance as soon as possible rather than wait another year. In conclusion, I should like to know why the domestic element for Wales will still remain at 36p whereas in England it is 18½p. I thought that had to do with paying extra water rates, but these are now being equalised. Why is it that the domestic element in Wales remains so much higher?
After last year's legitimate protests, we Liberals confidently expected a rather fairer settlement this time. We have not got it. Therefore, the only weapon left to us is to vote against the order tonight.
There may well be a case for having Select Committees on local government, because I do not believe that the House spends sufficient time on reviewing the role of local authorities and their financing. In fact, it is typical of local government in the United Kingdom that our Parliament, unlike many other Parliaments, seems to downgrade the status of local authorities within the governmental system. Yet Parliament is continually laying down laws which we expect the local authorities, as the basic public agencies, to execute. But at the same time we do not always examine the way in which the local authorities are financed or serviced in terms of staffing.
I want to direct my remarks to the Secretary of State for Scotland and to the Scottish order. As my right hon. Friend knows, a number of us made representations to him about the Glasgow position, and the fact that with the continuous decline in the city's population over the past 20 years Glasgow faces some severe financial problems. We welcome the extent to which the Government have moved on this matter by introducing a new factor into the needs element in the current calculations. We hope that this new factor, which should partly offset the impact of continuous population loss, will become an inbuilt factor in the needs element, and it seems essential to have some guarantee that the Glasgow predicament of steady population losses will be met.
I need hardly tell my right hon. Friend that the city's debt charges do not decline with the drop in population. Nor does the proportion of dependants in the city go down either because, although there may have been changes in the proportion of citizens under the age of 15, the city faces a decide in which the proportion of citizens over 65 will increase.
The Secreary of State will realise that the rating burden per head of population considerably affects the commercial and industrial structure of the city and its ability to retain and attract new industries, quite apart from the effects on civic life. We do not expect that the changes conceded by the Government on this occasion will achieve the desired results overnight, but we look for assurances about future calculations on the population factor.
What is the position on the employment of extra teachers in the Strathclyde region? The Secretary of State will be aware of the problem in some of our schools. We are grateful for the urban aid assistance and for the extra 500 teachers that my right hon. Friend provided in the areas of urban deprivation, but is the region making full use of the additional rate support grant which the Secretary of State has said that the authority receives?
My right hon. Friend will also be aware of the shortages of social workers in the region and the regional council's hopes of stepping up supply. The region has a low rate of car ownership and therefore a high dependency on public transport. Does the Secretary of State think that the additional money is ample to meet the needs of the Greater Glasgow transport executive in trying to minimise travel-to-work costs in the area?
The Secretary of State sent a circular to local authorities in October drawing attention to increases in expenditure that had taken place. In singling out leisure and recreational expenditure an item, which often comes at the bottom of the queue of priorities I hope my right hon. Friend will bear in mind that, at a time of high unemployment, it is important that there should be ample leisure and recreational provision in the area.
Scotland has the unique advantage of a single channel—the Convention of Scottish Local Authorities—to deal with the Secretary of State in rate support grant matters. That may make it easier for the Scottish Office, but whether it makes it easier for individual local authorities is another matter. It is essential that in this area of local government there should be greater openness and public awareness of the discussions that take place on the disbursement of local government finances, because the recommendations of COSLA have a considerable impact on Scottish life and local government.
The tragedy of debates such as this is the very short time that we have to discuss important matters, and I make no apology to the Secretary of State for Scotland for dealing in the barest outline with the subjects on which I wish to comment. I should love to have time to say more, but that time is not available when so many other hon. Members wish to speak.
What is the effect of the Scottish order? The simple effect is gross discrimination against the rural areas of Scotland. Taking the Grampian region, part of which lies in my constituency, we see a loss of £2¾ million for that regional authority. My hon. Friend the Member for Aberdeen, South (Mr. Sproat) will bear me out on that.
But it is not a matter only of Grampian. and I am not speaking only for my area. Looking at Fife—a loss of £1·4 million—the Borders, Dumfries and Galloway, one sees that all these areas have been subjected to gross discrimination in the order. What are the beneficiaries? They are the urban areas of Scotland, particularly Strathclyde and Glasgow. I simply ask whether this is fair.
For Grampian, the E2¾ million loss of grant is almost exactly equal to the sum that the region receives in oil-related grant. Could anything be a more obvious example of the Government taking away with one hand what they give with another? It is that kind of hypocrisy that we face in the kind of RSG that the Government have put before us. It is most unfair, against not only Scottish rural areas but against an area such as Grampian, which is contributing more to the British economy—because of the activity there related to oil—than almost any other area in Great Britain. Shetland is perhaps the only comparable area. We are contributing to the survival of the British economy, yet through this RSG the Government take away with one hand what they return in the other hand and for which they try to take credit by pretending that they are giving in other ways.
The Tayside region, part of which is also in my constituency, is not treated quite so badly as Grampian, but the loss there represents about 0·8p in the rates. In the districts of Angus and of Kincardine and Deeside, it is exactly the same sort of thing.
What is behind this? That is what we really want to get at tonight, even in this short debate. Of course, the reason is that the Secretary of State has chosen to change the distribution formula. The effect of the change, as has been said, is to reduce the differences in expenditure net of grant. The result of that is simply that local authorities are less inclined to pursue economies in the costs of running services. Any saving that they make is likely to be eliminated in the subsequent review of grant formula.
Where we have a regional authority such as Grampian, Conservative-controlled with the lowest administrative costs of regional councils in Scotland per head of population, it is simply hammered because it runs it affairs rather more economically than other areas. That is one of the effects of the change in the distribution formula.
Secondly, the Secretary of State must realise that there is great concern among local authorities in Scotland. I understand that a working party of the Scottish Office is currently considering these matters and the basis on which expenditure should be considered in relation to grant. It is wrong of the Secretary of State to introduce this change in the formula when this working party is carrying out its work, because the basis for assessment of expenditure should be the needs for expenditure—there is fairness in that—and not on the actual expenditure.
Thirdly, the Secretary of State must also realise that when he makes these continual changes in the distribution formula, as he has at present, although he has to explain these changes in the House, it is the local authorities in Scotland, be they regional or district councils, which have to explain them to the ratepayer. The Secretary of State knows that there is concern about this among many local authorities. By constantly changing the formula, he is contributing to the undermining of the credibility of Scottish local authorities.
Again, the Secretary of State has to answer for the fact that by the time he lays the order, as he did, in December of this year, most local authorities, especially the larger authorities in the regions, have already completed their work in deciding what their rates should be. If the Secretary of State at this stage introduces changes in the formula for the distribution, he puts local authorities in great difficulty. Therefore, he really should announce in advance what he is doing so that local authorities are better able to plan and to serve their ratepayers.
I have dealt with the problems only in outline. But let the Secretary of State realise that what he proposes means either a reduction in services or an increase in rates. When that becomes apparent to the ratepayers, it is not the regional councils or the district councils which will stand condemned. It is the Labour Government, for their mismanagement of the economy.
I am very pleased to be called immediately after the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith), because I know a certain amount about his constituency, having been its prospective Labour candidate until fairly recently.
The Scottish order is a slim little document which looks fairly insignificant but which is of paramount importance to all sorts of people all over Scotland. I was beginning to wonder what had happened to the SNP's representation in this House, but I notice that the hon. Member for South Angus (Mr. Welsh) has come scurrying in at the last minute.
Some of us have been here throughout this debate.
This is an interesting document. It says that the overall estimated aggregate amount of the rate support grant for Scotland is to be put up by about £130 million on the estimated figure for last year. That is tremendous. It represents an increase of about 34 per cent. However, when we look at the actual figure —because it was tinkered with last year —we find that the increase is £54 million, so we are back to the good old 5 per cent. that we seem to talk about in this House night in and night out. But at least it is an increase in public expenditure and, as far as it goes, I welcome it. Whether it will mean any increase in real terms remains to be seen.
I have been in this House just long enough to have become inquisitive. I have begun to wonder what effect this document will have on the local authorities in my constituency and how each authority will fare under the weird formula for distributing the rate support grant which is described in about two-thirds of the order.
I wrote to the Scottish Office to try to get some answers about a week ago, and I make no complaint about not yet having had a reply, because I know that it will take time. I recalled that my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) told me when I first arrived here that the fount of all knowledge in this place was the Library. So I asked whether the Library could give me the carve-up of the rate support grant for the coming year. I received a letter from someone in the statistical section saying:
I rang up the Scottish Office to see if they could give me comparable figures for the year 1979–80 but unfortunately they will be unable to do so until the local authorities have their rate poundages available in March next year and they have themselves obtained population estimates for June 1978.
This point about population estimates is quite interesting. Evidently last year, at the end of January when local authorities are supposed to "strike" their rates, as it is quaintly termed, the Registrar General for Scotland had not yet published the estimate of the population. So, when councils were fixing the rates last year, they did so without knowing what the rate would yield, and likewise I feel that we are fixing the rate support grant in this House without knowing what effect it will have on individual councils.
I persevered in my researches, and eventually I got in touch with the director of finance of the Borders regional council, who quoted a paper which had been produced by COSLA. That says that the estimated grant per head of the population for Scotland will increase by £1·16. That is all right. But it goes on to say that for the Borders region it will be cut by £6·31 per head of the population. That represents a net loss of £400,000, which does not seem very much but which amounts to 2 per cent. of the total budget of this small rural region and would result in what the director of finance of the Borders estimated would be an increase of 1·3p on the rates.
Tonight in the Chamber one of my hon. Friends had a paper in his possession which had been circulated to certain Glasgow Members. It contained the information I have been seeking, and I resent other hon. Members being given information that I have been unable to secure. I find that the increase in rates will need to be about 1·41p in the Borders region. But the rates in the Borders region are already well above the Scottish average while the standard of our services is below average.
As far as I can make out, all will be well in the Lothian region, which includes the other half of my constituency. Seeing you in the Chair, Mr. Deputy Speaker, I may say that I am delighted that Glasgow and our inner city problem areas are to get more resources—
Order. I want to assure the hon. Member that I had nothing whatever to do with that.
I apologise, Mr. Deputy Speaker. I am delighted that our inner city areas will get extra resources, but it is monstrous to seek to achieve that by robbing the rural areas. [HON. MEMBERS: "Hear, hear."] Before Conservative Members get carried away in their applause, I must tell them that I am not impressed by the pious protests of the Tory Party on this subject. Most rural councils are Tory-controlled, and their great ideal is to provide the minimum of services for the minimum of rates. The Opposition Front Bench is pledged to cutting back public expenditure and we all know the effect that would have on local authorities, as with everything else. No one is under any illusions on that score.
In the Borders we already have the barest minimum of services. If they are cut back any further some of them could disappear altogether. I am thinking particularly of certain local authority old people's homes, the upkeep of roads, and public transport in rural areas. For another example, the loss of one member of the headquarters staff of the housing department of Berwickshire district council would represent a 25 per cent. cut-back in that department, which would make it virtually unworkable.
Hon. Members from rural areas such as mine are in serious difficulties. We are appalled by the apparent implications of these orders for some of our constituents. But it would be absurd for us to oppose them, because then we should be left with nothing. I appeal in the strongest possible terms to my right hon. Friend to reconsider the allocation of rate support grant to the rural councils, and to consider what he can do in the course of the year to right some of the injustices to which I have referred. I hope that he will deal with some of these points when he replies.
