Rates (Limitation and Procedure for Increases)

– in the House of Commons at 4:01 pm on 25th February 1981.

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Photo of Mr William Shelton Mr William Shelton , Lambeth Streatham 4:01 pm, 25th February 1981

I beg to move, That leave be given to bring in a Bill to limit to the level of inflation rate increases made by local authorities, the Greater London Council and the Inner London Education Authority; to enable such authorities to raise additional monies from their ratepayers within one financial year only through one or more supplementary rates, each of which must be required to be paid before another one may be levied; to require no supplementary rate demand to exceed 25 per cent. of the initial rate increase; and to establish that both the Greater London Council and the Inner London Authority shall precept directly and independently on the ratepayers in their areas. I am sure that the House will agree that one of the foundations of local democracy is that local authorities should have the power to raise moneys from their citizens and to spend it as they wish. Although the central Government provide the majority of the money that they spend, the power of local authorities is more than symbolic. If all the moneys came from the central Government, or if the central Government imposed a strict ceiling on local government expenditure, inevitably the central Government would gradually assume the responsibilities of local government and would become enmeshed in running local councils throughout the country, which I am sure the House would view with some alarm.

In the past this system has worked fairly well. Nevertheless, I believe that the general view in the House—and I welcome the statement made recently by the right hon. Member for Manchester, Ardwick (Mr. Kaufman)—is that sooner or later the rates system must be changed. It is an unjust tax. However, that is not the burden of my remarks today.

There is a more immediate problem—the sea change that has taken place in the customary collaboration between the Government and local authorities. In some local authorities a new breed of men has grown up. Martians from outer space have come into some of our local authorities. A new breed of hard-faced men from the Left, with bizarre spending programmes, has come into being and its main accomplishment is waste and mismanagement.

In the borough of Lambeth, in which my constituency lies, the ratepayer has become a hunted species. The object of the Bill is to preserve and save at least the ratepayers in Lambeth and in other councils throughout the country.

In the year 1978–79, the borough of Lambeth spent about £50 million. Two years later, in 1980–81, which finishes in a month or two months, the borough has spent £96 million plus. In less than three years it has increased its expenditure by £45 million from a base of just over £50 million.

Opposition Members may cry that that is the result of Government cuts. I should tell those few hon. Gentleman opposite that the effect of Government cuts was less than £45 million over two and three-quarter years. I should add that there has been no obvious increase or improvement in vital services in the borough.

This sad story of waste and mismanagement has caused grave hardship both commercially and domestically. At a meeting in the town hall on 17 February the director of finance for Lambeth reported to the policy and resources committee the possibility of a first-time-ever rates strike. That must be of grave concern to the House, as it is novel in local government.

I do not suggest that leave should be given to legislate for only one borough. We have before us the examples of Camden and of the Inner London Education Authority. Should the May elections go the wrong way for the Greater London Council—I do not believe that they will—the Labour group on the GLC has already promised to double the GLC rate. Other councils are also following this sad path trodden by both Lambeth and Camden.

However, the situation changed dramatically in January this year. It was electrified by the introduction of a supplementary rate by the borough of Lambeth. That electrified the situation for three reasons. First, it was unexpected; secondly, only a short time was given for the payment of the supplementary rate; and, thirdly, and most important, it was received by many people in flats, in council accommodation and in multi-occupation who do not normally receive rate demands. They pay rates with their weekly rent. Therefore, they are not aware of the money that is taken from them by the council. This rate demand arrived like a bombshell on their doorsteps. I need hardly tell the House of the ferment of indignation and rage that has been exhibited in Lambeth. In only three weeks, a petition organised by the joint chambers of commerce has received more than 15,000 signatures.

Because of what I have seen in Lambeth and because of what I know is happening in other councils, I am asking for leave to bring in this unpretentious little Bill.

The Bill consists of three parts. The first part provides that annual rate rises should have a ceiling on them. They should not be allowed to be more than the going rate of inflation. One hopes that most will be below that. Nevertheless, no rate rise should be more than the going rate of inflation when that rate is introduced at Budget time in April.

But one cannot leave the matter there, for the reason that I have already given—that, should rates be fixed at a ceiling, the central Government will become involved. Therefore, the second provision that I propose is that should a council wish to raise additional funds during the year it may do so, but only through the mechanism of one or more supplementary rates, and that each supplementary rate—one would hope that it would be only one—should not be more than 25 per cent. of the increase in the April rate, and that no second supplementary rate should be introduced until the due date for payment of the prior rate has passed.

