Special Charging Orders

Orders of the Day — Local Government Finance (No. 2) Bill – in the House of Commons at 8:45 pm on 5th April 1982.

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'(1) In section 147 of the Local Government Act 1972 (expenses of principal councils) the following subsections shall be inserted after subsection (3):— (3A) If in any part of a district the district council is exercising as principal one or more of the statutory functions held by the parish or community councils (as the case may be) in its district, and such function or functions is elsewhere in that district being exercised by one or more parish or community councils (as the case may be) the district council shall make such charging resolution as is described in subsection (3) above as is appropriate in all the circumstances of the situation.(3B) The Secretary of State may by order made by statutory instrument prescribe (a) the factors to be taken into account by the district council in making any charging order under subsection (3A) above and (b) the procedure by which any parish or community councils desirous that any such charging order be made may secure the making of an appropriate order.(3C) Subsection (3A) of this section shall not come into force until the first day of April in the year next after the year in which the Secretary of State shall have made the first order under subsection (3B) above.

(2) In section 54 of the Local Government Planning and Land Act 1980 after subsection (8) there shall be inserted the following subsection— 8A Where 'relevant expenditure' includes sums payable under precept to the councils of parishes or communities the Secretary of State may by regulations made under section 113 of the General Rate Act 1967, provide for the transfer of the amount of block grant attributable to an such precept from the local authority to the council of the parish or community as the case may be.".'.—[Mr. Alton.]

Brought up, and read the First time.

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill

I beg to move, That the clause be read a Second time.

The new clause seeks to amend the Local Government Act 1972 and the Local Government, Planning and Land Act 1980. Its intentions are well known to hon. Members and they have been debated in Committee, on the Floor of the House and in another place. The objective is to give parish councils the opportunity of receiving some of the rate support grant which the Government give to district councils, but which is not always passed on to the parishes.

The clause is similar to one moved during the passage of the 1980 Act. At that time Lord Bellwin gave various assurances and, bearing in mind the assurances that have just been given by the Minister for Local Government and Environmental Services, I hope that hon. Members will realise that ministerial assurances are not always what they appear to be. However, I hope that the assurance just given by the right hon. Gentleman will result in an amendment being incorporated in the Bill.

Lord Bellwin said that the problem of parish councils would be considered. Unfortunately, no results have appeared and the Under-Secretary of State for Wales said in Committee that the objective of the new clause was an impossible task. That contradicts Lord Bellwin's assurances.

I refute the suggestion that the proposal in the new clause is an impossible task. Perhaps the best reason for my view is that some district councils already do what the new clause suggests. They pass on part of the rate support grant to parish councils, and if it is possible for some to do that I do not see why it should not be possible for others to do it. Therefore, I do not accept that it is an impossible task, though I agree that it is difficult and is not as easy as was suggested by the hon. Member for Bootle (Mr. Roberts), who proposed a similar new clause in Committee.

The new clause would apply to many parish, town and community councils which have continued to press for changes in the law. The precepts of the 8,600 parish, town and community councils, which are wholly met from rates levied on the ratepayers of those councils, are taken into account in determining the block grant payable to the local district councils, but none of that relevant grant has to be paid to the parish council and it is not credited to the parochial council to enable the parish ratepayers to benefit. Instead, the district ratepayers benefit, even though they did not have to bear the initial expenditure. That is grossly unfair.

There have been many previous calls to amend the legislation. My hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) on 12 March 1979 asked the then Minister: How can the hon. Gentleman possibly defend an arrangement under which expenditure earned by the decision of ratepayers in a parish to pay an additional rate should incur grant-aid on a general basis to the district council that does not need to be passed on to the parish? Does he recognise that a few district councils—fortunately, only a few—are actively opposed to the concept of parish councils and would much prefer parish councils to entrust all their functions to them and enable them, the district councils, to control all the grant-aid and for the parish councils to disappear?"—[Official Report, 12 March 1979; Vol. 964, c. 228.] The Minister said that he would consider that argument. However, since then, little has been done.

My hon. Friend the Member for Colne Valley (Mr. Wainwright) wrote to me last week to say: No Minister has ever attempted to defend this unfair situation, but the attitude has been 'wait till we have other legislation and we will include it then'. I have had more representations on this aspect of the Bill than on any of the other horrors perpertuated by the legislation. I have had representations from parish councils throughout the country.