It is curious that, at a time when Parliament is said to have little to do, the only moment when we can discuss this important matter is for a short period in the middle of the night.
There is no doubt that the rural areas in Scotland feel that they have been exceptionally badly treated. I have a letter from the convener of the Borders regional council who points out that it will lose £400,000 through the redistribution of the needs element of the rate support grant, although it claims to have been extremely economical.
In Orkney and Shetland we are put into a serious position, as the Secretary of State well knows. I must emphasise again that oil is not a blessing. It has led to great disruption in the Islands. It has, of course, led to an enormous burden on the local authorities, which have to provide roads, houses and other services, and it has led to very high prices while many people do not benefit from it at all. Furthermore, no oil was landed at all in Shetland until about a fortnight ago.
What is more, the terminals are de-rated, and that brings me to the first point that I put to the Secretary of State. I realise that he knows it already, but I hope that he is seriously examining whether these terminals in Orkney and Shetland should be exempted from the derating Acts.
In addition, owing to the revaluation in Orkney, which was more drastic than it was anywhere else in Scotland, with the exception of Shetland and Aberdeen, the resources element disappeared, and many people have been faced with immensely higher rates.
It must be noted also that the local authorities are now in difficulties in the recruitment of staff because all wages have been under pressure to rise and people are offered very highly paid jobs in oil. I should add that the industrial workers of local authorities are not at all well paid, and this is a matter which will have to be looked at.
All that is happening now is that the Government have offered Orkney £200,000 as island weighting, and Shetland £500,000, but this is nothing like the increase in the costs which the local authorities have to face. Moreover, I understand that similar treatment is being offered also to the Western Isles, although they have none of the problems which are the result of oil.
The Secretary of State said yesterday that he did not expect that rates in Scotland would rise by more than a single figure percentage. It is often forgotten that if they rise by a single figure percentage every year, that will be pretty stiff on top of the immense increase in valuations. But if the Secretary of State is to keep the rates in Shetland and Orkney down to even that figure, he will seriously have to offer a great deal more than the £200,000 and £500,000 which have so far, I understand, been suggested by the Scottish Office.
I conclude by saying again that oil is a national matter. It is not Orkney and Shetland which are benefiting from it—it is the whole of Great Britain—yet we are put to enormous extra costs and dislocation. We accept these if the benefit of accumulated oil funds goes to put back our own economy, but it would be a tragic error to use them simply for current purposes to assist local authority finance.
On a point of order, Mr. Deputy Speaker. Are we to have two Front Bench speakers from Scotland and then two Front Bench speakers from England? If so, I must ask about the rights of Back Benchers.
I am trying to proceed in the best interests of all right hon. and hon. Members. I indicated at the beginning of this debate what I proposed to do. With the winding-up speech of the Secretary of State for Scotland the Scottish debate is finished, and we are then back on the general debate.
I hope, Mr. Deputy Speaker, that that will reassure not just the hon. Member for Buckingham (Mr. Benyon) but the House as a whole. I wish to answer a number of points made in the few speeches we have had from Scotland and also to say something about the order as a whole, but I shall try to do so within a reasonable time.
First, regarding the order as a whole —I assure hon. Members that I shall come to the question of distribution a little later—the rate of grant provided in the Scottish order is exactly the same as in the previous year, and it is, of course, a very favourable grant, at 68½ per cent.
Next, as regards the level of rates for the year 1979–80, I repeat what I said yesterday, that I expect the overall increase of rates in Scotland to be well within single figures. In previous years I have given forecasts about rates in following years and they have been treated with a certain scepticism, but I am glad to say that in each case the actual rate increase has been rather less than I had forecast in the House. I say with quite considerable confidence that in 1979–80, provided that the local authorities in Scotland stick to the guidelines and stick to the relevant expenditure figures which I have agreed with them, the overall increase of rates will be well within single figures. Obviously, some local authorities will have rate increases which are higher than some others, but the average increase will be very modest indeed.
When I hear talk about the burdens on domestic ratepayers in Scotland I sometimes wonder whether hon. Members have been looking at what is happening. In the current year, 1978–79, the average level of domestic rates in Scotland has gone down by more than 6 per cent. be- cause of the effects of revaluation. Domestic ratepayers in Scotland as a whole will next year, taking the years 1978–79 and 1979–80 together, be paying no more in rates than they paid in 1977–78. Therefore, it is absurd for hon. Members to talk about the increasing burdens on the domestic ratepayer in Scotland.
I now turn to the question of the amount of relevant expenditure provided for in the Scottish order. It is a figure that has been agreed and fixed, like the English one, against the general economic background. I am glad to say that, in distinction from what has happened in recent years, we have been able to make a modest but significant increase in relevant expenditure by local authorities for 1979–80. The order provides for a net growth in real terms in 1979–80 of about 2·2 per cent., which is consistent with the Government's announced plans for the growth of public expenditure generally, and compares with the I per cent. which was contemplated for 1979–80 in our last White Paper on public expenditure.
I understand from what the hon. Member for Henley (Mr. Heseltine) said that the official Conservative view is that there should have been no increase at all in local government expenditure provided for in these rate support grant orders. I should be glad to have that confirmed by the hon. Member for Glasgow, Cathcart (Mr. Taylor) when he speaks later.
May I give one illustration of the kind of thing we have been able to do within this modest growth in relevant expenditure for Scotland? It relates to a question of teacher staffing, which my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) raised. I have allowed for a further improvement in school staffing standards and for the continuation of last year's scheme for the employment of extra teachers in urban areas of deprivation.
My hon. Friends will be glad to know that, as regards primary school staffing, I have today issued a new circular which will provide for complements in the primary schools in total about 13 per cent. greater than those provided now under circular 819. I am sure that that will be welcomed not only in the education service but in Scotland generally.
That kind of improvement would not be possible if we were to adopt the suggestion of the hon. Member for Henley that there should be no increase in local authority expenditure in real terms. That would mean that we should not be able to improve, for example, school staffing standards, and many of the other improvements outlined in the order would not be possible, either.
If Strathclyde regional council or any other education auhority in Scotland were to employ more teachers than the national minimum standards, would it qualify for extra rate support grant?
The rate support grant is not a specific grant. Therefore, it does not relate to particular areas in this respect. What is specific is the special grant given for the employment of teachers in areas of urban deprivation. Strathclyde is by far the biggest beneficiary from that in Scotland. That is specific, and it is included in the aggregate of grants with which we are dealing.
I have maintained domestic rate relief at 3p in the pound because the domestic ratepayer in Scotland has done extremely well on average over the past year. I believe that the maintenance of domestic rate relief at 3p next year will also be a very favourable settlement from the point of view of the domestic ratepayer.
The total of oil-related expenditure disbursed in 1979–80 is £9·5 million, and this portion of the needs element is to compensate authorities in areas where there has been an impact because of North Sea oil development for some of the additional expenditure that they have had to meet.
The amounts that have gone to the areas which have had additional burdens placed on them because of oil development have come out of the general rate support grant. In other words, they have represented a transfer of resources from other areas of Scotland, including Glasgow and Strathclyde, to the areas that have been bearing the burden of oil development. There is no question of additional money having been provided for them by the Government; it has been part of the distribution formula, and these areas have had very considerable benefit from it.
There seems to be some kind of assumption in a number of quarters in Scotland that the distribution formula should never change at all. Of course, it has not changed a great deal in Scotland in recent years. The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) talks about continual changes in the formula. There have been only modest changes in recent years.
But, of course, we must not let the formula be maintained on exactly the same basis from one year to the next. We have to look at changing circumstances. It would be easy for us if we were simply to make the formula exactly the same on a permanent basis. It would make the whole business of determining rate support grant much easier, but it would not make it fairer. Unless one changes the formula, one gets considerable elements of unfairness entering into the distribution of grant.
The most significant changes are related to population. Again there seems to be some misunderstanding about this, because hon. Members as a whole do not seem to realise that, for the last 10 years, there has been a provision in the distribution formula for population decline. It is not new to introduce a provision for population decline.
Falling population, among other things, tends to be a characteristic of deprivation, which generates expenditure requirements, and there is a time lag before expenditure reductions from falls in population take effect. But in my view the provision for population decline made hitherto does not adequately cater for continuous decline over a long period, as in the case of Glasgow and one or two areas in the West of Scotland.
I have therefore introduced a new factor into the 1978 order which makes some allowance for population decline of more than 5 per cent. over 10 years. This, of course, is related to urban deprivation, and there is not an hon. Member who does not at some time or other make great speeches about the needs of the urban areas and how we ought to be doing rather more for them. I am taking them at their word. I am doing rather more for the urban areas in this distribution formula, and it is a perfectly proper and appropriate thing to do.
But, of course, the change that is being made is very modest indeed. Some of the comments about it are ridiculously exaggerated. The total change is only about £6 million in needs element, and the needs element itself amounts to £861 million. The total provided for amounts to well over £1,000 million. We are talking about a redistribution of about £6 million out of that grand total of £1,100 million to £1,200 million. It is absurd to exaggerate the effect of that.
What is more, that is only the needs element aspect. When one takes account of the resources element, it works in the other direction to the extent of about £2 million, so that the total adjustment I am making is really the extremely modest one of about £4 million out of a total rate distribution of well over £1,000 million. In any case, grant will increase in real terms resulting from the enhancement of relevant expenditure and will subsequently increase in cash terms in virtually every area in Scotland: I do not think that there is one council in Scotland that will not have more rate support grant paid in 1979–80 than it has had in the current year.
Nor are these changes in distribution only in relation to the urban areas. I have also changed the islands weighting. That affects very favourably the rural areas of Orkney and Shetland and the Western Isles. These are not urban areas. I do not know why the right hon. Member for the Western Isles (Mr. Stewart) is not here, because his authority does very well out of the new distribution formula, as in my view also does the constituency of the right hon. Member for Orkney and Shetland (Mr. Grimond).
In Orkney and Shetland there is a particular temporary problem which will disappear after 1979–80. It may well disappear during 1979–80. Then in rating terms Orkney and Shetland will be among the most prosperous areas in Scotland. The right hon. Gentleman spoke about losing the resources element. He is saying in effect "We are now so prosperous in rating terms that we do not qualify for resources element." There is only one other authority in Scotland of which that can be said. I have recognised Orkney and Shetland's temporary problem in the increase in Islands weighting.
I have also introduced another factor, or extended a factor, which is of benefit to the Highland region. This, again, is a rural area, not an urban area. When the hon. Member for North Angus and Mearns asserts that this is all in favour of the urban areas against the rural areas, he is talking the most absolute nonsense. If he applied himself to the facts, he would know that.
If the hon. Gentleman will allow me, I shall give way in a minute. I want to make one further point about that in terms of equity. Then I shall give way to the hon. Gentleman.
Taking the whole of Scotland and whole regions—that is, regions with the associated districts and islands authorities—and comparing the new distribution formula with the old and comparing the expenditure net of needs element of grant, we find that eight authorities moved closer to the average and only one authority—the Lothian region—moved further from the average in the new distribution formula provided for in the order. In other words, the order is very much more equitable than the previous distribution order.
