Rate Support Grant (England)

Part of the debate – in the House of Commons at 7:53 pm on 16th February 1982.

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Photo of Mr Arthur Newens Mr Arthur Newens , Harlow 7:53 pm, 16th February 1982

The hon. Member for Ealing, North (Mr. Greenway), at the end of his speech, indulged in a trivial and petty argument which was unworthy of him and the respect in which he is generally held in the House as a result of his contributions on education.

The hon. Gentleman earlier argued adequate financial support for his constituency, which he regards as having the problems of an inner city area, in contrast to his hon. Friend the Member for Basildon (Mr. Proctor), who attacked the distribution of the total rate support grant as giving additional funds to inner city areas. I am utterly opposed to the attempts to set inner city areas against shire counties as rivals. Both shire counties and inner city areas have needs and we should he setting out to meet both. I oppose the policy of ruthless cuts in public expenditure

A principal reason for the increase in rates this yew is the rate support settlement and the Government's cutbacks. It is all very well for the hon. Member for Ealing, North not to face that aspect and to talk about the GLC. His attacks should be directed at the settlement proposed by the Secretary of State.

The objective pursued by the Secretary of State since he accepted office has been the reduction of public expenditure. Although he was frustrated, with the help of some of his hon. Friends, on some of his methods, he has relentlessly continued towards the same goal. It is not difficult to win public approval for this policy as long as it is presented as an opportunity to pay lower taxes or rates it is presented as an opportunity to pay lower taxes or rates and provided that no one mentions the consequences. People will applaud a policy if they are unaware that they will suffer as a result.

Many members of the public are now waking up to the fact that cuts, far from being painless, are becoming increasingly irksome and fraught with real hardship. We now see a continuing and, in many ways, catastrophic decline in local government expenditure in real terms. More and more local authorities are forced to make cuts in education provision, facilities for the old and disabled, fire cover, road maintenance and in many other spheres. As my right hon. Friend the Member for Manchester Ardwick (Mr. Kaufman) stated, the more local authorities have been prepared to economise, the harder they have

It is not true that Labour authorities are extravagant and that Conservative authorities are prudent. The records of many Conservative authorities are just as open to criticism, as my right hon. Friend the Member for Ardwick demonstrated, on the criteria set by the Government.

The truth is that the system for determining and distributing the rate support grant is not an effective method of measuring and rewarding efficiency. That fact ought to be recognised.

It appeared earlier in this financial year that all areas characterised by rapidly expanding populations were being shabbily treated. Among them, the new towns were probably hardest hit. As the hon. Member for Basildon stated, that was recognised not merely by Labour Members, such as myself, but by Conservatives. I see the hon. Member for Basildon nodding in agreement.

As a result of certain changes, particularly the way housing income has been treated, the situation fortunately altered. I have not yet seen the letter to which the hon. Member for Basildon referred, but I shall be interested to study it. Consideration should be given to introducing into the formula for determining rate support grant a factor which would reflect the particular problems of new towns and other areas where there have been rapid population expansions.

It is frequently necessary, in order to provide for the needs of such populations, to incur heavy capital expenditure on the provision of amenities, at much higher interest rates than those prevailing in past years when other communities were able to provide those amenities for themselves.

When compared with old towns, the position of new towns is analogous to that of an owner-occupier who begins to buy his house today compared with an owner-occupier who began to buy perhaps 30 years ago. In those circumstances, it is wrong and, frankly, idiotic to regard new towns as expanding areas which are extravagant. Their expenditure is higher. The very character of their problems necessitates spending at a much higher level than is true for older communities.

Therefore, I hope that careful consideration will be given to the introduction of a factor in the formula for determining rate support grant which will reflect new towns' problems. However, in the present rate support grant settlement, among the worst hit of the authorities are certain county councils. I shall refer, as did the hon. Members for Harwich (Sir J. Ridsdale) and Basildon, to Essex, to where my constituency is situated.

Essex has not been under Labour control in recent years, and its leaders have always claimed to be strong supporters of the Conservative Party and advocates of prudent expenditure. It is not possible to attack them as being responsible for extravagance or to blame the Labour Party for indulging in extravagant expenditure.

