Before we proceed with the Bill, I should like to say that I have received more than 76 applications from hon. Members to speak in the debate. As the defender of the interests of Back Benchers, I make a special appeal for very short contributions from Privy Councillors, even from the Front Benches, and from Back Benchers too.
I beg to move, That the Bill be now read a Second time.
The Government were elected in 1979 on a policy to restore the ability of this country to earn its living and to sustain and improve the standard of living and the quality of our public services. At the heart of that policy has been the need to curb the demands made both on individuals and on businesses by the public sector by reducing the burden of public spending and taxation. As a consequence of the measures taken so far, which were endorsed in the general election in June, inflation has come down and is set to fall still further, competitiveness is now improving, business confidence is now reviving, we are climbing out of the recession ahead of many of our competitors, and although much remains to be done the prospects for the British economy look better than they have looked for many years. If we are to achieve our goals, we must continue to urge restraint in public spending and work to reduce the taxes that people and businesses have to pay.
The Bill is about local public spending and local taxation. Although some have sought to deny it—I think that the right hon. Member for Manchester, Gorton (Mr. Kaufman) did so—successive Governments have always regarded local government expenditure as part of public spending. Rates are certainly part of taxation. I do not need to remind the House of how my Labour predecessors, in the years up to 1979, called on local authorities again and again to make substantial cuts in spending in order to strengthen the economy and defeat inflation. In 1976 the right hon. Member for Bethnal Green and Stepney (Mr. Shore) demanded of local authorities a 7 per cent. volume cut over four years, chiefly from capital spending. A year earlier the late Tony Crosland warned local government, speaking in the town hall in Manchester, "The party's over."
In the past local government has, by and large, responded. The local authority associations, then and now, accept without question that it is the responsibility of the Government, accountable as they are to the House, to set the total of public spending and that it is the responsibility of local government to abide broadly by the guideliness that have been set.
When the Conservative Government came into office in 1979 the volume of local authority current spending was set to rise by about 6 per cent. over the four years to 1982–83. Clearly that was inconsistent with the Government's policy objectives. Accordingly, in the 1980 rate support grant settlement, my right hon. Friend the Member for Henley (Mr. Heseltine) called on local authorities as a whole to cut the volume of their current spending in 1981–82 to a level around 5½ per cent. below the outturn for 1978–79.
What happened then is a matter of history. Instead of reducing current spending, local authorities as a whole increased it and this year, 1983–84, local authority budgets are running 4 per cent. above the 1978–79 spending in volume terms. In cost terms, taking account of general inflation, the increase is 9 per cent. That is the measure of the increasing burden local authorities are putting on the rest of the economy. In cash terms, spending is now £2½ billion higher than had been intended, equivalent to some £140 for each and every household in the country.
As we all know, however, that pattern is not even across the country. A few local authorities — and the Government are very grateful to them—have succeeded in reducing their spending. A much larger number have managed to hold their spending pretty well level in volume terms. But a minority have allowed their spending to rise very sharply indeed. The result has been that year after year, after figures for current local authority spending have been approved by the House in the public expenditure debate, my right hon. Friend the Chancellor has had to add back hundreds of millions of pounds to reflect the overspending; and year after year, in spite of thus raising the base line, local authorities as a whole have continued to overspend still further. In this year,1983–84, local authorities have budgeted to exceed their targets by no less than £750 million.
The crucial fact is that 75 per cent. of this overspend can be laid at the door of just 16 conspicuously extravagant councils.
Perhaps I can get further on and then I will certainly give way.
I should like to give the House a few figures because they tell the story very clearly. Since 1978–79 the average increase in councils' current spending in cash terms has been 86 per cent. But what is one to say about Islington or Greater Manchester, where the spending has gone up 105 per cent. in the same period?
This is spending. This has nothing to do with grants. I should have thought that the right hon. Gentleman would have understood the difference. I am sorry, the right hon. Gentleman's question was not clear.
What is one to think of Greenwich, where it has gone up 114 per cent., or Leicester or Camden?
Let me get a little further on because it is important that the House should hear the case. What is one to think of Hackney, whose expenditure has increased by no less than 154 per cent.? And of course top of the league, unrivalled for profligacy, is the GLC, whose spending has gone up no less than 185 per cent. Central Government have had to pay the cost of that.
There is another way to measure overspending and that is to compare it with grant-related expenditure, the assessment of the amount needed to provide a standard level of service. Any authority with a reasonable expenditure policy may be spending at or below GRE but will not be substantially above it. Yet 25 authorities this year budgeted to spend more than 25 per cent. above the GRE level. They include Sheffield at 26 per cent. above and Newcastle—I am not surprised that hon. Members express astonishment—at 31 per cent. above.
If the electors of those local authorities want their authorities to hire more teachers, more social workers, more lollipop women and more social service people, surely it is the entitlement and right of those authorities to provide their electors with those people. Is it not wrong for the Government to interfere and say "No"?
The hon. Gentleman is quite wrong. As I said before, all the local authority associations accept that it is the duty of local authorities— [HON. MEMBERS: "No."] Yes, it is—as a whole to abide by the broad general guidelines in spending that are laid down by the House. That was the policy of our predecessors and it is our policy now.
No, I shall not give way.
Of course, with profligate spending on such a scale, it is the ratepayers who suffer. In the four years between 1979 and 1983, while the RPI rose 55 per cent. and earnings rose 65 per cent., domestic rates went up on average no less than 91 per cent. [HON. MEMBERS: "Why?"] In 10 authorities, rates have increased by more than 145 per cent. since 1979–80. The GLC rate went up by 118 per cent. in just two years. [Interruption.] The right hon. Member for Brent, East (Mr. Freeson) was a member of my Department when the Labour Government reduced the rate support grant from 66 per cent. to 61 per cent., and of course this Government have continued the same policy, as the right hon. Gentleman knows, of seeking to increase the accountability of local authorities to their electors.
Whatever the bandying about between one decade and another on rate support grant levels, can the right hon. Gentleman tell us when, before the advent of this Government, there has been such a major and sharp reduction in central Government assistance to local authorities within such a short period as four to five years? Secondly, will he answer the question that was put to him in the intervention? He complains about the rate increases that he has just listed, but he does not speak about the equivalent cuts in Government assistance to the very authorities about which he complains. Let us have both sides of the story.
The right hon. Gentleman is singularly unconvincing, bearing in mind that he was a member of the Department of the Environment when it reduced the percentage of rate support grant from 66 per cent. to 61 per cent. [HON. MEMBERS: "Answer."] Yes, I shall answer. If local authorities had budgeted in line with the targets that were approved by the House, their rates would have gone up, on average, by less than the cost of living. I can justify those figures, and no doubt in Committee we shall be pressed on that matter.
Let us consider the level of rates. Of course, inner London boroughs are not responsible for education, but the average borough rate in inner London is 52·5p in the pound. In Camden, it is 78p, in Islington 94p, and in Greenwich 99p. In Southwark, it is now the staggering figure of 116p. In the metropolitan districts, which are education authorities, the average district rate is 142p. In Sheffield, it is 199p, having risen no less than 29 per cent. in two years, and in Newcastle it is now 216p.
Am I correct in assuming that if the rate support grant had stayed at 60 per cent. the rates, on average, instead of going up by 95 per cent. between 1979 and 1983, would have gone up by only 62 per cent.?
My hon. Friend is experienced in these matters. He will know that it is difficult to gauge what might have happened. [HON. MEMBERS: "Oh."] It is not simple arithmetic. [Interruption.] If Labour Members will allow me, I shall answer the point, although it is not a simple question. If reducing the proportion of rate support grant, as the previous Government did, increases the accountability of local authorities to their local ratepayers, which it does, one cannot say what the spending might have been if the reduction had not been made. That is a simple fact. One can do the arithmetical calculation, and I am sure that my hon. Friend has got that right, but that does not say what would have happened if the reduction in the proportion of rate support grant had not taken place.
I am sometimes asked whether the purpose of the Bill is primarily to cut spending or primarily to protect ratepayers. The answer is that it is both, because extravagant spending produces intolerable rate demands.
I am not misleading the House. If the hon. Gentleman had listened, he would have heard me say "non-domestic ratepayers". Two thirds of that share is paid by industrial and commercial firms. In these high-spending, high-rating areas, industry has suffered grievously from the burden of rates. In Sheffield, the chamber of trade's survey shows that rates per employee, which in 1979–80 were £255 per employee, have risen in 1983–84 to £787. Industry knows that rates cost jobs and that rates are a larger burden than national insurance surcharge and corporation tax combined. Excessive rates have added to unemployment difficulties in some areas and are certainly one of the reasons for the exodus of small firms from the inner cities.
I can illustrate that with one or two examples. The firm of Sykes Pumps in Charlton said:
One of the main reasons we decided to close our Charlton factory and move to Gloucestershire was the very high rate increases in Greenwich in recent years. This has meant the loss of about 100 to 150 jobs in Greenwich.
Let us take the case of Cedar Transport, also in Greenwich, which said:
The 150 per cent. increase in rates over four years has forced us to increase our charges and we have lost many customers. Our company used to run 39 vehicles, it now runs 6. It employed 50 people and now employs 10".
There is the plant hire company in Southwark, which said:
Next year's increase on top of the 220 per cent. increase over the last five years will take virtually all our profits. We would like to stay in Southwark but we will be forced out. We currently employ 50 people. Most of these jobs will be lost in Southwark".
Every one of my hon. Friends who represent an inner city constituency will have heard that said over and over again.
The Government have sought to increase accountability to local electors. The block grant made high spending more expensive at the margin. Local spending targets, with the holdback of grant for those who went above them, put even greater pressure on the high spenders. Supplementary rates have been banned. The Audit Commission has been set up and has started its work. Authorities must publish manpower numbers. Despite all those measures, the overspending has continued. The huge bulk of it is attributable to relatively few high-spending authorities that have made it clear that they do not regard themselves as being under any obligation to pay heed to the Government's guidelines, as endorsed each year by the House. That is the nub of the problem.
No, I shall not.
The question for the House is whether we do something about that problem or whether we just continue to let it rip. The Government, after deep consideration of the alternatives, concluded that we had to take action, and the Bill embodies our proposals.
What would be the alternatives? One alternative, which many hon. Members on both sides of the House hoped might provide a solution, would lie in finding some alternative system of taxation to rates. In the 1981 Green Paper we set out the arguments for and against various forms of local government revenue—raising that might replace the rates. Each of the possible options—a sales tax, a local income tax, a poll tax or a local share of central Government revenues—was examined minutely. Each solution had its admirers, but each suffered from fatal defects. In the event, none could be proved to be a suitable replacement for rates. None could be introduced quickly. There was no evidence that any would have had any impact on local authority overspending.
There has always been that dilemma. The more buoyant and more painless a local tax might be, the less would be the incentive for councils to economise. If councils were determined to overspend, in the way that I have been describing, the Government would face exactly the same problem, whichever system of taxation applied.
Another alternative would be to transfer a major service such as education to central Government, but surely central financing of education would inevitably lead to centralised control of education. I have never detected much enthusiasm for that solution.
Many have called for increased accountability, and there are a number of provisions in part III of the Bill that help in that direction. Clause 13 marks an important change in the relationship between local authorities and business ratepayers. In future, there is to be a statutory duty on rating and major precepting authorities to consult representatives of industrial and commercial ratepayers on their budget and rating proposals each year. Many do so already, and where such arrangements are working well we do not seek to interfere. Regulations will specify the information that must be made available to the representatives of business, and we envisage a code of practice that will allow the duty to be implemented flexibly.
While on the subject of business rates, mention two further changes. Schedule 1 will from 1985–86 give all non-domestic ratepayers the right to pay rates by instalments—domestic ratepayers already have this facility. For next year I have made an order to raise the limits for rateable value to £10,000 in London and £5,000 elsewhere. In the following year, the option will be available to all non-domestic ratepayers. I shall make regulations exempting empty industrial properties from rates.
The Bill includes also an important provision to increase accountability of councils to domestic ratepayers. Many domestic occupiers of council properties — we have heard this complaint over the years—do not pay their rates direct but have them included in their rents. Such occupiers will, from 1985, receive clear notice of their rating liability and a copy of the information about their council's budget which councils send out. We propose also to issue new rate demand rules for 1985–86.
I do not pretend—I make this absolutely clear—that those measures, useful as they will be, will have more than a small impact on accountability. The real problem is that the link between local spending, local rates and voting in local elections has become very tenuous. More than half of local authority net spending is met by Exchequer grant. Of the remainder raised from rates, nearly 60 per cent. comes from non-domestic ratepayers — industrial and commercial firms, public authorities, health authorities, universities, nationalised industries and a huge range of other bodies. None of those ratepayers has votes, and together they account for nearly 60 per cent. of the half of the money raised locally. Only 22 per cent. of local expenditure is met by the domestic ratepayer.
The difficulties do not stop there.
Many of us agree with my right hon. Friend's assessment that the present accountability is unacceptably low and should be improved. Will my right hon. Friend explain carefully how this Bill will improve the accountability of councils to their local electors?
The House has a duty to step in to protect the ratepayers in those areas with inadequate accountability. Even those who pay full rates in those areas know that on average for every £5 of spending they support they need to contribute only £1. When people talk about elective dictatorships, perhaps that is what they mean. Those who call for greater accountability owe it to the House to explain what they mean. Presumably no one is proposing votes for companies. [HON. MEMBERS: "Why not?"] It would be difficult to achieve. Conversely, are people arguing for the end of rate rebates and supplementary benefits for those on low incomes?
I am not saying that. I am arguing that, where the nexus between rates and the votes has become as slender as it has in some areas, the system does not work very well.
I am talking about accountability. Where lies the accountability of local councillors when those who pay most of the rates have no votes while many of those entitled to vote pay no rates? It is hardly surprising that in such areas councillors feel free to spend money like water. [Interruption.] I have said that for most of local government the system works reasonably well, although I am sure that more councils could run their services more economically and efficiently. The real problem lies in the small minority where the system has broken down.
Order. I said at the beginning of the debate that I was anxious to call as many Back Benchers as possible. The more interruptions there are, the more difficult that will be.
Alternative taxes would not solve the problem, and if we do not contemplate giving votes to companies or abolishing rate rebates, what is left? That is the question to which the House must address itself. Part I of the Bill provides the Government's answer. We have to put an upper limit on the spending and rating activities of the few authorities which have proved impervious to all other pressures. That provision will be backed up by the general reserve scheme which I shall now describe.
Clause 1 contains the power to prescribe a maximum for the rate or precept of a selected authority. As we have frequently said, we envisage that between 12 and 20 of the highest spending authorities will be selected. Clause 2 provides for selecting authorities whose expenditure appears to the Secretary of State to be excessive having regard to general economic conditions, but the clause also sets out two very important exemptions. Councils spending less than £10 million per year and councils spending below their GRE will be exempt from part I of the Bill. Furthermore, as many local authorities now recognise, because the Government intend to confine selection to only a very few of the highest spenders the mere fact, for instance, that a council may spend a point or two above its target certainly does not mean that it will automatically be selected.
What, then, will be the criteria? The kind of question that we shall ask is whether a council's spending is exceptionally high compared with that of similar authorities and how its spending compares with its GRE. Under the selective scheme we are going for only between 12 and 20 councils, so obviously we shall be looking only at councils which are spending very substantially in excess of their GRE. The great majority of councils thus have nothing whatever to fear from the selective scheme.
There is, however, a second criterion that we shall have in mind. There would be no purpose in applying part I of the Bill to any council which was showing itself ready to cut its expenditure satisfactorily without the need for selection. Here we shall look at the council's performance against its spending targets. If there are councils which, although historically high spenders, are making significant efforts to economise, we should, of course, wish to take full account of that. The 1984–85 budgets which will be settled in the next few weeks will provide the initial basis for rate limitation, so it is not too late even now for some of those high-spending councils to decide to take action.
One further point should be made. We are, of course, well aware of the devices for manipulating accounts to an authority's advantage—the so-called "creative accounting." In determining which councils to select for rate limitation we shall look at genuine spending levels and genuine spending reductions.
My point of order is this, Mr. Speaker. The Minister seems to reserve special venom for Sheffield, which he has mentioned no fewer than five times. Would it not be reasonable for him to give way to the Opposition just once on this as he is prepared to give way whenever a Conservative Member seeks to intervene?
I have given way to more Opposition Members than Conservative Members. Perhaps I may now continue my description of the system under part I of the Bill.
Having selected the authority, we shall then fix the level of spending under clause 3. If an authority feels that it has special problems in cutting spending, it can ask for that level to be raised. If the level can be agreed, well and good—under clause 4 the appropriate maximum rate would follow. If no agreement is reached, however, it will be for the Government to put their proposals for rate limits to the House and for the House to give its approval before the limit takes effect. Once a rate limit is set, the authority cannot go above it. It will be a legal maximum and if the authority tries to set a higher rate its ratepayers will not have to pay it.
To deal with an aspect raised in the press and elsewhere, there can be no doubt whatever that the proposals in part I of the Bill will result in a significant reduction in the level of local spending. Perhaps I may describe what would have happened if this selective capping power had been on the statute book in time for 1983–84. Eighteen authorities increased their current spending between 1982–83 and 1983–84 by 12 per cent. Assuming inflation at about 5 per cent., that is a volume growth of an average of 7 per cent. in one year. If our rate-capping proposals had restricted the expenditure of those authorities so that they reduced the volume of their expenditure by, say, only 3 per cent., spending would have been £300 million less than it is now likely to be—in just one year. Over a run of years, and taking into account the response of other authorities to the Bill, I have no doubt that the savings will be very substantial indeed.
Part I of the Bill therefore does precisely what we said in our election manifesto we should do, that is,
legislate to curb excessive and irresponsible rate increases by high-spending councils".
I come now to the second leg of this policy—part II of the Bill—which provides for the reserve scheme. I fully understand the anxieties which have been expressed about this, but perhaps I may set them in context.
First, the Government hope that this part of the Bill will never have to be invoked. We hope that the powers in part I, coupled with the existing system of block grant, expenditure targets and the other measures in the Bill, will bring local government spending into line with the Government's guidelines. Accordingly, the Bill provides firm safeguards. Part II can be brought into force only after consultations with the local authority associations and then with the approval of each House of Parliament by means of an order subject to the affirmative procedure.
In clause 10(2) there is also a power to exempt authorities from part II in any year by reference to spending levels. I am sure that Parliament would wish to be satisfied about any proposed exemption before approving the main order. I attach great importance to those safeguards. They ensure that the authority to introduce the general scheme rests firmly with both Houses of Parliament and that Parliament cannot act without the views of the local authority associations first being ascertained.
I know that many of my right hon. and hon. Friends are concerned about the circumstances in which it might be necessary for the Government to put to Parliament a proposal to introduce the general rate limitation scheme. Under part I, the selective scheme will catch the highest spending authorities. There is, however, a second tier of overspenders, less serious perhaps, whose spending and rating is certainly contributing to the overall problem, but who will, I believe, respond not only to the pressures of the grant system but also to a very real desire to avoid rate limitation under either the selective or the general scheme. There are as well, of course, the 80 per cent. of responsible authorities which are at present budgeting at or close to their targets.
What I would say to the House, therefore, is this. Any decision about whether there should be a move to general limitation must depend on the future spending decisions of not just a few authorities but of a significant number of authorities. If it becomes apparent that, for whatever reason, a substantial block of authorities are spending irresponsibly and so are pursuing a course calculated to overturn the Government's expenditure plans, we should have to consider asking the House to implement the general scheme. But I repeat that we do not want to have to do that. Only if the spending decisions of a substantial number of authorities cause us to act would we contemplate asking the House to activate the power.
I said at the outset of my speech that I understand the fears of those who dislike this legislation, not least those felt by local government itself, but it is not only on this side of the House that the excesses of some of the councils whose spending and rating behaviour are the root cause of this legislation have aroused disgust. I know that there are many in local government and many hon. Members of all parties on the Opposition Benches who deplore the way that some councils have been conducting their affairs. Some of the most responsible low-spending councils have in a sense had to pay the penalty for the excesses of the few. Because we have been unable to put a curb on those excesses, I and my predecessors have had to fix targets and hold back regimes that have made life extremely difficult for the many.
In addition, because of the overspending on current account, we have had to look for savings on capital account, something that I am sure none of us would have wished to see. If the House gives us the power in the Bill to curb the excesses of the few extravagant, irresponsible high spenders, I believe that we can look forward to restoring that traditional relationship with the vast majority of local authorities that have served this country well in the past.
In the meantime, when one has councils whose spending has risen nearly twice as fast as the average, councils whose spending exceeds GRE by as much as 20, 30 or even 50 per cent., councils whose rates have risen three or four times as fast as the cost of living, councils where the small proportion of domestic ratepayers who pay full rates are powerless to curb that headlong rush to profligacy, I say that it is the duty of the House to act. We have a duty to protect ratepayers from blatant exploitation. We have a duty to ensure that all parts of the public sector work within national economic policies. Other efforts to make these few authorities see reason have failed. That is why we seek the powers in the Bill, and I commend it to the House.
It is widely believed that the Bill being discussed today is one of the most fundamentally important measures to come before Paliament for a very long time. It is appropriate and fitting that there is such a high attendance for the debate because, if enacted, this measure will give the Government and Whitehall control over a wide range of aspects affecting the everyday lives of millions of people. That would be a very serious and fundamental change, and Parliament should pause and deeply consider whether such change is justified or necessary. Hasty and ill-considered constitutional upheaval could have very serious consequences.
We have just heard a rather pathetic speech by the Secretary of State.
It is the culmination of a lamentable performance over several months by the Secretary of State to persuade the House that the Bill has any vestige of merit. He was devoid of conviction, which is not surprising because his case lacks any sound principle and intellectual foundation.
No one in the House interested in democratic freedoms, local choice or local decision-taking, no one interested in the decentralisation of power, no one who opposes bureaucratic central control—Whitehall domination—could espouse the case embodied in this most sinister measure to control freedom proposed by any British Government this century.
It is safe to conclude from his performance that, when these proposals came before the Tory Cabinet during the last Parliament, the Secretary of State was in the majority which decisively rejected them on no fewer than four occasions. The Bill will do nothing to redress the manifest failure of the Government to resolve the major difficulties of local government finance, which are largely of the Government's making. Nor will the Bill do anything to reform the rates, as is claimed.
The Bill is not about rates reform, and it is quite deliberately and misleadingly named. The Bill should more accurately be called the "Abolition of Local Democracy Bill". Its central purpose is to eliminate the right of local communities to elect councils that will provide the level of community services that people desire.
The Secretary of State said that there was a tenuous link between local voting and rates. The tenuous link is between local voting and the Conservative party. That is what the right hon. Gentleman is really concerned about. The Bill aims to prevent locally elected councillors from deciding what priorities to choose for the people who vote them into office.
The Bill seeks to allow Ministers and civil servants to negate local democratic elections and to give bureaucrats more power over the budgets and services of towns, cities and counties than their elected councillors. Little wonder, then, that the Bill has been so comprehensively "rubbished" by all local authority associations, the professions, the press and the academic world. It is to the credit of Tory leaders in the Association of County Councils and the Association of District Councils that they have clearly and concisely denounced their own Government's policy. The Bill is a complete rejection of the Conservative party's long tradition of local government independence and has aroused more opposition from the grass roots of a party in government than any Bill in memory.
In this House, too, serious doubts and fundamental objections have been expressed in ever-growing numbers. We shall see this evening the true nature of the Conservative party displayed. If the Bill is given a Second Reading, the Conservative party will have totally forfeited any claim to be the party of individual freedom, local domocracy or democratic choice. What price now the 1976 Dimbleby lecture by Lord Hailsham—still a member of the Cabinet—that he entitled "The threat of an elective dictatorship"?
The reality is that this measure is a giant stride—the most serious and sinister yet — along the pathway to central control of all aspects of life in this country. The Government have consistently followed that pathway in all their legislation. In industrial policy, police powers, the Water Act 1983, health and social security proposals and in their general approach to information, always present, there have been more powers to Ministers and less openness and less public information. In the local government sphere it is a pathway littered with a trail of broken and castaway Tory promises.
The Government have espoused the cause of elective dictatorship with a vengeance, not just in legislation but in public appointments—in Whitehall, in the nationalised industries, in the Health Service and throughout public administration—and it has been the "one of us" syndrome. The time for this House to call a halt to these dangerous, unhealthy and unnecessary accretions of power to the centre of British Government is now. They will not produce better accountability or
better government or improve public administration. Perhaps the present Government can best be described in the words of Sir William Rees-Mogg, a former Tory parliamentary candidate, who said that the Conservatives had
ceased to be gentlemen without becoming democrats.
The Government's case for the Bill rests on a ramshackle framework of dubious assertions, unsubstantiated political claims and wholly dishonest financial and economic arguments. Conversely, the major constitutional change envisaged was given scant regard by the Secretary of State.
Ministers claim that the Bill is necessary because local government expenditure is out of control, that the medium-term financial strategy is threatened—we thought that had disappeared without trace some time ago—that the rates increases of the last five years have been solely the fault of local councils, that councils are no longer accountable to ratepayers, that only about 35 per cent. of local electors pay rates, that business has no vote, that rates are a tax on jobs and an important part of business costs and that local authorities have broken the consensus and defied the will of Parliament.
Those points have emerged in speeches by Ministers who have been forced to make such public utterances in an attempt to staunch the melting away of support. It is important to examine this ragbag of half truths, fabrications and deceptions in some detail and, in so doing, to expose the absolute dishonesty of the Government's case. I shall do that now.
In the fiscal year 1983–84, local government "overspending"—a pejorative claim in any event—is £771 million — 0·6 per cent. of the planning total for public expenditure. Total local government spending has in fact fallen in real terms. While central Government's current spending has risen as a share of national income—from 27 per cent. to 29 per cent. in the last five years—local government's share has fallen from 10·5 per cent. to 10·2 per cent.
Overall, local government current expenditure in cash terms has, it is true, increased by 90 per cent. in the same period, but central Government's similar expenditure has gone up by 93 per cent. Which is out of control? Who is profligate?
The major cause of rising rates in the last few years has been the reduction of rate support grant by the Conservatives. This support has been reduced by £2,800 million between 1978–79 and 1984–85. In addition, over that period, an accumulated loss to local government of about £9 billion has occurred. Without those reductions, and with decline in the economy, tax increases of at least 3p in the pound would have been necessary. Instead, the burden was shifted to the rates.
Much has been made of the impact of rates on industry and jobs. In 1979, when the Conservatives came to office, rates represented 0·6 per cent. of gross output, 1·6 per cent. of value added and 3 per cent. of wages and salaries. If those figures have increased, who has been responsible? All available evidence suggests that rates form a very small proportion of the cost structure of industry. Moreover, industry's share of the rate burden has been falling. In 1975–76 it was 13·4 per cent. of total rates in England and Wales, and by last year it had fallen to 11 per cent.
The Secretary of State frequently referred to Sheffield, and he mentioned Manchester and Newcastle as overspenders. If we take the increases in net current expenditure since 1978–79—the right hon. Gentleman's own figures, which he placed in the Library in answer to a parliamentary question from me — we find that Sheffield's expenditure has increased by the average increase for all local authority spending; that Newcastle's, at 70·1 per cent., is less than the retail price index; and that Manchester's, at 68 per cent., is lower than that. That is the reality of the situation in those three cities.
Between 1975 and 1981, rates on business fell by 20 per cent. in real terms. Since then they have risen as the Government have deliberately switched the burden of expenditure from the Exchequer to the rates, and it is no use Conservative Members denying that. The Under-Secretary of State for the Environment, who is to reply to this debate, wrote to Surrey county council in July 1983 admitting it. He wrote:
Such reductions inevitably put more of the burden of financial expenditure on to local ratepayers.
He went on:
I recognise that this has marked effects on the share of grant"—
referring to the reduction of grant—
and on percentage increases in rates for authorities like Surrey.
There we had a Minister from the Department sponsoring the Bill admitting the reality of that fact. That fact has also been made clear in leading articles in The Times and in the Financial Times, most recently today.
The right hon. Member for Chesham and Amersham (Sir I. Gilmour), speaking on "The World at One" today, said:
The reason the rates go up every year is because the rate support grant is cut.
Sir Robin Day then said:
But that is what the Labour party says.
The right hon. Gentleman replied:
It is not a matter of what the Labour party says. it is the truth.
Compared with VAT, the national insurance surcharge, energy costs, interest rates and the monetarist blizzard that has caused record bankruptcies and closures, rates are relatively unimportant.
The London chamber of commerce, in a survey of manufacturing and service industries, asked a number of questions about rates and businesses, and a similar exercise was conducted in the south-east. The results, which have been published, show that business men regard rates as of lesser significance than labour costs, payroll taxes, bank charges, other taxes, rent and transport costs. There is not much evidence there to support the Government's assertions.