Will the right hon. Gentleman explain the loss to the Grampian region of £2¾ million, the loss to Fife of £1¼ million and similar amounts for the Borders, and in Dumfries and Galloway? That is the question I want answered.
I am just about to answer it. I am very glad that the hon. Gentleman has asked me these questions. I shall take these regions in turn. Let us take Grampian region's expenditure net of needs element, which is what we are talking about. Under the previous distribution formula, Grampian region was bearing expenditure of only 93 per cent. of the Scottish average. This formula will take it up to 98 per cent. So it is still under the Scottish average.
The Fife region goes up from 86 per cent. to only 89 per cent. So in terms of net expenditure being borne by the ratepayers it is well under the Scottish average. The Borders region goes up from 94 per cent. to 99 per cent.—again, still under the Scottish average. Dumfries and Galloway goes up from 85 per cent. to 90 per cent.—again, well under the Scottish average. The Strathclyde region, which benefits from this formula, and which was previously at 106 per cent., comes down to only 103 per cent. So Strathclyde ratepayers are still bearing in terms of net expenditure rather more than ratepayers in the rest of Scotland.
It is absurd to say that this change in formula is a great bonus to Strathclyde and of great disservice to the rest of Scotland. Strathclyde is still bearing a burden that is proportionately a good deal greater than the rest of Scotland.
Would the Secretary of State say that Councillor Peter Wilson, finance convener of Lothian region, was talking rubbish when he said that every mainland regional area in Scotland would suffer a loss in RSG next year which, as far as Lothian is concerned, goes to another region? Is he talking rubbish in saying that every single mainland regional council loses as a result of the change?
Yes. I believe it is true that every mainland region loses something. But the islands of Orkney and Shetland and the Western Isles and the Highlands stay roughly the same as the formula has been altered in their favour. Highland region's net expenditure is 85 per cent. of the Scottish average. Every single authority that has lost on this matter, apart from Lothian, remains below 100 per cent. of the Scottish average and the ratepayers in these regions still pay proportionately less, in terms of net expenditure, than those in Strathclyde. This is a very modest change in distribution.
My hon. Friend, the Member for Berwick and East Lothian (Mr. Home Robertson), I am sorry to say, said that the ratepayers in his part of the Borders region were paying rather higher rates than elsewhere. He is completely misinformed. The average domestic rates bill in the Borders region is only 80 per cent. of the Scottish average. Even in Grampian region, which is not one of the less prosperous regions of Scotland, the average domestic rate bill in 1978–79 was only 94 per cent. of the Scottish average.
The hon. Gentleman seems to be arguing that we should cut back on services. I hope that the hon. Member for Cathcart will deal with this in his speech.
In fairness to his hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson), would not the Secretary of State accept that there is no other regional council in the length and breadth of Scotland losing as much, on estimated grant per head, as the Borders region? Would he not accept this while he is playing with the table of figures that is available to hon. Members? I should be happy to show the hon. Member for Berwick and East Lothian that his council is losing more than any other in Scotland.
I know that it is losing more than any other in Scotland but it is still below the Scottish average. The hon. Member for Cathcart is making absurd comments. The figure is still below the Scottish average and the domestic rate burden in the Borders is still very low compared with the Scottish average. In any case, the reduction in grant this year in the Borders amounts to less than 2p in the pound. It is a very modest reduction.
The hon. Member for Cathcart will have to explain to his constituents in Glasgow and Strathclyde why he will be voting against this order and square his action with the speeches he makes about the needs of Glasgow and its deprived urban areas. We are redressing the balance in a very modest way. It is absurd for the other areas of Scotland to have exaggerated over the past two or three weeks the effect of our proposals.
This a very favourable order generally. It is a high rate of percentage grant, which will mean a very modest increase in rates in Scotland in 1979–80. It provides for modest but significant growth in relevant expenditure, which will enable many services to which hon. Members attach importance to be improved on the basis of a distribution formula considerably fairer than those previously employed.
I want to concentrate on the injustice which is being done through the distribution of the rate support grant and particularly the needs element in the two western counties of Wales—Dyfed and Gwynedd. They should not really be called counties because they are big enough to be provinces and cover in area almost halt the territory of Wales. We know that the grants discriminate against non-metropolitan areas, and in Wales we have no metropolitan areas. All our eight counties are non-metropolitan areas.
Addressing the Consultative Committee on Local Government Finance, the Secretary of State said that his policy
is certainly not one of retrenchment; it is one of modest growth in the provision of vital services that local government provides for the community, and stability in the financing of that expenditure.
I should like to examine the situation in Dyfed and Gwynedd in the light of the Secretary of State's three criteria—no retrenchment, modest growth and financial stability.
The trend since 1974–75 is shown by the fact that since then London's needs grant per head has risen by 112 per cent. but Gwynedd's has risen by 46·5 per cent. and Dyfed's by 42·8 per cent. Dyfed in 1974–75 received 0·776 per cent. of the total for England and Wales. Next year it will receive 0·685 per cent. If they received the same percentage of the whole as they received in 1974–75 Gwynedd would be getting over £3 million more next year and Dyfed would be getting over £5 million more. But Dyfed is to get an addition in cash grant of £1,640,000 in real terms. There will actually be a fall of £365,000, equivalent to a rate of 6p.
Over five years, Gwynedd has lost 12·5 per cent. and Dyfed has lost 12·8 per cent. Compared with the average for England and Wales, Gwynedd stands to lose £697,000 between 1978–79 and the next year and Dyfed stands to lose £1,040,000 in the same period of one year. So much for the Secretary of State's "modest growth" statement and his claim that he is securing stability in financing expenditure on vital services. Obviously, in these cases, there will be a steep rise in the county precepts.
In stark contrast to the loss suffered by these two counties, London, where so much of the wealth of this kingdom is concentrated, is to receive an extra £41 million in real terms on account of the growing needs, says the Secretary of State.
Have Dyfed and Gwynedd no pressing needs? Quite apart from providing the same basic social services, what of their higher than average proportion of old-age pensioners? What of their higher than average proportion of persons with low incomes? What of the size of their territories and the sparsity of their populations, which entail large numbers of rural schools and extra costs in the administration of social services? What of bilingualism? Have they no problem with their very long coastline and with tourism, which doubles their populations during the summer months, involving additional costs for the basic services?
Have they no problems of inflation and increased interest charges? Those charges, together with inflation and increased wages, will probably swallow up alone the whole of the overall increase allocated to Wales. The standards of its present services, which are already being cruelly cut, will not be maintained, let alone improved. Still more cuts will be the order of the day. What has the Secretary of State to say to this, in view of his statement that his policy is certainly not one of retrenchment? To exacerbate the situation still further, the new grant is on the basis of the late 5 per cent. norm for wages and salaries.
The London-based secretary of NALGO has said that the increase in expenditure is not enough to pay the local government work force adequately. The settlement, he said, is a recipe for continued stagnation. If that is true of London—" the great Wen "as Cobbett called it—which has been sucking the material and human wealth of our little country into its system for centuries, how much bleaker is the outlook for Dyfed and Gwynedd? How is the army of low-paid workers to take a 5 per cent. increase across the board when inflation will be considerably in excess of that figure?
Will my hon. Friend accept that Gwynedd, according to the recent new earnings survey, is the lowest-paid area for manual workers in the whole of the United Kingdom? Is not this a reason for demanding that provision of rate support grant services should be adequate?
That is a vital point. I have tried to show the need for an improvement in the grant, on this ground among others. Dyfed and Gwynedd should at least have received enough money this year to restore some of the cuts they have had to make. They should have been allowed to maintain at least this year's standards of social and local government services. Instead they will be forced to follow a policy of still more harsh retrenchment.
When they look over Offa's Dyke they will see in the metropolitan areas people who are doing quite well. The Secretary of State has contended that it is a pure coincidence that the biggest concentration of votes happens to be where the grants are being increased most. That may be true, but it seems strange that there should be such a coincidence.
The Secretary of State may also say that we are, after all, receiving in Wales a £7 million increase. That sounds impressive, until we notice that Essex alone is receiving an £8 million increase—£1 million more than the whole of Wales. If Wales can be lightly brushed aside in this way, we have, sadly, to admit that it is largely our own fault. The Welsh county, district and community councils have not had the wisdom to form a strong all-embracing association of Welsh local authorities, with its own offices and staff and its own research workers. Such an office could have prepared a strong case for Wales.
I am glad to see that we are likely to have an elected Assembly. I hope that not only will this give Wales a stronger voice than we currently have in this House but that it will draw together the local authorities in Wales in the type of organisation which I have mentioned. I urge the Government to do our people a little more justice. We dare not ask for a restoration of the position as it was three, four or five years ago. We can ask, with some justice, that at least the impaired standards we have had this year be continued.
In the past few years the Staffordshire Members of Parliament on both sides of the House have been united in their concern about the way in which the rate support grant has affected Stafford- shire and its services. The right hon. Member for Stafford and Stone (Mr. Fraser) said earlier that Ministers had listened willingly and patiently to the complaints we put to them. It is, therefore, something of a change and a pleasure to be able to say to my right hon. Friend that Staffordshire appreciates the changes that have been made in the formula which have improved the position.
The present rate support grant means that Staffordshire will gain about £1 million in real terms. It could have been more and we should have liked more, but we are hoping that we can keep the rate increase to about 10 per cent. There have been increases of 22 per cent. and 15 per cent. in previous years, so 10 per cent. is acceptable. However, it is still an unhappy commentary on general inflation.
Much depends on a 5 per cent. settlement in the local authority sector. That is a dream that may not come true. If there is a settlement that goes 5 per cent. beyond the 5 per cent. policy, there will be a cost of £6 million to Staffordshire. That would mean imposing a 5 per cent. to 6 per cent. extra burden on the rates. We are viewing the Government's fight against inflation most keenly.
There is a special problem in Staffordshire that I ask my right hon. Friend to consider. There is a high proportion of schoolchildren. Numbers of children vary from authority to authority, but in 1977–78 in East Sussex there were 143 pupils per 1,000 of the population whereas in Cleveland there were 224 and in Staffordshire 201. Staffordshire had the fifth largest school population in Britain. In Essex the cost of maintaining 10,000 pupils at school would fall on 72,000 ratepayers whereas in Cleveland it would fall on 46,000 and in Staffordshire on 52,000. Staffordshire is not the county that is worst off, but it has a burden that many other counties do not have to bear.
It may be that my right hon. Friend cannot do anything to alleviate the burden in the present settlement. Clearly not all the anomalies can be ironed out overnight. However, I urge my right hon. Friend in the coming year to initiate some research into the problem that I have outlined with a view to including in next year's assessment of the rate support grant a formula that will help authorities that suffer from a large child population. It is not a problem that is confined to Staffordshire. It is to be found in many other counties in England and Wales.
My right hon. Friend said that he would take account of other legislation and other factors that may arise during the coming year in considering rate support grant increase orders. I ask my right hon. Friend not to encourage highly expensive legislation, thereby adding to the burdens of local authorities. They are already over-stretched and looking for economies in the services that they offer. No one objects to 100 per cent. grants for new legislation, but anything that imposes a greater burden on the authorities must be borne by the rates or supported by greater economies in the present services.