The third object of the Bill is that both the Greater London Council and the Inner London Education Authority should precept direct; they should send their rate demands independently and direct to the ratepayer, not to the borough.

What would be the result of this simple legislation? In April last year the Lambeth rate, instead of being 50 per cent. or 60 per cent., would have been 16 per cent., 17 per cent., 18 per cent., or whatever the rate of inflation was. In order to raise the funds that Lambeth has raised this year, I calculate that it would have needed eight supplementary rates at intervals of six weeks throughout the year.

Leaving aside the administrative problem, I am assured that the cost would not be very much. But I assure the House that such a procedure would have so daunted even Lambeth Council that it would have hesitated. It would have retrenched and cut out the waste that is so obvious in Lambeth and it would not have had a supplementary rate or, at most, it would have had only one or two supplementary rates.

Either the Government will have to cap the rate rises, in which case the Government will become enmeshed, or the democratic knowledge of the ratepayers will have to be brought to bear on overspending councils. That is the burden of my message. The procedure that I suggest would mean an increased democratic awareness on the part of all the ratepayers of any council, should that council wish to spend more money than the going rate of inflation in that year. This is not only democratic but unobjectionable. We would say to the councils that they could spend what they please, but if they wished to spend more than the going rate of inflation they would have to tell all their ratepayers through their supplementary rate.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I understand that the hon. Member is rising to oppose.

Photo of Mr Alfred Dubs Mr Alfred Dubs , Wandsworth Battersea South

Yes, Mr. Speaker, I am rising to oppose this proposal.

The hon. Member for Streatham (Mr. Shelton) seems to be totally obsessed by Lambeth council. In speech after speech in this House over the last year and a half he seems to have talked about nothing but that local authority. Whatever Conservative Members think, there is a whole world outside Lambeth council. The hon. Gentleman's Bill seeks to affect local government in the country as a whole and not just in Lambeth.

It is interesting that the hon. Gentleman referred to the coming Greater London Council elections. He said that if Labour were to win there would be an increase in rates because of the extra and improved services which would be provided. He then bemoaned that. However, that seems to be the answer to the argument. If the people of London think that London would be better off under a Labourcontrolled GLC, that is their choice at an election. Why should the hon. Gentleman seek to circumvent the right of the people of London to give effect to their wishes? The Bill would restrict the powers of the GLC to operate.

The real issue is the independence of local government. The hon. Member appears to wish that local authorities should become little more than the agents of the Government. We have already gone a long way in that direction as a result of the Government's efforts. The hon. Member seeks to take that process further. He knows that if the Bill were to have effect, the task of local government throughout the country would be made more difficult. He is advocating a course which would lead to bureaucracy going mad.

Not only would Labour-controlled local authorities be affected by the provision; Conservative boroughs, which are at the moment seeking to impose rate increases well ahead of the rate of inflation, would be affected. For instance, Westminster city council is intending to increase its rates in the coming year by 23 per cent.; Sutton by 25 per cent.; Kensington and Chelsea by about 50 per cent.; Harrow by 36 per cent.; and Havering by 25 per cent. In my area, it is likely that Wandsworth council, which is so beloved of the Conservative Party, will increase its rates by 30 per cent. Why are those Tory-controlled local authorities, as well as Labour ones, increasing their rates well above the rate of inflation? The reason is that the Government's rate support grant procedures have imposed this additional burden on local authorities.

If we are to have index linking of rates, what about index linking of rents? What about linking the rent increases in local authorities to the rates of inflation? I am sure that the council rent payers of Wandsworth would welcome that. In the last two years, the rent payers in council property in Wandsworth have seen rents rise by 88 per cent. when the rate of inflation has been about 35 per cent.

The level of rates in every local authority is a matter of political judgment for the local councillors who have been elected to that local authority. They must take their decisions in the light of the promises which they made when they were elected. It is their job to strike a balance between the services that they offer and the rates that must be levied to provide those services.

The hon. Gentleman's proposals would be costly. Supplementary rates and a separate precept would cost more to collect, and to have to do it eight times over would be an additional burden on the ratepayers.

The Government have already threatened the independence of many local authorities through the rate support grant procedure. The Bill would make a bad situation worse. Therefore, I hope that the House will reject it.

Question put, pursuant to Starding Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):

The House divided: Ayes 126, Noes 175.