I have a business in the London borough of Camden where there are many small and medium-sized businesses. Rates have become so high in the past year or two years that we have had to cut staff numbers in order to pay for the increases.
Presumably that is why the CBI decided to locate its headquarters there.
As the Financial Times and many economists have pointed out, there are no persuasive macro-economic arguments for the Bill either. Changes in local authority rates expenditure have no significant effect on either central Government expenditure or the public sector borrowing requirement. Councils contribute to the PSBR only through that part of their expenditure already under Whitehall control and supported through the rate support grant. Changes in rateborne expenditure do not affect the rate of monetary growth—for what that is worth—and it is not certain that lower rates would solve any business problems. According to the Department of the Environment's own survey of enterprise zones, a substantial proportion of the rate relief given within zones is immediately offset by increases in rents charged by property companies. The rates are, and always have been, a tax on property. They are not a tax on jobs.
The Chancellor of the Exchequer recently said that since 1979 local authority current expenditure had risen by 9 per cent. more than prices in general. That is true, but the equivalent figure for central Government expenditure in the same period is over 13 per cent. The Chancellor also said that the yield of non-domestic rates had doubled in that period. That also may be true, but the yield of central Government taxation has also doubled in that period—from £43·1 billion to £87·8 billion. What was the Chancellor trying to prove?
There is another misconception in the Government's case—that the public sector is unproductive and crowds out private investment. Nothing could be further from the truth. Local authority expenditure provides massive business opportunities for private enterprise. Hence the drive to privatise what local authorities are doing.
The Secretary of State has said many times—he has said it again today — that only a small number of councils need fear the proposals. Many of those councils — the so-called hit-list authorities—are recognised by the Government as having special problems. They are partnership councils. Rates control in such areas renders nonsensical that most important aspect of inner city policy. More than £400 million is pushed by the Secretary of State and his colleagues into special projects in the very councils where he now hopes to save hundreds of millions of pounds. In reality, the Secretary of State would have to act against several dozen councils to achieve worthwhile savings, unless he intends to decimate services and jobs in the conurbations and cities. That is the real reason why the general power to control any local authority budget in the land is required by the Secretary of State; and that is why that power is in the Bill.
The bureaucratic nightmare inherent in the application of such powers is clear. One envisages civil servants deciding budgets on South Tyneside, Newcastle-upon-Tyne, Hackney, Liverpool, Manchester, Sheffield, Buckinghamshire or Surrey. One envisages civil servants deciding which services can continue and which must be cut, how many teachers and home helps there should be, and what the level of bus fares should be. If it were not so stupid, it would be funny.
There is a massive inconsistency between the Minister's statement that he is concerned only to control a few authorities and his insistence on the inclusion in the Bill of such general powers. The general powers have to be there because the Government's real policy objectives are concerned far more with the overall approach of authorities than with the handful of councils that the Minister talks about. The Government know that although they argue that three quarters of the alleged overspending is done by a handful of authorities, a specific power could yield only comparatively small reductions in expenditure in any one year.
We must also remember that the so-called specific or selective powers could be generally applied. There are no restrictions in the Bill on the Secretary of State's use of the specific powers. The Secretary of State will exercise his powers to discipline authorities in accordance with principles that he will determine. Those principles do not appear in the Bill, and no restriction is placed upon the Secretary of State's freedom to use them.
The timetable envisaged is also a bureaucratic nightmare—
Purely as a matter of accuracy, I hope that the hon. Gentleman recognises that the statement of principles has to be laid before the House and that, unless the spending limit is agreed, it is only with the authority of the House that the capping process can take effect. It is not true that it is a matter for the Secretary of State alone.
We shall examine the matter in some detail in Committee. The Secretary of State's interpretation of the Bill is different from my own.
There will be many months of negotiations between the officials of the Secretary of State and the local authorities before anything comes before the House. Until those discussions and negotiations have been concluded, Parliament will have no say in the matter.
Does anyone who has seriously considered the implications of this fundamental constitutional change really believe Ministers who say that the powers will be used only in a limited way? That would belie the experience of the House and of local government over the past five years. I challenge the Government to clarify their intentions by inserting a limit on the number of local authorities to be controlled under the Bill. That would prove that they do not intend to undermine services and to reduce expenditure across the board.
In the past few days there has been a slow march of Cabinet Ministers to the lectern to send messages to their constituents in support of the Bill. Perhaps most pathetic of all was the performance of the Secretary of State for Education and Science. Within a week of being told by his own inspectors of the threat to standards in the education service caused by the shortage of resources and announcing an initiative to improve standards, he made a speech in support of the Bill and called on education authorities to cut their expenditure further. What a denial of his obligations and responsibilities that was.
Since their election, the Government have made seven major changes in the system of financing local government. The resulting instability, confusion, hostility and distrust are plain and all too predictable. At each new attempt to gain compliance, Secretaries of State gave assurances that were subsequently ratted on.
Clause 2 of the Bill clearly states that grant-related expenditure is now to be used as a test of overspending. The present Secretaries of State for Defence and for Employment assured the House and the local government associations that grant-related expenditure assessments would specifically not be used in that way.
On 17 May 1982, in answer to a parliamentary question, the Secretary of State for Defence said:
I have not at any time proposed grant-related expenditure assessments as the targets for individual authorities." —[Official Report, 17 May, 1982; Vol. 24, c. 5.]
Earlier, on 8 July 1980, the Secretary of State for Employment said:
Some people have suggested imposing individual cash limits on every authority. That would be a very serious step indeed. … When the public funds have been distributed, it is then a matter for individual local authorities and their councillors as to what their expenditure decisions are. It is their choice between services, their choice as to the volume of expenditure on those services, and their choice as to the rate levels that they decide to impose.
On the same day the Secretary of State said that grant-related poundage and grant-related expenditure
is in no sense a prescriptive definition by central Government of what the local authorities should spend".—[Official Report, 8 July 1980; Vol. 988, c. 304–313.]
The Conservative-controlled Association of District Councils says of grant-related expenditure assessments:
They are grossly unsuitable as individual targets because of the numerous and significant anomalies they contain.
The Secretary of State now proposes to go back on those commitments.
To underline those points, it is worth considering a few examples. Grant-related expenditure in Hackney is £59·25 million. Its budget is £81·34 million. Is it supposed that a cut of over £21 million can be enforced upon the London borough of Hackney? Similar arguments apply in Newcastle, south Yorkshire, Sheffield and the Tory-controlled shire counties. The differences between GREs and budgets are often colossal. If cuts of such magnitude are envisaged, some services would cease and areas of local administration would collapse with misery, deprivation, neglect and massive job losses.
In any case, between 1979 and 1983 Newcastle—on the hit list apparently—and Thamesdown—at the top of it apparently—and Middlesbrough raised expenditure by less than was needed even to keep pace with inflation. Why are those authorities under attack now?
Local authorities were also promised that the hold-back and penalty system would affect only a few councils. This year, dozens are to be penalised including 23 out of 37 members of the Association of County Councils. Next year, according to the Conservative chairman of the ACC, John Lovill, all members of the Association of County Councils will be affected by the penalty system.
As Mr. Noel Hepworth, the director of the Chartered Institute of Public Finance and Accountancy, demonstrated in an excellent article in The Times yesterday, the argument about which authorities should be controlled and what tests should be used is exceedingly confused. He also shares the view that these proposals are unlikely to produce immediately, or in the foreseeable future, reductions in spending to the level that the Government apparently require. We understand that the Secretary of State was so embarrassed about the predicament of Reigate that the Department of Employment computer became so overworked that it disappeared up its own VDU in an attempt to find a solution. The list of broken assurances and promises cast aside is one of the principal reasons why all local authority associations have said, "Enough is enough."
I challenge the Secretary of State to tell the House how much expenditure he expects to save in the first year of its operation if the Bill becomes law. If the Tory manifesto hit list is used and those authorities apparently marked out for abolition are discounted, an overspend of barely £82 million remains. Does the House believe that a major constitutional change is required to tackle that problem, or is the Government's secret intention to control many more council budgets and to slash services to millions of people?
It is pathetic and frightening to listen to the arguments that we have had from Ministers in favour of overriding the will of local voters. Apparently, the only manifesto that now matters is the Tory one in general elections, which in 1983 was supported by 31 per cent. of the electorate. We are told that the elderly, disabled, unemployed and disadvantaged should not have as much say as business men about the services upon which they depend. That is a naked attack on local democracy and universal franchise. We are told that business has no vote. That means that Ministers want business people to have two votes.
Ministers have argued that one person only in a household pays the rates. That demonstrates—
In that case, why have successive Ministers been deploying the argument for so long? Ministers have argued that only one person in a household pays rates, and that demonstrates how little they understand family income and expenditure in ordinary family homes, where everyone who can contributes to the family budget.
It is also explained that only 35 per cent. of local electors pay full rates and that therefore accountability is diminished. By the same token, only 45 per cent. of national electors pay tax. What are we arguing about? These arguments are spurious excuses for the Government to run roughshod over the local democratic process. No one disputes that Parliament's will is paramount, but the Government have broken the consensus with local government, not the reverse.
It is untrue that there was ever any agreement between central and local government about aggregate expenditure. The Government's claim that an agreement existed that local authorities' aggregated expenditure should not exceed planning totals determined by Government is a fabrication. Nor is it practicable to suggest that Parliament will decide the detail of individual council budgets and services. That will be done by civil servants — the codification of "Yes, Minister".
This fundamental constitutional change will not enhance local democracy; it will diminish it. The reasons for the Bill are political and not economic. First, it is an attack upon the public sector—on the public provision of decent services for the community by the community. Secondly, a political response to the appeal to curb local government to make it accountable to more central control will make local government less accountable to local ratepayers. Local authorities make an essential and vital contribution to the well-being of the communities that they serve. They provide crucial services on which the stability and well-being of our society depends — education, housing, public health, the environment, social services and the police.
The Bill seeks to remove from local authorities the right of control over those services and concentrate power within Government to an extent unparalleled since local councils were created.
The Bill aims to remove the bulwark of local rights used by councils of all political persuasions to prevent the worst excesses of the failure of the Government's economic policies damaging the interests of those least able to defend themselves. It is a further attempt to redistribute resources away from those who need them most and a further step towards the compassionless society that the Prime Minister seems so determined to establish.
Coming on top of the disgraceful rate support grant statement in December, the Bill can leave no one in any doubt about the Prime Minister's intentions to subjugate the democratic process as a subterfuge for that unmentionable political reason for this measure and to disguise the fact that the Prime Minister herself has ratted on perhaps the greatest vote-catching promise of all—to abolish rates altogether. In the Bill, rates are to be enshrined in central Government policy — a canon of Tory policy — which is the absolute reverse of that promise.
The Secretary of State has even threatened to resign if the Bill is not carried. It is worth while remembering that the right hon. Member for Henley (Mr. Heseltine), the previous Secretary of State for the Environment who is now the Secretary of State for Defence, published and then withdrew two local government Bills in the previous Parliament. He neither threatened nor offered to resign. He did, however, threaten to resign, we are told, if rates control was imposed upon him by the Prime Minister and the Treasury—quite a comparison between him and the present Secretary of State for the Environment. The time to stop the Bill is now. The House of Commons should ensure that it is withdrawn.
What we require are Government discussions with local authority associations, involving all political parties, on the restructuring of local government finance. Such talks should begin immediately to prevent further absurdities from occurring.
Could the Secretary of State for the Environment, who moved the Second Reading of the Bill, be the same person who, at a Conservative party summer school, said:
It is essential that local authority spending programmes should be subject to the democratic control of local councils. Grants can be fixed at such a level that local authorities' expenditure could be made within an acceptable increase in the rates. If any particular authority wishes to spend more than this then that excess must come wholly from the rates. The resistance of local ratepayers could usually be relied upon to prevent extravagance".
Can the Prime Minister, who has foisted the Bill on her Cabinet, be the same person who said:
One must always keep sufficient expenditure with the local authorities; otherwise the whole basis of local government is undermined for good and all. The task of a local councillor who was not responsible for rating would be absolutely marvellous. He could demand everything, the sky would be the limit and he could blame the Government always if he did not get it. It would cease to be local government. It would cease to have any semblance of responsibility whatever. In these circumstances I think I should very much like to be a local councillor. One would get the best of all worlds.
It would be tempting to say, if only to frighten some Conservative Members, that two can play the game of controlling council budgets. But on behalf of my right hon. and hon. Friends I give Parliament this assurance, and I also give it to local electors—
We in the Labour party want none of this Bill. We refute the arguments for it. We denounce the philosophy behind it. It is economically, democratically and morally indefensible. We shall fight it, and I invite all hon. Members who value and support local freedom to join us.
The Bill raises for me a matter of principle of the deepest importance. I believe this to be the case with many Conservatives, both inside and outside the House. It goes to the very root of Conservative philosophy, which has endured for centuries. It has always been Conservative philosophy that one of our main purposes in politics is to balance the power existing in our society. In particular, we have been opposed to the centralisation of power because we have throughout realised the intense dangers to freedom that that holds for everyone. The Bill deals with the balance of power betwen central and local government, and weighs it now heavily on the side of central Government.
My right hon. Friend the Prime Minister said in answer to a question this afternoon that it had long been accepted that the local authorities knew best. With that I agree entirely. If they know best how they wish to carry on their services, they should be enabled to raise the resources needed for those purposes. One cannot say that they know best and then deny them the means by which they may carry out their judgment. Nor can I accept the view expressed by my right hon. Friend the Prime Minister later that, because the House is responsible for financial matters and national taxation, it should therefore take over the responsibility for the rate taxation of local authorities. The logical conclusion of that view is that all local government finance should be taken over by central Government. Of course, some people wish to do that and have so argued for a considerable time. They have said, "Very well, take over the entire education expenditure and the police and all other services and finance them from central Government, and then there would not be a rate burden". That policy has been rejected by successive Conservative Governments for the reasons that I have given.
I entered the House in 1950 having fought an election on Mr. Churchill's theme that we were to set the people free. The theme was not to set the people free to do what we tell them but to set the people free. With it went a companion theme, that local government should be local. I have fought every election since 1950 on that theme.
My right hon. Friend may remember clause 13 of the Counter-Inflation Bill 1973. When he introduced the White Paper, he said:
We also have had to strike a balance between the improvement of local authority services and the impact of rates on the lower-paid. For these reasons we have accordingly increased the rate support grant to local authorities"—
My right hon. Friend continued:
and we are asking for powers to monitor the rates position with them to see that the changeover to revaluation is not in any way abused."—[Official Report, 24 January 1973; Vol. 849, c. 472.]
How does that square with my right hon. Friend's assertions on rate principles?
It squares perfectly well. It was designed to help local authorities in their difficulties. Any Government are entitled to ask for statistics to ascertain how they should help, how much help should be given and whether current help is being used. I am sorry that my hon. Friend should have lowered himself to such a level.
Secondly, the Bill confers enormous powers on the Secretary of State. It is in his discretion to determine what the criteria are for the action that he takes. The extent to which he applies the criteria lies also within his discretion. Further, it is within his discretion to exempt certain authorities from the criteria without anyone knowing his reasons for doing so. Those are draconian powers in both the selective section of the Bill and in the general powers section. They are powers such as we have never taken before, even in two world wars. This is why I regard the conferment of the powers as a matter of principle of the utmost importance.
The hon. Member for Copeland (Dr. Cunningham) deployed the pragmatic arguments in postulating whether the operation is worth while. As I am dealing with the issue as a matter of principle, those to me are arguments of a different calibre. However, I agree that it is necessary to ask my right hon. Friend, "But what are you getting in return for taking these draconian powers and for bitter fighting in the House, with Conservative councillors who are our supporters, and with many of those who really care about the constitutional basis of this country?" I deeply resent the accusation that has been made against Conservative councillors who are opposed to the Bill to the effect that they are opposing it purely on account of their vested interests and because they want to feather their own nests. No suggestion could be more unworthy. No councillor has an easy job today, and we should reject that argument completely.
I have been worried by the difference in emphasis in the White Paper on the purpose of the general powers when compared with what has been said by my right hon. Friends from the Government Front Bench since the Bill was published and the adverse criticism of it arose. In the White Paper it appears to be taken for granted that it will be a simple and straightforward business to take over the general powers if that is what the Government decide to do in the interest of their monetary or financial policies. Since the White Paper's publication, Minister after Minister has said, "That would be done only in the most extreme case." The Secretary of State has emphasised that again today. If my right hon. Friend thinks that that would be done in only the most extreme case, much the best thing would be not to take the necessary power. Let him come to the House and ask for the necessary power if an extreme case arises. The House would then be able to judge whether extreme powers were necessary.
That is not the entire answer because there is nothing to prevent my right hon. Friend doing everything that he can under the general powers and the selective powers, except for the £10 million limit. That is the only inhibiting factor and that applies only to the smallest of local authorities. My right hon. Friend may say in Committee, "I give up that part of the Bill", but that will not prevent abuse by a Minister of the whole of local government finance except for the smallest entities. As there is no provision for the indexation of the £10 million, the number of authorities that will come under the general powers will steadily increase. An offer from a Minister to abandon the general powers provisions would not alter the argument of principle on this issue.
I am fully aware of the problems that surround rates. I recognise that there is a difference between this period and that which prevailed 10 years ago. At that time the pressure was for changes in domestic rating. That was understandable because there was a feeling of injustice on the part of pensioners who were single ratepayers who lived next door to a house that was occupied by several wage earners. They felt it unjust that they should have to pay the same rates. In dealing with that feeling of injustice, we extended the rate rebate system extensively in the 1970–74 Parliament.
Industry remains in a state of depression and obviously feels the burden of rates considerably. It is felt especially by small businesses. We know that from our own constituency experience. That does not alter the fact that when rates are set against the total production of industry and its manpower and other costs, they are seen to be a comparatively small ingredient. Nevertheless, every ingredient matters. But that does not justify the argument that has been constantly advanced that the proposed changes should be made because business men do not have votes. Under our electoral system, there are those who have votes on matters with which they are not concerned and those who do not have votes on some matters with which they are concerned. That is accepted as part of the electoral system. However, we know from constituency experience that many business men live in the constituency in which their business is located, live in the borough and live in the rate-levying authority, and can influence it. Perhaps it would be a good thing if many of them took a more active part in local government.
My right hon. Friend the Secretary of State says that: in some areas the public are not responsive to what a local authority does or to its rates. Surely the answer is to persuade the people to be more responsive, and as a party we have that responsibility. From time to time the party has had amazing success in some of the Labour-controlled; authorities that have been damned this afternoon.
One of the many requirements is for local business men, members of chambers of commerce and others to take their part in local government. I welcome the provisions in the Bill for consultation between industrial organisations, commercial organisations and local authorities before the spending programme is set. That shows a movement towards consensus that I feared had been lost some time ago. That is to be welcomed but it is not the same thing as taking part in local government.
I ask myself how many members of the Institute of Directors are local councillors or do any work for the election of local councillors. How many members of the CBI are so engaged? I recognise that there are notable exceptions, including notable firms that require their members to take part in this work. However, to the great majority, local government is something to be left en one side. We are seeing one of the consequences of that.
I am sure that my right hon. Friend will appreciate that most business men, especially at a time of deep recession, have only a limited amount of time at their disposal. It is wholly unrealistic to expect them to be able to give the enormous amount of time that is now necessary to devote to local government business. How would my right hon. Friend represent, or have represented, the interests of domestic ratepayers who live in areas where the majority of the voters do not themselves pay rates? How are they and the business ratepayers to be protected if the Government take no action?
Those in that position can take part in local activity in the area in which their businesses are based. I appreciate my hon. Friend's argument about the amount of work that business men have to do, but that applies to all sections of society. It applies to professional men and to all others except those who have retired. If retired business men want to take part, I suggest that they should do so. The attitude of putting it on one side is not acceptable.
In regard to the relationship between local authorities and voters we have made a mistake in the past, with the Greater London council and other authorities, in having a gap of four years between elections. Of course, this was done for a good reason, which was to cut down expenditure on elections and, as some said, to give continuity. But it has prevented the electorate reacting speedily, as is desirable, to the work of a local authority. It has also meant that in the GLC there has been a swing every four years from one side to the other. Therefore, as a practical proposal, it would be useful to move to a system of more frequent elections.
I do not wish to go into all the statistics that have already been mentioned—
It would be briefer if I was not interrupted by my hon. Friend muttering behind me.
The general conclusion of those who have examined the statistics is that no major macro-economic benefit will accrue to the Chancellor of the Exchequer or" to my right hon. Friend the Secretary of State by the action which he is taking. If one is judging this purely on the benefits as against the costs, which will be political and much more dangerous, my right hon. Friend will not get any great benefit out of it.
I wish my right hon. Friend had given more details and an overall balanced assessment of what the burdens of local authorities have been, because they have been much more considerable than he indicated. In my constituency of Bexley there has been a Conservative council for many years. It is now over 22 per cent. above the assessment and some 2 per cent. over the target. Other councils, which have struggled hard to keep down their expenditure, are in a similar position. Councils such as Barnet, which includes Finchley, are all over the target. Local authorities must be given a fairer assessment of their expenditure.
I want to conclude by referring to the action that I think should be taken. The Government have turned down all alternatives. They turned down first the re-rating of agriculture, which would be a means of getting back some of the money spent on the common agricultural policy. I can understand that the advice may have been that there are political objections to this. With modern technology there could be a local income tax combined with national income tax but its great weakness would be that it would not bring home to the local voter or the local resident what expenditure was being incurred through the activities of his local council. That must be a major disadvantage.
We have had inquiries on functions and on the structure of local government — Redcliffe-Maud. We have had inquiries on the finance of local government. We have never had a proper inquiry into the relationship between the functions and the finance of local government.
It has been said that a further inquiry, or discussions between parties on finance, is required. It is necessary to examine finance and functions to get the balance right so that there can be a decision as to whether some functions individually should be taken over by other authorities or by central Government or whether funds should be increased for local government to deal with the burdens that it has.
I do not want to see the Bill carried through. I ask my right hon. Friend what we would have been saying about centralisation and control from Whitehall if the Labour party, as the Government, had introduced such a Bill. The complexity of the Bill will lead to an enormous growth of bureaucracy. Ministers themselves will not have the time to go into the details of each local authority and it will have to be left to civil servants. Those who are so strongly supporting the Bill but, at the same time in leaders in the press, are damning bureaucracy ought to think about that aspect of it. I do not believe that these powers should be given to the Minister. The Bill should not be kept on the Floor of the House.
My right hon. Friend has offered to resign. That is the last thing I want him to do. I have great respect and affection for him. I am grateful to him for what he did in the Parliament of 1970 to 1974 and what he has done in the Government since. All I am asking him to do is to recognise that to deal with these few authorities and an amount which is a minute part of either Government expenditure or the public borrowing requirement is not worth a breach of a major Conservative principle. He will gain respect if he takes the Bill away and lets us have a proper analysis of the functions and finances of local government. Let him come back with the answer for that. Then he will get the praise of both sides of the House and of the country.
In opposing the Bill I am conscious that no words of mine would be capable of expressing its devastating constitutional consequences or its chilling social concomitants. When the Secretary of State goes to bed at night and shuts his eyes, whatever else he does I am sure that he does not think of Hackney and the poorest people in the poorest borough in the country, according to the 'Z' indices of his Department.
We have asked the Secretary of State, as a reasonable man, to come to Hackney and see the kind of burdens faced by a society where there is barely social cohesion in the struggle for survival. As an unreasonable man, the Secretary of State has refused to come to Hackney because he is not prepared to face his duties, obligations and moral and political responsibilities. Therefore, the borough of Hackney is doing the only thing it can—it is taking the Secretary of State for the Environment to court, and proceedings are about to start. I suspect that when he appears in the dock he will be found guilty of robbing pensioners, children and the sick.
The borough of Hackney will ask the High Court of Justice to undertake a judicial review of the operation of the Minister's function under section 59 of the Local Government, Planning and Land Act 1980 and section 8 of the Local Government Finance Act 1982 on the grounds that the Secretary of State's actions have been unreasonable, capricious, unfair and unlawful.
There are four strands in the thinking behind the impending High Court action. First, the Secretary of State has not paid attention to whether his targets are attainable. Secondly, he has had no regard to the effects of his targets on Hackney's statutory duties and responsibilities. Thirdly, in the targets that he has set for this year, he has maliciously and unlawfully intended to penalise Hackney for expenditure undertaken in previous years. Fourthly, he is in error in assuming that the grant-related expenditure targets that he has set are an expression of the real social needs of Hackney.
I invite the House to agree that it is arrogant and constitutionally dangerous for the Secretary of State to maintain that he and his civil servants alone know the proper way in which to solve the problems faced by Hackney.
According to the 1981 census, 17 per cent. of Hackney's population is of pensionable age, 22 per cent. is under 15 years of age. the current rate of male adult unemployment is 26·8 per cent. and 10 per cent. of households have to share a bath. Moreover, two out of three households do not own a car. Hackney has the highest proportion of single parent families of any borough in the country and suffers the worst overcrowding in London. Wages there are 7 per cent. below the national average and more than 20 per cent. below the London average. Babies born in Hackney are 2 lb. lighter than those born in Hampstead because of nutritional deficiency, and 27 per cent. of Hackney's residents were born overseas.
As councillors in Hackney are struggling to deal with more widespread and intense problems than those encountered in any other part of the country, how dare the Secretary of State, the almighty and omnipotent, tell them how to deal with their problems? That simply does not make sense.
My plea is that the Secretary of State should have some regard for local democracy in Hackney. He should also have some regard for his being Secretary of State for the Environment. This morning I spoke to officers of Hackney council. They told me that, acting independently of councillors, they conducted an inquiry to assess what cuts can be made. They said that, irrespective of what councillors want to do, even if they were to make millions of pounds worth of cuts in public expenditure, they would still end up £10 million over target if they carried out their statutory duties and basic obligations to meet social needs in the borough. They maintain that the Secretary of State is asking them to do the impossible. They know that that is the truth and are prepared to swear to that effect in the High Court. Is the Secretary of State ordering Hackney to behave unreasonably, capriciously, unfairly and unlawfully? That seems to be the effect of the Bill.
We have reached present circumstances through two routes. Their cause is not through massive overspending by Hackney but through a series of changed definitions which have operated from 1980–81. As we have changed those definitions from the transitional arrangements to the barest definitions of targets and bases, we have slowly screwed down boroughs, such as Hackney, so that they are now told that they are overspending massively. That is not true.
On a national level, we already have government by the corporate state. That is not democratic. The Bill will result in the corporate state eliding with and then becoming part of the authoritarian state as state power increases massively. I cannot believe that the British people, least of all the people of Hackney, are prepared to put up with that burden. I hope that the House will oppose the Bill.
My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) has expressed the greatest reservations about the Bill. He echoed reservations similar to those that others of my right hon. and hon. Friends have expressed elsewhere in recent days. I have no doubt that they all represent areas that are well administered. I can understand that where local councillors are struggling to set the rates at a level which ratepayers can bear, they will feel some resentment that the Government should now find it necessary to reserve for themselves general powers to interfere in their hard work. However, not all local authorities are of that calibre.
I ask my right hon. and hon. Friends who feel in the way that I have described—for the best reasons and as a result of high principle—not to do or say anything that would mean the loss of the selective powers which are proposed in the Bill.
My constituency falls within the London borough of Haringey. That borough has the unenviable distinction of being the highest rated in Greater London. The non-domestic rate is now 261p in the pound. Moreover, we have suffered an increase in rates of 127 per cent. in the past five years. The effect of that is devastating.
No. Mr. Speaker has asked us to proceed quickly, and I am trying to do that.
People are leaving the borough in droves. They tell me that they cannot afford to live in the area. They move across the borough border — sometimes a matter of hundreds of yards — to Enfield and Barnet where rates levied on identical properties are about one third less than those levied in Haringey.
There are reasons for what I have described.
In the last 12 years, over which the Labour party has been in control in Haringey, the authority's staff has increased by 30 per month. At the same time there has been a dramatic decrease in population. Schools have closed down because of falling school rolls, but the number of teaching and non-teaching staff has increased substantially. A direct labour force, which is losing money hand over fist, is kept on for doctrinaire reasons in spite of its being uncompetitive. Private property has been bought wholesale and kept empty. I calculate the loss in rates, rents and interest charges from those properties to be about £4 million a year. I could explain why the rates are so high in Haringey compared with other London boroughs. At the root of the problem, however, is bad administration.
Accountability is another consideration. As I have said before — it is now almost a cliché—the relationship between local government and its electorate is now one of taxation without representation and representation without taxation. When that exists, it is not possible to rely on the ballot box to control the budget as councillors know that they can appeal successfully to elements in the community that they represent which are more interested in expenditure being increased than in rates being under control. That is what appertains in my constituency.