There is no unanimous approval for the diversion of some of the needs element to the district councils but as a district council representative I support it. I am sure that my right hon. Friend is not happy with the present method of calculation, which I understand is based on authorities' expenditure over the past few years. There is a fear that it will become an annual loan and that the big spenders will be those that get the largest handouts. I hope that my right hon. Friend will consider as a fairer system one that is based on population.
I ask my right hon. Friend to bear in mind—I am sure that he does constantly—that cities have problems when they are within a shire county. Their problems equal those of cities and towns in the larger conurbations. I ask him to continue to seek to find a formula that will take that into account so that the statistics of the towns and cities with urban decay are not lost within the general statistics for the county as a whole. I would support putting more money into these inner city areas but, as I have said before, this would be outside the general rate grant formula.
Two things are already clear in the debate, Mr. Deputy Speaker. First, it is absolutely outrageous that we should have only four hours in which to deal with a subject of such vital importance to every ratepayer in the country. Secondly, it is clear that there are very few friends indeed—we have not heard from any of them yet—of this rate support grant order. It is a very unsatisfactory order indeed.
Before making a few brief general remarks on it, I should like to raise one specific point which affects my constituency very importantly, although it affects most constituencies. The Under-Secretary of State will recall that in the debate earlier this year on the Rating (Disabled Persons) Bill I was given what I think was intended to be a very clear assurance when he said that the measure
will be operated so that the healthy constituents about whom the hon. Member for Hove is concerned will not as a consequence find an extra charge on their rates as a result of the relief given to those of his constituents who are disabled ".—[Official Report, 12th May 1978; Vol. 949, c. 1637.]
The relief required under the Rating (Disabled Persons) Act 1978, in the county of East Sussex, will certainly be over £300,000, and we do not yet know the full extent of the cost. It is not clear at all yet in the rate support grant order how the Government intend to fulfil the undertaking they gave in that debate, and later to me in correspondence. I should like an assurance that my local authority —and, indeed, all local authorities which are required to give relief under the Act —will be fully compensated for so doing and will not find an extra burden imposed upon them.
Having dealt with that minor point, Mr. Deputy Speaker, I should now like to turn to the more general aspects of the rate support grant. What is really offensive about it, and what moves hon. Members in all parts of the House to criticise it, is not only the method by which it is being distributed but the manner in which it is being presented—or, rather, I should say misrepresented—by Ministers. It is presented by them as being an assessment that is really genuinely based on need, and yet that proposition is entirely phoney. It is much more largely based upon the pattern of extravagant expenditure by some local authorities, a pattern which is boosted and encouraged, rather than a genuine assessment of needs. It is time that Ministers stopped pretending that something called a multiple or a regression analysis genuinely assessed the needs of local authorities. The whole thing is really misrepresented, starting with the domestic element.
We are assured that domestic rate relief will be maintained at the previous level. It is not being maintained at its previous level, for as the level of rates goes up and the domestic rate relief remains the same in terms of pence, its effect is gradually diminished. In addition, we have the special Welsh element. I should like the Minister to explain this in regard to a relief which was introduced, in the words of the late Anthony Crosland, when he was talking of the rate support grant, in the following way:
The basic reason for the wide margin "—
that is in domestic rate relief—
is that the cost both of local government reorganisation and of water reorganisation was much greater in Wales than it was in England."—[Official Report, 12th December 1974; Vol. 883, c. 789.]
Are we to believe that the Welsh are still suffering to that extent, in spite of water equalisation? What new explanation is there for this special subsidy, worth some £45 million, other than the intention of providing a little bonus for a number of marginal Labour seats?
What about the resources element? Even the population on which it is assessed is doubtful, but we should be quite clear about the resources element as a matter which is largely expenditure-based. I quote from the Government's own White Paper on the rate support grant order of 1978, at paragraph 49:
Resources element is calculated as the product of the authority's rate poundage and its local deficiency in rateable value.
One does not have to be a brilliant mathematician or computer analyst to see that if the rate poundage is multiplied by the deficiency, the higher the rate poundage, the higher the resources element that will be received. That is one of the principal reasons why the extravagant and wasteful local authorities under Socialist control, pouring the ratepayers' money down the drain on things such as direct labour organisations, get more and more encouragement for continuing to do so.
Of course, the resources element is a bit more straightforward in its distortion than is the needs element. We have perhaps had enough criticism already of the multiple regression analysis. In a way, I could read out the speech that I made last time and still wait for the Minister's reply to the charge of multicollinearity. I do not think that he has yet understood it. He certainly has not answered it.
We have the factors, and the change in those factors, to which my hon. Friend the Member for Henley (Mr. Heseltine) so clearly referred. I find it most extraordinary that the factor of lone-parent families, which was not included at all in 1974–75, now takes up no less than 32·3 per cent. of the needs element. Yet factors relating to the elderly are almost entirely absent. Are we meant to assume that there are only needs because of lone-parent families? As Ministers well know, the statistics actually relating to the number of lone-parent families are, to say the least, highly suspect. The Finer report, which is the authoritative document on that subject, was very clear on that matter.
The idea that the multiple regression analysis is related to needs is shown to be a nonsense when one considers that East Sussex has suffered a loss of 13·5 per cent. in its share of the rate support grant from 1974–75 to the current year, and 6·3 per cent. alone last year. Yet that county has by the most normal standards a very high need under the social services element. For example, 14·2 per cent of the population is over 65 and 10·4 per cent. over 75—well in excess of, nearly double, the national average.
East Sussex has more elderly in care than any other county in England, based on the proportion per 1,000 of the population. It has more blind and partially sighted than any other county in England. It is that county, and districts such as Hove—with more than one-third of its population retired—which are being deprived of help. Yet the Secretary of State has the gall to tell us that this multiple regression analysis is a genuine assessment of need.
The truth is much clearer. Appendix F, paragraph 2, of the 1977 White Paper stated:
The technique "—
that is, multiple regression analysis—
identifies a quantitative relationship between the per head expenditure of local authorities and the incidence of various need and cost factors ".
That is what it is doing. It is putting through this complicated system—a formula designed to bring out the right answer in relation to expenditure patterns, not in relation to need patterns. This is why continually the more economical and efficient Conservative authorities are penalised, while the extravagant and inefficient Socialist authorities are encouraged.
The rate support grant settlement has been presented as one which is genuinely based on need, which it certainly is not, and still more as one that is likely to keep down the increase in rates to single figures. Yet I know that the increase in the Hove district will be nearer 20 per cent., and one-third of my constituents are retired and living on their pensions. These pensions will not go up by 20 per cent., and, according to the Government's policies, no one's earnings will go up by 20 per cent. This is a bad rate support grant settlement and I call upon all hon. Members to vote against it
Even more astonishing than the words of greed, irresponsibility and selfishness which we have heard from the Conservative Benches has been the display of mathematical incompetence by the hon. Member for Henley (Mr. Heseltine). Far from his calculations being accurate, the position is that if the average householder with a typical income faces a rate increase which is twice the level which my right hon. Friend expects, his gross income will need to increase by less than three-quarters of 1 per cent., and not the 14 per cent. or so which the hon. Gentleman suggested was necessary.
This is surprising, because the hon. Gentleman is one of those Conservative Members who is sometimes thought to be numerate. It suggests that the private schools of Britain need to concern themselves with improving basic skills.
At least the hon. Gentleman did not criticise the principle of equalisation and central support. We must congratulate the Conservatives on that advance. They now accept that if a local authority faces particularly severe problems and has inadequate resources, it should receive greater support. However, I suggest that if the rate support is granted on that pre- mise, we should be confident that the support is used for the purposes for which it is designed. If the payment of equalisation is used to stabilise inadequacy, questions in the House are justified and ought to be asked at a more reasonable hour than this silly time.
I do not want to harp on our local position, which is a little better this year, but only because it was so unsatisfactory last year. I am concerned because, while I am grateful for the improvement, I do not want to find that we are complaining again next year. I hope that my right hon. Friend the Secretary of State will ensure that the improvement of the safety net in the shire counties is reflected in the metropolitan arrangements so that if there is a variation on existing arrangements of 2½ per cent. above or below the previous year's determination, there can be a built-in inhibition to that change. It is highly desirable that we should promote consistency in local government finance.
It is perhaps because of the inadequacy of last year that we have had some disturbance and disappointment in my area in recent months. There has been considerable criticism of my local authority for not improving the pupil-teacher ratio and many inaccurate comments have been made. The Rotherham authority is 12th of the 36 metropolitan areas in the amount it invests in education. We need to improve our pupil-teacher ratio and I hope that the better rate support that we are to receive next year will allow the local authority to make an advance and trust that meaningful negotiations will start soon.
The Government must accept that they need to explain far more clearly that, while they provide the bulk of the money spent by local authorities, it is the local authority and not the Government which determines most of the patterns of expenditure in its area. Last year, the Government expressed the hope that 1½per cent. more teachers would be employed. It was said that the rate support grant would be increased to provide for that improvement.
An improvement was secured, but it was less than the extent desired and some people claimed to believe that each local authority received funds earmarked for that purpose. As the Secretary of State can confirm, that was not so. Extra provision could be added only to the national total and, one hopes, averaged out.
I do not suggest that the Government should accept the alternative and return to the system of specific grants, because there are powerful arguments against that, but if the Government are to refrain from taking that power, they should at least explain more clearly that, while they can hope, whilst they can support opportunity and whilst they may seek to persuade, they cannot instruct that Exchequer moneys should be used for the purposes for which they may have been hopefully provided.
I recognise that there are special needs and difficulties in various Harts of Northern Ireland, Wales and Scotland, but educationally, socially, environmentally and economically some of the older industrial areas of England may face needs that are just as acute. It therefore seems right for me to ask the Secretary of State whether he is satisfied that rate support is equitable in that context.
This year, rate support for Wales—and the hon. Member for Carmarthen (Mr. Evans) will not be comforted by the figures—is £184 per head. In Scotland, it is £199 per head. In the area of the Greater London Council, the figure is £161 and in the rest of England, excluding London, the support is £137 per head. I accept that there are severe difficulties in Wales and Scotland, but sooner or later the needs of the older industrial areas of England will have to receive a higher priority. I hope that long-term thinking is being given to that matter.
I wonder, at the same time, whether my right hon. Friend is satisfied that local government is always effective in its financial efficiency. I have seen a suggestion that it costs immensely more to administer each council home in the area of the Greater London Council than it does in my area. I know that my right hon. Friend is to write to me about this matter, so I shall not pursue it very far.
But I hope that taxpayers' money is not being spent in supporting any local authority which is wasting resources in pursuit of the imitation of the least competent of the estate agents within its area. Certainly it would ill become the Government to be rather too cautious about transport supplementary support for South Yorkshire if they are to ignore the profligate attitude of some of the local authorities which incur vast and bureaucratic expense in the way that the GLC is doing for the administration of its council properties.
As I said, I welcome the modest recovery in the support for Rotherham. I hope that we shall never again experience the adverse and severe fluctuations which we encountered last year. I hope that we can see modest advance, not least because some of the people employed by local councils receive appallingly poor wages. I would hope that there can be marked advance during the next few months to lift the level of some of their earnings.
