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Part of the debate – in the House of Commons at 5:40 pm on 26th July 1983.

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Photo of Gerald Kaufman Gerald Kaufman , Manchester, Gorton 5:40 pm, 26th July 1983

The right hon. Gentleman is breaking his word to the House because he said that the White Paper would be published this month. Next week is not this month but August. Moreover, next week Parliament will no longer be sitting and the right hon. Gentleman will not have to come to the House and justify his actions. He is now admitting that he is diving for the recess rather than coming to the House honestly with a White Paper that has already been drafted. He is deliberately delaying it to dodge the House. The Chancellor of the Exchequer did the same knavish trick yesterday and had to be made to make a statement.

We shall make further representations on this matter because we are not satisfied with that procedure, just as we are not satisfied with the fact that the Secretary of State has now told us that he is not prepared to present the targets—ceilings as they should more properly be described—;to the House before the recess. They were presented to the House last year before we went away. The right hon. Gentleman knows that he has them, so why is he not presenting them to us? Presumably it is because he is afraid to come to the House and justify his actions on the ceilings as on the White Paper.

The right hon. Gentleman is withholding from Parliament and local authorities information about the extent to which he will invent local authorities' overspending for the next financial year. I shall demonstrate what I mean by inventing the overspending. Even if the concept of overspending as defined by ceilings that are prescribed by and penalties that are imposed by Ministers was acceptable, the report would be quite unacceptable. It categorises as overspenders in 1983–84 local authorities that it is impossible to demonstrate are overspenders, even if there were such things as overspenders. Less than one third of the financial year has elapsed and outturn expenditure for the relevant financial year will not be known for another two years or so. That is why we have the 1981–82 report now.

Having invented a crime, the Secretary of State is punishing local authorities that have not even committed it. Local authorities are being fined for overspending simply because they have announced their budgets. It is as if someone is to be fined for shoplifting simply because he has been found in possession of a shopping list. Not only is the crime invented, not only has no one committed it, but the fines are ludicrous. That is not surprising, considering the incoherence and incomprehensibility of the formula for assessing the penalties.

Let us look at the formula for assessing the penalties, as given in the main report, published in January this year. It states: The principles in accordance with which the Secretary of State would propose to exercise his powers are as follows. He would set multipliers greater than 1 for authorities which exceed their expenditure guidance figures. The multipliers would be calculated so as to have the effect of continuously increasing grant-related poundages at the following rates". There is then a list under "class of authority". We are told: Additions to grant-related poundage are to be calculated by multiplying percentage overspend (calculated to four decimal places) by the figures below. For example, the calculation for non-metropolitan districts is as follows: throughout the first 1 per cent. overspend, 0·1367p; throughout the second 1 per cent. overspend, another 0·1367p; for overspending above 2 per cent., another 0·6835p.

The report continues: The split of the ratepayer abatement amount between tiers of authority in the same area is in proportion to each tier's share of grant-related expenditure (ie the same basis as the grant-related poundage schedule is split between tiers in this Report). The split between tiers of the abatement amounts would not be subsequently adjusted to take account of changes in share of grant-related expenditure made in supplementary reports. That is the gibberish on which local authorities are penalised. As for those figures—;0·1367p, 0·6835p and the rest of it—;no one knows how the Government have arrived at them or how they did it. The Government have simply plucked them out of the air. It is scarcely surprising that the way in which those penalties fall on local authorities is little short of berserk.

I shall give the House some examples. Let us take my authority, which has been referred to, of Manchester, and compare it with Hounslow. Manchester is accused of overspending £3,264,000 and is accordingly being fined £715,000. Hounslow is accused of overspending £3,250,000, which is slightly less than Manchester, yet it is being fined £3,512,000. That is five times as much as Manchester and more than its alleged overspend. Bradford is accused of overspending £2,847,000. It will be charged £598,000 for that prospective crime. Leicester is accused of overspending £2,815,000, which is slightly less than Bradford, yet its fine is £3,098,000. That is five times as much as Bradford and, once again, more than its alleged overspend.

Let us consider two inoffensive little Tory authorities— first-time offenders, one might say. Worthing is accused of overspending £121,000, and is being fined £39,000 for doing so. Malvern Hills has an alleged overspend of £120,000, which is slightly less than that of Worthing, yet at £139,000 its fine is four times that of Worthing and once again more than its alleged overspend. This is not financial control; it is Russian roulette. Those local authorities and many others that are equally illogically penalised do not understand their punishment for their non-existent crimes, and they cannot understand why on the one hand they are being urged by the Government to spend money, while on the other they face punishment from that same Government if they take their advice and spend the money.

This year, local authorities are being urged by the Secretary of State to commit funds for home improvement grants. Indeed, they receive a special grant for doing so. However, the problem is that the Government grant is guaranteed for this year alone. Any local authority that agrees to a grant now may well have to pay up in the next financial year. In that case, the Government subvention may not continue, and the local authority's own expenditure may lead to it to being fined for overspending.