In such circumstances, it is right — my constituents are asking for it—that the Government should intervene to protect ratepayers by putting a ceiling on rates. That ceiling should be reasonable and responsible, and below it councillors should be free to order their priorities in any way that they wish. There must be such protection, and, under the present system, the ballot box does not provide it. That is my short plea. I hope that my right hon. and hon. Friends will bear it in mind.
The theme of the speech of the hon. Member for Hornsey and Wood Green (Sir H. Rossi) appears to be that if democratically elected authorities do not exercise the powers which the House has given them as he wants those powers should be taken away. That is the heart of the Bill. That is why it is so utterly foreign to the the traditions of the country and the House.
This is a most extraordinary Bill not simply because of the very serious constitutional consequences but because it comes from a party that is supposed to be philosophically dedicated to freedom and against centralisation. That is what makes it such a strange Bill.
Today is a very black day for anyone who has any feeling for local government. I know that the many hon. Members on both sides of the House who have spent many years on local authorities, as elected representatives, as I have, will be able to do nothing but shed tears for our democracy if the Bill is given a Second Reading tonight. Democracy began at local level in this country. The local government traditions in England go back far beyond the origins of Parliament itself. The anti-local government campaign that has been the prelude to the introduction of the Bill is one of the most disgraceful episodes in our political history. A propaganda campaign, orchestrated by Ministers and supported by some sections of the press, has completely changed the meanings of some words.
The word "overspending" has come to mean something quite different from what it meant last year or the year before. Overspending by a local authority means the authority spending more than it intended. According to Ministers, it means authorities spending more than the Ministers intended them to spend. There has been a complete change in the meaning of that word.
Ministers pretend that the Bill is necessary because some local authorities have broken a sort of gentleman's agreement and are in breach of a convention that the total of local authority expenditure has always been controlled by Ministers. The fiction has been put around that authorities, because they are controlled by nasty, irresponsible people, are in breach of that convention. There never was such a convention. The figures that the Government used to publish on the total of local authority expenditure were never targets but merely estimates. To suggest that local government officers have broken an agreement is an absurd distortion of the truth.
That point was made by the right hon. Member for Old Bexley and Sidcup (Mr. Heath). I thought that he put his finger on the point very well. I only wish that he had understood the need to get local government finance right before altering the structure of local government in 1971–72. However, I am pleased to note that he has learnt it now.
There has never been a need for Ministers even to influence, much less control, the total of local government expenditure. There is no economic case for that. The level of rates has no bearing whatever on the national economy, except to the very limited extent that they can affect a company's competitiveness. [HON. MEMBERS: "That is right."] I am glad to hear that Conservative Members agree with me. That extent is vary marginal. I do not want to cover the same ground as my hon. Friend the Member for Copeland (Dr. Cunningham). He made an outstandingly good speech from the Opposition Front Bench. However, I must say something on this point. Rates are a very small element in production costs. I do not know why the Government should feel it right to control that tiny bit while apparently not taking any steps to bring down energy costs, which are a much more significant factor.
That would be the logical outcome of the Government's philosophy.
If Ministers are concerned about the rate burden on industry, let them tell the House and industry why they have deliberately increased that burden over the past four years by drastic reductions in the rate support grant. My hon. Friend the Member for Copeland made that point, and I hope that it will not be overlooked. I get rather cross when people such as those in the Confederation of British Industry and the chambers of commerce constantly criticise local authorities for increasing rates and do not place the blame where it belongs.
In my constituency in south Yorkshire, the county council is on the hit list. The Minister regards it as an authority that overspends. Much of its expenditure is on the extremely popular fares policy, which is almost unanimously supported throughout the county. That expenditure is reflected in the precept in the rates paid in my constituency.
The rate imposed on industry in Rotherham in the current financial year, despite the heavy precept from the county council, is 132·90p in the pound. In 1979–80 it was 77·53p in the pound. If the 1979 level of rate support grant had been maintained, the commercial rate needed to meet the current year's expenditure would have been only 96·85p in the pound — 36p less. It can be said, quite properly, that if the rate support grant had been maintained perhaps the council would have decided to increase total expenditure. That is fair, but it is speculation. What is an absolutely incontrovertible fact is that almost two thirds of the increase in rates imposed on industry in Rotherham in the past four years is directly attributable to cuts in the Government grant. No one can escape that fact.
Therefore, the Government's case on industrial rates is totally false. All that is left is the argument about domestic rates. My hon. Friend rightly said that members of households contribute to the rates. It is nonsense to say that only X per cent. of people pay rates. Indirectly, everyone who lives in a house helps to pay the rates. Those are the people who have the right, through the ballot box, to change the membership of the local authority. Surely that is what should happen in a democratic society.
If the Bill is enacted, the Department of the Environment will become the majority party on every local authority in Britain. That will make a hollow farce of our elections. The Secretary of State should tell the House when he proposes to introduce a Bill to abolish elected local authorities. That is what the path that we are now on is leading to.
I welcome the fact that some Conservative Members have expressed their opposition to the Bill. I was particularly pleased to hear the comments of the right hon. Member for Guildford (Mr. Howell), who in the debates on the Transport Bill spent a long time expressing the opposite view to the one that he now holds. I am pleased to hear about his conversion. We are assured on biblical authority that
joy shall be in heaven over one sinner that repenteth, more than over ninety and nine just persons.
Those Conservative Members will gain nothing but honour and respect from the public if they vote with us against this appalling Bill.
I am sorry to have to say that I believe that this is one of the most deplorable Bills that has been brought before the House in all the time that I have been a Member.
The Prime Minister said just before Christmas that the proposal to cap rates was overwhelmingly popular among ratepayers. That may be true, but, if so, it is because the public profoundly misunderstands the nature, purpose and effect of the Bill. Its nature is undemocratic and contrary to the spirit of our unwritten constitution. Its purpose is to create the illusion of rate reform and rate reduction while avoiding the fundamental changes in the structure of local government finance that are needed. The effect will be damaging to local democracy but minimal in its consequences for the national economy or, for that matter, for rates or rating reform. On the Secretary of State's own figures, if this Bill were in operation today some £300 million might have been saved by capping. That is out of a total of over £12 billion of rate expenditure and in relation to a total national expenditure of £126 billion. This is why I say that it is a sledgehammer Bill just to crack a few nuts.
Before Christmas I told my right hon. Friend the Leader of the House that I thought that this was
a classic example of elective dictatorship."—[Official Report, 22 December 1983; Vol. 51, c. 570.]
and that phrase has been taken up. It is, of course, a phrase taken from the Lord Chancellor's notable book ''The Dilemma of Democracy", in which he argued powerfully that in this country we are halfway between two inconsistent theories about the nature of democracy, indeed about the whole nature and function of government. The first theory is that of centralised bureaucracy, which the Lord Chancellor describes as "elective dictatorship" and the second is that of limited government which is, in the Lord Chancellor's language, the doctrine of freedom under the law. The Lord Chancellor is right when he says that there is ultimately no possibility of compromise between those two theories.
One of the specific consequences of an elective dictatorship, according to the Lord Chancellor, would be the destruction of local authonomy. "The Dilemma of Democracy" — I think that the Secretary of State for Education rather likes these reading lists — should be compulsory reading for every member of the Cabinet except, of course, the Lord Chancellor, who should simply be reminded that he wrote it.
In the White Paper the Secretary of State has proclaimed that
we live in a unitary and not a federal state".
That rather over-simplistic view raises the question of what state we live in or what sort of state we want. We are only a unitary state in the sense that Parliament is supreme. We can pass whatever legislation we like, pass this Bill, extend our life, censor the press. The only limitations are moral and unwritten and are based on the acceptance of the need for certain checks and balances, including the maintenance of the historic relationship between central and local government.
In an article on 5 January, the New York Times pointed out that the rule of law in British society has become very limited by American standards and it commented,
talk of Parliamentary supremacy really amounts to giving the executive a free hand.
Of course, it does not have to be so. If the House has the will, then it has the power to curb the executive. This is the real issue before the House today.
There may, as my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) said earlier, be a case for rate-capping selected authorities where it can be shown that they have abused their powers and functions, but each case ought to be examined on its merits and approved by Parliament, because when we rate-cap a local authority we are, as it were, putting it into commission. The criterion for such action should be clearly defined and should be in the legislation.
The observations that the Secretary of State made today are of no help to us at all. He says that he might do it "on this basis" or "on that basis". This is a totally unfettered discretion that he seeks and that I do not think he ought to be allowed to have. There can be no case at ail to my mind for the sweeping general power sought by the Government.
It is not sufficient, as the Secretary of State says, for it to be a reserve power which he does not expect to use. If that is the case, why have it? There is no merit at all in the argument that clause 9 provides that this great sweeping general power can be approved only by an order passed by both Houses of Parliament. We know what that means—an hour and a half's debate at ten o'clock with no possibility of amendment. No one can describe that as bringing this sweeping general power back under the control of Parliament.
A Conservative Government may believe that they will always exercise their power wisely, but that is not a good reason for increased central control. It has never been a principle of Conservative Government, wet or dry, Right or Left, that the gentleman in Whitehall knows best. In fact, we used to go about proclaiming "Town hall, not Whitehall", and how foolish Mr. Douglas Jay was to say that the gentleman in Whitehall really does know best. Legislation should not rely on the good intentions of present Ministers; on the contrary, it should provide restraints on a bad Minister who may exercise power unwisely in the future. My right hon. and hon. Friends are very happy that power should be in the hands of the Secretary of State at present, but suppose that Secretary of State were Mr. Ken Livingstone, who might take the view that it would be right to rate-cap rural authorities that were spending too much so that more money could go into inner city areas.
Since 1601 every local authority has had the right to levy the rate that it considers necessary to fulfil its statutory functions. That does not mean that it can spend anything it likes. It is bound by the doctrine of ultra vires. Its capital expenditure has always been controlled. For the rest, it must justify expenditure by relation to a statutory function. The only freedom that it has is the so-called tuppenny rate, and there has been criticism because that has been abused. However, even if that were abolished altogether, there could be no more than the saving of the tuppenny rate.
The truth about this Bill is that, quite apart from it being a major constitutional measure, it is as if the Government are trying to disguise the realities of the rating situation by showing that they are just doing something. In my view, the constitutional issue is so important that, as we have had no debate on the White Paper, the minimum of intervals between First Reading and the debate today and no opportunity, because of the recess, to discuss it in committee, the Government ought to agree to take the Committee stage on the Floor of the House. If they are not prepared to do that on an issue of this kind, I shall certainly vote against the Second Reading of the Bill today. If the Government think so well of the Bill and if it is so popular, they will be only too glad to have its merits proclaimed as widely as possible.
The truth is that the Bill does nothing to deal with the real problems of rates, rating reform and the distribution of rates. I accept that industry and commerce have a grievance. They pay something like 57 per cent. of the total rate. That is because successive Governments have deliberately moved the burden of rates away from voters to non-voters. We should redress that. We should consider a measure of industrial de-rating. That would create real jobs and real growth. I would certainly be willing to see a measure of that kind go through the House. However, as we have shifted the burden from voters to non-voters, so we have shifted the burden of expenditure from central Government to local government. We say that the rates are a bad tax, yet we have loaded the rates with more and more of the public expenditure. So, in spite of the fact that local authorities have reduced their expenditure while central Government have increased it, in real terms the rate burden has gone up.
I shall illustrate this by reference to Northumberland. Had the central grant been the same this year as in 1977–78 the rate would have been 103p in the pound instead of 158p. However, I do not think that many of the ratepayers really understand how this has been done. It may be right for the Government to reduce general Government expenditure and the general contributions to rates, but the Government should not then pretend that this has no effect on the rate bill that is presented. No one suggests that local authorities should have complete autonomy when central Government provide so much of the expenditure, but the powers of this Bill are totally unnecessary and will lead to greater confusion.
We have been told that there have already been seven grant systems and four Bills, two withdrawn. We could make this another. As a result of what the Government have already done, the local government finance system is in utter chaos. It is a complex, unscientific, muddled mess and whether the authority is extravagant or prudent, Socialist or Conservative, it does not know from year to year, even month to month, what grant conditions are to be imposed. The Bill does nothing to improve that situation. The Government have come to the conclusion: "Something must be done. This is something. Let's do it." Once again, we shall find that they have produced a measure that will make a badly handled situation worse. Once again, we shall find that the parliamentary convenience of today will become the parliamentary embarrassment of tomorrow.
I must say in conclusion, having been involved in local government for much of my political life, that I feel a sense of despair that a Conservative Government are bringing to the House a measure that is so basically bad, so potentially dangerous and, in the final analysis, so pathetically inadequate.
The Secretary of State made a puny and unconvincing speech when he introduced his Bill this afternoon. The Bill has been condemned by every Conservative Member who has spoken in the debate. My hon. Friend the Member for Copeland (Dr. Cunningham), speaking from the Opposition Front Bench, dealt with the Bill very powerfully. The strength of the arguments that he advanced should have convinced the whole House that we should not vote for the Second Reading tonight and that the Bill should be thrown out.
The Secretary of State said that the Bill was about local tax. He also said that it was about local spending. He should have said, if he wished to describe the Bill adequately, that it is about local coercion—coercion of local authorities to do what the Government intend them to do—which will have a devastating effect on the local services that are provided by local authorities.
The Government intend, in the Bill, to take direct control over rating, and thus over the expenditure decisions of local authorities, taking away the right of local authorities to make their own decisions. That will deny local electorates the right to decide for themselves the expenditure policies that they wish to pursue. Thus, central Government will be a dictator, telling local authorities what expenditure decision they may make. Councillors will become puppets of the Government, carrying out only policies approved by this Government, and having the freedom merely to do what the Government
Hitherto local government has had the power to make decisions to spend money on policies and programmes presented to its electors. I speak as one who for many years before I came to this place was a member of a county council, and a rural district council. Those policies and programmes are approved by a majority of voters at elections and are then carried out by the council after the election. That is democracy, is it not?
I shall quote the words of the Minister then responsible for local government in 1980, in the Standing Committee considering the Local Government Planning and Land Bill:
My Department will not be in the business of saying how much each authority should spend, where it should or should not make cuts or on what it should spend money … We have said that our concern is the distribution of public money … the ultimate decision on rating and on the volume of expenditure on local authorities is a matter for the councillors themselves."—[Official Report, Standing Committee D, 27 March 1980; c. 840–41.]
That is what the Secretary of State is now denying to local authorities. It was as described in 1980, and so it should continue to be. If electors do not care for the way in which councillors spend ratepayers' money, they always have a remedy: they have the opportunity, at elections, to vote the councillors out of office.
The concentration of more and more power in the hands of this Government poses a threat to democracy. To sweep away the budgetary freedom of local authorities, merely because their ideas about the use of that freedom are different from those of this Government, is both dangerous and scandalous. In a unitary state such as we have, local government has considerable responsibility—far greater than in a federal state — because it is only the democratic, elected check on the concentration of all Government power in one central dictatorship. I hope that local electors will make sure that all Tory councillors and candidates who support this Bill are defeated when those electors next have the opportunity to vote. I hope that they will bear in mind, when the next election comes around, that those Conservative Members have had the nerve to go into the Lobby and support the Bill tonight.
I remind the House that if we had a Secretary of State who believed in subsidising urban public transport, for example, many of our so-called overspending local authorities could become underspending local authorities overnight. This measure means that henceforth the Secretary of State will be involved in the detailed budgetary process of every local authority, interfering in business that is not his business. He will have to have regard to their balances and their levels of spending. Will he then tell local authorities where specific cuts have to be made? Will he dictate to them how to carry out their duties? Will he tell them what to spend or not spend on particular services? Perhaps the Minister will reply to these questions.
The Bill represents an unprecedented increase in the dictatorial powers of this Government. As a consequence of this Government's majority, Parliament will be quite unable to help any local authority that appeals against the dictatorial powers of the Secretary of State. Arbitrary power will replace local budgetary processes.
My own local authority has managed—frequently by reducing expenditure—to contain the net budget roughly in line with the Government target. However, it is becoming more and more difficult, and the latest projections of our target, GREA and expenditure levels indicate severe problems for subsequent years So although Wolverhampton is complying with targets, the position could change dramatically in a year or two.
My local authority provides a first-rate service for its ratepayers. It has an excellent school meals service, providing good and well-balanced meals, with a good choice. I understand that the education committee of the Herts county council — an overwhelmingly Tory county council — has just decided to cut out school meals altogether to save £1·5 million. My local authority would never dream of doing that. I hope that the Hertfordshire ratepayers will remember what they did.
My local authority provides community services for the handicapped, elderly people and small children. There are also services for minority groups, maintaining good relations in a multicultural society. It provides a rich pattern of activities — probably better than those provided by most other local authorities in areas with similar problems. We give a great deal of help to deprived families, whose children are deprived as a result of this Government's policies which have put 3·5 million people out of work and created 18 per cent. unemployment in Wolverhampton. The community services for young people in the area are varied and rich. Those young people are denied the opportunity of getting jobs when they leave school, and instead do a year's activity on some of the Manpower Services Commission schemes, on which the Government are spending money instead of providing proper jobs. My authority believes that we should help young people after that year, thus avoiding the problems that would arise if they were left without help. Many services are provided in my local authority, giving a rich and varied pattern to the community.
Our GREA in Wolverhampton, at £99·887 million recently notified for 1984–85, is now lower than the Government's target of £100·248 million. So we shall probably spend more than the GREA next year, even if we avoid grant penalties which, of course, are calculated in relation to targets and GREAs.
It is no argument to say that the Government, for economic reasons, must control expenditure by local authorities if that expenditure is financed by rates. As long as local authorities finance their increased spending out of their local rates and balance their budgets without borrowing to cover any deficit, their expenditure poses no problems for the public sector borrowing requirement and the money supply. So why on earth do the Government not leave local authorities to manage their own affairs as they see fit, as they have been given the support and confidence of their local electorate to carry out the policies presented to their electorate at the time of the local elections?
I hope that Tory Members will join us in the Lobby tonight to ensure that this pernicious Bill is thrown out of the House.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon) said at the beginning of his speech that this proposal has the support of ratepayers, and went on to imply that that was because they were either too stupid or too ignorant to understand the implications. The House responds to talk about large-scale economic policies and principles of the constitution. However, the kernel of this Bill is about ratepayers, people smarting under bills going up by £100 or £200 a year, who see no respite. I shall say something about both economic and constitutional issues before returning to the ratepayer.
The Government have helped to obscure the issue by justifying the Bill on the ground that Governments must control the total amount of local government expenditure. They say that local authorities account for one quarter of expenditure and therefore must be controlled. However, the Government already do that — they control grants and borrowing and have many statutory and other methods of bringing persuasion to bear on local authorities. As has been made clear in the debate, they have succeeded to a great measure. Local authority total expenditure has fallen. Local authorities take a smaller share of public expenditure now, and a roughly similar proportion of gross domestic product. Without Government pressure, that would not have happened, and without continued Government pressure it will not continue. However, the Bill is not needed for that purpose.
Nobody believes, in this debate at any rate, that overspending on arbitrary targets by £770 million, or less than 0·6 per cent. of public expenditure, will shatter the economy. We should not look at the Bill from that point of view. That is trying to give a veneer of scientific respectability to the old business of horse trading and political bargaining and negotiation that has been the basis of local and national government for as long as we can remember.
From the Opposition to the Government, critics hail the Bill as the end of local government as we know it. That is completely untrue. Such people have a romantic view of the independence of local government. Councils never have been, are not and should not be, independent. Parliament lays down their functions, funds many of their services and even lays down rules for their staff. Governments override local policies on schools or council houses and the Government pick up the pieces and pay the bill when things go wrong. For example, what happens to all the costs that arise when the policies of a council contribute to the decline of business activities in the city centres?
We should be careful how we alter the balance between local and national government, but we must not pretend that we should never do it. The truth is that the case for part II is weak, and my right hon. Friend the Secretary of State has not advanced it very strongly today. This may lead to the demise of part II during the passage of the Bill, but the case for part I is overwhelming. The case starts and finishes with the ratepayer, just as it did when the Government made their original promise.
I remind the Government of that original promise to abolish the domestic rate. We have reneged on that promise. When the 1981 Green Paper was published we stated again that it was our aim to
remedy as fully as possible the shortcomings of the existing system".
We have failed in that aim. Nothing has changed. People still perceive rates as unfair and arbitrary, which they are.
There are some wise people who knowingly say, "I told you so." They will list for one, at the drop of the hat, all the complications, the need for revenue, the lack of agreement about an alternative. They parade the excuses for failure and they exhibit that age-old error of those on the inside looking out—they forget the customer. They forget the poor old ratepayer. The customers have long since made their decision. They want public services paid for in a fairer way than rates, if not entirely then at least in good measure. We gave the original promise for good reasons and the good reasons still exist.
Instead of switching from the unfair to the fairer we have loaded costs on to the rates. In 1979–80, 8·56 per cent. of general government revenue was raised on the rates. The forecasts for 1983–84 put the proportion at 10·41 per cent. We have raised £2·3 billion more on the rates than if we had kept to the old percentage. The proportion of local government expenditure borne by fairer taxes has fallen from 61 per cent. to 52·8 per cent. My right hon. Friend proposes to switch rate support grant next year towards 51·9 per cent, and I shall have great difficulty in supporting him in that move.
The Government justify the switch from fairer central taxes to unfair rates by saying that if the ratepayers pay more of the total they will take more interest and bring the councils to account. That is sheer humbug. The White Paper admits, and much has been made of this today, the facts about the sluggish relationship between voting and paying. Practice and theory are widely different. The link is at best sluggish and in some cases non-existent.
As a result, we have councils of which the composition does not change and in which councillors and officials hardly ever feel under threat. The absence of periodic spring cleaning produces bad, fat and sloppy administration, in which vested interests bed down undisturbed. It would happen to national Governments if we did not throw them out from time to time. The cost of these circumstances is not borne by those who live in the leafy lanes of Conservative shires but by the ratepayers of the long-entrenched big-spending authorities. They need part I, and it ill becomes any of my hon. Friends who have already broken a promise about reforming rates to deny ratepayers this much chance of relief.
Part I has a limited objective, which is to tackle the profligate. Some local authorities are profligate and some are not. We shall have to make a stab at the worst offenders, and the Bill provides Parliament with the means to oversee that choice. It would be absurd to imagine that a detailed examination of all authorities is expected and in part I the Bill excludes three quarters of them. The Bill provides for a rigorous examination, forcing local authorities into public justification in front of people who have the resources and muscle to be taken seriously. If the high spenders are right, that will soon become apparent. If not, it is time that they were brought down to size.
I hope that the Government will keep their eye on this simple objective. I am not greatly interested in whether Manchester hits the Government target. Nor am I hoodwinked if Manchester expenditure increases less than the others in percentage terms. As the highest spender outside London, it has room to change. A small increase on too much is worse than a big increase on too little. However, I want to know why it costs Manchester twice as much to empty the dustbins as it costs Birmingham,
Newcastle or Bradford, or why it costs 20 per cent. more to educate children in Manchester than in Sheffield, and more than 50 per cent. more than it costs in Leeds. Our dustbins are no cleaner and our children are no better educated. Why is it that if we merely come down to the average for metropolitan districts Manchester could knock £100 off the average rate bill?
Individuals and ratepayers' groups tended to favour abolition, while representatives of local government and the professions thought on the whole that domestic rates should be kept.
Well, they would, wouldn't they? However, local government is for the customer and not for the councillors or professions. We go through a great pretence of independence which gives the councils a nice feeling and the ratepayers a pain in the neck.
Teachers' salaries are negotiated centrally. The Government in the past have taken charge — they will again — if they do not like the results of the negotiations. About 83 per cent. of police costs are salary costs and, within that, the pay of the police is settled centrally and the establishment approved by the Home Secretary. Higher education outside the universities is paid for out of a national fund and redistributed according to the siting of the institutions. It is a national fund paid out of unfair rates rather than fairer taxes. Those are examples of items better paid centrally.
We are breaking our promise and imposing real hardship on many ratepayers and unnecessary complications on the local government system in the pursuit of an illusion about council independence. Part I may not be much compared with what we promised, but at least let us use it to give some relief to the hard pressed.
I regard the Bill as a logical step along the road of centralisation down which the Government started in 1979, but it is worth remembering that it is a step that the Government implied on a number of occasions that they would not take. Among the many well-thumbed statements made by the Secretary of State for Employment, when Minister for Local Government and Environmental Services, during the passage of the Local Government, Planning and Land (No. 2) Bill is his statement on 27 March 1980:
My Department will not be in the business of saying how much each local authority should spend, where it should or should not make cuts or on what it should spend money.
The right hon. Gentleman continued:
the ultimate decision on rating and on the volume of expenditure of local authorities is a matter for the councillors themselves." —[Official Report, Standing Committee D, 27 March 1980; c. 840–41.]
It will not be a matter for the councillors themselves if this Bill gets on the statute book.
A number of speakers, including the hon. Member for Manchester, Withington (Mr. Silvester), have made it clear that the Government's economic argument does not stand up to any scrutiny. Even taking the Government's arbitrary decisions on targets, the total overspending is only 0·6 per cent. of total public expenditure. Surely no one is really trying to persuade us that the great economic recovery through which we are supposed to be going will be jeopardised by that type of overspending, especially when it is set against the margin of error of the public sector borrowing requirement or the fact that local government has been far more successful than central Government in controlling its expenditure.
A good deal has been made in the debate so far about the burden of rates on industry and commerce. We ought to recognise that rates can be a problem, especially for small firms, when there are sudden, steep rises in rate levels. We cannot disguise the fact that rates are an element in overall industrial and commercial costs. lf the Government are really bothered about the problem, there are far better ways of tackling it. They could take a measure of industrial derating if they felt that that was a way forward. They could take a much better step to transfer the non-domestic rate to central Government. That rate could be replaced by a local income tax as part of a general reform of local government finance.
The difficulty, as successive speakers have pointed out, is that the Government have been forced to bring in the Bill because they raised expectations that they could not meet. They raised expectations in 1974 about the abolition of the domestic rate. All the talk about the reform of local government finance during the past couple of years raised expectations again. The Government are unwilling or unable to deliver a proper, thoroughgoing reform of local government finance, so they introduced this shoddy Bill as a sign that they were doing something to protect ratepayers.
The central part of the Secretary of State's speech was about the protection of ratepayers. He made the case that central Government power must be invoked to protect ratepayers against extravagant overspending local authorities. I declare an interest, because I noticed that the London borough of Greenwich figured prominently on the target or hit list — whatever it is called. I have lived in that borough for more than 20 years. I represented the borough on its local authority for nine years, and have represented it in Parliament for another nine years. I am a former leader of that local authority.
I do not accept that council's spending priorities, many of which are out of sympathy with the average Greenwich ratepayer and voter. But if I were to remove all the things that I dislike in that council's spending — the police advisers, women's advisers, magazines, campaign organisers and the rest of the trendy Left-wing froth—I do not believe that the London borough of Greenwich could get its spending down to the levels that the Government are setting for it without cutting into the services that are vital in a borough that has more than its fair share of social deprivation, which has suffered deindustrialisation very rapidly and very high levels of unemployment.
To find some impartial support for that statement, I looked up the figures produced by the Audit Commission for Local Authorities in England and Wales, which is a creature of this Government. It was established by the Local Government Finance Act 1982. The Audit Commission has produced a profile of Greenwich in which it compares Greenwich spending with a number of similar London boroughs. Those similar London boroughs were Ealing, Enfield, Hounslow, Lewisham, Merton, Redbridge and Waltham Forest. The majority are outer London boroughs and Tory-controlled. I looked with great interest to see how Greenwich compared with those paragons of virtue. Spending per head of population in Greenwich is £231·50; the lowest figure for that clutch of authorities is £205·10 and the highest is £395·70. The average figure is £310. Greenwich —the focal point of this tremendous ministerial criticism as a wicked overspender—is well below the average of that group of authorities.
The hon. Gentleman is comparing an inner London authority, which is not an education authority, with outer London authorities which are such authorities. I may have misunderstood what he is trying to say. He must compare authorities in the same class.
Surely the right hon. Gentleman is not suggesting that the Audit Commission had not noticed that. The services that I am citing are the same for all the authorities in the group. I did not want to delay the House by going through each of the services, but naturally they do not include education because as the right hon. Gentleman rightly said, Greenwich is not an education authority. I was comparing like with like. The Audit Commission also compared like with like. I am not a friend of the political leadership of the London borough of Greenwich, but I say in fairness that those figures do not support the idea that Greenwich is way out of line in its spending levels. Even if it were, I believe that local spending priorities are a matter for local debate and argument.
I shall back my chances and those of other political opponents of the present town hall regime, and we shall battle this matter out in the right place — the London borough of Greenwich. We have already had some success in parliamentary elections. I should not be a Member of Parliament if we had not. We will fight our own battle. We do not need big brother or interfering auntie from Whitehall to help us in that argument.