The Sussex Association of Parish Councils said: Parish Councils have been inhibited from taking an initiative on local enterprises and spending money on them, because they know that although the amounts of their precepts are included in the calculation for Rate Support Grant, none of the Grant will be passed on to them. The Great Wyrley parish council said: We … urge you to support the amendment which I am proposing today on the grounds of justice, as the precepts by Parish Councils are taken into account when calculating the District Council's entitlement to the Grant but the District is not compelled to pass on the Grant. Only a very few Districts do so under voluntary arrangements. The honorary secretary of the Derbyshire Association of Local Councils said: The Town and Parish Councils have fought long and hard since even before the 1972 Act for the grant to be paid to town and parish councils on the grounds of justice—their precepts, which are wholly met by parish ratepayers, are taken into account in calculating the district councils entitlement to grant but districts are not compelled to pass on the grant. Only a very few districts do so, under voluntary arrangements. The Yorkshire and Cleveland Councils' Association said: Parish and Town Councils are the smallest tier of Local Government and without doubt the most economically efficient. With relatively modest calls on ratepayers' money they achieve marvellous results for those living within their area. Mr. P. R. A. Newell, the secretary of the Wiltshire Association of Local Councils—it is interesting to note that the president of that association is the hon. Member for Devizes (Mr. Morrison)—said: I have been asked to draw your attention to an amendment put down to the above Bill which would entitle Parish and Town Councils to receive an appropriate share of the rate support or block grant on their precepts. He hopes that I would support that. It is because of such representations, and those of my hon. Friends, that I decided to pursue this matter today.

The Government have said that they have much sympathy with this general idea, but no Minister has ever tried to justify not doing anything about it. Therefore, I have, albeit reluctantly, picked up a suggestion made in the other place 18 months ago that the Secretary of State should make regulations as to how rate support grant attracted to district councils for parish councils expenditure should be passed on to the parish council. That is something which has been debated in the passage of successive local government Bills both by this and previous Governments.

It is apparent, for example, in Wiltshire, that the district council will agree to make the appropriate payment only if there is legislation to force it to do so. The obvious iniquity of the present system is that parish councils are double rated. Parish ratepayers pay their parish rate and the district rate, and the rate support grant element designed for the parish is used to alleviate district council expenditure generally. Areas with active parish councils are subsidising those without them. This injustice works as a deterrent both to the initiative and the establishment of parish councils.

Particularly now, when communities are breaking up for lack of community oriented work, the Government should respond to ensure that these efficient, locally based organisations receive adequate resources and encouragement. As one letter put it: No Parish Council will eagerly undertake (in the low key and economic way which is their trade mark) new valuable local initiatives if the expenditure attracts rate support grant from which the Parish and its ratepayers get no benefit. 9 pm

The most recent survey by the National Association of Local Councils conducted in October 1979 produced 157 answers from 328 district councils with parish or community councils. The Association of District Councils advised its members not to reply to the questionnaire. Of the 157 which answered, 16 said that they paid the amount requested, 42 said that they gave grants of more than rate support grant resource element, 61 said that they gave less than their rate support grant resource element, two gave rate support grant resource and needs element and 38 gave nothing.

There is no reason to suppose that the figures have changed in favour of parish councils. With the present squeeze the money is even less likely to be paid out. In Treasury terms what I am asking for is a small sum. For 1981–82 it represents about 0·16 per cent. of a total local government expenditure of about £36 million.

The Government said in Committee that, if a way could be devised to force district councils to pay, they would adopt it. There is a solution in my proposal. It will allow the Secretary of State to make enabling regulations. Even if the Government will not accept the new clause, I hope that they will assure the House that a more acceptable amendment will be introduced in the other place.

I commend the new clause. Its purpose is to make parish, town and community councils masters in their own homes, to ensure that funds intended for their use are passed to them and to demonstrate that Parliament fully appreciates the valuable work of small councils which are rooted in their neighbourhoods.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

I have sympathy with what the hon. Member for Liverpool, Edge Hill (Mr. Alton) said. Parish councils have tended to be the Cinderella of local authorities since 1972, but they are important.