Again, under what it calls its "Care in the Community" initiative, the DHSS—;with which the Secretary of State once had something to do—;is urging local authorities to take part in joint schemes for moving elderly people out of hospital into the community. National Health Service money helps to set up those schemes, which are very worthy. However, local authorities under those schemes eventually take over the running costs. Those running costs mount, yet they count against the council's spending ceilings. The Government refuse to exclude those costs from penalty.

Therefore, if local authorities do what the Government urge them to do, they will be failing to do what the Government urge them to do. Russian roulette becomes "Catch 22". Inevitably, in such intolerable circumstances, services are declining. No wonder there was so much gloom in the report by Her Majesty's inspectors, "Effects of Local Authority Expenditure Policies on the Education Service in England— 1982." That document was published only last week. I shall quote just a couple of passages from the lamentable documentation of the effects of the Government's spending cuts.

Paragraph 29 states: It has to be noted that there was clear evidence that (except, perhaps, in London) primary schools were frequently dependent upon parental contributions, not only for 'extras' but to buy books and basic materials. Paragraph 37 states: Overall provision of books in secondary schools was judged to be satisfactory in only two-fifths of LEAs. Library provision was often found inadequate to support the pupils' levels of learning, particularly those of the less academic, and, although in two-thirds of the work observed textbooks were in satisfactory supply, there were still too many cases where pupils did not have enough textbooks in subjects such as English, modern languages and, especially, science. The pupils' capacity to work on their own was therefore reduced. Yet many of those cuts are pointless and unnecessary because they are caused by the non-payment of grant which was wrongly withheld. If those are strong words, it is the evidence of the Government that confirms them. That evidence is contained in the 1981–82 report before us today; a report over which the Secretary of State slid in a sentence or two. However, it is a most significant report in the light of the 1983–84 report. The contradictions in the Government's policies become a chasm of futility when those two reports are compared. On the one hand, the 1981–82 report carries further the Government's policy of close-ending grant—;that is, reducing grant allocation because of grant overclaim by local authorities. On the other hand, the 1983–84 report deals with the very opposite problem—;the failure of local authorities, because of the incomprehensibility of the system, to claim all the grant to which they are entitled. Thus, they are getting some more which they did not ask for, because they did not claim enough, because they did not know how to claim enough.

Then again, as the Secretary of State has told the House, the 1983–84 report withholds £280 million in grant from local authorities that are accused of overspending for the current financial year. On the other hand, the 1981–82 report refunds £77 million grant to local authorities that were wrongfully fined for overspending in that year. Last December, the House approved a supplementary report. In it, 104 local authorities, simply on the basis of their published budgets, were savagely fines for overspending in precisely the way that this report is fining 153 authorities for overspending. But now that the actual spending returns of those 104 local authorities are in, it turns out that nearly half of them did not overspend at all, although they were fined. Most of the others did not overspend by as much as the Government believed they would. In this report, of the 104 penalised authorities, 43 will get back every penny of their fine, and another 12 will be refunded more than half their fines. In all 81 of the 104 will get back some of the grant which was taken away from them by the House last year on the recommendation of the previous Secretary of State.

The total penalty has been cut by more than one third, from £201 million to £121 million, because what the Government alleged last year to be an overspend of £544·1 million turns out, on the Government's criteria, to be only £224·7 million. That was last year's whopping error. What will this year's error be? The Secretary of State talked about a £700 million overspend, but he does not know. On the precedent, it will be much less than that. The Secretary of State made a 142 per cent. over-estimate and shrugged it off as being all in a day's work, yet if local authorities are one or two percentage points out he slices them up on the bed of Procrustes. The right hon. Gentleman said that local authorities know how to calculate, which is true. The problem is that the Secretary of State does not know how to calculate. He calculates 242 per cent. when he means 100 per cent.

Hon. Members will remember the debate after which the fines were imposed. We remember the present Secretary of State for Defence parading the scapegoats during that debate. We were told how wicked south Yorkshire was, but today hon. Members will vote to give back to south Yorkshire £329,000 of its fine. The evil west midlands will get back £1,709,000. Next came that notorious wrongdoer, west Yorkshire, whose refund is £372,000. Hounslow receives a refund of £147,000, and Lewisham receives £327,000. The previous Secretary of State rounded off his list of culprits with the arch-criminal, the dreaded Dr. Moriarty of local authorities—;Lambeth council. Last year the Secretary of State docked Lambeth £3,687,000 for its alleged profligacy. He is now refunding to Lambeth every penny of that £3,687,000, and the same hon. Members who voted to take it away will dutifully march through the Division Lobby to give it back and will say that they were right both times.