Division No. 83][4 15 pm
Adley, RobertEmery, Peter
Alexander, RichardFenner, Mrs Peggy
Ancram, MichaelFisher, Sir Nigel
Atkins, Robert (PrestonN)Fox, Marcus
Atkinson, David(B'm'th,E)Fry, Peter
Baker, Nicholas (NDorset)Garel-Jones, Tristan
Beaumont-Dark, AnthonyGlyn, Dr Alan
Bell, SirRonaldGorst, John
Benyon, W.(Buckingham)Gow, Ian
Bevan, David GilroyGriffiths, Peter Portsm'thN)
Biggs-Davison, JohnGrylls, Michael
Blackburn, JohnHamilton, HonA.
Bottomley, Peter (W'wichW)Hamilton, Michael (Salisbury)
Bowden, AndrewHawkins, Paul
Braine, SirBernardHeddle, John
Bright, GrahamHiggins, Rt Hon Terence L.
Brotherton, MichaelHogg, Hon Douglas (Gr'th'm)
Brown, Michael (Brigg&Sc'n)Holland, Philip(Carlton)
Buck, AntonyHordern, Peter
Budgen, NickHunt, David (Wirral)
Butcher, JohnHunt, John(Ravensbourne)
Carlisle, John (LutonWest)Jessel, Toby
Carlisle, Kenneth (Lincoln)Kellett-Bowman, MrsElaine
Chapman, SydneyKershaw, Anthony
Churchill, W.S.Kimball, Marcus
Clark, Hon A. (Plym'th,S'n)Knight, Mrs Jill
Clark, SirW. (CroydonS)Knox, David
Corrie, JohnLatham, Michael
Costain, SirAlbertLawrence, Ivan
Cranborne, ViscountLewis, Kenneth (Rutland)
Dorrell, StephenLloyd, Ian (Havant & W'loo)
Dover, DenshoreLloyd, Peter (Fareham)
Dykes, HughLoveridge, John
Eden, Rt Hon Sir JohnLyell, Nicholas
Eggar, TimMcNair-Wilson, M.(N'bury)
Elliott, SirWilliamMarlow, Tony
Mawby, RayShersby, Michael
Mawhinney, DrBrianSkeet, T. H. H.
Maxwell-Hyslop, RobinSmith,Dudley
Mellor, DavidSpeller, Tony
Meyer, Sir AnthonySpicer, Michael (SWorcs)
Mills, Iain(Meriden)Sproat, Iain
Moate, RogerSquire, Robin
Molyneaux, JamesStainton, Keith
Montgomery, FergusStanbrook, Ivor
Morris, M. (N'hamptonS)Stewart, A. (ERenfrewshire)
Mudd, DavidTaylor, Robert (CroydonNW)
Nelson, AnthonyTaylor, Teddy (S'endE)
Page, John (Harrow, Wast)Thomas, Rt Hon Peter
Page, Rt Hon Sir G. (Crosby)Thorne,Neil(IlfordSouth)
Page, Richard (SWHerts)Thornton, Malcolm
Patten, Christopher(Bath)Viggers, Peter
Pawsey, JamesWalker, B. (Perth)
Price, SirDavid(Eastleigh)Walker-Smith, Rt Hon SirD.
Rathbone, TimWall, Patrick
Rees-Davies, W. R.Waller, Gary
Rhodes James, RobertWard, John
Rhys Williams, SirBrandonWells, John(Maidstone)
Ridsdale, JulianWheeler,John
Rost, PeterWhitney, Raymond
Sainsbury, Hon TimothyWilkinson, John
St. John-Stevas, Rt Hon N.
Scott, NicholasTellers for the Ayes:
Shaw, Michael (Scarborough)Mr. William Shelton and
Shepherd, Colin (Hereford)Mr. Christopher Murphy.
Allaun, FrankFlannery, Martin
Alton, DavidFletcher, Raymond (llkeston)
Armstrong, Rt Hon ErnestFletcher, Ted(Darlington)
Atkinson, N.(H'gey,)Foot, Rt Hon Michael
Bagier, Gordon A.T.Forrester,John
Barnett, Guy (Greenwich)Foster, Derek
Beith, A.J.Foulkes, George
Benn, Rt HonA. WedgwoodFreud, Clement
Bidwell, SydneyGarrett, John (NorwichS)
Boothroyd, Miss BettyGarrett, W. E. (Wallsend)
Brown, Hugh D. (Provan)George, Bruce
Brown, R. C. (N'castle W)Gilbert, Rt Hon Dr John