Surely one of the major points is that if domestic and industrial ratepayers face a rate increase of 59 per cent. in one year, which may be followed by similar increases for another two years before there are local elections when the political bounds of the council may change, it may be too late to improve employment, the standard of living and ratepayers' interests in the borough.
I would put my trust in the political ingenuity of my supporters and those of the hon. Member for Eltham (Mr. Bottomley) in ensuring that our case is put before the people of Greenwich and they have a chance for voting for it.
To misquote the right hon. and learned Member for Hexham (Mr. Rippon), the Government are taking a sledgehammer to crack a few Left-wing nuts and, in so doing, are putting at risk the whole system of democratic local self-government built up over generations in this country.
There are far better ways to tackle the problem. If we had a fair voting system for local elections, it would be impossible for unrepresentative small groups to take power in town halls on the basis of a very small percentage of the electorate. As the right hon. Member for Old Bexley and Sidcup (Mr. Heath) implied, a local income tax would create a far more direct link between those who pay for local services and those who make the spending decisions. That would do wonders in raising interest in local government and increasing the turnout at local elections. I believe that if local people are given the essential tools to do the job, they will be far better at controlling local authority expenditure than all the bureaucrats in their Whitehall offices.
The suggestion that there will be a genuine safeguard in parliamentary scrutiny cannot be taken seriously. Clause 2 makes it clear that an authority will be designated for rate capping by an order laid before but not approved by Parliament. Only when the whole process of negotiation is complete will parliamentary approval be involved. Even then, clause 4 provides that the order
may relate to two or more authorities.
How many authorities will be involved? Will there be a mass production line and a conveyor belt system for trundling rate-capped authorities through the House? In any case, how effective will the scrutiny be? None of us is naive enough to suppose that we shall be considering the merits of the case. The Whips will be applied and what the Secretary of State wants the Secretary of State will get. Parliamentary approval is thus a complete charade.
In any case, I was not elected to Parliament to usurp the functions of the policy and resources committee of a local authority or to go through the budgets of individual local councils. Local councillors are elected to do that job, and they should be told to get on with it. I certainly wish them to be made accountable, but not to a bunch of mandarins in Marsham street. They should be accountable downwards to the people whom they are elected to serve. The Bill confuses responsibility and will give inefficient councils a perfect alibi. After the rate-capping performance, they will be able to say that central Government have interfered and mucked everything up so it is not the councillors' fault that services are bad and rates are high.
Social Democrats and Liberals reject the whole basic approach of the Bill and the idea that central Government have a right and a duty to control local authority spending. We want alternative independent sources of power and decision making. We reject the dead, cold hand of Whitehall uniformity. We wish to encourage the diversity, the initiative and the sensitivity that are the life blood of genuine local self-government. The Bill threatens that, and we look forward to playing our part in fighting it every inch of the way.
I begin by referring to a figure that my right hon. Friend the Secretary of State used in his speech and that has subsequently been mentioned in the debate. He implied that if the powers had been available for use in the current financial year he might have used them against 18 high-spending authorities, with a saving of about £300 million. I draw two conclusions from that.
First, the relief for the hard-pressed ratepayers of Islington, Sheffield or wherever will be far more modest than they have been led to expect from Government statements and media treatment of the measure and certainly does not justify a Bill of this consequence.
Secondly, savings of that order are utterly irrelevant to the Government's macroeconomic problems, so I hope that we shall hear no more about the need for the Treasury to have powers of this kind because local authority spending is about 25 per cent. of total public expenditure. Since 1979, the Government have been more successful than any post-war Government in bringing public spending under control, and they should not be too modest about that. They successfully brought down inflation. They did not need these powers for that purpose then and they do not need them for it now. Moreover, Britain competes in world markets with many federal countries in which the Government have far less power over total public expenditure than the British Government have had for many years. I hope, therefore, that we shall hear no more claims from Ministers about a macroeconomic case for the Bill.
The Bill will provide no substantial relief for ratepayers so long as the Government intend to use the specific powers only in respect of 12 to 20 authorities.
My right hon. Friend dismisses the economic case, but since 1979 real expenditure by local authorities has increased by about 4 per cent., which amounts to considerably more than £300 million. My right hon. Friend the Secretary of State did not say that he would have applied the powers as my right hon. Friend suggests. He was merely giving an example. The overall effect would be to prevent local authority expenditure from growing so that the 4 per cent. increase in the past four years could not be repeated in the next four years. The saving would therefore be not £300 million but 4 per cent. over the next four years, which is a far greater sum with a far greater impact on the economy.
I shall not give way again as we have all been asked to be brief, but I am grateful to my hon. Friend the Member for Northampton, North, (Mr. Marlow) as he has helped me to lead on to my next point.
The Bill could certainly have a far greater effect if the powers were used more widely than in specific counteraction against high-spending authorities. Even if the general power were never brought into use, there is no limit to the number of local authorities which could be tackled and the extent to which this could be done through the specific powers in part I. Only if it were intended to increase the use of the powers over the years would it be worth while for the Government to introduce a measure of such constitutional importance. We all know from experience that when Governments have powers of this kind they tend to use them more and more as the years go by and there will be pressure every year from the CBI, the Treasury, hard-pressed ratepayers and many other sources, including Members of Parliament, for the Government to use the powers more drastically.
Against that background, there is clearly a constitutional argument, and I resent the attitude of some people in the House and in the media who suggest that that is not so. If the Bill is to have any real impact, it will alter the balance between national and local government in Britain. If we embark upon such a move at all, we should do so with very great care. The fact that the United Kingdom in a unitary and not a federal state makes local government more important, not less important. In a democracy of this kind, it is vital to have a certain disperal of power among various elected bodies which will sometimes conflict with one another. Parliament, of course, is sovereign, but over many generations Parliament in its wisdom has delegated to local authorities important powers over important aspects of people's lives. Local government in Britain thus fulfils at least part of the function which in a federal country would be fulfilled by the individual states.
Local government has been a tremendous success story. I wish sometimes that its spokesmen were not so apologetic and that people in the media who have never served on a local authority would not sneer at it in the way that they do. The fact is that over the last century or more in this country local government has built up a system of public education, a system of municipal housing, many elements in the Health Service, the police force and many other vital public and social services that make up the quality of life in Britain. These have been achievements of local government. To take an example with which I was intimately concerned when I was the Minister responsible for the disabled, in the past 13 or 14 years there has been a great expansion by local authorities of personal social services to chronically sick and disabled people, bringing more dignity into their lives.
All these achievements are achievements of local government. It might be argued that all this could have been done by some sort of national Government machinery. I suppose that one could imagine a concept whereby every director of education was the county officer of DES or every director of social services was the county officer of DHSS. If that had been the case in the past 100 years, I believe that our public services would have been of lower quality and, incidentally, probably would have cost much more. They would certainly have had to bear the burden of a vast regional and national bureaucracy in order that decisions could be made. For goodness sake, let us not slip towards that position by accident, as we might do if the Bill were fully implemented.
I preface my other criticism by saying that I condemn as strongly as anyone some of the extreme Left-wing Socialist authorities in the country. The advent of people like Mr. Livingstone and Mr. Blunkett has produced a new ball game. We are looking at local authorities concerned primarily not with serving their communities but with fighting a class war, and that produces a new situation of which the Government have to take note. [Interruption.] My advice to hon. Gentlemen is that they should not keep interrupting. I am on the same side as them, so they ought to listen and, if they care about the future of the Labour party, some of them ought to be condemning the Livingstones and Blunketts of this world.
What my right hon. Friends on the Front bench propose in this measure would help the tactics of the hard Left in local government because the last vestiges of responsibility will now be taken away. Every budgeting exercise by a Left-wing controlled authority will lose all touch with reality. It may be said that some of them are out of touch with reality now, but they will no longer be under a compulsion to stay in touch with reality. All they need do every year will be to draw up a manifesto.
I am sorry to prolong my speech, Mr. Deputy Speaker, but I am bound to put in this comment. If one thing would persuade me to vote with the Government tonight, it is the conduct of some Opposition Members. Fortunately, I am immune to that.
I want to go on to repeat the point that I think has been made insufficiently in the debate. The real decisions every year on the selected authorities will be made by the Secretary of State or, as other hon. Members have said, by civil servants in his Department. All that the councillors need do is to draw up a manifesto. They will then give every pressure group in the locality everything it wants in every department, and they can blame the Secretary of State when the targets are not reached.
There will be the further consequence, I think, that it will become a kind of virility symbol for the hard Left to be in that category. I want the House to imagine the situation of a Labour-controlled authority in which the controlling Labour group is in what is now called the soft Left category but it has a hard Left element in its ranks and a strong hard Left element in its general management committee. What would they say? They would say: "Why are our comrades in the next town being rate-capped and we are not? Why are we not on the Tory Government's check list? Why are we cosily co-operating with a reactionary Tory Government to keep spending down?" [HON. MEMBERS: "Hear, hear."] When hon. Members cheer, they give strength to the argument. I repeat: it will become a virility symbol of the hard Left to be on the hit list. The Secretary of State will find that, unwittingly, he is encouraging those forces that he is trying to oppose.
If I may say so, I see some parallel here with the history of the Conservative Government in the past 15 years on the subject of industrial relations. In 1971, for the best of all motives, the Industrial Relations Act was brought in, and it was a practical failure, I think, because of fundamental misunderstandings by Ministers of the time of what made trade union militants tick.
The trade union legislation passed since 1980 has been very much more successful in dealing with the problems of industrial relations. In the understanding of local government Ministers seem to have reached approximately the same point that they reached in the early 1970s in the understanding of industrial relations. If the Government are trying to fight the hard Left, I wish they would listen to people who know something about it. I believe that they are heading, without intending to do so, for making a bad situation worse.
Those of us who care about the failure of local democracy will recognise that many changes are needed. One of the basic changes needed is a change in the rating system, or at least the identification and the implementation of some other source of finance to go alongside local authority rates. Ministers ought not to give up the search for achieving that objective. I know the difficulties. I do not want to say this in a critical way, but I think that people throughout the country will expect Ministers to go on looking for an alternative to the rates. The Government could also have some sort of rate capping for non-domestic rates. I think that there is strength in the argument on behalf of the business community.
Above all, the Government should sit down in genuine consultation with the representatives of local authorities to try to strengthen the accountability of local government. I do not have time to go into my own ideas on that, but I suggest that the questions to be asked are the following. How can we encourage men and women of ability to continue to make the sacrifices that are needed to serve their communities as councillors? Secondly, how can we encourage professional men and women and administrators to continue to seek a career in local government when they might make more money outside? Thirdly, how can we encourage more citizens to take a continuing critical and constructive interest in the affairs of local government so that local government elections become more of a reality?
These are difficult challenges, and I think they should not be dodged. We shall not encourage any of those objectives if local government is to be clobbered by central Government year after year by some new technique with the Government saying every year, "We were trying something last year, and now we are going to try something else," because people in local government are becoming very discouraged, and their morale is suffering as a result of that process.
Therefore, I urge my right hon. Friends to think again.
First, I think it is fair to comment on some of the remarks made by the Secretary of State. I felt that it was a very jaundiced presentation. On numerous occasions prior to today's debate we have witnessed the right hon. Gentleman in broadcasts and interviews and statements to the newspapers giving some very distorted views about the real position.
I represent an inner city, and it is the inner cities that are often at the receiving end of the venom that is regularly pumped out by the Secretary of State. I am sure that every hon. Member with local authority interests has been snowed under by protests about the concept of the Bill. Those protests have come not just from Labour authorities and organisations; dozens of Tory organisations have written to Labour Members, just as, I am sure, they have written to Conservative Members. They have come from voluntary organisations of all kinds, including housing and youth organisations. I shall not delay the House by giving examples. They all state that the Bill would be detrimental to the quality of life.
The Secretary of State frequently talks about making savings, but we must get the matter in perspective and realise that he is really talking about cuts; and there is a big difference between making legitimate savings and imposing cuts that will be detrimental to the needs of the community.
The hon. Member for Manchester, Withington (Mr. Silvester) still does not seem to understand the facts of life when he speaks, for example, about education in Manchester. Why does education cost about 20 per cent. more in Manchester than in other cities? That is the kind of question the hon. Gentleman poses, and I will answer him, though he could easily obtain the facts from the local education authorities.
The inner cities, including Manchester, spend more on education because of the higher percentage of ethnic minority groups who require special education assistance. We also have a higher incidence of poverty in our schools, with more parents appealing for necessary clothing for their children, and many more free school meals are given. We also have the problem of population movement. All those factors increase the cost of education.
It is wrong for the general public to think that money is being wasted in strict educational terms in the classroom. The environment and the needs of the community in the inner city areas cause the problem. I am sure that the hon. Member for Withington has had that explained to him on numerous occasions. I appreciate, however, that it is more attractive if statements appear in local Tory newspapers to the effect that money is being wasted on education, when that is far from the truth.
The Secretary of State often blatantly distorts the position when he refers to local authorities being "overspenders", and "waste" is another favourite word of his.
An example of distortion appears in paragraph 1.22 of the White Paper, where it is stated that during the period April 1979 to April 1983 rates went up by 91 per cent. while the retail price index went up by only 55 per cent. If, in that White Paper, the base point had been taken correctly and if account had been taken of the loss of rate support grant and of the fact that domestic rate relief had stayed still, then instead of the difference being 36 per cent. one way, it would have been 2 per cent. the other way. Does it not lower the authority of this House and of the Government when, although the statements may be right in themselves, together they give the wrong impression?
I am grateful to my hon. Friend for making the very point to which I was coming next. I tabled a parliamentary question on the subject of rate support grant and received a reply on 21 December confessing that the Government's aggregate Exchequer support had fallen by 10 per cent. in cost terms. Although the Secretary of State keeps telling local authorities that their rates are going up, even a blind man can see some of the consequences of reducing the rate support grant.
It is dishonest of the right hon. Gentleman to sit with a look of innocence on his face when he does not understand the basic economics of local authorities. I urge him to start afresh and spend a few years in local authority service. Then he may comprehend what the problem is all about.
Not long ago the Minister for Housing and Construction. accompanied by the hon. Member for Withington and local Conservative councillors, came to Manchester to see some of the housing stock. The Minister spoke of the standards that were demanded and of the need for more maintenance work to be carried out on council houses. Did it not dawn on him that the local authority would be only too delighted to spend more on maintaining its housing stock if only the Government would allow that expenditure? That is an example of the contradictions that occur. In that case the Minister and local newspapers condemned the town hall for not spending more on maintaining council houses, but they did not refer to the consequences of the cuts being made by central Government.
A few organisations, such as the CBI—in my view, they have been put up to it—have written in support of rate capping. They are on their own in supporting the Bill. After all, in many inner city areas industry has much to answer for. After industrialising areas, its chemical and other spoil heaps have been left for local authorities to clean up. Rivers and canals have had to be cleaned. Industry has left it to local ratepayers to clean up and pick up the bill.
The Minister quoted two letters to show, he said, that industry had moved to areas where rates were cheaper. He was, of course, making a case for Conservative authorities when he spoke about cheaper rates and the need to protect jobs. I have news for the right hon. Gentleman. Adjacent to Manchester was the largest industrial estate in Britain — Trafford Park. At one time up to 80,000 workers were employed there. Today there are probably no more than 15,000. That is a Conservative authority where the rates are lower than in the other 10 local districts. How does that square with the letters from which the right hon. Gentleman quoted? How can rates be driving industry away and causing the loss of jobs?
The inner cities have many problems. In the inner city of Manchester—the core of 10 districts—there are three teaching hospitals and the Christie's hospital, which is a specialist cancer hospital. No less than 93 per cent. of the patients at the Christie hospital are not residents of Manchester. However, the Manchester social services department has to pay the social workers who see to the day-to-day needs of those patients. The bill for paying those social workers to support those patients amounts to £1·5 million a year. Does the Minister expect the city to stop supporting and supplying the social workers in those hospitals in order to save money? Does he consider that we are wasting money there? How does the Minister suggest that we should offset some of the financial liabilities that are not strictly the responsibility of the inner city?
On the other side of the coin, fanning enjoys the highest subsidies of all and pays no rates whatsoever. Nothing is done or said about that. No-one suggests that the fanners should chip in more money towards the costs of the local authorities.
Before the Government talk about overspending, they might find it useful on occasions to look at their own management. The Public Accounts Committee considers Government overspending. For example, there was the sale of Hamilton house. That building, which was sold for £700,000, was discovered to be worth £15 million. Was that not a waste of public money? We could also consider the Crown Agents. Their speculations may have cost the Government, the nation and the taxpayers hundreds of millions of pounds, but very little was said about that.
The Government cannot even control their own tax system, yet they have the hard-faced cheek to talk about the inefficiency and overspending of local authorities. From experience, I can say that local authorities are far more efficient about expenditure and accountability than the present Government.
I agree with the Government that nobody likes paying rates. By the same rule, nobody likes paying taxes. However, people need and demand services, and they legitimately criticise the Government for making handouts to their frends through legislation, for stripping national assets, for privatisation and for the sale of lucrative interests on the cheap. The Conservatives do not criticise such activities, yet they take away the resources that should provide for the day-to-day needs of the less well off in the inner cities.
The Bill will not improve local government. It will increase the misery of the old, the poor, children and minority groups, and it will affect housing and health. The Minister clearly wants dictatorial powers. I hope that the Bill will be rejected tonight.
The hon. Member for Manchester, Blackley (Mr. Eastham) made one comment with which I agree. lie said that we have all been inundated with letters about the Bill.
So we have. They have mostly been duplicated, stereotyped letters, all containing the same parrot phrases originating in Transport House. We have received precious few genuine letters. I can tell those of my right hon. Friends and hon. Friends who are unhappy about the Bill that the majority of the genuine letters that I have received have come from the ratepayers who have to foot the bill. They are not interested in neat, constitutional, university debating speeches.
I fully support the Bill. However, I am not wholly uncritical of it. It is three years too late. Those of us who had served in local government knew three years ago that the Blunketts, the Livingstones and the Hodges would laugh and raise two fingers if we withdrew the rate support grant and expected the voters to put them out. In the rotten boroughs of Sheffield, Islington and the like, there was no way in which that could happen.
Yes, it is disgraceful that the ratepayers have to suffer in that way.
My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) has said that he came to the House in 1950 when the slogan was "Set the people free". I was in local government at that time. I had just defeated Anthony Greenwood and Baroness Serota, taking their council seats. I was also an active Young Conservative. My right hon. Friend failed to remind the House of the other half of the phrase. Sir Winston also said "Trust the people".
What the people are saying now is, "For goodness sake, protect the ratepayers." One trusts the people, but in places such as Sheffield and Camden few of those who pay full rates can command a majority of the votes.
Let nobody pretend that the legislation is unconstitutional. Under the framework of law and custom connecting central and local government, local government has always spent within national guidelines. Until about 1970, nobody argued against that. I am talking about the facts of life, not about constitutional theories. I led Camden borough council during the one period when the Conservatives controlled it.
I led the Conservatives there in opposition and in power. In terms of rateable value, it was the fourth wealthiest local authority in the country. In 1968, there was a Tory council and a Labour Government. The Labour Government asked for restraint in local government expenditure. That Government were so unpopular that I could have defied them. I could have said that we would spend as much as we considered necessary. However, I and my colleagues knew that we were not an alternative parliament. We would spend money in accordance with what the Government, of whatever party, said that the nation could afford. If that pattern still prevailed, there would be no need for the legislation.
I was also at that time not vice-president but deputy chairman of the Associaton of Municipal Corporations, which was Tory-controlled. The chairman was my noble Friend Lord Marshall. We all honourably observed the request of the Labour Government that we should restrain expenditure. There was no need for legislation.
It is the Left wing of the Labour party that has made the legislation necessary. My right hon. Friend the Member for Daventry (Mr. Prentice) knows a great deal about the hard Left. He knows that the hard Left is deliberately stirring up the Government in order to try to harm local government. As most of us know, the situation suits the book of the hard Left.
Let us consider the rate burden of Mr. Average Citizen in Camden. There is an ILEA precept and a GLC precept on his residential property, with a rateable value of £500 —less than the rateable value of many properties in Camden. In 1965–66, that ratepayer would have paid £233. In 1971–72 he would have paid £385. In the current year, he will pay £2,537. That is a 1,000 per cent. increase. Part of the cause, of course, is the loss of the Government grant, but that was courted deliberately by ILEA and the GLC. They spend their money on glossy publications, most of whose contents are untrue. They set up committees for which there is no statutory requirement. They spend hundreds of thousands of pounds on political assistants for their elected councillors, none of whom is necessary. There is no requirement by statute for the GLC and the London boroughs to have anti-police committees, women's committees or employment committees. If they were to cut much of this expenditure, life would be much easier. It is, however, even worse—
What I resent even more are the despicable tactics being practised by the authorities in Greater London. They are printing cards at the ratepayers' expense for pensioners to fill in. The pensioners are told that their bus passes are at risk, although the Labour party knows that that is a deliberate fabrication. There is a poster campaign throughout London on matters for which they have no statutory responsibility—Ken Livingstone's nuclear-free zones and his anti-racist year. If he understood market research, he would know that he is having exactly the opposite effect to what he wants.
Worse than that, however, is the fear which is being instilled into ordinary people. I have a letter from a teacher who runs literacy classes. It contains four letters from students, and they all end by saying:
Please vote against the ILEA cuts so that our class can carry on.
Each one uses the same words. That is the type of propaganda that has been put into people's minds. [Interruption.] The trouble with the Labour party is that it hates the truth.
I have a letter from someone who says:
I come from Vietnam. I live in Camden and go to adult classes.
I hope that you will do everything to stop the proposed cuts. I ask you demand the restoration of £150 million rate support grant.
Who put such words into people's minds for them to send to Members of Parliament? That is the type of spontaneous nonsense that we are receiving. I believe that the people who indulge in such tactics know before they start that the battle is lost and that Parliament will pass the legislation.
The Secretary of State spoke about the problems of the business community. Hon. Members will know that not merely the CBI but the Association of British Chambers of Commerce, the London Chamber of Commerce and the Chemical Industries Association all provide jobs for people. They say, as we know, that high rates are driving them out of business, and that is why unemployment is increasing.
I believe that local government should be allowed to spend only if Parliament has specifically authorised the expenditure in general terms. Let me remind one or two of my right hon. and hon. Friends of certain facts. We all fought the last general election on a manifesto which promised the abolition of the metropolitan counties and rate capping. No one was in ignorance of the Government's determination to put those measures through.
If any of my right hon. and hon. Friends said to their electors specifically, "I dissociate myself from that," fine. I acquit my hon. Friend the Member for Milton Keynes (Mr. Benyon), who did the same about the right-to-buy provisions and most of the central legislation that we tried to pass. He and I remain good friends. Anyone who failed to dissociate himself is repudiating his voters, and, more importantly, his workers, because I should not be here and nor would my right hon. and hon. Friends without the hard work of the sloggers who go from door to door, and who raise the 50 pences and the voters who voted for us. They are being let down by any of my right hon. and hon. Friends—
—who are not prepared to keep to the manifesto promises which they backed. If they did not dissociate themselves from the manifesto, of course they backed it.
I am sorry that my right hon. Friend the Member for Old Bexley and Sidcup is not here, but I know that he will not mind my saying that he will recall our commitment to the Common Market in the 1970 manifesto. He will remember the great pressure that there was on certain hon. Members who did not support that legislation. It was said that the voters expected us to do our duty because they had voted for us. I suggest that there is little difference between that manifesto commitment and the recent one.
I say to the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore), who has just returned to the Chamber, that when I was a Minister in the Department of the Environment I was a partnership chairman and went to Hackney. I told Hackney some of the ways in which it could reduce its expenditure to spend more money on sensible things. Hackney chose not to do so. It threw out its moderate leader and its second semi-moderate leader and it now has the hard Left. It is among the most extravagant local authorities in London. One sympathises with the poor, long-suffering voters and residents of Hackney. Somehow they have to bring themselves to throw out that mob or rely upon the Government to protect them. The Government will protect them by passing this legislation.
I hope that there is no truth in the belief that there are those, particularly in the media, who are fostering the idea that perhaps the other place might decide not to pass the Bill. The other place also has a convention that if something was a general election manifesto commitment it does not try to block it. I do not believe that it will, but I do not want any of my right hon. and hon. Friends who are unhappy about the Bill to try to build up the other place into thinking that it might be able to do something about it.
I agree with only one thing that the hon. Member for Copeland (Dr. Cunningham) said. It was his criticism about the Bill's title. The Rates Bill is an innocuous title. I believe that in Committee it could well be amended to something like Relief for Domestic Ratepayers Bill. They are the people who put Conservative Members into power on the clear and specific pledge that they would cap the rates. I am not prepared to let them down, and I hope that my right hon. and hon. Friends will not either.
We have heard a speech that has had one characteristic. It is the first speech that has wholeheartedly supported the Government. If that is the tone of the people who support the measure, the House and the country know much more having heard the speech. The speech had an element of, "Trust some of the people some of the time, but do not trust them if they live in Sheffield or Camden." That is the sort of democracy to which we are coming. We have heard about a democratic means test. Conservative Members who have better fundamentals than the hon. Member for Hampstead and Highgate (Sir G. Finsberg) should think seriously about the Bill. The answer in Camden and elsewhere is to convince the people that the policies are wrong. If the hon. Gentleman cannot do that, he should not hide behind Parliament in forcing through measures that the local people do not want.
The Bill is cheap, brassy and opportunist, and is before the House because we are debating the failure of successive Governments to respond to the Layfield report and the failure of other Government measures since 1979 to deal with the rate problem.
I oppose the Bill for three reasons. First, I am opposed in principle to the centralisation that is contained within the Bill, and the constitutional implications of centralisation. Secondly, I oppose the Bill for the practical reasons that it is unfair, discriminating and impractical. Thirdly, the Bill is irrelevant in dealing with the real problems facing Wales.
We are witnessing the inevitable danger implicit in a unitary state. The saying is that power devolved is power retained. The Bill means that, ultimately, the powers of local authorities will be overriden by the Government. It is not devolution that we need, but a proper framework of local democracy as the only tong-term defence against the centralist command politics that lie behind the Bill is basic constitutional change that will give the nations, regions, counties and districts of these islands formal constitutional safeguards against a centralist enemy.
As to principle, we are attacking the fundamentals of local democracy. Powers are being removed from properly elected councillors who also fought their elections on manifestos and gave commitments to their electorates. By taking away such power, we are reducing local responsibility. We shall have to live with the consequences of such action in the fullness of time. For every failure of local councils in the future, the tendency will be to blame central Government rather than the local authorities that are carrying the responsibility where it properly lies.
The Prime Minister said earlier today that democratic answerability exists because Parliament has been directly elected. The reality is that in the areas that the Bill attacks, such as Sheffield and elsewhere, the voters did not elect the Government and did not vote for the programme that the Government put forward at the general election. In other words, the Bill is political, aimed at narrow political purposes. That is a dangerous precedent.
The Bill is also discriminatory. If two companies in different district council areas are making identical products, one in a council area with an expenditure of less than £10 million and the other in a council area with an expenditure of slightly more than £10 million, the rates may be fiddled by central Government in one area and not in the other. The Bill thus discriminates between the interests of private individuals and companies. Should the Bill be treated as a hybrid Bill, affecting different interests in different ways? That is a constitutional question to which the House should address itself later. It is significant that so early in 1984 we are moving towards central control by Whitehall bureaucrats.
I am making a practical criticism and not a theoretical one. The idea seems to be that Whitehall knows best what is good for people in various areas of these islands. Inevitably, Whitehall will get involved in the amount of education, social service, housing and road provision in every nook and cranny of these islands. That is a crazy way to move forward. We shall not have better decisions or cheaper services on that basis.
The objectives described in the consultative document will not be reached in this Bill. The size of the public sector borrowing requirement, which is referred to in the consultation paper, will not be affected. As to protection for the non-domestic ratepayers, in Wales the non-domestic sector paid only 13 per cent. of revenue expenditure in 1982–83. Rates represent only 2 per cent. of manufacturing wages in England and Wales and they are allowable against profits for tax. The real effect of rates is not on businesses but on the purchaser and the taxpayer. If the Government are concerned about the effect on the business ratepayer, why did they reduce the grants to local government, which led inevitably to higher rates?
Rates have increased from 1974–75 to 1982–83 in the county of Gwynedd by 159 per cent. but the RPI has increased by 210 per cent. Rates have increased considerably less than the RPI.
The level of grant aid in England has dropped from 66 per cent. in 1976 to 51 per cent. in 1984–85. The reduction is generally accepted to equal a saving of 4p in the standard rate of income tax. The grant was increased initially from 61·5 per cent to 66 per cent. specifically to finance the Houghton pay award to teachers, which is still being paid, together with its successor, the Clegg award. The grant subsequently has been reduced to 51 per cent. and the ratepayer must meet the difference as a result of a calculated and deliberate act of central Government policy.