When a parish council expresses an opinion to a Member of Parliament, one knows that is the opinion of elected representatives, not a pressure group. Some parish councils have been adversely affected because the parish rate does not always go to the parish but is absorbed by a district council, in much the same way as some EEC grants go into the Treasury maw rather than into the areas to which they should be directed. Parish councils feel that acutely.

The parish of Halewood in my constituency is big and rich. Ford operates there. The parish calls itself the town council and is regarded as such by many inhabitants. It does a tremendous amount of work in Halewood. It does more than Knowsley district council can do, because it is closer to the inhabitants and more akin to their needs.

I listened carefully to the debate. I am not sure that the new clause is the appropriate way to deal with the difficulty. I accept the Minister's view on that aspect. However, it is not beyond the wit of Her Majesty's Government to introduce an amendment in another place if the new clause is unsatisfactory.

The clause was drafted by laymen, not by Government draftsmen. Nevertheless, the Government should accept that there is a problem and that, if possible, it should be dealt with in another place. If not, the Government may be assured that hon. Members on both sides of the House will come back to this matter to do right by parish councils, whether they call themselves parish or town councils. Parish, town or community councils are often much nearer to the wishes of an area's inhabitants than the gigantic district councils created by the Local Government Act 1972.

Many urban and rural district councils, which were councils in their own right until 1972, opted to become parish or town councils. The hon. Member for Edge Hill referred to an urban area. Halewood has a population of between 20,000 and 30,000. If it were not in the sort of urban areas that the hon. Gentleman and I represent, it would be regarded as a major county town.

I accept that this may not be the right new clause, but I hope that the Government will listen carefully to what the hon. Member for Edge Hill said about it. I hope that the Government will introduce a new clause in another place which will do effectively what the hon. Gentleman wants. I assure the Government that if they do not do that, the Opposition—including the Liberal and Social Democratic Parties—will put considerable pressure on them. There will also be pressure from the Government's supporters because many of these parish councils are controlled by them. Such councils do an extremely good job, no matter who controls them.

I hope that the Minister will assure the whole House that an attempt will be made in another place to remedy the defects in the present system that have existed since 1972.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

I knew that, in moving the new clause, the hon. Member for Liverpool, Edge Hill (Mr. Alton) would deploy strong arguments in favour of making this rearrangement to improve the lot of parish councils.

Two points arise at the outset. First, the Government, and I suspect hon. Members of all parties, were aware for some considerable time of the anxieties of district councils and parish councils on this matter. Secondly, Governments of both parties, for a considerable time, have tried to find an equitable and sensible way to resolve the matter.

I spoke at the local councils association's national conference in Harrogate recently when this matter was obviously of major concern and a topic for debate. I explained that under the existing RSG procedure the formula, albeit not entirely accepted on both sides of the House, but at least designed to provide a system of local financing based on a careful assessment of need, and spread over a national network of a substantial number of districts, is not capable of being redesigned to deal with 10,500 parish councils.

The hon. Member for Edge Hill will understand that if some of those parish or community councils have zero ratepayers—as I believe they do—several hundred have small numbers of ratepayers or electors. Therefore, it is beyond administrative possibility to extrapolate from the present RSG system to deal with each and every parish or community precept or requirement, given that they have such variable calculations and requirements.

I admit that that does not alter the fact that parishes and community councils exist and that where they have the right to precept against district councils, in all fairness, they should be able to obtain from the precepting authority the correct sums of money to spend on the matters for which they have statutory power. I suggest to the hon. Member for Edge Hill and to the right hon. Member for Widnes (Mr. Oakes) that it is a major obstacle to try to redefine the rate support grant and GREA systems in order to make an equitable settlement for 10,500 additional authorities, given the substantial number of authorities currently covered by the mechanism. Therefore, it is not for want of seeking to find a way, but I must say to the hon. Member for Edge Hill that I do not believe that the existing mechanism works in that way.

We come to the question of how the parish or community council can obtain satisfaction to do what is seeks to do on behalf of its parishioners or ratepayers. In that matter we have traditionally relied on the relationship between the parish or community council and its district. There is plenty of evidence that in most cases there is an amicable arrangement whereby under precept the district will provide the required sums. The parish seeks to say that the discounted amount, not the full amount, should be levied. It regards what it does as a second rate levied on individual persons. That is the burden of the remarks made by the hon. Member for Edge Hill.