Brown, Ronald W. (H'ckn'yS)Grant, George(Morpeth)
Buchan, NormanHamilton, James(Bothwell)
Callaghan, Jim (Midd't'n&P)Hamilton, W.W. (C'tral Fife)
Campbell-Savours, DaleHardy, Peter
Canavan, DennisHarrison, RtHon Walter
Cant, R. B.Hattersley, Rt Hon Roy
Carmichael, NeilHaynes, Frank
Carter-Jones, LewisHealey, Rt Hon Denis
Cartwright, JohnHeffer, EricS.
Clark, Dr David (S Shields)Hogg, N. (EDunb't'nshire)
Cocks, Rt Hon M. (B'stol S)Home Robertson, John
Cohen, StanleyHomewood, William
Coleman, DonaldHooley, Frank
Concannon, RtHon J. D.Huckfield, Les
Crowther, J.S.Hughes, Mark(Durham)
Cryer, BobHughes, Robert (Aberdeen N)
Cunliffe, LawrenceHughes, Roy (Newport)
Cunningham, G.(IslingtonS)Jay, Rt Hon Douglas
Cunningham, DrJ.(W'h'n)John, Brynmor
Dalyell, TamJohnson, James (Hull West)
Davidson, ArthurJohnston, RusselI (Inverness)
Davies, Ifor (Gower)Jones, Barry (East Flint)
Davis, T. (B 'ham, Stechf'd)Jones, Dan (Burnley)
Dean, Joseph (Leeds West)Kaufman, Rt Hon Gerald
Dixon, DonaldKerr, Russell
Dobson, FrankKinnock, Neil
Dormand, JackLamborn, Harry
Douglas, DickLamond, James
Douglas-Mann, BruceLewis, Ron (Carlisle)
Dubs, AlfredLofthouse, Geoffrey
Duffy, A. E. P.Lyon, Alexander(York)
Dunlop, JohnLyons, Edward (Bradf'dW)
Dunwoody, Hon Mrs G.Mabon, Rt Hon DrJ. Dickson
Eastham, KenMcCartney, Hugh
Evans, John (Newton)McElhone, Frank
Ewing, HarryMcGuire, Michael(Ince)
Fitch, AlanMcKay, Allen (Penistone)
McKelvey, WilliamRowlands, Ted
McTaggart, RobertSever, John
McWilliam, JohnSheerman, Barry
Marshall, D(G'gowS'ton)Sheldon, Rt Hon R.
Marshall, DrEdmund (Goole)Shore, Rt Hon Peter
Marshall, Jim (LeicesterS)Silkin, Rt HonJ.(Deptford)
Maxton, JohnSilkin, Rt Hon S. C. (Dulwich)
Maynard, MissJoanSilverman, Julius
Mikardo, IanSkinner, Dennis
Millan, Rt Hon BruceSmith, Cyril (Rochdale)
Mitchell, Austin (Grimsby)Smith, Rt Hon J. (NLanark)
Mitchell, R.C.(Soton ltchen)Snape, Peter
Morris, Rt Hon C. (O'shaw)Soley, Clive
Morton, GeorgeSpearing, Nigel
Moyle, Rt Hon RolandSpriggs, Leslie
Newens, StanleyStallard, A. W.
Oakes, Rt Hon GordonSteel, Rt Hon David
O'Halloran, MichaelStewart, Rt Hon D. (W Isles)
O'Neill, MartinStott, Roger
Orme, Rt Hon StanleyStrang, Gavin
Palmer, ArthurStraw, Jack
Park, GeorgeSummerskill, Hon Dr Shirley
Parry, RobertTaylor, Mrs Ann (Bolton W)
Pavitt, LaurieThomas, DrR.(Carmarthen)
Pendry, TomTilley, John
Penhaligon, DavidTinn, James
Powell, Raymond (Ogmore)Urwin, Rt Hon Tom
Prescott, JohnVarley, Rt Hon Eric G.
Price, C. (Lewisham W)Wainwright, R.(ColneV)
Race, RegWatkins, David
Radice, GilesWelsh, Michael
Rees, Rt Hon M (Leeds S)Whitehead, Phillip
Richardson, JoWhitlock, William
Roberts, Allan (Bootle)Wigley, Dafydd
Roberts, Ernest (Hackney N)Willey, Rt Hon Frederick
Robertson, GeorgeYoung, David (BoltonE)
Rooker, J. W.
Roper, JohnTellers for trie Noes:
Ross, Ernest (Dundee West)Mr. Ron Leighton and
Ross, Stephen (Isle of Wight)Mr. Andrew F. Bennett.

Question accordingly negatived.