At the same time, I hope that we shall see a greater concern for the explanation of reality as well as for the continued endeavour to secure more equitable distribution of public support for local spending, which is essential. I certainly hope that the views of some hon. Members to whom we have already listened this evening will never be applied; otherwise the cause of justice in this country will be forgotten.
Order. Seventeen hon. Members are trying to catch my eye. The winding-up speeches will be starting at five minutes to two o'clock. I appeal for brevity.
I shall do my very best to be brief, Mr. Deputy Speaker, because I recognise that many of my colleagues, like me, have most anxious constituency problems in regard to these orders.
The orders have evoked bitter opposition on the Opposition Benches and scant support on the Labour Benches. Many of the Labour Members who have spoken in the debate have recognised the anomalies and inequities in these orders which are common to both Scotland and England. It is not the case that those anomalies and inequities are all between the country and the town. I represent Solihull, a metropolitan district. Solihull has been bitterly penalised by successive rate support grant orders for the last four years. This year, redistribution of the needs element alone will add £2 to the rate bill of every ratepayer in Solihull.
The hon. Member for Rother Valley (Mr. Hardy) asked whether money was being paid to extravagant authorities. I paraphrase his words, but that was the gist of his question. I can answer that question. The answer is clearly in the affirmative. Whilst Solihull ratepayers are to lose £2 a year each, the ratepayers of Greenwich are to get £27 a year, those of Hackney are to get £17 a year, and those of Camden are to get £15 a year. It is not in Solihull that £80,000 a house is being spent on council houses: it is in Camden.
The matter does not end there. In Solihull over the last four years there has been a reduction from 66½ per cent. to 61 per cent. in the Government content of local government finance. That means that out of every £100, the ratepayers are now having to find £39 for local government finance, as compared with £33·50 when the present Government came into power.
The reason for this is perfectly plain. The reason why Solihull is being treated in this way is also perfectly plain. The reason is that Solihull is an economically run authority. The level of spending on services judged by expenditure per head has consistently ranked amongst the lowest of all metropolitan authorities, and still it is done extremely well. Yet we find that in inner city areas, where all sorts of extravagances are practised, money is poured into the coffers by this selective judgment of how the grants shall be administered.
I am not saying and I am not to be taken as saying that there are not many desperate needs in inner city areas. At the same time, it is not and ought not to be the duty of the Government to encourage extravagance in local government spending. I referred just now to an example in Camden of such spending. It is monstrously unfair that well-run local authorities, urban areas themselves with great needs, should be penalised in the way that my constituency is penalised in Solihull.
My constituency is only a part of the Solihull metropolitan district. The other part is represented by the hon. Member for Meriden (Mr. Tomlinson)— [HON. MEMBERS: "Where is he? "1 It is in that part of the metropolitan district that the greatest needs arise and the greatest cause for expenditure arises. We have there virtually a new town in Chelmsley Wood, and we have areas of considerable deprivation— areas which are crying out for and are receiving old people's homes, libraries and other amenities provided by the whole of Solihull. I regret that the hon. Member is not in his place to support my plea on behalf of the people of Solihull.
I promised to be brief, and I shall say very little more. The case which I have exemplified from my own constituency can be repeated all over the country. It is not right that Parliament should be passing orders into law which are producing anomalies of this kind, based on wholly arbitrary criteria laid down by the Secretary of State.
The right hon. Gentleman says "Rubbish ". These are his criteria. It is not rubbish at all, and what is happening in my constituency is a very good example of that fact.
I hope that when we come to debate this matter next year, we shall have a Conservative Government who will see that justice in this matter is done and that inequities and anomalies of this kind are not repeated.
In appendix A on page 14, the relevant expenditure for the urban programme is given as £69.4 million. In appendix B, on the other side of the page, the grant calculated is £89 million. It appears, therefore, that the Government are authorising £20 million worth of grant for which there is no corresponding expenditure figure, and I am curious to know how this works out.
However, my main concern is with the needs element of the rate support grant and its impact on Sheffield. The Secretary of State should not he under any illusion that dissatisfaction with the needs element of the RSG is confined to the shire counties. There is real bitterness and resentment in Sheffield at the outturn this year as well as last year, and I think that there is some justification.
For the purpose of my argument, I shall refer to some figures given to me by the Secretary of State in a parliamentary answer last week rather than figures supplied to me by the city treasurer, because there is some variation and I do not understand why. According to my right hon. Friend, the per capita grant under the needs element to Sheffield in 1977–78 was £95·32. This has fallen in 1979–80 to £89·85. That is a decline of 5·5 per cent. For Manchester, the corresponding figures are £153·17 in 1977–78 and £162·84 in 1979–80. Not only is there an enormous difference in the figures. Whereas Sheffield's has gone down 5·5 per cent., Manchester's for some reason has gone up. For Newcastle, again we see a rise in the corresponding period, £103·30 in 1977–78 and £104·46 in 1979–80. The same is true of Liverpool where the increase is from £146·37 to £147·88. These are not such big jumps as in the case of Manchester, but in each case there is an upward trend as compared to a downward trend in Sheffield.
I have deliberately chosen these cities because they are all major industrial cities in the North of England. I have excluded London, which is in a different category altogether. I have tried honestly to compare like with like. I cannot understand why the major industrial city of Sheffield should be treated worse than comparable great cities. It cannot be argued that the needs of men, women and children in Sheffield are so radically different from the needs of their counterparts in Manchester, Liverpool, Leeds and Newcastle.
These are the major industrial provincial cities of the North of England. It is ridiculous to argue that they are so different as to justify such widely differing treatment in the needs element of the grant. I am not referring to the other technical adjustments.
Nor do I believe that on a commonsense basis the per capita needs calculation for the inhabitants of industrial cities should vary to the extent it does as between Sheffield and Manchester. The per capita ratio for Sheffield is 100, and for Manchester 181. I would readily accept that there would be some variations. The relative levels of unemployment could account for variations of need, but I do not understand how any commonsense calculation could produce a variation of 81 per cent.
That result is produced by the famous pseudo-scientific statistical technique known as regression analysis. The results it produces will depend clearly on the factors which are chosen for the basis of the analysis. It is not an objective slide rule system. There are selective and fairly arbitrary selective elements in the formula used to calculate the grant. The table on page 23 shows that some factors are included in some years but are omitted in others. There is no obvious logic as as to why certain factors are included at certain times.
The most striking omission in the calculation for this year and next is the factor of the elderly. That is most important for Sheffield as well as for other areas. I am puzzled by why that factor, which is becoming increasingly important, has now been omitted after having been included in previous years.
Let me quote here from the Sheffield treasurer on this point. He writes:
Factors of significance to the City, elderly persons, and declining population, were not selected and not tested respectively for either the 1978–79 or 1979–80 fomulae. The factors used in the current formula assess the City's spending need 13·4 per cent below its actual expenditure level in the base year 1977–78. This folows a 6·5 per cent under-assessment for the current year, which shows a worsening position.
The Sheffield needs element of the rate support grant is below the average for England and Wales, and it is 12½ per cent. below the average for metropolitan districts. The cumulative loss of income over the past two years, according to the city treasurer's calculation, is some £8 million, or the equivalent of an 8p rate.
The strangeness of this calculation rests in the fact that Sheffield has been accepted as a programme authority with special inner urban problems and it would appear, on the one hand, that while the Government are offering us a modest £1 million or £1¼ million under the urban programme, on the other hand Sheffield is being penalised in some peculiar way by the regression analysis calculation which is actually reducing the level of the needs element of the rate support grant.
If there are some special or peculiar explanations for that situation, I shall be glad to hear them, but I must tell my right hon. Friend that I do not understand, comparing like with like—taking the great industrial cities of the North of England as a group—why Sheffield is assumed to have a declining rate of need of 5½ per cent. whereas in all other cases the opposite is true, in some cases a modest increase and in the case of Manchester a quite substantial increase. I find that an anomaly which is quite unjustifiable.
I do not think that in my 20 years' connection with local government I have ever read such a strong and incisive case against a rate support grant as that made by the Association of County Councils.
If the Secretary of State wants to know why I and my hon. Friends from Buckinghamshire—I know that I speak for them all—are so angry, he need look no further than the increased figures for the needs element of grant per head of population as between Buckinghamshire and London.
In 1974 the figures were £70 per head for London and £55 per head for Buckinghamshire. By 1978 those figures had risen to £122 for London and £58 for Buckinghamshire—in short, a rise of 75 per cent. for London and 5 per cent. for Buckinghamshire—yet during that same period the population of London had decreased by 1·4 per cent. and our population had risen by 5·5 per cent.
As a result, we are faced this year with a rising rate, which must be 20 per cent. just to keep the services as they are. It will probably have to be more than that.
What is all the talk about balances? We have no balances. We used them up last year, and even last year they were too small for the sort of enterprise which we were running.
I am proud to represent in my constituency the fastest-growing part of the whole United Kingdom. The majority of this growth is coming from London yet, far from this being recognised in the rate support grant, Buckinghamshire is being penalised for taking this large number of people for settlement.
Of course, I genuinely accept that the cities have great problems. But, surely, it is inconceivable that the real spending needs of the inner areas of London should vary to that extent from the spending needs of Buckinghamshire, which is taking such a large number of people from London for settlement. Even more inconceivable is it that these changes should take place so quickly. The inescapable conclusion is that these changes have been made to reward spendthrift Labour councils in those areas where the local council is threatened. To those that spend more, more will be given. We have heard that said already this evening.
On any concept of equity the Government should abandon their present approach and for the coming year adopt a different form of calculation for the rate support grant, at least giving something back to those local authorities, such as my own, which have lost so heavily over the past five years.
However, if the Government are determined to go ahead, they must try to mitigate the effects of their approach more than they are doing at present. Some of the ways of doing that have been suggested in the brief from the Association of County Councils, and for the sake of brevity I shall not spell them out. The Secretary of State knows what has been suggested, and I support it wholeheartedly.
I shall say a brief word now about the transfer of the needs element to district councils. My district council is one of those that will benefit, but I must point out that making a sudden change like this is bound to create great difficulties, as is spelt out in the excellent brief to which I have been referring.
Unless the needs element that has been given to councils is taken off the rate, and therefore compensates for the extra rate that will have to be put on by the counties, the whole point will be lost. As I look up and down the country, I very much doubt that that will happen.
Secondly, the districts deal only with certain items of expenditure. The major services of education, social services and transport will remain with the county, and they will come under increased pressure.
Whatever the Government's true motives in producing this rate support grant—and I have indicated that I think they were basically political—they have contrived to make a bad system very much worse. The anomalies, discrepancies and unfairness of the rating system have become far more blatant over the past four years. As a Member of Parliament, all I can do is to make certain that my electors know where the blame lies.
I suppose that by the very nature of things those hon. Members who represent areas that are rather dissatisfied with the settlement turn up for these debates and fight hard to say a few words, whereas those who are satisfied do not come to praise the Government.
I am here to express some dissatisfaction, although I shall be supporting the order, because I am well aware that Stockport has not done very well out of it. However, if the alternative formulas that were canvassed had been accepted, Stockport would have done even worse. Such areas deserve a little more help than Stockport has had from the order.
I particularly appreciate the building into the formula last year of the safety net, which helped Stockport, and I am pleased that it remains. However, for such areas there are considerable problems, and I wonder whether a little more thought could be given to varying the order for particular areas where there are problems.