It is true that there is a double rating point for the individual elector, who is at one and the same time a ratepayer of the parish, a ratepayer of the district and a ratepayer of the county. That is not a new position for the ratepayer. Equally it is true that in many district council areas there is now a mechanism whereby the council can take out from its formula for charging the rate the parishes over which it has rating authority and can rate differentially. That provides part of the solution to the problem of double rating. However, there is no mechanism at the moment that will prevent the possibility of an individual community or parish being double rated if the district seeks so to do.

The question is whether we should amend in the manner laid down by the hon. Gentleman. Should we amend the Bill at this time to achieve that objective? We shall not be able to draft an amendment that will allow the RSG mechanism to go through to the 10,500 individual communities or parish councils in such a way that it will become an effective local authority financing mechanism. I do not believe that we can do that. It would not be right for me to seek to mislead the House by assuring it that we can design an amendment in another place that will carry out that intention.

We must rely on the relationship between the parish or community council and its precepting district. In a number of cases that is an effective instrument whereby the parish can obtain what it wishes. That is the correct way to deal with the matter.

9.15 pm

We are not prepared to accept the amendment. I invite hon. Members to vote against it. That is not because what the hon. Member for Edge Hill asks is so controversial and unacceptable in political terms that we would not wish to meet it. With our system of local government financing it is not possible for us to design a mechanism, based on the RSG system, which would effectively deal with every community, parish or town council requirement.

That cannot be a satisfactory answer for the hon. Member for Edge Hill. However, I suspect that a vast majority of local authorities and their associations feel, as the Government do, that with the present system that is as far as it can be taken. It would be wrong for us to seek to legislate further by enacting the new clause so eloquently moved by the hon. Member for Edge Hill.

Photo of Alan Beith Alan Beith Opposition Whip (Commons)

I am disappointed and depressed by the Minister's reply. My hon. Friend the Member for Liverpool, Edge Hill (Mr. Alton) will no doubt wish to reply to the Minister. However, as vice-president of the National Association of Local Councils, and having been concerned about this issue for a long time, I am amazed that Ministers in successive Governments are still unable to devise a solution to what is a relatively simple problem. It cannot be an insoluble problem, otherwise those district authorities—they are not in the majority—which now transmit the earned element of the rate support grant to their parishes would be unable to do so.

If a district council can devise a way of calculating the right amount of money and transmitting it to the authority, surely the Department of the Environment can find a way of doing so. Heaven knows, it has overturned, changed, modified and refined the system of rate support grant so many times over the past few years that its officers must have been able to address their otherwise overburdened minds to this relatively limited but specific problem.

The Minister has confused some aspects of the situation. He referred to parish council requirements and needs as if local councils were seeking additional government finance with which to support their services. That is not the case. We are talking about simple justice and ensuring that Government grant already paid to district councils on the basis of parish council precepts actually gets to the parish councils, whose precept earned it in the first place. We want to ensure that the money that the Treasury allows for local government goes to the people who should get it. We are not talking about additional resources.

Nor are we talking about 10,500 parish councils. There are only 8,600, many of which do not levy a rate. We are referring to the active parish councils. We are not even including some councils who raise ½p and 1p rates. We are concerned with councils that raise a larger sum. I ask the Minister to consider the injustice and ludicrousness of the position. For example, the inhabitants of a parish might decide that they need a desirable amenity in their village—perhaps a bus shelter or playing fields. A combination of voluntary effort and public funds brings that about. That is the unique feature of parish councils. They draw together voluntary effort and public funds. Ministers should be encouraging, not discouraging, that. The council gets its playing fields but has to raise a 4p or 5p precept to do so. That inevitably affects the rate support grant calculations that bring grant to the district council. Meanwhile, a neighbouring parish, which has an inactive parish council, does nothing.

However, the district council decides that it does not want other people running the playing fields in its areas and that it would rather be in charge of them itself. When the rate support grant arrives in the treasurer's office the district council duly pockets the whole amount that was effectively earned by the precepting of the active parish. At the end of the day the district council says "By the way, we shall have a district council playing fields project", and the parish that was not prepared to lift a finger to help itself also benefits. The district council will say that it will provide the playing fields, with district council funds, using the precept that was earned by the parish that was helping itself. By that process it will believe that it is teaching the council that it would be far better off if it did not have a parish council at all.