The Secretary of State's criticisms about increases in local authority spending are misleading. First, in criticising the percentage increase, he presupposes that the base was correct at the beginning of the period, which is not necessarily correct in many areas. Secondly, he presupposes that there is no possibility of a disproportionate change in need in those areas throughout the period. Thirdly, he used the term "spending irresponsibly", which is an entirely subjective measuring rod and cannot be defined by the Bill or by any of its subsequent regulations.
The £10 million cut-off for applicability is not subject to indexation and erosion will take place. At present few authorities will be included, but in the fullness of time the limit could affect the vast majority of local authorities, should the Government choose to allow it to do so. Even if the Government do not operate in that way, that does not mean that a successor Conservative Government will not choose to do so.
The Government claim that business does not have a business vote. I do not like the implication of that. The implication seems to be that because some people have more money than others—I see that some Conservative Members nodding—they should have a larger influence in democracy. If we are going in that direction—I note that some Conservative Members seem to be concurring with that view — the people of these islands should be aware of the fact.
The Bill applies to Wales, although it is not needed or called for in that country. It does not extend to Northern Ireland or Scotland. I appreciate that the circumstances are different in those countries and that they have different legislation.
The Association of District Councils in Wales — reference had been made to it supporting the Bill in other areas — does not support this measure. Clwyd and Gwynedd, which comprise 11 district councils, have sent a telemessage saying that they are unanimously resolved to reaffirm total opposition to the Bill. In that area, five of the nine seats are held by Conservative Members in Westminster. Opposition exists in the form of those who represent the Conservative party in the local authorities as well as within other parties. Wales has no need for the Bill because the structure of local government finance in Wales is different. The Secretary of State for Wales, who is on the Government Front Bench, will shortly be introducing orders into the House and we shall have a debate on the RSG distribution in Wales next week or the week after. As I have said, the distribution formula in Wales is different. There is a different treatment of joint funding in Wales when assessing overspending and Wales has different patterns of need in housing and in the old industrial areas. The level of resources is different in Wales. Average per capita personal wealth is only 70 per cent. of that in the United Kingdom. The structure of public bodies in Wales is different, especially the health authorities, as is their interface with the local authorities and the water authorities. People in Wales are demanding better control of the level of water rates but the Bill does nothing about that.
Few Welsh districts will come over the £10 million threshold and if the Welsh counties are guilty of anything, it is of under-provision in specific areas. The details of Welsh county overspending in 1983–84 shows that it is £20 million on an aggregate target value of £1,034 million, which is less than 2 per cent. The Secretary of State has said that the level will most likely fall to 1 per cent., allowing for budget drift in the future.
Wales has no need for the Bill. I hope that if it is not defeated tonight — I will be voting against it— we shall have an opportunity in Committee or on Report to move an amendment to exclude Wales from its provisions.
I rise to address the House for the first time, mindful of the fact that anything I say as long as I am a Member of this place will probably have been said by someone else before me and put more eloquently.
I am greatly honoured to have the privilege of representing the people of Basildon. The burden of responsibiliy is made all the more heavy by my following no fewer than five extremely able predecessors, all of whom remain Members of this place. I refer to my hon. Friend the hon. and learned Member for Fylde (Sir E. Gardner) and my hon. Friends the Members for Castle Point (Sir B. Braine), for Holland with Boston (Mr. Body), for Brentwood and Ongar (Mr. McCrindle) and for Billericay (Mr. Proctor), all of whom served the House with distinction and diligence. I hope that they will long continue to be Members of this place. I do not wish to forget Eric Moonman, who is no longer a Member of this place but who used to sit on the Labour Benches. He was one of the most hardworking and conscientious Back Bench constituency Members of his time and he is still regarded with great affection by many of my constituents.
As an East-Ender, I am especially pleased that so many of my constituents were my former neighbours from that most warmhearted part of London. I tried for a number of years to persuade those good people to cast their vote for me but I never persuaded enough of them to do so to enable me to win an election.
When the electors of Basildon returned me to this place, they created, I believe, a unique circumstance. As far as I am aware, I am the only Conservative Member in this Parliament who does not have within his constituency a county or district Conservative councillor. I hope that I shall prove to be the forerunner of many successful Conservative candidates in Basildon at all tiers of government, and I shall work towards that end. Although there may be an uneasy relationship occasionally between the local Member and the district council in the meantime, I shall not be deflected from the course set when I was elected. I have always accepted the maxim that creative tension is beneficial, and I hope that it will prove to be so in Basildon.
Basildon was designated as a new town in January 1949. The town has blossomed and grown and has finally matured into one of the most exciting places in Britain. The town can be conveniently divided into Fryerns, Langdon Hills, Vange, Pitsea, Nethermayne and Lee Chapel, all nestling in the heart of the beautiful Essex countryside. There can be few places in the country where the effects of this Government's policies can be so beneficially seen as in Basildon. It is a town which has imaginatively, through the help of the development corporation, grasped its opportunities. The opening of the M25 has further enhanced its attractiveness as a centre for commerce and industry. We have probably the finest shopping centre in the country, if not in Europe.
We have our problems in the town, but those with open minds are working together to try to solve them. It is self-evident that the future success of Basildon is linked inextricably to a growing and expanding economy with minimal inflation, and it is for these reasons that I welcome the introduction by my right hon. Friend the Secretary of State for the Environment of the Rates Bill. The Bill is a vital ingredient to the success of the Government's economic policies. It is absurd to have a national economic policy that is at odds with a local economic policy.
Rate reform is long overdue and the Bill will go some little way to meeting that need. I welcome the Bill but there are some aspects of it that I regret. I am still convinced that there is a practical alternative to the present rates system and I am disappointed that the Government feel unable, after great deliberation, to recommend one. The poll tax still has an irresistable attraction for me, if only because of the intellectual exercise of seeing which sectors of our society would be happy to disfranchise themselves.
Before commenting on the core of the Bill, I shall draw the attention of the House to two clauses that have great merit. I know that clause 13 will be warmly welcomed by representatives of industry and commerce in Basildon, as indeed throughout the country. At long last we have some element of democracy, with the requirement of consultation, remembering that non-domestic ratepayers provide over 50 per cent. of local authorities' income. I hoped that businesses would be given the vote and am a little concerned about the form of consultation and the notice that will be taken of it. I am concerned also about the recommendations that will be made. Schedule I, paragraph 19, widens the circumstances in which rate relief is available to institutions for the disabled. It represents a much-needed change.
As we have already heard from my right hon. Friend, it is most unfortunate that some parts of the Bill have had to be introduced. In a perfect world where all local councils were under Conservative control, I am sure that such legislation would be unnecessary. The Government have made a genuine attempt not to resort to this type of legislation, but continued non-compliance by certain councils has made this action necessary. It is ridiculous to suggest that the Bill threatens local democracy. Anyone would think that local government was self-financing. It is conveniently forgotten that 52 per cent. of rate fund revenue in 1982–83 in England and Wales came from the national Exchequer.
Some local authorities have made magnificent efforts to control expenditure and maintain a high calibre of services. The first that I wish to mention is the London borough of Redbridge, where I still serve as a councillor and which includes part of the constituency that is represented by my right hon. Friend the Secretary of State for the Environment. The authority has kept within the guidelines, yet continues to serve the community well.
Essex county council also runs a tight ship and still manages to maintain services. Oh, that I could wax lyrical about Basildon district council! We have heard earlier how the selective scheme for rate limitation will be applied to relatively few of the high-spending councils, but unfortunately Basildon district council may be among that number. This is an example of an authority that has gone out of its way to thwart the Government's economic policies. Far from merely maintaining services, the council has set about expanding them in the most cavalier and irresponsible fashion.
I shall give some examples of Basildon district council's wastefulness of ratepayers' money. First, the costs of administration of council houses is five times higher than that of the development corporation. It is about £4 a house instead of 75p. Secondly, there is the cost of unnecessary area rent offices. The office at Laindon, for example, was opened at a cost of £90,000. Thirdly, there is the nuclear-free zone nonsense. The council has given grants to local CND groups and has spent £6,000 on a peace festival. I look forward to the district auditor's remarks on such expenditure.
Oh, and then there is the "Caring Friend" strategy. The council's theme is that of the caring council, and speaker systems blast out the caring council theme tune all over the town. The council spent £26,000 purchasing a "caring friend" caravan and after a month the wheels dropped off. A sex advice centre for young people called Grapevine has been set up at a cost of £52,000. Golf courses and bowling alleys run by the district authority made a loss last year of £41,800, at least. A legal advisory service has been set up, despite the perfectly adequate citizens' advice bureau, at a cost of £68,000. Wat Tyler park is being built at a cost of £150,000 on a munitions dump in an area where deposits of asbestos have been discovered.
An officer has now been appointed to advise the adminstration, which amounts to him being a Labour political adviser. A publicity officer has been appointed to the administration; this is really to help the Labour party promote its views through the monthly distribution of the so-called council information sheet "Link"—a platform for the distortion and misrepresentation of Government policy. In Basildon approximately 70 per cent. of rates, representing £8·4 million, goes on salaries and other associated staff costs.
Despite all this, many companies have been attracted to the area—the Ford tractor plant, Marconi Avionics, Rothmans, Yardleys, the Distillers group and Gordon's gin, to name but a few. Should any business man or entrepreneur wish to find an area in the United Kingdom in which to set up a business there is no finer place than Basildon where there is a willing, enthusiastic and skilled work force available.
We are fighting hard to attract new business to the area. However, last year Littlewoods, a major retail outlet, pulled out of the area, blaming the high level of rates. Just recently we have had the devastating news that Carreras Rothmans may leave Basildon in April. Whilst I would not single out the level of rates as the main reason, it cannot help when decisions such as this have to be made when there is a rates bill of £0·5 million, particularly when contrasted with the rates paid by other Carreras factories in Spennymoor and Darlington.
Charity has been described as that amiable quality that moves us to condone in others the sins and vices to which we ourselves are addicted. Full of amiable qualities as right hon. and hon. Members of the Opposition are, and addicted as they may be to using public money to buy trinkets and ideological toys, their vigorous defence of prodigality and inefficiency sterns more from a desire to preserve some corner of a field from reselection than any real commitment to the wasting of money as such.
I hope that by taking control of the taxpayers' money that is going to local councils, we shall eventually be able to reduce the amounts being taken from the taxpayer. By making local government more efficient we shall ease the burden on businesses. Last June the Conservative party placed before the British people a manifesto part of which contained proposals for the introduction of this Bill. Although the Opposition have never accepted the fact, the Conservative party gained an emphatic victory at the polls and an endorsement of those proposals. We have the full support of the people on this matter and we are determined that the Bill will become law.
At the risk of inciting dissent from those behind me, I congratulate the hon. Member for Basildon (Mr. Amess) on his maiden speech. I do not agree with what he said, but it was no worse than the speech of the Minister. I wish the hon. Member well in what time he has in Parliament.
The Bill is appalling. The only good thing I could find in it was schedule 1, paragraph 19, which gives a small measure of rate relief to disabled people's organisations.
The Bill is born of dogma, not necessity, and of the argument about the nature of wealth in our society. It is the child of those who believe that all wealth is generated in the private sector and that a good education or a high standard of health care is not wealth but a luxury. This measure is not necessary for the Government's management of the economy. Local rates do not affect the public sector borrowing requirement or the money supply except in the area of capital schemes and borrowing. The Executive already have power to control these. Even what the Conservative party would regard as the most excessive local government expenditure is covered by revenue so it does not affect the borrowing requirement. If inflation is the issue in the management of the economy, the Government must explain the inconsistency in their approach which leads them to see rises in rates as an evil but to insist on rises in fuel costs.
The real reasons for the Bill are to be found in the parliamentary brief circulated by the Confederation of British Industry and also in the prejudices of the Conservative party. The CBI tells us about the burden of the rates, yet, as we have heard in the debate, nationally rates amount to less than 1 per cent. of industry's costs. The CBI brief states this key fact in a different way; it says that rates yield more than mainstream corporation tax. Quite so. All that proves is that, no matter how agile the accountant is, he cannot find a way for a business to avoid paying the rates.
We were told that enterprise zones, with their nil rate burden, would help enterprising business men. They helped some enterprising business men but not those they were supposed to help. While the rates have gone altogether, site owners have been able to put the rents up. That is enterprising, but it does not create wealth for anybody except the owners of the sites. I am sure that that is not what was intended.
The Minister told us of companies whose owners allege that rates have driven them out of business or forced them to reduce the size of their businesses. He has told us that he wants only to curb a few naughty councils and that the rest will be all right if they are good. The Minister is a good Conservative and I am sure that he believes in market forces and leaving business free to respond to market forces. If that is the case, why does he not leave it to market forces, let businesses choose which area they will be based in and let them move from high-rated to low-rated authorities if they wish? Why legislate on the rates?
I have been asked not to give way so as to allow other Back Bench Members to speak.
The answer is that every business man moans about his rates. He cannot get out of paying them and he cannot reduce them. He would much rather not pay them, but rates do not relate to ability to pay. That is an argument for reform of the rates system and not for decreasing the taxation. If the rates, or their successor tax if one was introduced, related to ability to pay, there would be no income from industrial or commercial sources. Indeed, we might owe them money. Businesses would rather have almost any commercial debt than waste money on paying taxes. Rates are a highly visible form of taxation and therefore are unpopular.
Closing schools is unpopular too. A petition containing 20,000 signatures was presented at the last meeting of Newcastle city council protesting about the removal of a tier in the tertiary system in the west end of Newcastle. The petition was presented by Labour members, Conservative members and even by a representative of the Liberal party. All were opposed to the cut.
On the question of housing in Newcastle, the deterioration of the Rochester estate in Walker has reached the proportions of a local scandal. Reports to the city council say that it will cost £8,000 per dwelling to bring the property up to a minimum acceptable standard. That means spending £3 million on the estate. Newcastle has a capital programme that will take 20 years to fulfil at the present rate of progress. It will build 60 homes next year; the waiting list contains 16,000 names.
The Minister tells us that the city's rates are too high. They are too high, but they cannot be reduced without hurting people. On Tyneside—this is the case not just in Newcastle but in other conurbations — many of the prosperous suburbs are outside the catchment area of the inner city and its rate base, so rates cannot be levied on them. In general, those who have less income have to contribute More to the rate base. How odd it is for the Government to say on the one hand that they will give extra money to help cope with inner city problems through the partnership programme and on the other hand that if we try to deal with structural problems in inner cities through our own moneys they will penalise us. That is a schizophrenic approach; we are given money and then have it taken away. The Bill will simply make matters worse and households which rely on low incomes will be hurt most. Many of my constituents take home £60 or £70 for a 40-hour week, that being the average pay for shipyard labourers whose greed is sometimes referred to during industrial disputes. I much prefer to refer to the facts.
Other right hon. and hon. Members have spoken extremely well and movingly about the constitutional issue which is involved. They have dealt with the price that the country must pay for the Bill. It strikes a fundamental blow at our current system of Government. I accept that we are not a federal state, but many decisions in Britain are taken locally by locally elected representatives. That will no longer happen. Key spending decisions will be taken away from such representatives, and, in practice, because Ministers cannot scrutinise everything personally, be made by the Civil Service. All effective power to prevent that is now put in the hands of the Executive. The element of local decision making, discussion and votes has been taken away.
Local councillors will no longer be able to fight an election on whether to increase rates to build a new swimming pool. That is quite a lively issue in the east end of Newcastle. There is no longer any point in fighting an election on such issues as the Government are taking the power to decide whether such spending will be allowed. Therefore, candidates will only be able to say whether they would be advocates of such a scheme if they had the power to implement it. That is precisely the type of decision which should be made locally and it is precisely the type of decision which will no longer be made locally.
There must be good reasons for making such a fundamental change. The only sound reason that has been advanced is that the Bill was a pledge in the Conservative party's manifesto in the June general election campaign. I accept that there was such a pledge but it took up just one paragraph of a manifesto which previously contained a pledge completely to reform the rating system. How was the electorate to know which pledge would be reneged on?
What has happened to the party that once fought an election on the slogan "Set the people free"? Why is it now attempting to do the reverse? The Bill is wrong because it undermines our country's constitution, because it penalises those who can least bear it, because it centralises power in the hands of the Executive, because it erodes the accountability of councillors to their electorate and because it fails to meet the points of the very arguments that are used to justify it. It is an intellectually contemptible measure, and I am not in the least surprised that large sections of the Conservative party find it extremely hard to stomach.
It is my great pleasure to congratulate my hon. Friend the Member for Basildon (Mr. Amess) on a refreshing and generous speech. What counts is not how often an hon. Member speaks in the House but what he says and what he does on behalf of his constituents. To judge by my hon. Friend's performance today — he acquitted himself well — the House looks forward to hearing him again and to seeing him being active on behalf of his constituents in the next Parliament as well as this.
I have been surprised and not a little saddened by the hostility of some of my right hon. and hon. Friends to the Bill. It is easier, when one lives under some councils, to say that everything is going quite well and to forget the excesses elsewhere. However, living in areas of high taxing authorities, such as Nottinghamshire and South Yorkshire, one finds things are different. We joke about the people's republic of South Yorkshire, but it is no joke when trying to run a business there. I understand that the hon. Member for Rotherham (Mr. Crowther) is the only representative of South Yorkshire to have spoken so far. I was interested in his assertion that almost everyone in South Yorkshire supports the bus scheme. I must tell him that that is not so. Many people there bitterly resent having to pay for that bus scheme and regard it as an expensive nonsense.
Until May 1981, Nottinghamshire was the lowest-rated county council in the country. Since then rates have increased by 67 per cent., and it is proposed that they should increase still more. Such councils say that the Government's reduction of grants is to blame. My reply is that 67 per cent. or 100 per cent. increases cannot be entirely the result of the Government reducing grants. The answer lies substantially in the hands of the councils. I refer to their profligate spending, hugely subsidised public transport and support for every lunatic fringe organisation, such as is the case in London. I refer also to hospitality for all types of marches and causes which happen to pass through centres of population. Those are the excesses that my right hon. Friend is trying to curb. Only a minority of authorities need to be curbed, but my right hon. Friend must have the relevant powers in case they should prove necessary.
The tragedy is that authorities such as those I have mentioned are the cause of savings having to be found in other authorities, the spending of which is quite reasonable. That has involved a cut in capital allocations, because, if we spend too much on revenue, there must be cuts, and it is capital spending which must be reduced. Parliament has a duty to manage the economy. We cannot ignore that duty. If we do, we might as well go home. If some authorities insist on going over the top, the Government cannot stand idly by. That is why I support the Bill.
Like many of my hon. Friends — and, I venture to suggest, hon. Gentlemen opposite — I receive letters almost daily from constituents who are groaning under the burden of excessive rate demands.
Their message is, "Do something." I have passed that message on to my right hon. Friend. Many of my right hon. and hon. Friends have urged for years that something should be done. Many of them did so at the recent general election, but they are now unwilling to face the consequences of the legislation that we promised and are now presenting.
Nobody wants this legislation. I am sure that my right hon. Friend hopes that it will never have to be implemented. There are no easy answers in politics and we should not expect any. If there were, they would all have been tried before, the millenium would have arrived and we should all have gone home. Life is not like that. Right hon. and hon. Members know that unpalatable decision must sometimes be taken. I speak on behalf of hundreds of thousands of ratepayers in Nottinghamshire when I say that I support my right hon. Friend's proposals.
It is argued that the Bill is a constitutional monstrosity. However, Parliament has a duty to manage the economy. All the powers of local authorities, including those to raise money by taxation, derive from the House. Local authorities have no powers but those granted to them by Parliament. That has been so for well over a century. Never before in that time have local authorities taxed their ratepayers without mercy and without regard to ability to pay, but they are doing so now. That is what the Bill is about and that is why something must be done.
Only about 22 per cent. of local authorities' net expenditure is paid for by domestic ratepayers, so there is little democratic accountability. The Bill is an attack not on democracy but on the ability to levy swingeing rate increases without restraint on those who often have no power, through the ballot box, to do anything about it. Of those who do pay domestic rates and thus have a vote, 16 per cent., quite properly, get a rate rebate and a further 12 per cent. have their rates taken into account in supplementary benefit payments.
The present system is a licence to tax without hindrance, in the knowledge that the majority of those who have a vote have little interest in the amount levied and that the tab will be picked up by those who have no vote. Those electors with no vote look to this place for relief. This is an attack not on local democracy but on entrenched local excesses.
We should not be agonising over whether the local authority associations are against the proposal. They do not pay the rates. We should ask the ratepayers whether the Bill is necessary. That is the main test. Do the ratepayers want their local authorities to have the power of unrestrained taxation? The vast majority of ratepayers would say that they do not. For all their high-sounding titles and propaganda, the local authority associations have one inbuilt deficiency: they do not speak for the ratepayers.
Forty-one companies took part in a CBI survey on rates in Nottinghamshire last month. They said that they had declared 3,500 redundancies since January 1982, and that high rates were a significant cause of 46 per cent. of those redundancies. They said that rates averaged £240 a year for each employee. That is the extent of the rates burden which Opposition Members try to minimise. Those surveyed said that a rates increase of 5 to 10 per cent. would affect future employment prospects in their companies.
If we accept what those companies have said — I am sure that Labour Members have no reason to doubt it—
—Opposition Members should be arguing for the Bill because it would protect jobs if we could curb authorities such as Nottinghamshire. Rates have affected the level of business activity in my county. They have contributed to unemployment, which is already high.
I started by saying that I was astonished that some of my hon. Friends opposed the Bill. I conclude my saying that if it is not passed, some electors will suffer dire consequences. Ratepayers in many areas need the Bill. They were promised it at the general election. I believe that they should have it, and I support it.
Not only the local authority associations to which some hon. Members referred, but most of the authorities in the county of Derbyshire oppose the Bill. The authorities of west Derbyshire, High Peak and south Derbyshire all oppose it, as does the council in the city of Derby.
There are two major reasons for the opposition voiced by those councils. First, there is no point in having local government that cannot make local decisions in the light of local circumstances. That is what local government is about and what it is for. That is what the Bill seeks to remove.
Of course not.
The second major reason why the councils are opposed to the Bill is that they rebel against the phoney case that the Government and their supporters have sought to make in proposing the Bill.
There have been several major causes for rate increases up and down the country in recent years. The first is the fall in the rate support grant—the money that the Government make available to assist local councils to meet their expenditure needs. The second is the increase in the burdens that the Government have imposed on local authorities — to which I was happy to hear some Conservative Members refer—such as the transfer of the administration of housing benefits and yet other burdens that will come in future as the Government seek to bring down their expenditure and pass the buck to someone else. The third cause for rate increases, to which there has been little reference, has come about through previous direct action by the Government with regard to local government. I refer to the penalties, under the Government's previous legislation, which have contributed to an increase in the rate burden.
The Derbyshire county council has been castigated both by local Conservative Members of Parliament and by the Government as an overspending authority. Yet, without the Government-imposed penalties, the rates would be 35p in the pound less than they are, and the rate increase in recent years would be at or even slightly below the rate of inflation, although the services in Derbyshire have improved, as promised in the county council's manifesto, on which it was elected.
However, Derbyshire is only one of many authorities—some Conservative-controlled—the spending needs of which, as assessed by the Government in their figures for grant-related expenditure, are above the target set for the rates that they should charge. In the coming year alone, the Government's assessment of Derbyshire's spending needs will rise by £16 million, but the target given will rise by only £5·4 million. The grant-related expenditure figure will be £12 million higher than the target for spending. Therefore, who is overspending and who is to judge by what amount or in what way the overspending is taking place?
Most important of all, in the past week the Government's newly created quango, the Audit Commission, produced its survey of a family of 18 comparable authorities, of which Derbyshire is one. The Government's own body's survey shows that in Derbyshire current expenditure is below the average for that family of comparable authorities. It appears that in this case, as in so many others across the country, the criteria for overspending will be merely at the whim of the Secretary of State, not according to related financial facts.
Apart from the county of Derbyshire, the Derby city council, on an all-party basis, has asked its Members of Parliament to oppose the Bill. The council's budget is in accordance with the Government's targets. Between 1978–79 and 1983–84 the city rate rose by only 29 per cent., whereas the retail price index rose by 73 per cent., and the Government's own spending—they are happy to criticise everyone else—rose by 78 per cent. However, because its rate-borne expenditure is more than £10 million, Derby, like many other councils, will fall within the scope of the Bill.
How can the Secretary of State have the impertinence to claim that he and his civil servants can manage Derby better than its elected representatives? Their record meets with no party criticism in the city. They are admirable and prudent, yet the Secretary of State will have the power to take the decisions out of their hands. I do not doubt that the Minister will claim that councils such as Derby wil1 not be affected, but the Derby city council does not believe that and neither do I. The council has written to say that it is united in opposing this legislation as an unwarranted interference in the constitutional relationship between the two levels of government.
There seem to be two basic reasons why we cannot believe that councils such as Derby will not be affected in future. First, it is quite clear—as far as I can judge, no one in local government disagrees—that the selective scheme, if brought in for 1985–86, is bound to fail to meet its targets, because there is no way in which even a few authorities can be brought back to the Government's targets within their time scale. Therefore, the Government are bound to turn to their general powers.
Secondly, we believe that those general powers will be used to reduce expenditure across the board in local councils throughout the country, whether they are managing their electorates' affairs well or otherwise. The explanatory and financial memorandum says that clause 2 will be used
having regard to general economic conditions",
not the needs of local areas.
There is no point in having local government if its assessment of local need is not allowed to differ from that of central Government. We might as well leave everything in the hands of central Government and abolish the structure of local government altogether. I fear that the Bill will be yet another weapon in the Government's war to destroy the welfare services that have been built up in this country, wherever they may be found, including at local level.
For those reasons, I have no hesitation in following the wishes of local representatives of all parties in opposing the Bill.
At this stage of a debate it is incumbent on all hon. Members to endeavour to introduce original aspects. So many foxes have been shot, so many arguments deployed that it is important not simply to re-run those already put forward. I will not pursue all the points made by the hon. Member for Derby, South (Mrs. Beckett) but she referred to the fact that local authorities have had greater obligations imposed upon them by central Government. I could give the House a catalogue of duties lifted from the shoulders of local authorities — industrial development certificates and office development permits, to name but two. She failed to mention that under this Government local authorities now have a bounden duty to pursue the real policies of setting the people free by following a vigorous policy of sale of council houses and other surplus assets, thereby creating capital with which to provide for the programmes that the electorate and the ratepayers want.
A debate of this nature would be enhanced if hon. Members of the Opposition, just some, actually admitted that some local authorities abuse the system, that some local authorities take the ratepayers to the cleaners and that some check, balance and control might in some circumstances be necessary. The hon. Member for Newcastle upon Tyne, East (Mr. Brown), who spoke before the hon. Lady, referred to the fact that rates comprise just 1 per cent. of manufacturing industry's costs. He chose to ignore the fact, as have other hon. Members of the Opposition, that the rates element paid by manufacturing industry in the United Kingdom amounts to one eighth of the gross trading profits before tax—12·5 per cent.
The hon. Member for Copeland (Dr. Cunningham) opened the debate for the Opposition. I sought to intervene twice at that point in his speech where he deplored the fact that central Government, by means of this Bill, were to impose their will on local authorities. Where was the hon. Member—where were other hon. Members—on the night of 4 February 1976 when enthusiastic support was given in the Aye Lobby to the Second Reading of the Education Bill, which compelled local education authorities to respond to the dictates of central Government in ensuring that every single school became comprehensive, notwithstanding the fact that the parents, the teachers, the friends, the governors and the pupils of those schools did not want this to happen? This is a complete U-turn in the philosophy of the party in opposition.
My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) advocated increasing the frequency of local government elections—one third every year in three or one quarter every year in four. I wholeheartedly agree with that. It is perhaps a pity that when his Government enacted the Local Government Act of 1972 he did not seek to incorporate such provision. He also said that, as far as he was aware, the Secretary of State had no power under the special powers provisions of the Bill to raise the threshold above £10 million. My reading of the Bill suggests to me that clause 2 gives my right hon. Friend the Secretary of State that power. That I believe to be absolutely right.
I agree with my right hon. Friend the Member for Old Bexley and Sidcup when he says, as I have said on a number of occasions, that it is possibly not realised by some Members of this House—and certainly not by others outside—that there is a direct relationship and also a direct contradiction in the way local government raises its money and the way in which the money is spent. Neither side of that particular balance sheet can be dealt with in isolation. They must be dealt with together. I welcome my right hon. Friend's suggestion that there should be, as part of the continuing grant/rate debate, at least some appreciation of the interface between these two things.