One device that is used is that from year to year the area of the Isles of Scilly is changed in the order. I assume that that is to get the right figure to come out at the end. If that can be done for the Isles of Scilly, cannot specific elements be fed into the formula to relieve some of the anomalies that crop up for particular local authorities?
I think that in real terms Stockport is about £68,000 worse off, but that is before taking into account the Government's exhortation that there should be 1.6 per cent. growth, which means that in real terms it is probably about £500,000 worse off. But Stockport should be spending much more than that, because it has one of the worst pupil-teacher ratios in its primary schools of any area in the country. If it were to achieve both the Government's growth target and the sort of growth target that many people in Stockport feel it should achieve to get up to average standards, it would be going for a much larger sum, which would present many problems.
Moreover, within Stockport there are problems of allocation. The Government would have done much better to look at areas of specific grant. If I had more time I should try to develop that argument to show that some of the older parts of Stockport, the old borough, have many problems that are almost identical with Manchester's. Yet it seems to receive much less help for those parts of the town, on the theory that the money can be averaged out over the whole of the new area. But that theory does not work.
I particularly plead with the Government to look at the case for making sure that this time the low-paid local government workers do not lose. It is unacceptable to tell them that they must take 5 per cent. I can see the arguments for saying that in private industry the Government should set a norm of 5 per cent., and if in practice it turns out at 8 per cent. or 9 per cent. everybody can probably be satisfied. The stewards, the people who negotiate, may well feel fairly satisfied if they get a bit more than the target, and in terms of inflation the Government may well be very satisfied.
However, it would be a travesty of justice if we then told the local government workers, particularly the low-paid among them, "You must settle at 5 per cent." Therefore, I plead with the Government to enable the local government workers to receive at least the average going rate that everyone else ends up with, with just a little more than that average for the low paid.
I hope that in doing so the Government do not use the cash limits to put the squeeze on the local authorities and leave them with rate problems at the end, but come up with an increase order later in the year which enables the local authorities to make a realistic payment to the low-paid.
I am glad to have the opportunity to put from the Opposition Benches a view from the North of England. Especially do I want to say that there is no part of the country where the Secretary of State's remarks on this order will be received with more of a hollow laugh than in Cumbria. No one there will believe that the background to the order is not a matter of political motivation. It is widely believed in Cumbria that the order is just blatantly unfair.
Cumbria is heavily reliant on the rate support grant. Since 1974, its needs grant has been inexorably whittled away, however. Each year another bit has been chiselled off. This year, Cumbria will lose £1½ million. From the list I have received, it seems that only five non-metropolitan counties will lose a bigger proportion of their needs grant than Cumbria.
Perhaps it is hard to attack any individual year's treatment, but overall these cuts in five years have had a devastating effect on Cumbria. In terms of the needs grant this year, the income from the rate support grant will be down by £9 million on what it would have been if the 1974 criteria had still been used. It is worth explaining to the House just what that means in material things in a county like Cumbria.
As a result of this change, we have been done out of the money which would have paid for the fire services, economic development and planning services, library services and consumer protection services, and also there would have been some cash left over from that in the end.
This has meant, apart from cuts in expenditure, increased rates to the ratepayers of Cumbria. We estimate that this coming year the rates will have to be 12p in the pound higher than they would have been on the 1974 basis. The Secretary of State for the Environment said that no county this year had to put up with more than a 2 per cent. reduction. That is what Cumbria will have to face this year. In 1978 it was 3p, in 1977 it was 3p, in 1976 it was 1½p, and in 1975 it was 2½p. Those are the increases in rates that these successive orders have meant to Cumbria.
What is especially irritating is that we are told that this cash has been diverted to the urban areas. It is extremely irritating to learn of some of the counties which are having relatively less difficulty than Cumbria on the figures we have received. We really do not understand why money should be diverted to the metropolitan areas and London.
My hon. Friend the Member for Devizes (Mr Morrison) said that his constituents did not resent money being diverted to London, but I am sure that the ratepayers of Cumbria resent it very much. In Cumbria we have a great many economically deprived areas. We have the problems of West Cumberland. The whole of Cumbria is a development area, and a large part of it is a special development area.
Looking at the position of non-metropolitan areas in the North of England, where there are special development areas, it seems that Cumbria has been much the worst treated. Almost inevitably, over the years Durham has actually benefited, and Lancashire has benefited, but Northumberland to a lesser extent and Cumbria to a much greater extent have been clobbered. We want to know why no consideration has been given to the great problems of remoteness which one has in a county like Cumbria, where there are vast areas of mountains and uplands.
I have voted against these orders for the last two years; I regard this year's order as just another chapter in the story of Government cheating and deceit over this matter.
On a point of order, Mr. Deputy Speaker. I gather that you are about to call the Front Bench speakers. You will see from your list of speakers that about 10 Conservative Members who have sat here throughout the debate have not been called, yet by the end of the debate there will have been five Front Bench speakers—three by Government spokemen, one of these being a speech lasting nearly half an hour by a Scottish Minister. Will you call the attention of Mr. Speaker to this fact? It is yet another example of the erosion of the rights of Back Bench Members.
Further to that point of order, Mr. Deputy Speaker. Is it not an absolute disgrace that this debate has been allocated so short a time although so many hon. Members wish to speak? Scotland, which has a population of only 5 million, has had five Members to speak for it. The South-West region of England, which has a population of 21 million, had not had one Member called to speak for it.
I am the servant of the House. I understand that it is the wish of the House that the debate should stop at 2.21. I can do nothing about that.
Further to that point of order, Mr. Deputy Speaker. May I point out the very regrettable fact that not one Conservative Member representing the North-West has been called, although the population of the North-West is larger than that of Scotland and we have great problems?
If we are to have any reply to the speeches which have been made, we should hear the Front Bench speeches.
Further to that point of order, Mr. Deputy Speaker. May I point out to you that Government Front Bench speakers have taken up one hour out of a four-hour debate? Many important areas of the country which are adversely affected by these orders have not had their views put forward in the debate. Will you please make known to Mr. Speaker the views of Conservative Back Bench Members so that he can, perhaps, make representations in turn to the Lord President of the Council?
I am not sure that Mr. Speaker has any arrangements with the Lord President as to indicating what his wishes would be. Perhaps it would be best to contine with the debate; otherwise we shall not have any further speeches, either from the Front Benches or the Back Benches.
Further to that point of order, Mr. Deputy Speaker. Would you not think, on reflection, that it is a legitimate grievance of Back Benchers that in the event every Scotsman who sought to participate in the debate was able to do so, whereas there are countless numbers of English Members who wished to take part in the debate but who have been disappointed? In particular, London, which has 10 million inhabitants, has had its case put by only one Member.
I am governed by the decision of the House, which is that the debate will stop at 2.21.
Further to that point of order, Mr. Deputy Speaker. The House is going to adjourn and we are now at 2 o'clock. Is there no means whereby the House—100 Members are present—can agree to extend the debate by an hour? It would not inconvenience anybody. There are hon. Members on both sides who wish to make modest contributions. It would not injure the House if we extended the debate.
I am bound by the decision of the House, which is that the debate must end at 2.21.
I assure my hon. Friend the Member for Macclesfield (Mr. Winterton) and others of my hon. Friends that this particular Front Bench speaker will speak for a very few minutes indeed. Everyone will agree that, despite our views on the order, it has been highly unsatisfactory to have major orders for Scotland, England and Wales dealt with in a truncated debate in which many hon. Members who have sat here throughout the debate and whose constituents are seriously affected have not been called to speak.
The Secretary of State, in introducing the orders, used phrases such as" carefully judged ", "the best possible objective assessment ", and" a fairer pattern ". I think that he will accept, after the speeches which have been made from both sides, that this is very much a minority view. From his side, Members such as the hon. Members for Sheffield, Heeley (Mr. Hooley), Rother Valley (Mr. Hardy) and Berwick and East Lothian (Mr. Home Robertson) have made it clear that they do not accept that the orders are fair or reasonable.
Any order coming before the House which gives more money to one area and less to another would arouse controversy but also acceptance from those which gained. A strong belief has been expressed from both sides of the House that these orders establish part of a pattern of major redistribution over four years which has little relationship either to justice or to real need.
The first objection is that many of the areas which are losing under the orders this year have also suffered considerably over the last four years. My hon. Friends the Members for Westmorland (Mr. Jopling), Buckinghamshire (Mr. Benyon) and Devizes (Mr. Morrison) and my right hon. Friend the Member for Stafford and Stone (Mr. Frazer) made clear that their authorities have suffered a great deal over the past three or four years and will again suffer considerably this year. They are all areas requiring help.
In 1974–75, the last year in which the Tories had influence, the English counties received 34 per cent. of the total grant. That figure is now down to 26 per cent., a substantial reduction. This year, it goes down again.
The second objection is that the formula has no objective assessment of need built into it. We have seen a shifting round of various factors. It seems that a judgment, perhaps political or economic, has been made by the Minister and factors inserted or omitted to achieve a desired result. The fact that unemployment has been excluded at a time when unemployment has reached an all-time high shows there is little justice or logic in the assessment.
The third objection is that authorities which have exercised prudence and restraint have been penalised. Many of those losing substantially today, which have also lost in recent years, are not the spendthrift authorities but authorities which exercised a great deal of prudence and restraint. As my hon. Friend, the Member for Westmorland, has said, complaints have been made that there appears to be some element of political motivation in the decisions. It is certainly a strange coincidence that those authorities which have consistently tended to lose under these orders have been Conservative-controlled. In these circumstances, there are many objections to the fairness and logic of these orders.
One question which the Minister must deal with is that raised by a number of hon. Members and relating to possible increases in expenditure. It is strange that among the assumptions built into the cash limits is the assumption that all wage setlements between November 1978 and March 1980 will be 5 per cent. and will last for a 12-month period. The cash limit is stated in both Scotland and England to be subject to review if the pace of inflation generally proves to be substantially higher than anticipated. We are aware that negotiations are taking place on local authority manual workers' wage rates. Could the Minister be more specific about his proposals if, as is likely, we have substantial settlements?
In Scotland there have been similar complaints to those voiced about the English order. The difference is that here the redistribution is more sharp and obvious. The Secretary of State seemed to indicate that everyone was gaining. As he well knows, every single mainland regional area in Scotland except Strathclyde will suffer a loss in rate support grant next year which it would not have suffered had here not been a change in the formula. We accept that Glasgow has massive and unique problems which call for special attention but, as with the English inner cities, the answer is not to try to solve these problems by milking areas which have real problems, demands and needs.
The Secretary of State said that there were minor changes but, as my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) made clear, they are not minor. The Grampian region, one of the most efficient in Scotland, will lose £2,750,000; the Fife region, £1·4 million; the Central region, £1,250,000, and the Borders region, to which the hon. Gentleman, the Member for Berwick and East Lothian referred, £400,000, equivalent to 2p on the rates. It is strange that Berwickshire is losing the most under this order. That is not much of a prize for the hon. Member for Berwick and East Lothian and the area which elected him.
