We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.

Donate to our crowdfunder

Rates (Limitation and Procedure for Increases)

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

Alert me about debates like this

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.