I will support this Bill in the Division Lobby tonight. I have my reservations because in many ways it is a sad Bill because of the failure of all political parties, local authority organisations, professional institutions and trade bodies to reach a consensus on what to do about the rates. We have all sought to make political capital out of expressing sympathy for the poor hard-pressed ratepayer. Have we acted responsibly as a House in coming forward with a view that would command respect and cease to tempt the abuse of local government? What we are seeing now is a product of the lack of consensus on an alternative to the present system. No uniform view exists about the perceptibility of local income tax, the equity of a poll tax or the reliability of a local sales tax. It is the product of a desire on the part of all political parties when in government to fudge the short-term issue in the hope that it will go away. I deplore the behaviour of both the last Labour Government, and so far of my own party in government, in fudging the issue of a rate revaluation.
I hope that my hon. Friend the Under-Secretary of State, in his wind-up speech tonight, will give me some assurance that at least the Government intend during the lifetime of this Parliament to embark first on a commercial rating revaluation and then on a residential revaluation to eliminate the anomalies and distortions in the present system.
As my right hon. and learned Friend the Member for Hexham (Mr. Rippon) said in a very thoughtful speech—though I did not agree with his conclusions—for years there was a consensus and a convention that local authorities in general followed the wishes of central Government as regards the total level of expenditure. However, that convention has been broken in a number of well publicised instances, and I believe that it is the Government's bounden duty to respond to the changed situation and circumstances and to protect the ratepayer.
As local government has become more political—some of us would perhaps prefer it not to be so—some councils have abused the trust that central Government placed in them and have levied rates of such iniquitious and horrendous proportions, particularly on industry and commerce, that companies have gone bankrupt and their employees have joined the dole queue.
Local government is big business. It accounts for 25 per cent. of all public expenditure, and it employs one person in 10 throughout the country. Like all businesses, it has a threefold duty: first, to spend the money that its bankers invest in it wisely; secondly, to produce goods or services that reflect value for money; and thirdly, to produce a reasonable return for the shareholder. When any of those three criteria is not met, I believe that the banker, the customer or the shareholder has a right to be heard. In the context of local government and rates, the voice of the shareholder — the ratepayer — goes unheard, by and large. The turnout at local elections is pathetically low. As we heard, it is 20 per cent. or 30 per cent. and historically the voter will vote not on the behaviour or prudence of his or her local authority but on the behaviour at the time and the popularity of the Government in power in this place.
This Bill provides a measure of protection—some say a crude measure of protection, but it is at least a measure of protection—for the banker and shareholder, in the form of specific and general powers. I hope that the specific powers can be seen to work, but I have deep reservations about the desirability and practicability of the general powers. However, I fail to see how the Bill can be attacked in the name of democracy. Is it not a strengthening of democracy that councils should be forced to be more accountable? Is it not a strengthening of democracy that greater rights be conferred on the payer of the piper? However, I fear that the right of consultation for industry and commerce in clause 13 is no more than a paper tiger, and will not do much to enhance the rights of the industrial and commercial ratepayer when being consulted by a potentially hostile local authority.
How strong, in fact, is the constitutional argument, when the reality is that with so many of the functions devolved upon it, local government acts merely as a convenient agent of central Government? How strong, in fact, is the constitutional argument when more than half the money that councils spend comes from Whitehall or elsewhere, and over 60 per cent. of the remainder comes from the industrial and commercial ratepayer who has no voice, no vote, no say and no sanction in the way that the money is spent?
In February of this year, I committed an act of parliamentary vandalism by helping to strip the roof off a factory in Wolverhampton to enable the owners of the factory to avoid paying empty rates. After all, those owners were doing their best. They employed local labour in the construction industry, and let the factory to a company to provide employment in Wolverhampton which had to pay £26,000 for services that it was not receiving. I am glad that the Bill provides protection for the industrial and commercial ratepayer against the payment of void rates.
I end with a plea to my right hon. Friend that he extends the void rating exemption beyond industrial property—I understand that his Department is consulting interested organisations and bodies—and across the commercial sector. How many owners of office blocks are told by local authorities that they must let those office blocks to firms within the borough? They have no right so to do, if the owners of the premises wish to let them to provide employment from outside the borough. I hope, therefore, that my right hon. Friend will consider carefully the whole subject of void rating, and look at it from the point of view of the ratepayer, who is being taxed for property that he is not occupying and being made to pay for services that he is not receiving.
With those reservations, I welcome the Bill, at least as an attempt to ensure that the quiet voice of the ratepayer is heard the more effectively.
Order. Before I call the next hon. Member it might be helpful if I inform the House that the wind-up speeches are expected to begin at 9 o'clock. There are still many hon. Members on both sides wishing to speak. Short speeches will mean fewer hon. Members being disappointed.
My hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) referred to the problems that this Bill, if passed and implemented, will impose on people who live in Hackney; and similar problems will arise for other people living in most of the deprived areas of Greater London. If one looks at the hit list of authorities—those that the Government intend to attack in this measure—one sees that a large proportion of them are in London. The most spectacular example is the Inner London Education Authority. I propose to confine my remarks this evening to the problems of that authority.
I take as my text a speech that was made by the Secretary of State for Education and Science in Sheffield on Friday, 6 January of this year, when he said:
I am myself ready to acknowledge that I underestimated the task which we face in raising standards in schools when I took up my office in 1981. In particular, I did not at that time fully appreciate, for example, the problems of teaching low attainers and the special difficulties faced by teachers in many inner city schools.
The Inner London Education Authority is responsible for providing the education service for the inner city part of London. The problems that the authority faces are far greater than the problems faced by any other education authority in the country. Some areas of the country may have a higher proportion of people who are unemployed,
but not many. Some areas of the country may have a higher proportion of children whose mother tongue is not English—but not many. There are no fewer than 50,000 children in ILEA schools—50,000 out of 300,000—whose mother tongue is not English. At heart, they are not a problem. Indeed, it would be useful to our country to have 50,000 fluent in other languages, provided that those children in the meantime became fluent in English as well. So ILEA has a large task in turning that characteristic into an asset to the country.
Some other areas may have a higher proportion of children in single parent families — but not many. Indeed, ILEA has 14 per cent. of its children come from single parent families. Some areas may have a higher proportion of people who live in abject poverty, although I doubt it. However, none has the same combination of problems of multiple deprivation affecting the population, and consequently the education service, of inner London.
The combination of stresses is quite unique. It is reflected in the Government's own figures, calculated by the Department of the Environment. It came up with what were called "Z" scores of multiple deprivation in local authority areas. Out of the 10 authorities with the highest "Z" scores, no fewer than seven are inner London borough areas, and all 10 are from Greater London. Indeed, the inner London average deprivation, according to the DoE's figures, is considerably worse than that of any authority outside London. Hackney has the highest score with 6·69. The inner London average is 4·36. The next worst authority, outside London, is Manchester, with 4·19. Liverpool—goodness knows Liverpool's problems are legion and known to everyone—comes out at 3·51, which is much lower than the inner London average.
In the face of this, ILEA is trying to do a job of work. For this purpose it gets not a penny from the Government towards its day-to-day running costs. All its running costs are met by inner London ratepayers, yet what is its record compared with other authorities in the rest of the country? Her Majesty's inspectors of schools, still, under this centralising Government, independent, have in the past three years produced annual reports on the standards of educational provision in the whole country. There are 96 education authorities and never in the past three years have more than five or six authorities been satisfactory in every aspect that Her Majesty's inspectors look into, but ILEA has been among that five or six on every occasion.
ILEA is not perfect. As a parent of children who go to ILEA schools, I know as well as many other parents that considerable improvements need to be made. One of our objections to everything that is going on, and the continuing attack by the Government on the education authority, is the extent to which the good will, effort, expertise and energy of countless people in inner London, instead of being devoted, as most parents, teachers and education authority administrators would want, to improving education standards in inner London schools, have been diverted into trying to protect the education authority from the depradations of the Government year in, year out. That is a great loss.
The Government say that it costs a lot to provide an education service in inner London, and it does, but it was ever thus. It has always cost much more to provide an education service in London than in any other part of the country. As long ago as 1878, when Matthew Arnold, better known as a poet, was Her Majesty's chief inspector of schools, it cost 50 per cent. more to educate a child under the London school board than the national average school board cost. Why does it cost more? It is because the cost of everything in London is higher and because ILEA is trying harder than any other authority to cope with the problems that it faces and to give all the children a good start in life.
The ILEA scheme for the use of computers in all schools was so well approved by the Department of Education and Science that it was adopted nationally and the eclair French teaching scheme and the Smile mathematics scheme have been taken up by legions of authorities in other parts of the country. It pioneered bringing in parent governors, now apparently so dear to the hearts of Tory Ministers. It pioneered graded testing, which the Secretary of State was lauding and proposing for every other authority in the speech that I quoted earlier. All these services, improvements and attempted improvements cost money. Everything in London costs more than it costs elsewhere. If the House were to be removed to Yorkshire or Northumberland, the cost of providing its services would be substantially reduced.
There is another local service in London. It has more than 20,000 staff and its cost per member of staff is 40 per cent. more than the average cost in the rest of the country, and on the standard of performance set by the Government Department responsible for it, it is twice as inefficient as the next most inefficient equivalent organisation. There might be a case for rate capping that organisation or bringing it under the control of the Secretary of State for the Environment, but if he tried to do so he might be in trouble because the Home Secretary is responsible for it—it is called the Metropolitan police. I use that as just one example. The disparity between the cost of the Metropolitan police and the police service in the rest of the country is roughly the same as the disparity between the cost of ILEA and of the education service in other parts of the country.
I do not suppose that the Secretary of State will do anything about that, but he proposes to do something about the costs of ILEA. If he does, the additional facilities that ILEA tries to provide in all its schools will disappear, the extra teachers will be reduced, the 35p school meals will probably be doubled in price, and the generous clothing allowance for the poorest children will disappear, as it has disappeared in skinflint Tory authorities all over the land. The provision for poor children to go on school trips and holidays and journeys will go. As seen by mandarins in Whitehall and the Treasury Bench, these are trivia. The combined salaries of the Ministers on the Government Front Bench earlier would have paid a decent rate support grant for a number of authorities.
The nursery services in ILEA, which are more extensive than any other, will be threatened. Some parts of the country, under the Government's present loony system, get grants for a nursery education system that they do not provide, but ILEA, which provides the largest system, gets no contribution from the Government. There is more adult education provision in London than anywhere else. It is so successful that Members representing the outer London Tory boroughs, if they were here, would have to confirm that legions of their inhabitants are ever eager to come into adult education classes provided by ILEA because the skinflint Tories will not do it. Such people do not all come for flower
arranging. Adult education has a vital role to play in combating illiteracy and ignorance. I shall read a letter that will be more eloquent than anything that I can say. [Interruption.] The hon. Member for Northampton, North (Mr. Marlow) should keep quiet, and at least pay some respect to the person who wrote me this letter, even if he holds me in no respect. The letter is written by Mr. James Doyle of 6 Hazle house, Maitland Park road, NW3, in my constituency. This is not a form letter, whatever anyone may say. It says:
Dear Sir, I have come to school for 4 years to Camden Institute. I come to the classes because I wanted to learn to read and write. I feel that I'm learning well and don't want the classes to end. So, as my M. P., I would like you to make sure that there will be not cuts in I.L.E.A. and classes will not be affected or teachers' jobs lost.
The Secretary of State seems to wish to speak. I challenge him now, and I shall give way, to give a promise that Mr. Doyle's classes will continue after this Bill has gone through, and if the Secretary of State will not promise that, will he keep his stupid mouth shut?
The Bill proposes catastrophic reductions in the level of expenditure by ILEA. Government members are in a curious position on this matter because most of them do not send their children to schools in the state system anyway. They make no contribution to ILEA's costs. I do not know what status the Government have in a debate about ILEA's future. I believe that my children are precious, and most people believe that their children are precious. We should have a decent society in which we all hold everyone's children precious. All the children in inner London, whatever their ethnic background, however poor their families may be, whether they are in Hampstead, Highgate, Blackheath or Hackney, should have as good an opportunity in life and as good a basic education as those children in the schools to which rich members of this Cabinet send their children because they do not think that inner London schools are good enough. If they do not think that inner London schools are good enough for their children why are they trying to reduce the money spent on the schools and so make them worse?
I give the Government this warning: the people of inner London treasure their education service which they have had for well over 100 years, and they will not give it up. They will fight like the devil at every stage during the passage of this legislation and afterwards. They will wreak a terrible vengence on any party that destroys their children's educational opportunities.
In the age of videos we should always remember that there is no action replay of childhood. We get only one childhood. If we do not provide a decent education during the childhood of our children there will be no second chance. They will not see themselves as part of our society. I warn the Government that the people of inner London will not accept sweeping, smashing reductions in the expenditure of the ILEA. The Government have no mandate from the people of inner London to do so. The Government contribute nothing towards the education service in inner London. The people of inner London pay for that service. It is not in the Government's hands to destroy that for which they do not pay.
My hon. Friend the Member for Manchester, Withington (Mr. Silvester) will probably say that I take too romantic a view of local government, but I make no secret of my strong opposition to this measure. This is a sad day for those of us who feel strongly about the independence and importance of local government.
I accept what my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) said about Camden council. As a ratepayer in the London borough of Hackney, I am equally worried. If we are to have local government, we must take it warts and all. We cannot just have cosy Tory councils and get rid of or control the rest. We might just as well carry the logic of the argument to its proper conclusion, get rid of local government entirely and put in a commissioner. That is the role that all authoritarian regimes have taken.
There is an inevitable progression in this matter which started in the 1960s and 1970s when the Labour party tried to force comprehensive education on local authorities. It would he invidious to quote the passionate speeches made by Conservative Members during the debates on those measures. They were followed by the Housing Finance Act 1972, during the Administration of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). The only significance of that was the Clay Cross incident when a very Left-wing Labour council broke the law. I believe that that incident had an effect out of all proportion on my colleagues in the Conservative party. They came to the conclusion that we would never achieve co-operation on a matter of important official policy, and, therefore, the basis of mutual trust and respect which had governed relations between central and local government was gravely undermined.
When the present Administration came to power and wanted to sell council houses, they made certain that the legislation forced local authorities to adopt that policy even though their electorates, apparently, did not want it. Therefore, the slope towards centralisation became steeper and more slippery. That process culminated at the end of the last Parliament in the Local Authorities (Expenditure Powers) Act 1983. Hon. Members will remember that that legislation originally sought to limit the rate-raising powers of local authorities. Eventually, the Government changed their view and that part of the Bill was removed.
The Secretary of State at the time was very specific in his assurances. I thought then that the argument had been won, but, out of the blue, we had this particular proposal in the Conservative party's election manifesto. As far as I know, that proposal had not received detailed and careful discussion—certainly not in the parliamentary party. We now find ourselves putting into law a measure to implement that promise. I do not believe that we should do so. I take the point of my hon. Friend the Member for Hampstead and Highgate that manifestos are dangerous documents, as the Labour party discovered when dealing with devolution.
I cannot force from my mind the conviction that a House of Commons concentrating in itself the whole power of the State might establish in this country despotism of the most formidable and dangerous character".
Disraeli was talking about the checks and balances in the constitution. What would he think today when the monarch and the House of Lords exercise less power than
they did in those days? Lord Salisbury was Prime Minister when the Local Government Act 1888 was passed. At the moment, that legislation governs the relationship between central and local government. It enshrined the principle that went back to the 1600s. I shall not quote what he said because the hon. Member for Blackburn (Mr. Straw) quoted him in his article in the Daily Telegraph. Lord Salisbury referred to the excessive and exaggerated powers which have been heaped on the central authorities in London. What would he think today? If the powers were excessive and exaggerated then, what are they now?
I leave it to others to argue whether the Bill will or will not control local government expenditure. For me, the Bill essentially means a measure of centralisation. The Conservative party in particular must ask itself where the legislation will lead us. First, the Bill gives substantial power to the Secretary of State, and that power does not stop at fixing the rates. It goes into the details of the local authorities concerned because that will be debated on the Floor of the House. The Bill sets a precedent that would be dangerous if the Secretary of State came from a Government of a different persuasion.
Secondly, the Bill leads inexorably to further erosion of the status of local government. Electors will not seek their remedies locally, but will petition central Government where the power patently lies.
Thirdly, the Bill will encourage irresponsibility. There will be no need to take the onus of difficult, dangerous and unpleasant decisions. The villain will be there for all to see.
It used to be fashionable for Tory speakers to quote Burke. Recently he has been out of favour, and one can understand why. When he was talking about the French monarchy, he described its leading vice as
a restless desire of governing too much.
He went on to say:
as always happens in this kind of officious universal interference, what began in odious power, ended always, I may say without exception, in contemptible imbecility.
Hitherto, the Conservative party has been the implacable opponent of centralised state power, and it should stay that way.
After listening to Government Members I find that the Government's argument for the Bill is that it is a necessary economic measure. The truth is that this year's overspend—as interpreted by Government speakers — by local government amounts to a meagre 0·6 per cent. of total public expenditure, and that is measured against a unilateral target set by the Government.
This kind of local spending, which is providing local services, can hardly be jeopardising our economic recovery. In real terms, local government spending has grown less than that in the rest of the e conomy and less than central Government spending. There is no sound economic justification for rate capping. The truth is that this Government—the most reactionary one in history for their actions towards local government — are covering up their increased spending on defence and the dole; they are shifting the cost onto rates by withdrawing rate support grant from councils. The rating system is out of date, and we should be introducing other ways of financing local government.
This afternoon, we have heard a great deal of comment about keeping election promises. In 1974, the present Prime Minister promised to abolish domestic rates. Domestic rates take a higher proportion of income from poorer households than from richer households. I am a firm supporter not of total abolition of rates but of supplementary help. When the Tories came to power in 1979 they again said that they intended to reform the rating system, but again they went back on their promises to the ratepayers of this country. Because they cannot carry out their manifesto promises, they have decided to make unwarranted and vicious attacks on local government.
The Tory-controlled Association of County Councils—the Government's own supporters and front-line troops—says in its report on rates:
The Association understands the Government's concern about a handful of local Authorities which have not operated within national economic and social policies, but nevertheless, even if there were no other way of tackling the problem of those few authorities, the implementation of the Government's proposals appears to be based on expediency and would result in an unacceptable centralisation of power in practice in the hands of the Executive, rather than of Parliament and a further weakening of local democratic control.
The price to be paid is too high, for a problem which is overstated and can be reduced by further improvements to the system of local taxation to make Local Authorities more accountable to their electorate and taxpayers". That appeal from the Government's own supporters is echoed by the great majority of people who serve in local government. The Secretary of State is seeking executive powers to act against authorities whose expenditure is considered excessive but he will give no indication of how he defines "excessive".
The Bill as presented is not about rates. It is designed to give the Secretary of State more and more power over local government. It should be called the Direct Rule Bill — direct rule over communities and councils and democratically elected councillors not by Parliament but from No. 2 Marsham street. Clause 1 gives the Secretary of State power to prescribe a maximum rate to be levied and clause 2 allows him to designate the authorities for which he will prescribe a maximum. Even the £10 million maximum put into the Bill to appease the Tory district councils is not secure. Conservative Members who represent smaller district council areas should be aware of the dangers in the powers sought by the Secretary of State. The £10 million maximum can be changed and non-metropolitan districts are included in the classes for which the Secretary of State seeks power to set a maximum.
Clause 3 enables the Secretary of State to determine the total expenditure of an authority without regard to the needs of the authority. Clauses 4 to 7 and the rest of the Bill also seek to introduce direct rule by central Government. The essence of the Bill is a threat to the basis of democracy in this country. The Secretary of State and his officials say that they should set expenditure levels for local government but they do not explain how the levels will be decided. The problems of defining reasonable and appropriate levels of expenditure for individual authorities have bedevilled local government finance in recent years and the Department of the Environment has had substantial experience of those problems but has been unable to find equitable solutions. The difficulty of defining appropriate spending levels for block grant determination highlights the problems involved. Under the Bill, the Secretary of State will be able to determine expenditure levels for individual authorities, to make judgments on appeals against his own decisions and to lay down undefined conditions for a temporary relaxation of any decision. In other words, he will be both judge and jury for local government.
The Government are pressing for the Bill to become law to provide greater control over local government when what is really required is reform of local government finance. The Government's real failure in respect of local government accountability is their failure to implement the proposals in the Layfield report in relation to some form of local income tax or to accept the consequences outlined in that report. The Government's conclusions on the responses to their Green Paper on the reform of domestic rates represent another lost opportunity. Every hon. Member is aware of the problems and difficulties facing local government due to the outdated system of local government finance and this Parliament should be working to reform local government finance.
I appeal to the Secretary of State and to the House to reject the Bill because it is a direct and vicious attack on local government.
I have four minutes before the latter-day Lord Salisbury addresses the House.
As part-owner and founder of a small factory, I know that rates are a crucially important part although not the most important part of a small business's costs. Rental costs in a factory such as mine are £2 per sq ft and the rates are equivalent to 60p per sq ft. It is therefore vital that anything that can be done to reduce the rate burden should be done. I am lucky in that my factory is an area in which the local authority is reasonable and I do not for a moment mind paying the rates, but my views are borne out by the experience of others in other areas.
In 1978 rents and rates in London were double those in East Anglia. Between 1965 and 1979 East Anglia increased its share of manufacturing employment from 6·9 per cent. to 8·8 percent., with an increase of 140,000 jobs. Inner London, however, lost 240,000 manufacturing jobs between 1966 and 1976. Moreover, between 1966 and 1971 there was an exodus of 301 companies and only 17 moved into inner London. Rates, of course, are not everything, but they must have been a significant factor in those figures. To argue, therefore, that the Government should not take powers to stop an excess of rate spending—and I have listened to a great number of speeches today by those who are spenders rather than earners—seems to me to be ridiculous.
The final point I make to the House is this. For a community to survive, it has to have diversity. That diversity can exist only if there are rich people, not so rich people, small businesses, big businesses—
That is right, and if I am rich, then I have earned it myself and not off the backs of others. If that is the case, it is crucial that the people who have to pay taxes are not so exorbitantly taxed that they have to move out.
It is for that reason if no other, to maintain the importance of communities, that the Government are right to make sure now that they have power to do something because one cannot constantly wait for new ideas, new reforms, many of which have been discussed at length, to come forward on to the statute book. That is why the Government have to ensure that the rates where they are in excess are properly controlled.
On a point of order, Mr. Deputy Speaker. A number of hon. Members on both sides of the House have sought to get into the debate to express the anxieties of their constituents and of the local authorities, both the county councils and the district councils. I put it to you, Mr. Deputy Speaker that, because this is a change in the constitutional relationship between local and central government, the Bill must be taken on the Floor of the House and not upstairs in Committee.
In winding up for the Opposition tonight, I first congratulate the hon. Member for Basildon (Mr. Amess) on a spirited, if a slightly controversial, maiden speech, and I am sure that the electors of Basildon will look forward to further details of the proposals for a poll tax that he has put forward.
The debate has been remarkable in two respects. It has been remarkable for the strength of opposition to the measure on both sides of the House. So far as the Conservative Party is concerned, that opposition, as we have heard from speeches today—and as we would have heard from many speeches that have not been given because hon. Gentlemen such as the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) were not able to catch your eye, Mr. Speaker—is not confined to one wing of that party, but is spread across it. The debate has been remarkable also for the way in which some of the supporters of the measure have let their masks slip, and they have produced crude, anti-democratic arguments, as the hon. Member for Hampstead and Highgate (Mr. Finsberg) did, in which the voters of Camden, Sheffield and Islington were abused for no other crime than that they have consistently voted in Labour councillors. Indeed, in that speech the very right to vote of those people who do not have to pay rates was challenged.
Central to the argument for the Bill is the Government's concern to hold down the overall level of public spending. As my hon. Friend the Member for Copeland (Dr. Cunningham) made clear in his commanding speech, the claim that local authorities have overspent is a most staggering impertinence by the Government for, on almost any measure, local government's record of efficiency, expenditure and service is better than that of central Government and the Prime Minister.
As we heard, since 1978–79 central Government expenditure has risen as a share of national income while local government's share has fallen. So arbitrary and unjust has the Government's selection of overspenders been that of the top 40 whose budgets this year are already above their targets for next year, 26 of those alleged overspenders have increased their spending by less than the Prime Minister has increased that of central Government. Twelve of these authorities have increased their spending by less than the average of local authorities. Rochdale, Tameside, Walsall, Lewisham, Tower Hamlets, Haringey, Avon, Cheshire, Cleveland, Derbyshire, Humberside and Lancashire, all on the hit list, have increased their spending by less than the average. Fourteen of these authorities have increased their spending by less than the rise in pay and prices which means that they are being hit despite the fact that they have had to make real cuts in their spending over the past four years—Liverpool, St. Helens, Gateshead, north Tyneside, south Tyneside, Hounslow, Cumbria, Durham, Northumberland, Newcastle upon Tyne, Salford, Manchester and Richmond-upon-Thames. The example of Newcastle upon Tyne which was quoted by the Secretary of State speaks eloquently of the humbug of the Government on the issue of rate increases. It is, indeed, true, that Newcastle's rates have increased by 130 per cent. over the last four years, but Newcastle's spending has increased by only 70 per cent. The reason why Newcastle's rates have gone up so much is not because of the ratepayers or the electors of Newcastle but because of central Government. The Government are principally responsible for the mass rise in rates that has taken place in almost every area of the country.
However visible they may be, and despite the increases that have taken place, rates are but a small burden compared with the burden of central taxation imposed on the British people by the present Government. Rate bills for the average family have risen from £3·07 to £6·50 a week since 1978–79, but the same family has seen its centrally imposed taxation bill rise from £38 to £75, 13 times the size of its rate bills. We should tonight be talking not about rate capping but about tax capping, for no local authority of whatever political hue has broken its promises on spending and taxation as abjectly as the Conservatives. They promised to reduce taxation in 1979 and again in 1983. Instead, they have increased the overall burden of taxation by 14p in the pound, and today we learn that the increases in taxation last year were the highest of any western country.
As for business rates, the Government have had to resort to the wildest exaggerations to justify the Bill. As the Under-Secretary told me, rates form just one hundredth, 1 per cent., of business costs, a figure that has barely moved in the past.
Moreover, unlike domestic ratepayers—this point has not been mentioned in the debate—business ratepayers obtain tax relief on their rate bills of 52p in the pound. No wonder corporation tax has gone down as rate bills have gone up. For all the false propaganda from the Secretary of State and his lickspittles in the CBI, the burden of business taxation including rates in the United Kingdom is low, to quote from the latest report of the influential and respected Institute for Fiscal Studies.
International comparison can also show what nonsense is the Government's argument that the whole of their economic strategy could be knocked off course by the spending decisions of local authorities. No western country controls its local authority spending in the way in which this Government are proposing. Indeed, the only parallels for this measure are to be found in the Soviet bloc, and I ask Conservative Members whether that is the example they wish to follow. In most other western countries, including those whose record of economic success is better than ours, the totals of local authority spending are not even included, let alone controlled, in their public expenditure plans.
Additional expenditure by local authorities that is borne on the rates cannot in any significant way affect the level of borrowing, the level of interest rates or the level of the money supply. If the Government do not already know that the alleged overspending cannot and will not affect their overall economic strategy, they will soon find out, for what takes the Bill into the stratosphere of absurdity is the fact that it cannot in any event work to produce the savings that the Secretary of State claims for it.
The argument today has been about £770 million—0·5 per cent. of public spending, 0·25 per cent. of national income—and as the director of the Chartered Institute of Public Finance and Accountancy pointed out yesterday, there is no way in the world that the Government can get back that sum or anything like it through the Bill. To do so would, for example, from the point of view of the GLC, require a London Transport fares increase in real terms of 40 per cent. But the Secretary of State for Transport, who is now assuming responsibility for London Transport fares, has said that fares will not rise above the level of inflation. If so, the Treasury will not get its cut. To claw back this £770 million would require the hit list authorities— for example Islington, but it is true of all the others—to close nearly all their libraries, old people's homes, day care centres and baths and cancel their home helps, which would be impossible.
Essex county council — a Tory-controlled authority—is bound either to overspend in the next financial year by £6·5 million or to cut essential services such as the police and the fire service, in spite of traditional Tory promises. Most of the Essex Tory Members signed a letter of protest to the Secretary of State, yet hardly any of them have been present tonight and no doubt none of them will have the courage to vote in the Lobby against the Bill.
I am grateful to my hon. Friend. The Bill will certainly hit Conservative as well as Labour authorities.
On 3 January, the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) told The Birmingham Post:
The pressure on backbenchers"—
to vote for the Bill—
is quite extraordinary. If all those offered the prospect of office in the near future were to receive it, there would be no backbenchers left.
The hon. Member for Aldershot (Mr. Critchley) has said:
of the Whips—
have been busy,
on the telephone, directing Conservative Members into the Aye Lobby.