The Scottish areas which are losing most are the Borders, Grampian and Dumfries. Why are they being singled out? Are they the most inefficient authorities? Far from it. Is there less need for spending? No—Grampian is one of the growth areas. Are there wealthier ratepayers? Certainly not in the Borders—
We accept that it does have special needs, which a Conservative Government will face up to, but the way to solve Glasgow's problems is not to cause damage and reduce the money available to these authorities.
We object to the orders because the changes proposed are not based on logic or fairness, in our objective assessment. Therefore, I hope that those on these Benches who are suffering from the orders and who have protested loud and long will back their words with their votes and reject the orders.
I was surprised when the hon. Member for Henley (Mr. Heseltine) suggested that we should not have budgeted for the increase in local government expenditure of 1·6 per cent. which these orders include. Nor were the ranks massed behind him enthusiastic. Many of his hon. Friends have shown that they appreciate that growth even if he did not. The Association of Metropolitan Authorities, now Tory-controlled, submitted to my right hon. Friend a document called "Priorities for Progress ", in which it demanded that the Government make substantial additions to local authority spending. The hon. Gentleman seems out of tune with those Tory authorities.
Many hon. Members have said that the rate support grant system is complicated and therefore somewhat incomprehensible. I agree that it is complicated, but that it is hardly surprising since in one operation Governments are trying to compensate for the difference in the expenditure needs and the rateable resources of over 450 different authorities, with widely different characteristics.
I have sat here throughout the debate and I shall only take one second.
Order. Unless the Minister gives way, the hon. Lady must resume her seat.
No. I certainly do not propose to give way, having come to an agreement with the Opposition as to the length of my speech and then having to reduce it even further.
I want to say something about the much maligned regression analysis. I want to repeat it because hon. Members have questioned the honesty of my right hon. Friend. If they throw those stones, they should have the decency to sit and listen to the answers.
It was suggested, first of all, that regression analysis rewards the profligate authorities. This betrays a most disappointing cynicism about local government. As a whole, local authorities are responsible bodies, spending what they need to spend. The system should reward high-spending authorities, if their high spending is needed. [Interruption.] I say to those on the Opposition Benches—
Order. Various questions have been put to the Minister. It is only proper that he should now be allowed to answer them.
The suggestion was made that an individual local authority, by spending a great deal, could increase its level of grant. No authority can, by its own spending behaviour, influence its entitlement to grant. It is only if there is overspending by a large number of authorities, with simlar economic and social characteristics, that the regression analysis could be significantly affected. There is not one jot of evidence for the existence of such a group.
The hon. Member for Henley displayed what I thought was a disappointing lack of knowledge of the intricacies of regression analysis. If he wants to criticise it, he ought, at least, to try to understand it. He misled the House because he failed to grasp the difference between the testing and selection of factors in the regression analysis.
Each year's factors for testing are discussed and agreed with the local authority associations before the regression analysis is carried out. The only reasons for rejecting factors which have been previously tested are either that the local authority associations agreed that such factors were out of date or that there are better measures which can be used. Having agreed the factors to test, it is the regression analysis, not any arbitrary political judgment, which determines the selection of factors in the formula.
Whether factors are included in the final outcome each year depends upon how well they explain, in statistical terms, the pattern of expenditure. Arbitrary judgments by my right hon. Friend do not and cannot enter the picture.
I have something to say in reply to the hon. Member for Carmarthen (Mr. Evans). He criticised the rate support grant settlement for next year because of its effect on individual Welsh counties. I understand his point. No one who looks at it objectively can say anything other than that this is a fair and favourable settlement for Wales as a whole. Overall, Welsh authorities will be better off, with an increased needs element of £7 million and with over £23 million in monetary terms. This is a larger proportionate increase than for England and Wales as a whole. I can appreciate that those Welsh counties receiving less than the general proportionate increase in needs element, Powys, Dyfed and Gwynedd, will feel disappointed. We must recognise that the needs of some authorities are inevitably assessed as being, relatively speaking, lower than others compared with a year ago. Even so, I remind the hon. Gentleman that needs element payment per head for those three counties will still be above the average for England and Wales, and for Wales as a whole—in the case of Powys substantially so. The figures are £96—
Order. I have requested the hon. Member for Lancaster (Mrs. Kellett-Bowman) to remain seated as the Minister is not giving way.
In reply to the hon. Member for Carmarthen, the needs element figures are as follows: £96 per head average for England and Wales, £100 for Dyfed, £101 for Gwynedd and £166 for Powys. The hon. Gentleman has suggested that Wales has been dealt with unfairly. I remind him that there are all-Welsh authorities such as the Council for the Principality and the Welsh Counties' Committee.
Many hon. Members have said that shire counties are getting clobbered again. Complaints about losses in successive years seem to start from some mystic assumption that the authorities' needs element entitlements in 1973–74were at the right level. There is no evidence to suggest that. A substantial number of shire counties containing communities with pressing social and economic problems have fared well since the present rate support arrangements were introduced in 1974–75. It is no good the hon. Member for Isle of Ely (Mr. Freud) shaking his head. I shall name them. They are Cleveland, Cornwall, Durham, Humberside, Lancashire. There are many more.
Order. For the third time I must request the hon. Member for Lancaster to remain seated.
On a point of order, Mr. Deputy Speaker. Is it in order for the Minister to make reference to my shaking my head when you, Mr. Deputy Speaker, will not allow me to stand up and do anything else?
Order. What the Minister says or does not say is not a matter for the Chair.
On a point of order, Mr. Deputy Speaker. Is it correct for the Minister to refer to another Member's county and perhaps make an inaccurate statement and not permit the hon. Member representing that county—
Order. The contents of the Minister's speech are not a matter for the Chair.
I was about to remind hon. Members that in the present rate support grant settlement that we are discussing, or trying to, the needs element going to the shire counties has increased by £37 million in real terms. The Association of Metropolitan Authorities issued a press release today—I remind hon. Members who represent the shire counties that the AMA is a Tory-controlled organisation—stating:
The fact is that the problems of urban areas are growing at a faster rate than those elsewhere, Grant settlements should recognise this by increasing resources available to urban authorities.
When hon. Members say that some special punishment has been meted out to the shire counties to provide rewards for urban areas, they should discuss the matter with their own representatives who serve on the AMA.
I was asked about the domestic element as it applies in Wales and England. It was suggested that the need for the difference in the domestic element is no longer justified bearing in mind that the level of water charges in Wales has been
|Division N0. 29||AYES||[2.22 a.m.|
|Anderson, Donald||Cunningham, G. (Islington S)||John, Brynmor|
|Archer, Rt Hon Peter||Davidson, Arthur||Jones, Alec (Rhondda)|
|Armstrong, Ernest||Davies, Bryan (Enfield N)||Jones, Barry (East Flint)|
|Bagier, Gordon A. T.||Davis, Clinton (Hackney C)||Kaufman, Rt Hon Gerald|
|Barnett, Guy (Greenwich)||Deakins, Eric||Lamborn, Harry|
|Bales, Alf||Dean, Joseph (Leeds West)||Lamond, James|
|Bean, R. E.||Dewar, Donald||Lestor, Miss Joan (Eton & Slough)|
|Benn, Rt Hon Anthony Wedgwood||Dormand, J. D.||Litterick, Tom|
|Bennett, Andrew (Stockport N)||Douglas-Mann, Bruce||Luard, Evan|
|Bidwell, Sydney||Duffy, A. E. P.||Lyons, Edward (Bradford W)|
|Blenkinsop, Arthur||Eadie, Alex||McElhone, Frank|
|Booth, Rt Hon Albert||Evans, loan (Aberdare)||MacFarquhar, Roderick|
|Boothroyd, Miss Betty||Evans, John (Newton)||McGuIre, Michael (Ince)|
|Brown, Hugh D. (Provan)||Ewing, Harry (Stirling)||McKay, Alan (Penistone)|
|Brown, Ronald (Hackney S)||Flannery, Martin||MacKenzie, Rt Hon Gregor|
|Buchan, Norman||Forrester, John||Maclennan, Robert|
|Buchanan, Richard||Fraser, John (Lambeth, N'w'd)||McNamara, Kevin|
|Callaghan, Jim (Middleton & P)||Freeson, Rt Hon Reginald||Madden, Max|
|Campbell, Ian||Garrett, John (Norwich S)||Mallalieu, J. P. W.|
|Carmichael, Nell||George, Bruce||Marks, Kenneth|
|Cartwright, John||Golding, John||Marshall, Jim (Leicester S)|
|Cocks, Rt Hon Michael (Bristol S)||Grant, John (Islington C)||Maynard, Miss Joan|
|Cohen, Stanley||Hardy, Peter||Millan, Rt Hon Bruce|
|Coleman, Donald||Harrison, Rt Hon Walter||Moonman, Eric|
|Colquhoun, Ms Maureen||Home Robertson, John||Morris, Rt Hon Charles R.|
|Cook, Robin F. (Edin C)||Hooley, Frank||Morris, Rt Hon J. (Aberavon)|
|Cox, Thomas (Tooting)||Howell, Rt Hon Denis (B'ham, Sm H)||Morton, George|
|Craigen, Jim (Maryhill)||Huckfield, Les||Moyle, Rt Hon Roland|
|Crowther, Stan (Rotherham)||Hughes, Robert (Aberdeen N)||Murray, Rt Hon Ronald King|
|Cryer, Bob||Irving, Rt Hon S. (Dartford)||Newens, Stanley|
Those hon. Members who followed the passage of the Water Charges Equalisation Bill through this House will have heard it spelled out on numerous occasions that the level of water charges does not now have a bearing on the level of the domestic element. The reason we have decided to maintain the present levels of domestic element in England and Wales for next year is that this is broadly consistent with one of the main objectives of this settlement, namely, to enable a degree of stability in local authority finances throughout England and Wales. To have equated the domestic relief in England and Wales would have been inconsistent with this objective. It would have put Welsh authorities under severe pressures and Welsh domestic ratepayers would have been faced with unacceptably high rate increases.