I have frequently been opposed to some of the policies of Essex county council. In some areas it has been prepared to aim at the standards that I and many of my Labour colleagues on the authority desire. I am critical of its failure to provide nursery education, of its lack of generosity with student grants and of the introduction of charges for many services that are available for the less well off. It has been quite wrong in not collecting transport supplementary grant to pass on to support the Epping-Ongar stretch of the Central line in my constituency. I am not intent on attacking the county council. I am merely showing that I speak of its present problems as one who cannot be regarded as an unqualified supporter of all that it has set out to do.

Having made that clear, it is fair to say that the way in which Essex has been treated is little short of disgraceful. The grant-related expenditure figure is the Government's assessment of the amount that an authority needs to spend to maintain a common standard of service. They set Essex's GRE at £450.7 million. However, the Secretary of State has set the target for Essex—the realistic and fair figure that would result in low rate increases—at £415 million—in other words, £36 million below the GRE.

Essex will receive £7 million less in 1982–83 than it received in 1981–82. The Secretary of State is requiring Essex to make draconic cuts equivalent to about £36 million. It cannot possibly carry out those cuts, even on the basis of the figures that have been provided by the Government, without a drastic reduction in services which would hit all Essex people very hard.

There is no equity in the Government's approach. Kent, with a similar population and area, will receive £60 million more than Essex. I appreciate that rateable values in Essex are higher than those in Kent and that Kent should receive more than Essex, but the disparity between the two counties cannot be explained adequately on that ground.

Earlier in the debate the Minister for Local Government and Environmental Services asked about the product of a 1p rate in Essex. He was implying—although the hon. Member for Basildon could not give him a direct reply—that the product had increased considerably. According to the figures that I have, the product of a penny rate in 1981–82 was £2, 309, 000. By 1982–83, it had increased to £2, 333, 000. It is true that it has risen, but the increase is nothing like the proportion that would be necessary to justify the way in which Essex has been treated in this rate support grant settlement.

The vote this evening will determine the position for this year, but the matter should not be left there. I shall vote against the rate support grant settlement, and I hope that Conservative Members who represent Essex constituencies will decide likewise. However, I suspect that even if they do, the Government will still have a majority. None the less, I hope that they will find the means of returning to the specific problems with which the Government have landed Essex. Ultimately, county ratepayers will be hit hard—let it be stated clearly—by the Government, not by any local authority or the Labour Party or the Conservative Party in the country. It is their responsibility. When I receive complaints about the level of rates, I shall reply that it is the Government who are to blame. I shall use that reply for industrial, commercial and domestic ratepayers alike. As the House knows, domestic, commercial and industrial ratepayers' circumstances concern me greatly.

Everybody knows that industry in Harlow is having a thin time. Everyone knows also that in many instances those who are engaged in small businesses are finding it difficult to continue their operations under this Government. In the circumstances, it is too much for the Government to saddle them with additional rate payments and then to blame local authorities. Responsibility for any cuts which take place in school transport, education provision, social services and other facilities will rest equally in the same quarter.

I shall oppose many of the cuts that the Essex county council may determine to implement. Having said that, I recognise the impossible position in which the county council has been placed by the Government. That is the message that the Under-Secretary of State should take to the Secretary of State and the Prime Minister. It comes from Opposition Members and Conservative Members representing Essex.

It will be no good the Under-Secretary of State, or whoever is to reply, saying "Next year, Essex will do better." What is Essex supposed to do during the current year? What will it do if services have to be cut? Services cannot be left in limbo. We cannot say to employees "Go away and come back for your wages in a year's time when we have a more favourable rate support grant settlement."

The Government have imposed a serious financial crisis upon Essex county council. They should not be allowed to get away with it. I hope that, even at this late stage in the debate, the Government will come forward with other proposals that will enable the people of Essex—whether supporters of the Conservative, Labour or any other party—to enjoy the standards to which they are entitled without having draconic rate increases imposed on them as a result of the Government's policies.