I remind the Minister that some district councils inherited parishes from rural parts of the districts that made them up in the first place, and some district councils do not like the elements of local democracy, especially mixed urban and rural areas where the urban centre calls the tune, not the parish that was formerly in the rural area. Some district councils are determined to depress and shut out parish councils altogether.

That is a ludicrous thing to do to the very element in local government that can minimise rate-borne expenditure and can combine voluntary and rate-borne efforts effectively to provide community services. It is ludicrous that after years of examining the problem, civil servants in the Department of the Environment, numerous though they are, have still not produced a worthwhile basis for a solution satisfactory to Ministers. It is ludicrous that Ministers have been so dilatory that they have not demanded, before the next local government Bill comes before the House, a solution in the form of an amendment that will be acceptable to all.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

I cannot help reflecting that while the hon. Member for Berwick-upon-Tweed (Mr. Beith) wants central Government support to solve the problem it is extraordinary that a parish in the district council community cannot prevail on the district council to see that the matter is voluntarily put right.

Photo of Alan Beith Alan Beith Opposition Whip (Commons)

The Minister betrays scant understanding of the relationship between parish and district councils in many areas. Some district councils are opposed to the very concept of the parish council. They do not welcome parish councils but wish to see district-run services right across their area. The district councils can pursue that policy with the Minister's aid and money and can find more expensive ways of providing services, and of using the money that he has provided instead of handing over the proper grant share to the parish councils, which are trying to do things as cheaply as possible.

With his knowledge of various parts of the country, the Minister should know better. He should know that some authorities have a definite and strong objection to parish councils and would prefer that services were centralised and run on a grand and expensive scale. That does not make good local government. Good local government is where the community is able to contribute its effort and support, where public services are used sparingly in conjunction with the voluntary resources of the local community. The Minister is penalising such people to the benefit of authorities that want to run matters centrally.

I cannot understand why the Minister wants to do that. That is why I am sorry that he has not applied his mind and made his civil servants apply theirs to this relatively simple problem.

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill

The Minister may now understand the strength of feeling of the Liberal Party on the matter and why I moved the new clause. I suppose that I am unlucky to represent an inner city constituency, which is not so beautiful as those of my right hon. and hon. Friends. I am equally unlucky that my constituency does not have any town councils. That is not the fault of the city council, as some of its members tried to introduce town councils but the mover was turned down by other members of the city council. That is unfortunate as there is a role in cities for the same form of authority that my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) described.

It is regrettable that parish, town and community councils are treated with some disdain and contempt merely because they operate on a small scale. I am disappointed that the Government have not found a formula, or even shown themselves prepared to find a formula in another place, to rectify the obvious injustice whereby parish councils desperately doing their best are penalised because rate support is not handed on to them or because other parish councils in the area are not doing the same job and so they are being discriminated against.

It cannot be beyond the wit of the officials in Marsham Street and the people who have given us rate support grant settlements, block grants, county councils, housing investment programmes, housing revenue accounts and the rest, to find some way to ensure that parish councils receive a fair return for the efforts that they put in, usually on a purely voluntary basis. People further on in local government, on district and county councils, are often reasonably well remunerated for their services, but members of parish, town and community councils usually serve in an entirely voluntary capacity, giving their time free to the local community in the very best traditions of local government in this country.

I am therefore glad that the right hon. Member for Widnes (Mr. Oakes) and my hon. Friend the Member for Berwick-upon-Tweed both supported the new clause and accepted that there is a desperate need to do something about this, but I am disappointed that the Minister could not give the assurances that we sought. I do not intend to press the matter to a Division today, but I hope that the Minister will understand the anger that is felt, not just by many Members of Parliament but by members of the National Association of Local Councils. I conclude by reading to the House the first paragraph of a letter from the secretary of that association. He says: I hope you may feel able to support the new clause, whose effect is to entitle the 8,600 parish, town and community councils in England and Wales to their fair share of the block grant paid to the district councils. That is what the new clause is about—a fair deal for parish, community and town councils.

I beg to ask leave to withdraw the new clause.

Motion and clause, by leave, withdrawn.