While the Secretary of State has been threatening petulantly, or promising, to resign if the Bill is rejected, he has already been preparing for defeat. Under the headline
Rate Bill may cost Treasury £500m",
the Financial Times tells us that the Secretary of State is already preparing to go to the Cabinet and ask them to legitimise at least £500 million of the alleged £770 million overspend, because he knows that it is impossible under his present measures, or future measures, to claw back that sum.
Apart from the sheer size of the cuts required from individual local authorities, there is another reason why the Bill will not work and will simply result in the most monumental bungle that the House has ever seen. In place of local democracy and the collective judgment of 24,000 councillors and 400 local councils, it sets the judgment of the Secretary of State for the Environment. In practice, as the Conservative-controlled Association of County Councils has told us, effective control will be by the civil servants. The civil servants will be controlled in turn by the computer at the Department of the Environment and the calculation of each authority's grant-related expenditure assessment.
No, I will not.
GREAs are horrendously complicated and it is not surprising that many hon. Members and Ministers should have found better things to do than grasp the details. However, the report presented to the House by the Secretary of State on 14 December shows that GREAs are based upon 54 different sets of compound mathematical factors which, added together, determine an authority's level of spending.
I will give way in a moment.
With the events in Liverpool in mind, we are all concerned about how social service departments treat children — particularly young children — at risk. At present—in Redbridge, in Bristol and across the country—individual councillors use their skill and judgment to assess the level of services to be provided to children under five who are at risk. Under the Bill—I have to tell Conservative Members that I mean part I as well as part II — the judgment of those councillors will be subordinated to the calculations of the grant-related expenditure assessment factor XI.
The computer will determine how much will be spent on children at risk not by making a careful study in each area but by multiplying the number who live in households lacking the exclusive use of a bath or inside WC by 0·04761 and adding the number who live in households containing a lone parent family, multiplied by 0·54864, and the number who live in households with an immigrant head, multiplied by 0·029293. Can that be the right way to make judgments about children at risk and the services with which they should be provided? That is exactly what the House is being invited to do tonight.
What makes the measure even worse is that by seeking to use GREAs to control the overall level of spending by local authorities, the Secretary of State is breaking solemn undertakings given to the House by his predecessor, that the GREAs would never be used in that way. My hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) reminded the House of that this afternoon.
Before the hon. Gentleman moves too far from councillors' judgment, will he recall that one hon. Member called the Bill an introduction of direct rule? Is the hon. Gentleman aware that we have lived under direct rule for many years in Northern Ireland where the Government are directly responsible for most local government functions, and that under that system there is great frustration? [Interruption.]
I take the hon. Gentleman's point, and although the circumstances are different, we should all be aware of where the taking of central powers can lead and what has already happened in Northern Ireland.
The hon. Gentleman is one of the more sensible souls on the Opposition Benches. He will realise that many ratepayers are being devastated by the massive rate increases that they are having to pay as a result of some of his more loony friends. Will he tell the House whether he believes that a local authority should have an unlimited discretion about the level of rates that it charges?
I would ask the hon. Gentleman to avoid flattering me, because it can do my future no end of harm. Yes, I do. I believe, as his hon. Friend the Member for Milton Keynes (Mr. Benyon) said, that we should accept local government, warts and all. I also believe—he happens to live in Lambeth, as I do—that the level of rates is not significantly high and that we receive good services for them. He and I may disagree over that and make different decisions when we vote, as can the electors.
Since GREAs were established, the system has been so manipulated by the Secretary of State that inner urban areas, particularly Labour-controlled ones, have been hit exceptionally hard. Whatever criteria are chosen have to be applied to all authorities in a particular class. Therefore the system has had a random and capricious effect upon Conservative-controlled local authorities as well. That is one reason why ratepayers in Hove, Portsmouth, Gillingham, Wandsworth, Kensington and Chelsea, and Essex face rate rises of 40 per cent. or more, or major cuts in their services, if they are to keep to the Government targets. It is why the Conservative leaders of the local authority associations remain wholly unconvinced by the reassurances that the Secretary of State has sought to give. They know that the system is unfair and unworkable from their experience the past four years.
In 1979, the present Leader of the House said:
Once you centralise power, a bad decision is disastrous".
Nothing so eloquently proves the wisdom of his advice than the chaos of the system of grants and penalties on whose crumbling foundation the Bill is based.
Some hon. Members have sought reassurance from the fact that the Government say that they will only use reserve powers if the selective powers fail. The Conservative leaders of the local authority associations have not been taken in by those so-called reassurances, and neither should Conservative Members. Mr. John Lovill, the chairman of the Association of County Councils, has said that the selective powers were in any event pretty pernicious because even to exercise the selective powers the Department of the Environment and the Secretary of State have to make a judgment about every authority.
It may not be realised by Conservative Members who support the selective powers that if they work and reduce the rates of the so-called overspending authorities, they will then qualify for the extra rate support grant which they are presently denied. As the total rate support grant is fixed as a cash limit, it will mean that if rate capping works there will be less rate support grant for those authorities that have not been selected for rate capping and their rates will rise faster than they would otherwise have done.
To add to the insanity, Mr. Noel Hepworth, the director of CIPFA—the Chartered Institute of Public Finance and Accountancy—said yesterday:
Given a relatively continuous list of levels of overspending, all overspending authorities may need to be capped to avoid uncapped authorities being allowed to overspend more than capped ones.
It is all very well saying that 20 authorities must be capped, but if those authorities are capped and another 10 are behind them, the 10 uncapped authorities will have higher rates than the 20 capped authorities. Therefore, the uncapped authorities will have to be capped. In those circumstances, 30 local authorities will be capped and another 10 authorities will be behind them. Their rates will be higher than those of the 30 capped local authorities and so the following 10 local authorities will have to be capped, and that state of affairs will continue. No Conservative Members should take reassurance from the syrupy words of the Secretary of State for he will be down the neck of every local authority in the land.
To all of this, the Secretary of State has but one refrain—the Government have a mandate. Of course, what appears in party manifestos should be taken seriously. but while Governments may propose, it is for the House to dispose. A claimed mandate is no excuse for Members suspending their judgment on what is put before them. We know, not least from the words of the right hon. Member for Daventry (Mr. Prentice), that this manifesto commitment was never properly considered by the Government. The hon. Member for Milton Keynes said that it came out of the blue. We know that proposals of this type were considered four times by the Cabinet during the previous Parliament and rejected on each occasion. Above all, we know that this measure was forced into the Conservative manifesto as a cover for the Prime Minister's personal failure to fulfil her personal pledge to abolish domestic rates and was not incorporated in it on its merits.
The Conservative party has traditionally seen itself as the party most in favour of the maximum diffusion of economic and political power, and of the weakest possible state. Lord Salisbury, in laying the foundations of the present system of local democracy, told the Conservative national union:
the purpose of local government is to diminish central government.
Other Members of the Conservative party have followed that advice throughout the decades.
The Secretary of State for the Environment told the Conservative party conference in 1980:
I also believe that a massive shift of power from local government to central Government would be wholly incompatible with our wish to entrust people personally and directly with the maximum responsibility for their lives.
The debate is particularly poignant occasion because 100 years of Conservative traditions, customs and principles are to be torn up in pursuit of this sordid measure, which will not work in practice but will accord to the Secretary of State for the Environment unbelievable powers centrally to control rates, and therefore the services of every local authority in the land.
We know from the defensive speech of the Secretary of State and his colleagues, and what he himself has declared in the past, that he knows that he is departing from Conservative principles. When talking at a dinner of county treasurers in 1973, he said of local authorities:
As autonomous bodies, they cannot be coerced. nor have we any wish to coerce them.
Earlier in 1973, at a meeting of the Association of Municipal Corporations, he said:
I would very much rather see local authorities have a fair degree of discretion and prepared to take on their own shoulders the full responsibility for their decisions rather than that they should merely become glorified agents for Whitehall.
The Secretary of State, in justifying his actions, has invented the novel constitutional notion that Britain is a unitary state. Albania and the Dominican Republic are also unitary states but they are not democracies.
The extent to which power is spread makes a country democratic. That applies, most of all, to the extent to which those who do not support the Government of the day are themselves accorded power to express their view, and above all, power to act in a way that is contrary to the Government's wishes.
In the celebrated Dimbleby lecture in 1976 Lord Hailsham warned that over-centralisation, of exactly the sort that we are discussing tonight, would lead, in his words, to an "elective dictatorship" and to Government riding roughshod over all those who fail wholeheartedly to agree with them.
The Secretary of State is unquestionably taking the House and the country down a road that will destroy local democracy. He will do so by controlling the services of local authorities and, more sinister, by challenging the legitimacy of those who vote in local elections. For the Secretary of State to argue that in the past there has been a form of consensus between local authorities and central Government over economic policy, which some allegedly overspending authorities have broken, is nonsense. As my hon. Friend the Member for Rotherham (Mr. Crowther) has said, there has never been such a consensus, There has been discussion between local authorities and the national Government; sometimes authorities have spent more than central Government would have wished and sometimes they have spent less. That has been the experience of Governments of both major parties.
In 1972, the present Secretary of State for Education and Science sent a circular to every local authority in the land advising it to plan for an increase in its spending of 10 per cent. per annum in real terms for each of the following 10 years. That Conservative underspending Secretary of State advised every authority to increase its spending by over 100 per cent. in real terms in the following 10 years. No authority in the land was able to match his profligacy. It was only the autonomy of local authorities and local democracy that prevented one man's brainstorm from becoming the nation's disaster.
There will always be room for argument about exactly where the balance should lie between a uniform national policy and local autonomy. The Labour party has tended to favour greater intervention in education while the Conservative party has favoured greater intervention in housing. Wherever the balance between national policy and local autonomy has been struck, both sides of the House have always been agreed on one major and central principle. Each side has been agreed that in pursuing statutory duties each local authority and each community should have the right in the final analysis itself to determine how much to spend on a service and how much to raise in rates. Common sense has told us to leave it to local councillors to balance what their areas need against what their areas can afford. It is that central principle of local democracy, which has been accepted on an all-party basis for more than a century, that the Bill will destroy.
The Bill is the most important single measure that will come before the House this Session. As it is a constitutional measure of great importance, it merits consideration by a Committee of the whole House. In terms of the powers that it transfers, it is at least as significant constitutionally as the devolution Bills and the European Communities legislation, all of which were considered in Committee on the Floor of the House. The Bill is certainly of greater significance than the Conservative Government's London Government Bill of 1963, the major clause and schedule of which were considered in Committee on the Floor of the House.
The Bill involves the greatest single act of centralisation ever seen in this century in peace time or in war. Those were the words of the former Conservative Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath). The Bill takes us down the road of the bureaucratic and authoritarian state. It is justified by economic arguments that are hollow and by constitutional arguments that are undemocratic and entirely inconsistent with the traditions and principles of the Conservative party. It is a measure without friends. It is opposed, moreover, by all parties outside the House. It cannot work and it is without justification. We shall fight it with all the means at our disposal. We shall vote against it this evening, and I hope that in so doing we shall be joined by many Conservative Members who have the courage of their own convictions and not of ours.
The case for the Bill rests on two main arguments. One is to do with the need for the House to be able to exercise in reality the rights and duties it pretends to have in setting the level of total public expenditure and setting the priorities within public expenditure. The second is to do with ratepayers and the protection of the ratepayer against a system which no longer gives him a fair deal.
The arguments against the Bill seem to fall broadly within the same headings. On the one hand, it is said that the burden of the ratepayer is exaggerated or it is claimed that the remedy lies in his own hand. On the other hand, some hon. Members seek to say that the House either has no right to control public spending or should not seek to do so.
I start with the non-domestic ratepayers because the hon. Member for Blackburn (Mr. Straw) put some weight on this matter. He has been refuted by my hon. Friends the Members for Stamford and Spalding (Sir K. Lewis) and for Wiltshire, North (Mr. Needham) who have the advantage over him that they run businesses, and also by my hon. Friend the Member for Newark (Mr. Alexander). If they were not enough to refute him, as they should be, there are other authorities urging support for the Bill—the Confederation of British Industry, the Association of British Chambers of Commerce, the Institute of Directors and the Chemical Industries Association. All this must count for something with my hon. Friends. A survey of London companies showed that 92 per cent. of the companies surveyed said that high rates led to job losses. A recent opinion poll showed that a majority of Labour voters agreed with them.
Small businesses of different kinds support the Bill. I shall quote one that I came across recently whose rates went up from £90,000 to over £160,000 in a year and which had to lay off people: it is a small, indeed declining, business called the Labour party at 150 Walworth road. There can be no question but that the additional fixed costs represented by rates will be passed on either in higher prices or in the fiercely competitive atmosphere of recent recession.
If this is not possible, firms will be forced to pay lower wages or, if unions prevent that, to diminish their labour forces. If hon. Members want a clear, professional, economic analysis of that truism, I refer them to Christopher Foster's great book on the subject.
I know that the hon. Member is frustrated, but it is not for me to give him the opportunity to make his speech.
Mr. Foster's book further deploys an interesting argument about fairness and high business rates, that in so far as high business rates are passed on in higher prices the effect is that
local authorities can provide benefits to their local community at the expense of people elsewhere who have no say in the matter.
The hon. Member for Blackburn has brewed up a storm in a teacup to which he did not refer in his speech. I want to give him the opportunity to refer to it; I think he is a little ashamed of it now. He has talked about the difference between a figure I gave him on the subject of rates as a proportion of profits and a CBI estimate. The CBI estimate was 50 per cent. or more. The Department of the Environment estimate was one eighth. There is a simple answer, as the hon. Member now knows. It was made explicit in my answer that I was talking about profits before allowance for depreciation and the CBI was talking about profits after depreciation. The difference is almost wholly explained by this simple point. Perhaps the hon. Member for Blackburn, as a former economics spokesman for the Labour party, would like to learn about definitions of profits.
I wanted to give the hon. Member for Blackburn, who is a decent and fair-minded person, the opportunity to apologise to my right hon. Friend because he said in the national press in so many words that my right hon. Friend was lying. He knows that that is not so. Therefore, I give him the opportunity to apologise.
I am delighted not to apologise but to take this opportunity to repeat once again that the Secretary of State has wildly exaggerated the impact of rates on the profits of business. The Secretary of State says that the figures are those produced by the CBI, but the Under-Secretary of State forgot to say that the letter which the Secretary of State wrote to me admitted that the figure was not 50 per cent. but 40 per cent. The CBI tells me that the figure for this year is 30 per cent. In selecting the figure which was tendentious—the Secretary of State knew that—he was trying wildly to exaggerate the impact of rates and his hon. Friend the Under-Secretary of State who quoted a figure which was one quarter of that given by the Secretary of State was giving the correct figure.
The hon. Gentleman might have disappointed the House by not exhibiting his normal fair-mindedness. I trust that in future he will read the questions that he has tabled as well as the answers to them.
There can be no question of the importance of the Bill for industry and commerce. No serious person denies that. Nor can there be any doubt about the impact on domestic ratepayers. That is not a serious argument.
Accountability is an argument which has exercised the minds of many of my right hon. and hon. Friends who have their doubts. That is a serious argument and we must address it.
Many people say that it is not that high rates do not matter but that the remedy lies in the hands of ratepayers. That argument was made by the hon. Member for Copeland (Dr. Cunningham), by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) and by my hon. Friend the Member for Manchester, Withington (Mr. Silvester). My right hon. Friend the Secretary of State has given the essence of the answer to that argument. Only 22 per cent. of local expenditure is met by the domestic ratepayer. As my right hon. Friend says, the weakness does not stop there. Only 35 per cent. of local electors are householders who pay rates directly. We all know, and any psephologist can prove, that local elections are reflections of satisfaction or otherwise with the national Government.
I am not suggesting that financial accountability mechanisms do not work at all. They work in many places where sensible and responsible people run local government. Such people make the accountability system work almost voluntarily, but the system is far too weak to protect ratepayers in such classic circumstances when the Government are right to take powers to prevent ratepayers suffering from institutions which are not working as intended.
My right hon. Friend the Member for Old Bexley and Sidcup said that he opposes the centralisation of power. In a fierce, formidable and short speech, my hon. Friend the Member for Milton Keynes (Mr. Benyon) said the same. That is quite right, but the only aternative if we are serious about the maintenance of control over public spending is so to diminish local athorities that their spending would not matter to the management of the central economy. That would be a real centralisation of power. Great services would have to be taken from local authorities. Surely that would be far worse for those such as my right hon. Friend the Member for Old Bexley and Sidcup who are anxious about the diffusion of power. That argument was also made by my right hon. Friend the Member for Daventry (Mr. Prentice) and by my right hon. and learned Friend the Member for Hexham (Mr. Rippon). I urge them to bear it in mind that if we are serious about the control of public spending and the annual votes on the level of public spending, what I have outlined is the only alternative.
With all due respect to my right hon. Friend the Member for Old Bexley and Sidcup, he must remember when arguing about centralisation the far greater experiment that we made—I was a junior soldier in his army when we made it—in centralisation through the statutory incomes and prices policy. Surely that was a far greater exercise in centralisation than anything in the Bill. I believed in it at that time but learnt from experience that it could not work. The power to set priorities locally must remain with local authorities—even those whose levels of rates have been capped.
I have the duty to try to respond to the many formidable speeches that have been made.
The other principal reason for the Bill lies at the heart of the Government's mandate — the struggle to hold down the growth of public spending. I suspect that some of my right hon. and hon. Friends who are doubtful about the Bill are also doubtful about the need to control public spending.
The argument of principle was settled long ago when local spending was defined as public spending and included in the public expenditure White Papers approved by the House every year. Professor Alan Day said years ago in his brilliant essay in the minority report to the Layfield committee that local spending has long been the Achilles heel of this House's control over public spending.
Year after year, we pretended to vote for levels of spending and an order of priorities within spending that were, in reality, mythical. Whenever, every year, spending was drifting up, the dissonance between reality and the myth was not too great. However, when the majority in the House votes for overall control and for a shift in the order of priorities, the self-contradiction begins to matter. Surely no one on the Conservative side pretends to doubt the right of the House, indeed the duty, not to shirk the control of spending. In an excellent maiden speech, my hon. Friend the Member for Basildon (Mr. Amess) made that clear.
I shall quote from the best modern writer on Conservatism:
Where local spending and tax-raising cut across central macro-economic policy, Whitehall must have the right to call the tune.
That was said by my hon. Friend the Member for Bath (Mr. Patten), the Under-Secretary of State for Northern Ireland.
I honestly believe that it would serve the House better if I tried to answer the points that were made in the debate.
My right hon. and learned Friend the Member for Hexham and the hon. Members for Copeland and Blackburn and others commented on the fact that we cut the rate support grant. Of course we cut the rate support grant. [Interruption.]
I am grateful to my hon. Friend for giving way. Does he accept that many of us are deeply disturbed that we have yet to hear a single word to justify the taking of these general powers? He now has 20 minutes to justify that part of the Bill. Will he please seek to do so?
I now have 19 minutes left after that intervention.
Of course we cut the rate support grant. That was not an exercise in the transfer of spending from one tax to another, but an exercise in showing local authorities that we needed to cut spending. That is what they should have done in response. As my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) said, that is what they would have done in the old days. Of course Government spending went up faster, in total, than local spending. That is what the House voted for in all the White Papers. The House endorsed the Government's priorities, which included spending on defence, unemployment and the Health Service—on things that, by the accident of history, fall on the central government programmes.
Some say that although we have the right, it is all de minimis. They say, "What does a few hundred million a year matter?" The hon. Member for Copeland and my right hon. Friend the Member for Old Bexley and Sidcup said that, as did my right hon. and learned Friend the Member for Hexham, my right hon. Friend the Member for Daventry and the hon. Member for Blackburn. Like all Labour spokesmen, he said "What does a few hundred million matter?" It matters intensely. I remind my hon. Friends that the whole argument about the Health Service last year was about finding an additional £110 million—[Interruption.]
On a point of order, Mr. Speaker. Would it not be better for the House and the conduct of the debate if the Minister looked at the Opposition Benches when he spoke and opened his mouth so that we could hear what he was saying? I am sure that he is ashamed of what he is saying, but let us hear what it is.
I did not hear a word of the hon. Member's intervention.
This £100 million matters intensely. Let me remind my hon. Friends that the whole argument in the Health Service last year was about the finding of £110 million. The local government overspend last year alone was seven times that figure. I notice, sadly, that some of my hon. Friends who were most concerned about the situation in the Health Service are those who are most concerned today about our taking powers to try to control that kind of overspend. If we cannot ultimately control current expenditure overspends — and we cannot effectively do so without this Bill—we can do nothing but continue to slash the capital spend, a process that started under the late Mr. Crosland, continued under the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and has gone on ever since. Again I notice among my hon. Friends who are our critics today some of those who were most vociferous — and justifiably so — in calling upon us to protect capital spending.
The figures that my right hon. Friend gave about how local authority spending has increased in spite of all the efforts of my right hon. Friends in the last four years should be ingrained in the mind of every Member on the Government's side of this House by now. The volume increase is 4 per cent. The increase in cost terms is 9 per cent. The manpower figures went down a little by 4·5 per cent. but they have started to rise again and there are still about a million people more in local government than in 1963.
These figures are not de minimis. This Bill is needed to help restore the balance in local government, which has been undermined by the conjunction of weakness in institutions and a determined attack on them by those who have seen that weakness. My hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) agreed with this point. With respect to some of my right hon. Friends from some of the more sensible counties and those who run local government in those areas, they simply do not know what problems are faced by their colleagues elsewhere. Long may their innocence last.
Let me try to spell out some of those problems. My right hon. Friend has already reminded us how weak direct accountability has become in many local authorities. One votes to spend £5 and if one contributes at all it is probably only £1 and the chances that one contributes at all are about three to one against. Nevertheless, in areas where traditional standards of public service still reign, councillors of all parties, albeit almost involuntarily, behave as if they should pretend that financial accountability works. Elsewhere new groups of those whose direct interests rest in the expansion of local government dominate councils and run them on quite different principles.
Let me give some examples. According to David Walker of The Times, 39 Labour councillors in Camden work in taxpayer or ratepayer-financed jobs or in unions, 45 in Islington, 30 in Lambeth, 48 in Southwark and so on. These people are, it is said by some hon. Friends—by my hon. Friend the Member for Milton Keynes and other right hon. Friends who doubt the necessity for this Bill—to be entrusted, without any safeguard, with the task of cutting jobs and costs in the public sector, with negotiating with public sector unions and with constraining the expansion of the very empire of which they are the functionaries. If hon. Members believe that they will do that, they will believe anything. My hon. Friend the Member for Hampstead and Highgate put this case very well.
I suppose that it is possible that we could pretend to believe that they hold, high-mindedly, to a Victorian ideology of disinterested public service, that the Victorian
political philosopher beginning with "M", of whom they are devotees, is after all John Stuart Mill, but they tell us different. It is asking rather a lot of my hon. Friends to read much of this thing, but they should have a look at the London Labour Briefing to find out what these people believe. I have read every word of it. There is a new breed of Labour councillors who are no more reticent on paper than on the soap box or the television screen. There are plenty of quotations that I could read to the House tonight if it were not for the affront to good sense. Let me quote from one of the many articles:
Labour councils should appoint teams of economic planners; and should be prepared to campaign vigorously against critic isms from capitalist lobbies about unfair competition, feather bedding etc."—
and so on. I hear their supporters helping me along by saying, "Hear, hear", in the background.
As The Guardian recounted of Ms. Valerie Wise, creator of the GLC's new women's committee:
She laughs, engagingly declines to conceal the sheer heady pleasure of sitting at this amazing, lifesize Monopoly board that is London".
That is no exaggeration. These people are not given to exaggeration.
Will the Minister answer the question to which I tried to get an answer from him earlier? If local government elections are only a reflection of national Government popularity, why do not the Government introduce legislation to abolish elections to local authorities and simply appoint councillors?
Because in most of the country the system works perfectly well, with the good will of all concerned. We are dealing with a minority of places and areas where the system has been corrupted, and quite deliberately corrupted.
As I was saying, this new breed of Labour councillors is not much given to exaggeration. Hear Mrs. Hodge, the leader of Islington, modestly describe herself and her people in the ratepayer-funded propaganda sheet "Focus" as
the most able, the most representative, the most united and the most committed group ever to have been returned to the town hall".
We do not have wholly to share Mrs. Hodge's estimation of herself to recognise that these are people who know what they want to do and that they will do it unless the House stops them.
To fail to see how firmly the ideology of Labour councils such as these is based on the expansion of local spending, paid for by the capitalism that they hate and the Westminster Government whom they despise, is to underestimate how formidable an enemy they are to local government as we have known it in this country.
The Minister quoted John Stuart Mill. If I remember it correctly, he said that a democratic and free society was one where all opinion could flourish and we could debate openly and decide what was right. Nevertheless, the Minister tries to tell us that because some representatives in local authorities have views that he does not like, he will take away their power to represent the people who voted for them at the ballot box. Is that in John Stuart Mill?
The Government are proposing to provide reserve powers to protect the citizen and the ratepayer where the system is not protected properly by its own self-righting mechanisms.
The hon. Member for Copeland (Dr. Cunningham) asked how much would be saved, and the hon. Member for Blackburn discussed Mr. Hepworth's article. Undoubtedly, we shall have a prolonged opportunity to discuss these matters in Committee. However, let us say that we were to save £300 million—that is probably the order of magnitude, as my right hon. Friend said—in the first year. It will depend entirely on the criteria that we finally agree. Let us say that the figure is £300 million or £400 million. That would be a major contribution to keeping Government finances on an even keel. I have already mentioned the scale of savings that we could make in this connection alongside the kind of savings—
The hon. Gentleman knows perfectly well that until we have discussed and agreed the criteria it would be foolish to say exactly how much, and what is more, we do not yet know what the effect on local councils' budgeting for next year will be. Of course, many local councils are budgeting sensibly in advance of this Bill.
May I seek your guidance, Mr. Speaker, from your wealth of experience in this Chamber? Will you offer advice to some of the younger Members here? Would you say, from your experience, that the honourable spokesman for the Government has to make an effort, or whether it comes to him naturally, to prove himself so patently inept as a Government apologist?
My hon. Friend the Member for Mid-Staffordshire (Mr. Heddle) asked about rating revaluation. The Government are already committed to the case for non-domestic revaluation, and that is now being discussed. On domestic revaluation, my right hon. Friend the Secretary of State has already announced that we shall be issuing a consultation paper.
There is one matter that lay behind many of the complaints from my right hon. and hon. Friends, which derives from the pressures put on them by their counties, very often low-spending counties — Essex was mentioned, but there are many others. They have come to fear this Bill and have doubts about it because they see the predicament in which low-spending councils find themselves. Even in the lowest-spending councils, as the Audit Commission shows, there is much more to be saved by greater efficiency. I know of no organisation spending £300 million or £400 million a year that cannot make efficiency gains. It is at the heart of the Bill that if we can bring high spenders under control, it should be possible, perhaps slowly at first, to move towards a fairer deal for low spenders. It is our overriding duty to the House, the Government and the national economy to make the books balance. If we cannot stop the runaway spenders we have to bring pressure to bear on everybody.
The Bill brings help for those of my hon. Friends whose doubts about this rate support grant system as a whole derive from what they see in their counties. The Bill is essential to them in allowing the pressure to come off them in due course.
Will my hon. Friend recognise that many of us on the Government Benches who want to cap the rogue elephant in local government because they have got away with it for far too long nevertheless have grave reservations about part II, about which neither he nor the Secretary of State have said very much? We believe that the Committee should look at a compromise on this, such as putting on a time limit. My hon. Friend must not think that because many of us vote tonight with the Government in favour of rate capping we necessarily support him on part II.
I take my hon. Friend's point.
I have supplied the arguments as to why the House needs a countervailing power to protect those who pay and to protect the concept of disinterested public service, which is under threat. What we propose will work—let no-one doubt that — and the very shrillness of the opposition to it proves it. No one doubts that it will work. To quote Peter Kellner of New Statesman, who is by far the best Labour political commentator:
The Government will say that its new law means lower rate rises. And it will be right.
I point out to my right hn. Friend the Member for Daventry and others that the Bill will work. It has already worked in Scotland. Modern populism is the most acute problem that we face and any Government committed to responsibility in public finance will have to deal with it. There is also the deeper problem of the momentum for growth in programmes administered by local government. After all the conflicts of the past years, that growth goes on. As David Walker writes, the party is not over—it is somewhat subdued.
I remind my right hon. and hon. Friends of the figures once more. Local authority spending has increased 9 per cent. faster than prices and there has been a 4 per cent. increase in real volume. After all that my right hon. Friend has said and after all the votes in the House, manpower numbers are creeping up again. That is why we need the warning inherent in the general powers in the Bill. It is almost certain that the continuation of the present tough financial regime with the selective scheme will hold the line, but the primary financial duty of the House is to maintain overall financial order. If we are wrong about the effectiveness of the selective financial scheme we could not possibly afford what might be two years' delay and a further round of legislation.