|Noble, Mike||Shore, Rt Hon Peter||Tomlinson, John|
|Orme, Rt Hon Stanley||Short, Mrs Renée (Wolv NE)||Wainwright, Edwin (Dearne V)|
|Palmer, Arthur||Silkin, Rt Hon John (Deptford)||Walker, Harold (Doncaster)|
|Park, George||Silkin, Rt Hon S. C. (Dulwich)||Ward, Michael|
|Parry, Robert:||Silverman, Julius||Williams, Alan Lee (Hornch'ch)|
|Pavitt, Laurie||Skinner, Dennis||Williams, Rt Hon Shirley (Hertford)|
|Richardson, Miss Jo||Smith, Rt Hon John (N Lanarkshire)||Wilson, William (Coventry SE)|
|Robertson, George (Hamilton)||Snape, Peter||Wise, Mrs Audrey|
|Rodgers, Rt Hon William (Stockton)||Stallard, A. W.||Wrigglesworth, Ian|
|Roper, John||Summerskill, Hon Dr Shirley|
|Rowlands, Ted||Taylor, Mrs Ann (Bolton w)||TELLERS FOR THE AYES:|
|Sedgemore, Brian||Tilley, John||Mr. James Hamilton and|
|Shaw, Arnold (llford South)||Tinn, James||Mr. Ted Graham.|
|Altken, Jonathan||Grylls, Michael||Page, Rt Hon R. Graham (Crosby)|
|Alison, Michael||Hawkins, Paul||Pattie, Geoffrey|
|Atkins, Rt Hon H. (Spelthorne)||Heseltine, Michael||Penhaligon, David|
|Awdry, Daniel||Higgins, Terence L.||Percival, Ian|
|Banks, Robert||Hodgson, Robin||Pym, Rt Hon Francis|
|Beith, A. J.||Hooson, Emlyn||Raison, Timothy|
|Benyon, W.||Hordern, Peter||Renton. Rt Hon Sir D. (Hunts)|
|Blaker, Peter||Howells, Geraint (Cardigan)||Renton, Tim (Mid-Sussex)|
|Boscawen, Hon Robert||Hurd, Douglas||Rhodes James, R.|
|Brittan, Leon||James, David||Ridley, Hon Nicholas|
|Brocklebank-Fowler, C.||Johnson Smith, G. (E Grinstead)||Ross, Stephen (Isle of Wight)|
|Brotherton, Michael||Johnston, Russell (Inverness)||Sainsbury, Tim|
|Buchanan-Smith, Alick||Jopling, Michael||Shepherd, Colin|
|Bulmer, Esmond||Kellett-Bowman, Mrs Elaine||Smith, Dudley (Warwick)|
|Butler, Adam (Bosworth)||Kimball, Marcus||Speed, Keith|
|Clarke, Kenneth (Rushcliffe)||King, Tom (Bridgwater)||Spicer, Jim (W Dorset)|
|Clegg, Walter||Kitson, Sir Timothy||Spicer, Michael (S Worcester)|
|Cooke, Robert (Bristol W)||Le Marchant, Spencer||Sproat, lain|
|Cope, John||Lloyd, Ian||Stainton, Keith|
|Dean, Paul (N Somerset)||Luce, Richard||Stanbrook, Ivor|
|Dodsworth, Geoffrey||Marshall, Michael (Arundel)||Taylor, Teddy (Cathcart)|
|Douglas-Hamilton, Lord James||Mates, Michael||Tebbit, Norman|
|Durant, Tony||Mather, Carol||Thomas, Dafydd (Merioneth)|
|Emery, Peter||Maxwell-Hyslop, Robin||Townsend, Cyril D.|
|Evans Gwynfor (Carmarthen)||Mayhew, Patrick||Wainwright, Richard (Colne V)|
|Eyre, Reginald||Meyer, Sir Anthony||Warren, Kenneth|
|Fairbairn, Nicholas||Mitchell, David (Basingstoke)||Weatherill, Bernard|
|Fowler, Norman (Sutton C'f'd)||Moate, Roger||Wells, John|
|Freud, Clement||Montgomery, Fergus||Whitelaw. Rt Hon William|
|Gardiner, George (Reigate)||Morris, Michael (Northampton S)||Whitney, Raymond|
|Gilmour, Rt Hon Sir Ian (Chesham)||Morrison, Hon Charles (Devizes)||Winters. on, Nicholas|
|Glyn, Dr Alan||Morrison, Peter (Chester)|
|Goodhart, Philip||Mudd, David||TELLERS FOR THE NOES:|
|Goodhew, Victor||Neave, Airey||Mr. Anthony Berry and|
|Goodlad, Aiastair||Nelson, Anthony||Mr. John MacGregor.|
|Grieve, Percy||Neubert, Michael|
|Division N0. 30]||AYES||[2.33 a.m.|
|Anderson, Donald||Blenkinsop, Arthur||Carmichael, Neil|
|Archer, Rt Hon Peter||Booth, Rt Hon Albert||Cartwright, John|
|Armstrong, Ernest||Boothroyd, Miss Betty||Cocks, Rt Hon Michael (Bristol S)|
|Bagier, Gordon A. T.||Brown, Hugh D. (Provan)||Cohen, Stanley|
|Barnett, Guy (Greenwich)||Brown, Ronald (Hackney S)||Coleman, Donald|
|Bates, Alf||Buchan, Norman||Colquhoun, Ms Maureen|
|Bean, R. E.||Buchanan, Richard||Cook, Robin F. (Edin C)|
|Benn, Rt Hon Anthony Wedgwood||Callaghan, Jim (Middleton & P)||Craigen, Jim (Maryhill)|
|Bennett, Andrew (Stockport N)||Campbell, Ian||Crowther, Stan (Rotherham)|
|Bidwell, Sydney||Canavan, Dennis||Cryer, Bob|
|Cunningham, G. (Islington S)||Kaufman, Rt Hon Gerald||Robertson, George (Hamilton)|
|Davidson, Arthur||Lamborn, Harry||Rodgers, Rt Hon William (Stockton)|
|Davies, Bryan (Enfield N)||Lamond, James||Rooker, J. W.|
|Davis, Clinton (Hackney C)||Lestor, Miss Joan (Eton & Slough)||Roper, John|
|Deakins, Eric||Litterick, Tom||Rowlands, Ted|
|Dewar, Donald'||Luard, Evan||Sedgemore, Brian|
|Dormand, J. D.||Lyons, Edward (Bradford W)||Shaw, Arnold (ilford South)|
|Douglas-Mann, Bruce||McElhone, Frank||Shore, Rt Hon Peter|
|Duffy, A. E. P.||MacFarquhar, Roderick||Short, Mrs Renée (Wolv NE)|
|Eadie, Alex||McGuire, Michael (Ince)||Silkin, Rt Hon John (Deptford)|
|Evans, loan (Aberdare)||McKay, Alan (Penistone)||Silkin, Rt Hon S. C. (Dulwich)|
|Evans, John (Newton)||MacKenzie, Rt Hon Gregor||Silverman, Julius|
|Ewing, Harry (Stirling)||Maclennan, Robert||Skinner, Dennis|
|Flannery, Martin||McNamara, Kevin||Smith, Rt Hon John (N Lanarkshire)|
|Forrester, John||Madden, Max||Snape, Peter|
|Fraser, John (Lambeth, N'w'd)||Mallalieu, J. P W.||Stallard, A. W.|
|Freeson, Rt Hon Reginald||Marks, Kenneth||Summerskill, Hon DrShirley|
|Garrett, John (Norwich S)||Marshall, Jim (Leicester S)||Taylor, Mrs Ann (Bolton W)|
|George, Bruce||Maynard, Miss Joan||Tilley, John|
|Golding, John||Millan, Rt Hon Bruce||Tinn, James|
|Graham, Ted||Moonman, Eric||Tomlinson, John|
|Grant, John (Islington C)||Morris, Rt Hon Charles R.||Wainwright, Edwin (Dearne V)|
|Hamilton, James (Bothwell)||Morris, Rt Hon J. (Aberavon)||Walker, Harold (Doncaster)|
|Hardy, Peter||Morton, George||Ward, Michael|
|Harrison, Rt Hon Walter||Moyle, Rt Hon Roland||Williams, Alan Lee (Hornch'ch)|
|Home Robertson, John||Murray, Rt Hon Ronald King||Williams, Rt Hon Shirley (Hertford)|
|Hooley, Frank||Newens, Stanley||Wilson, William (Coventry SE)|
|Howell, Rt Hon Denis (B'ham, Sm H)||Noble, Mike||Wise, Mrs Audrey|
|Huckfield, Les||Orme, Rt Hon Stanley||Wrigglesworth, Ian|
|Hughes, Robert (Aberdeen N)||Palmer, Arthur|
|Irving, Rt Hon S. (Dartford)||Park, George||TELLERS FOR THE AYES|
|John, Brynmor||Parry, Robert||Mr Thomas Cox and|
|Jones, Alec (Rhondda)||Pavitt, Laurie||Mr Joseph Dean|
|Jones, Barry (East Flint)||Richardson, Miss Jo|
|Alison, Michael||Henderson, Douglas||Page, Rt Hon R. Graham (Crosby)|
|Atkins, Rt Hon H. (Spelthorne)||Heseltine, Michael||Pattie, Geoffrey|
|Awdry, Daniel||Higgins, Terence L.||Penhaligon, David|
|Banks, Robert||Hodgson, Robin||Percival, Ian|
|Beith, A. J.||Hooson, Emlyn||Pym, Rt Hon Francis|
|Benyon, W.||Hordern, Peter||Raison, Timothy|
|Blaker, Peter||Howells, Geraint (Cardigan)||Renton, Rt Hon Sir D. (Hunts)|
|Boscawen, Hon Robert||Hurd, Douglas||Renton, Tim (Mid-Sussex)|
|Brittan, Leon||James, David||Rhodes James, R.|
|Brocklebank-Fowler, C.||Johnson Smith, G. (E Grinstead)||Ridley, Hon Nicholas|
|Brotherton, Michael||Johnston, Russell (Inverness)||Ross, Stephen (Isle of Wight)|
|Buchanan-Smith, Alick||Jopling, Michael||Sainsbury, Tim|
|Bulmer, Esmond||Kellett-Bowman, Mrs Elaine||Smith, Dudley (Warwick)|
|Butler, Adam (Bosworth)||Kimball, Marcus||Speed, Keith|
|Clarke, Kenneth (Rushcliffe)||King, Tom (Bridgwater)||Spicer, Jim (W Dorset)|
|Clegg, Walter||Kitson, Sir Timothy||Spicer, Michael (S Worces'er)|
|Cooke, Robert (Bristol W)||Le Marchant, Spencer||Sproat, lain|
|Cope, John||Lloyd, Ian||Stainton, Keith|
|Dean, Paul (N Somerset)||Luce, Richard||Stanbrook, Ivor|
|Dodsworth, Geoffrey||MacGregor, John||Taylor, Teddy (Cathcart)|
|Durant, Tony||Marshall, Michael (Arundel)||Tebbit, Norman|
|Emery, Peter||Mates, Michael||Thomas, Dafydd (Merioneth)|
|Evans Gwynfor (Carmarthen)||Mather, Carol||Townsend, Cyril D.|
|Eyre, Reginald||Maxwell-Hyslop, Robin||Wainwright, Richard (Colne V)|
|Fairbairn, Nicholas||Mayhew, Patrick||Warren, Kenneth|
|Fowler, Norman (Sutton C'f'd)||Meyer, Sir Anthony||Weatherill, Bernard|
|Freud, Clement||Mitchell, David (Basingstoke)||Wells, John|
|Gardiner, George (Reigate)||Moate, Roger||Welsh, Andrew|
|Gilmour, Rt Hon Sir Ian (Chesham)||Montgomery, Fergus||Whitelaw, Rt Hon William|
|Glyn, Dr Alan||Morris, Michael (Northampton S)||Whitney, Raymond|
|Goodhart, Philip||Morrison, Hon Charles (Devizes)||Winter on, Nicholas|
|Goodhew, Victor||Morrison, Peter (Chester)|
|Goodlad, Alastair||Mudd, David||TELLERS FOR THE NOES:|
|Grieve, Percy||Neave, Airey||Mr. Anthony Berry and|
|Grylls, Michael||Nelson, Anthony||Lord James Douglas-Hamilton.|
|Hawkins, Paul||Neubert, Michael|
|Question accordingly agreed to.|
|SOCIAL SECURITY (MARINERS)|
|That the draft Social Security (Contributions) (Mariners) Amendment Regulations 1978, which were laid before this House on 1st December, be approved.—[Mr. Deakins.]|