If the House tonight endorses both the selective and the general powers, not only will a signal have been given so that those general powers will be less likely to be needed, but across the economy as a whole we shall have reaffirmed our commitment to the control of costs and the pressure on public spending that is at the heart of the legitimacy of our mandate. That is why I urge those whose doubts I respect but cannot share to join us in the Lobby tonight.
|Division No. 123]||[10 pm|
|Adley, Robert||Crouch, David|
|Aitken, Jonathan||Currie, Mrs Edwina|
|Alexander, Richard||Dickens, Geoffrey|
|Alison, Rt Hon Michael||Dicks, T.|
|Amess, David||Dorrell, Stephen|
|Ancram, Michael||Douglas-Hamilton, Lord J.|
|Arnold, Tom||Dover, Denshore|
|Ashby, David||du Cann, Rt Hon Edward|
|Aspinwall, Jack||Dunn, Robert|
|Atkins, Rt Hon Sir H.||Durant, Tony|
|Atkins, Robert (South Ribble)||Edwards, Rt Hon N. (P'broke)|
|Atkinson, David (B'm'th E)||Eggar, Tim|
|Baker, Kenneth (Mole Valley)||Emery, Sir Peter|
|Baker, Nicholas (N Dorset)||Evennett, David|
|Baldry, Anthony||Eyre, Reginald|
|Banks, Robert (Harrogate)||Fallon, Michael|
|Batiste, Spencer||Farr, John|
|Bellingham, Henry||Favell, Anthony|
|Bendall, Vivian||Fenner, Mrs Peggy|
|Bennett, Sir Frederic (T'bay)||Finsberg, Geoffrey|
|Berry, Sir Anthony||Fletcher, Alexander|
|Best, Keith||Fookes, Miss Janet|
|Bevan, David Gilroy||Forman, Nigel|
|Biffen, Rt Hon John||Forsyth, Michael (Stirling)|
|Biggs-Davison, Sir John||Forth, Eric|
|Body, Richard||Fowler, Rt Hon Norman|
|Bonsor, Sir Nicholas||Franks, Cecil|
|Bottomley, Peter||Fraser, Rt Hon Sir Hugh|
|Bowden, A. (Brighton K'to'n)||Fraser, Peter (Angus East)|
|Bowden, Gerald (Dulwich)||Fry, Peter|
|Boyson, Dr Rhodes||Gale, Roger|
|Braine, Sir Bernard||Galley, Roy|
|Brandon-Bravo, Martin||Gardiner, George (Reigate)|
|Bright, Graham||Gardner, Sir Edward (Fylde)|
|Brinton, Tim||Garel-Jones, Tristan|
|Brittan, Rt Hon Leon||Glyn, Dr Alan|
|Brooke, Hon Peter||Goodhart, Sir Philip|
|Brown, M. (Brigg & Cl'thpes)||Goodlad, Alastair|
|Browne, John||Gorst, John|
|Bruinvels, Peter||Gow, Ian|
|Bryan, Sir Paul||Gower, Sir Raymond|
|Buchanan-Smith, Rt Hon A.||Grant, Sir Anthony|
|Buck, Sir Antony||Greenway, Harry|
|Budgen, Nick||Gregory, Conal|
|Bulmer, Esmond||Griffiths, E. (B'y St Edm'ds)|
|Burt, Alistair||Griffiths, Peter (Portsm'th N)|
|Butcher, John||Grist, Ian|
|Butler, Hon Adam||Ground, Patrick|
|Butterfill, John||Grylls, Michael|
|Carlisle, John (N Luton)||Gummer, John Selwyn|
|Carlisle, Kenneth (Lincoln)||Hamilton, Hon A. (Epsom)|
|Carttiss, Michael||Hamilton, Neil (Tatton)|
|Chalker, Mrs Lynda||Hampson, Dr Keith|
|Channon, Rt Hon Paul||Hanley, Jeremy|
|Chapman, Sydney||Hannam, John|
|Chope, Christopher||Hargreaves, Kenneth|
|Churchill, W. S.||Harvey, Robert|
|Clark, Hon A. (Plym'th S'n)||Haselhurst, Alan|
|Clark, Dr Michael (Rochford)||Havers, Rt Hon Sir Michael|
|Clark, Sir W. (Croydon S)||Hawkins, C. (High Peak)|
|Clarke Kenneth (Rushcliffe)||Hawkins, Sir Paul (SW N'folk)|
|Clegg, Sir Walter||Hawksley, Warren|
|Cockeram, Eric||Hayes, J.|
|Colvin, Michael||Hayhoe, Barney|
|Conway, Derek||Hayward, Robert|
|Coombs, Simon||Heathcoat-Amory, David|
|Cope, John||Heddle, John|
|Corrie, John||Henderson, Barry|
|Couchman, James||Heseltine, Rt Hon Michael|
|Cranborne, Viscount||Hickmet. Richard|
|Higgins, Rt Hon Terence L.||Morrison, Hon P. (Chester)|
|Hill, James||Moynihan, Hon C.|
|Hind, Kenneth||Mudd, David|
|Hirst, Michael||Murphy, Christopher|
|Hogg, Hon Douglas (Gr'th'm)||Neale, Gerrard|
|Holland, Sir Philip (Gedling)||Needham, Richard|
|Holt, Richard||Nelson, Anthony|
|Hooson, Tom||Neubert, Michael|
|Hordern, Peter||Newton, Tony|
|Howard, Michael||Nicholls, Patrick|
|Howarth, Alan (Stratf'd-on-A)||Normanton, Tom|
|Howarth, Gerald (Cannock)||Norris, Steven|
|Howe, Rt Hon Sir Geoffrey||Onslow, Cranley|
|Howell, Ralph (N Norfolk)||Oppenheim, Philip|
|Hubbard-Miles, Peter||Osborn, Sir John|
|Hunt, David (Wirral)||Ottaway, Richard|
|Hunt, John (Ravensbourne)||Page, John (Harrow W)|
|Hunter, Andrew||Page, Richard (Herts SW)|
|Hurd, Rt Hon Douglas||Parkinson, Rt Hon Cecil|
|Irving, Charles||Parris, Matthew|
|Jackson, Robert||Patten, Christopher (Bath)|
|Jenkin, Rt Hon Patrick||Patten, John (Oxford)|
|Jessel, Toby||Pattie, Geoffrey|
|Johnson-Smith, Sir Geoffrey||Pawsey, James|
|Jones, Gwilym (Cardiff N)||Peacock, Mrs Elizabeth|
|Jones, Robert (W Herts)||Percival, Rt Hon Sir Ian|
|Jopling, Rt Hon Michael||Pink, R. Bonner|
|Joseph, Rt Hon Sir Keith||Pollock, Alexander|
|Kellett-Bowman, Mrs Elaine||Porter, Barry|
|Key, Robert||Powell, William (Corby)|
|King, Roger (B'ham N'field)||Powley, John|
|King, Rt Hon Tom||Prior, Rt Hon James|
|Knight, Gregory (Derby N)||Proctor, K. Harvey|
|Knight, Mrs Jill (Edgbaston)||Raffan, Keith|
|Knowles, Michael||Raison, Rt Hon Timothy|
|Lamont, Norman||Rees, Rt Hon Peter (Dover)|
|Lang, Ian||Rhodes James, Robert|
|Lawler, Geoffrey||Rhys Williams, Sir Brandon|
|Lawrence, Ivan||Ridley, Rt Hon Nicholas|
|Lawson, Rt Hon Nigel||Rifkind, Malcolm|
|Lee, John (Pendle)||Roberts, Wyn (Conwy)|
|Leigh, Edward (Gainsbor'gh)||Robinson, Mark (N'port W)|
|Lennox-Boyd, Hon Mark||Roe, Mrs Marion|
|Lewis, Sir Kenneth (Stamf'd)||Rossi, Sir Hugh|
|Lilley, Peter||Rost, Peter|
|Lloyd, Ian (Havant)||Rowe, Andrew|
|Lloyd, Peter, (Fareham)||Rumbold, Mrs Angela|
|Lord, Michael||Ryder, Richard|
|Luce, Richard||Sackville, Hon Thomas|
|Lyell, Nicholas||Sainsbury, Hon Timothy|
|McCurley, Mrs Anna||Sayeed, Jonathan|
|Macfarlane, Neil||Scott, Nicholas|
|MacGregor, John||Shaw, Giles (Pudsey)|
|MacKay, Andrew (Berkshire)||Shaw, Sir Michael (Scarb)|
|MacKay, John (Argyll & Bute)||Shelton, William (Streatham)|
|Maclean, David John.||Shepherd, Colin (Hereford)|
|McQuarrie, Albert||Shepherd, Richard (Aldridge)|
|Madel, David||Shersby, Michael|
|Major, John||Silvester, Fred|
|Malone, Gerald||Sims, Roger|
|Maples, John||Skeet, T. H. H.|
|Marland, Paul||Smith, Sir Dudley (Warwick)|
|Marlow, Antony||Smith, Tim (Beaconsfield)|
|Marshall, Michael (Arundel)||Soames, Hon Nicholas|
|Mates, Michael||Speller, Tony|
|Maude, Francis||Spence, John|
|Mawhinney, Dr Brian||Spencer, D.|
|Maxwell-Hyslop, Robin||Spicer, Jim (W Dorset)|
|Mayhew, Sir Patrick||Spicer, Michael (S Worcs)|
|Mellor, David||Squire, Robin|
|Merchant, Piers||Stanbrook, Ivor|
|Miller, Hal (B'grove)||Stanley, John|
|Mills, Iain (Meriden)||Stern, Michael|
|Mills, Sir Peter (West Devon)||Stevens, Lewis (Nuneaton)|
|Miscampbell, Norman||Stevens, Martin (Fulham)|
|Mitchell, David (NW Hants)||Stewart, Allan (Eastwood)|
|Moate, Roger||Stewart, Andrew (Sherwood)|
|Monro, Sir Hector||Stewart, Ian (N Hertf'dshire)|
|Montgomery, Fergus||Stokes, John|
|Moore, John||Stradling Thomas, J.|
|Sumberg, David||Walker, Bill (T'side N)|
|Tapsell, Peter||Walker, Rt Hon P. (W'cester)|
|Taylor, John (Solihull)||Waller, Gary|
|Taylor, Teddy (S'end E)||Walters, Dennis|
|Tebbit, Rt Hon Norman||Ward, John|
|Temple-Morris, Peter||Wardle, C. (Bexhill)|
|Terlezki, Stefan||Warren, Kenneth|
|Thatcher, Rt Hon Mrs M.||Watson, John|
|Thompson, Donald (Calder V)||Watts, John|
|Thompson, Patrick (N'ich N)||Wells, John (Maidstone)|
|Thorne, Neil (Ilford S)||Wheeler, John|
|Thornton, Malcolm||Whitfield, John|
|Thurnham, Peter||Whitney, Raymond|
|Townend, John (Bridlington)||Wiggin, Jerry|
|Townsend, Cyril D. (B'heath)||Wilkinson, John|
|Tracey, Richard||Wolfson, Mark|
|Trippier, David||Wood, Timothy|
|Trotter, Neville||Woodcock, Michael|
|Twinn, Dr Ian||Yeo, Tim|
|van Straubenzee, Sir W.||Young, Sir George (Acton)|
|Vaughan, Dr Gerard||Younger, Rt Hon George|
|Waddington, David||Tellers for the Ayes:|
|Wakeham, Rt Hon John||Mr. Carol Mather and|
|Waldegrave, Hon William||Mr. Robert Boscawen.|
|Abse, Leo||Cowans, Harry|
|Alton, David||Cox, Thomas (Tooting)|
|Anderson, Donald||Craigen, J. M.|
|Archer, Rt Hon Peter||Critchley, Julian|
|Ashdown, Paddy||Crowther, Stan|
|Ashley, Rt Hon Jack||Cunliffe, Lawrence|
|Ashton, Joe||Cunningham, Dr John|
|Atkinson, N. (Tottenham)||Dalyell, Tam|
|Bagier, Gordon A. T.||Davies, Rt Hon Denzil (L'lli)|
|Banks, Tony (Newham NW)||Davies, Ronald (Caerphilly)|
|Barnett, Guy||Davis, Terry (B'ham, H'ge H'I)|
|Barron, Kevin||Deakins, Eric|
|Beaumont-Dark, Anthony||Dewar, Donald|
|Beckett, Mrs Margaret||Dixon, Donald|
|Beggs, Roy||Dobson, Frank|
|Beith, A. J.||Dormand, Jack|
|Bell, Stuart||Douglas, Dick|
|Bennett, A. (Dent'n & Red'sh)||Dubs, Alfred|
|Benyon, William||Dunwoody, Hon Mrs G.|
|Bermingham, Gerald||Dykes, Hugh|
|Bidwell, Sydney||Eadie, Alex|
|Blair, Anthony||Eastham, Ken|
|Boothroyd, Miss Betty||Edwards, R. (W'hampt'n SE)|
|Boyes, Roland||Ellis, Raymond|
|Bray, Dr Jeremy||Evans, Ioan (Cynon Valley)|
|Brown, Gordon (D'f'mline E)||Evans, John (St. Helens N)|
|Brown, Hugh D. (Provan)||Ewing, Harry|
|Brown, N. (N'c'tle-u-Tyne E)||Fatchett, Derek|
|Brown, R. (N'c'tle-u-Tyne N)||Faulds, Andrew|
|Brown, Ron (E'burgh, Leith)||Field, Frank (Birkenhead)|
|Bruce, Malcolm||Fields, T. (L'pool Broad Gn)|
|Buchan, Norman||Fisher, Mark|
|Caborn, Richard||Flannery, Martin|
|Callaghan, Rt Hon J.||Foot, Rt Hon Michael|
|Callaghan, Jim (Heyw'd & M)||Forrester, John|
|Campbell, Ian||Forsythe, Clifford (S Antrim)|
|Campbell-Savours, Dale||Foster, Derek|
|Carlile, Alexander (Montg'y)||Foulkes, George|
|Carter-Jones, Lewis||Fraser, J. (Norwood)|
|Cartwright, John||Freeman, Roger|
|Clark, Dr David (S Shields)||Freeson, Rt Hon Reginald|
|Clarke, Thomas||Freud, Clement|
|Clay, Robert||Garrett, W. E.|
|Cocks, Rt Hon M. (Bristol S.)||George, Bruce|
|Cohen, Harry||Gilbert, Rt Hon Dr John|
|Coleman, Donald||Gilmour, Rt Hon Sir Ian|
|Concannon, Rt Hon J. D.||Godman, Dr Norman|
|Conlan, Bernard||Golding, John|
|Cook, Frank (Stockton North)||Gould, Bryan|
|Cook, Robin F. (Livingston)||Gourlay, Harry|
|Corbett, Robin||Hamilton, James (M'well N)|
|Corbyn, Jeremy||Hamilton, W. W. (Central Fife)|
|Hardy, Peter||O'Neill, Martin|
|Harman, Ms Harriet||Orme, Rt Hon Stanley|
|Harrison, Rt Hon Walter||Owen, Rt Hon Dr David|
|Hart, Rt Hon Dame Judith||Park, George|
|Hattersley, Rt Hon Roy||Parry, Robert|
|Healey, Rt Hon Denis||Patchett, Terry|
|Heath, Rt Hon Edward||Pavitt, Laurie|
|Heffer, Eric S.||Pendry, Tom|
|Hogg, N. (C'nauld & Kilsyth)||Penhaligon, David|
|Holland, Stuart (Vauxhall)||Pike, Peter|
|Home Robertson, John||Powell, Rt Hon J. E. (S Down)|
|Howell, Rt Hon D. (S'heath)||Powell, Raymond (Ogmore)|
|Howells, Geraint||Prentice, Rt Hon Reg|
|Hoyle, Douglas||Prescott, John|
|Hughes, Mark (Durham)||Radice, Giles|
|Hughes, Robert (Aberdeen N)||Randall, Stuart|
|Hughes, Roy (Newport East)||Redmond, M.|
|Hughes, Sean (Knowsley S)||Rees, Rt Hon M. (Leeds S)|
|Hughes, Simon (Southwark)||Richardson, Ms Jo|
|Janner, Hon Greville||Rippon, Rt Hon Geoffrey|
|Jenkins, Rt Hon Roy (Hillh'd)||Roberts, Allan (Bootle)|
|John, Brynmor||Roberts, Ernest (Hackney N)|
|Johnston, Russell||Robinson, G. (Coventry NW)|
|Jones, Barry (Alyn & Deeside)||Rogers, Allan|
|Kaufman, Rt Hon Gerald||Rooker, J. W.|
|Kennedy, Charles||Ross, Ernest (Dundee W)|
|Kilfedder, James A.||Ross, Stephen (Isle of Wight)|
|Kilroy-Silk, Robert||Ross, Wm. (Londonderry)|
|Kinnock, Rt Hon Neil||Rowlands, Ted|
|Kirkwood, Archibald||Ryman, John|
|Lambie, David||Sedgemore, Brian|
|Lamond, James||Sheerman, Barry|
|Leadbitter, Ted||Sheldon, Rt Hon R.|
|Leighton, Ronald||Shore, Rt Hon Peter|
|Lewis, Ron (Carlisle)||Short, Ms Clare (Ladywood)|
|Lewis, Terence (Worsley)||Short, Mrs R. (W'hampt'n NE)|
|Litherland, Robert||Silkin, Rt Hon J.|
|Lloyd, Tony (Stretford)||Skinner, Dennis|
|Lofthouse, Geoffrey||Smith, C.(Isl'ton S & F'bury)|
|Loyden, Edward||Smith, Cyril (Rochdale)|
|McCartney, Hugh||Smith, Rt Hon J. (M'kl'ds E)|
|McCusker, Harold||Smyth, Rev W. M. (Belfast S)|
|McDonald, Dr Oonagh||Snape, Peter|
|McGuire, Michael||Soley, Clive|
|McKay, Allen (Penistone)||Speed, Keith|
|McKelvey, William||Steel, Rt Hon David|
|Mackenzie, Rt Hon Gregor||Stott, Roger|
|Maclennan, Robert||Strang, Gavin|
|Macmillan, Rt Hon M.||Straw, Jack|
|McNamara, Kevin||Thomas, Dafydd (Merioneth)|
|McTaggart, Robert||Thomas, Dr R. (Carmarthen)|
|Madden, Max||Thompson, J. (Wansbeck)|
|Maginnis, Ken||Thorne, Stan (Preston)|
|Marek, Dr John||Tinn, James|
|Marshall, David (Shettleston)||Torney, Tom|
|Martin, Michael||Wainwright, R.|
|Mason, Rt Hon Roy||Walker, Cecil (Belfast N)|
|Maxton, John||Wallace, James|
|Maynard, Miss Joan||Warden, Gareth (Gower)|
|Meacher, Michael||Wareing, Robert|
|Meadowcroft, Michael||Weetch, Ken|
|Michie, William||White, James|
|Mikardo, Ian||Wigley, Dafydd|
|Millan, Rt Hon Bruce||Williams, Rt Hon A.|
|Miller, Dr M. S. (E Kilbride)||Winnick, David|
|Mitchell, Austin (G't Grimsby)||Winterton, Nicholas|
|Molyneaux, Rt Hon James||Woodall, Alec|
|Morris, Rt Hon A. (W'shawe)||Wrigglesworth, Ian|
|Morris, Rt Hon J. (Aberavon)||Young, David (Bolton SE)|
|Morrison, Hon C. (Devizes)|
|Nellist, David||Tellers for the Noes:|
|Oakes, Rt Hon Gordon||Mr. John McWilliam and|
|O'Brien, William||Mr. Frank Haynes.|
|Division No. 124]||[10.15 pm|
|Abse, Leo||Edwards, R. (Whampt'n SE)|
|Alton, David||Ellis, Raymond|
|Anderson, Donald||Evans, Ioan (Cynon Valley)|
|Archer, Rt Hon Peter||Evans, John (St. Helens N)|
|Ashdown, Paddy||Ewing, Harry|
|Ashley, Rt Hon Jack||Fatchett, Derek|
|Ashton, Joe||Faulds, Andrew|
|Atkinson, N. (Tottenham)||Field, Frank (Birkenhead)|
|Bagier, Gordon A. T.||Fields, T. (L'pool Broad Gn)|
|Banks, Tony (Newham NW)||Fisher, Mark|
|Barnett, Guy||Flannery, Martin|
|Barron, Kevin||Foot, Rt Hon Michael|
|Beaumont-Dark, Anthony||Forrester, John|
|Beckett, Mrs Margaret||Forsythe, Clifford (S Antrim)|
|Beggs, Roy||Foster, Derek|
|Beith, A. J.||Foulkes, George|
|Bell, Stuart||Fraser, J. (Norwood)|
|Bennett, A. (Dent'n & Red'sh)||Freeson, Rt Hon Reginald|
|Benyon, William||Freud, Clement|
|Bermingham, Gerald||Garrett, W. E.|
|Bidwell, Sydney||George, Bruce|
|Blair, Anthony||Gilbert, Rt Hon Dr John|
|Boothroyd, Miss Betty||Gilmour, Rt Hon Sir Ian|
|Boyes, Roland||Godman, Dr Norman|
|Bray, Dr Jeremy||Golding, John|
|Brown, Gordon (D'f'mline E)||Gould, Bryan|
|Brown, Hugh D. (Provan)||Gourlay, Harry|
|Brown, N. (N'c'tle-u-Tyne E)||Hamilton, James (M'well N)|
|Brown, R. (N'c'tle-u-Tyne N)||Hamilton, W. W. (Central Fife)|
|Brown, Ron (E'burgh, Leith)||Hardy, Peter|
|Bruce, Malcolm||Harman, Ms Harriet|
|Buchan, Norman||Harrison, Rt Hon Walter|
|Caborn, Richard||Hart, Rt Hon Dame Judith|
|Callaghan, Rt Hon J.||Hattersley, Rt Hon Roy|
|Callaghan, Jim (Heyw'd & M)||Haynes, Frank|
|Campbell, Ian||Healey, Rt Hon Denis|
|Campbell-Savours, Dale||Heath, Rt Hon Edward|
|Carlile, Alexander (Montg'y)||Heffer, Eric S.|
|Carter-Jones, Lewis||Hogg, N. (C'nauld & Kilsyth)|
|Cartwright, John||Holland, Stuart (Vauxhall)|
|Clark, Dr David (S Shields)||Howell, Rt Hon D. (S'heath)|
|Clarke, Thomas||Howells, Geraint|
|Clay, Robert||Hoyle, Douglas|
|Cocks, Rt Hon M. (Bristol S.)||Hughes, Mark (Durham)|
|Cohen. Harry||Hughes, Robert (Aberdeen N)|
|Coleman, Donald||Hughes, Roy (Newport East)|
|Concannon, Rt Hon J. D.||Hughes, Sean (Knowsley S)|
|Conlan, Bernard||Hughes, Simon (Southwark)|
|Cook, Frank (Stockton North)||Janner, Hon Greville|
|Cook, Robin F. (Livingston)||Jenkins, Rt Hon Roy (Hillh'd)|
|Corbett, Robin||John, Brynmor|
|Corbyn, Jeremy||Johnston, Russell|
|Cormack, Patrick||Jones, Barry (Alyn & Deeside)|
|Cowans, Harry||Kaufman, Rt Hon Gerald|
|Cox, Thomas (Tooting)||Kennedy, Charles|
|Craigen, J. M.||Kilfedder, James A.|
|Cranborne, Viscount||Kilroy-Silk, Robert|
|Critchley, Julian||Kinnock, Rt Hon Neil|
|Crowther, Stan||Kirkwood, Archibald|
|Cunliffe, Lawrence||Lambie, David|
|Cunningham, Dr John||Lamond, James|
|Dalyell, Tam||Leadbitter, Ted|
|Davies, Rt Hon Denzil (L'lli)||Leighton, Ronald|
|Davies, Ronald (Caerphilly)||Lewis, Sir Kenneth (Stamf'd)|
|Davis, Terry (B'ham, H'ge H'I)||Lewis, Ron (Carlisle)|
|Deakins, Eric||Lewis, Terence (Worsley)|
|Dewar, Donald||Lightbown, David|
|Dixon, Donald||Litherland, Robert|
|Dobson, Frank||Lloyd, Tony (Stretford)|
|Dormand, Jack||Lofthouse, Geoffrey|
|Douglas, Dick||Loyden, Edward|
|Dubs, Alfred||McCartney, Hugh|
|Dunwoody, Hon Mrs G.||McCusker, Harold|
|Dykes, Hugh||McDonald, Dr Oonagh|
|Eadie, Alex||McGuire, Michael|
|Eastham, Ken||McKay, Allen (Penistone)|
|McKelvey, William||Robinson, G. (Coventry NW)|
|Mackenzie, Rt Hon Gregor||Rogers, Allan|
|Maclennan, Robert||Rooker, J. W.|
|Macmillan, Rt Hon M.||Ross, Ernest (Dundee W)|
|McNamara, Kevin||Ross, Stephen (Isle of Wight)|
|McTaggart, Robert||Ross, Wm. (Londonderry)|
|Madden, Max||Rowlands, Ted|
|Maginnis, Ken||Ryman, John|
|Marek, Dr John||Sedgemore, Brian|
|Marshall, David (Shettleston)||Sheerman, Barry|
|Martin, Michael||Sheldon, Rt Hon R.|
|Mason, Rt Hon Roy||Shore, Rt Hon Peter|
|Maxton, John||Short, Ms Clare (Ladywood)|
|Maxwell-Hyslop, Robin||Short, Mrs R.(W'hampt'n NE)|
|Maynard, Miss Joan||Silkin, Rt Hon J.|
|Meacher, Michael||Skinner, Dennis|
|Meadowcroft, Michael||Smith, C.(Isl'ton S & F'bury)|
|Meyer, Sir Anthony||Smith, Cyril (Rochdale)|
|Michie, William||Smith, Rt Hon J. (M'kl'ds E)|
|Mikardo, Ian||Smyth, Rev W. M. (Belfast S)|
|Millan, Rt Hon Bruce||Snape, Peter|
|Miller, Dr M. S. (E Kilbride)||Soley, Clive|
|Miscampbell, Norman||Speed, Keith|
|Mitchell, Austin (G't Grimsby)||Steel, Rt Hon David|
|Molyneaux, Rt Hon James||Stott, Roger|
|Morris, Rt Hon A. (W'shawe)||Strang, Gavin|
|Morris, Rt Hon J. (Aberavon)||Straw, Jack|
|Morrison, Hon C. (Devizes)||Tapsell, Peter|
|Nellist, David||Thomas, Dafydd (Merioneth)|
|Oakes, Rt Hon Gordon||Thomas, Dr R. (Carmarthen)|
|O'Brien, William||Thompson, J. (Wansbeck)|
|O'Neill, Martin||Thorne, Stan (Preston)|
|Orme, Rt Hon Stanley||Tinn, James|
|Owen, Rt Hon Dr David||Torney, Tom|
|Park, George||Wainwright, R.|
|Parry, Robert||Walker, Cecil (Belfast N)|
|Patchett, Terry||Wallace, James|
|Pavitt, Laurie||Wardell, Gareth (Gower)|
|Pendry, Tom||Wareing, Robert|
|Penhaligon, David||Weetch, Ken|
|Pike, Peter||White, James|
|Powell, Rt Hon J. E. (S Down)||Wigley, Dafydd|
|Powell, Raymond (Ogmore)||Williams, Rt Hon A.|
|Prentice, Rt Hon Reg||Winnick, David|
|Prescott, John||Winterton, Mrs Ann|
|Radice, Giles||Winterton, Nicholas|
|Randall, Stuart||Woodall, Alec|
|Rathbone, Tim||Wrigglesworth, Ian|
|Redmond, M.||Young, David (Bolton SE)|
|Rees, Rt Hon M. (Leeds S)|
|Richardson, Ms Jo||Tellers for the Ayes:|
|Rippon, Rt Hon Geoffrey||Mr. John McWilliam and|
|Roberts, Allan (Bootle)||Mr. John Home Robertson.|
|Roberts, Ernest (Hackney N)|
|Adley, Robert||Biggs-Davison, Sir John|
|Aitken, Jonathan||Body, Richard|
|Alexander, Richard||Bonsor, Sir Nicholas|
|Alison, Rt Hon Michael||Bottomley, Peter|
|Amess, David||Bowden, A. (Brighton K'to'n)|
|Ancram, Michael||Bowden, Gerald (Dulwich)|
|Arnold, Tom||Boyson, Dr Rhodes|
|Ashby, David||Braine, Sir Bernard|
|Aspinwall, Jack||Brandon-Bravo, Martin|
|Atkins, Rt Hon Sir H.||Bright, Graham|
|Atkins, Robert (South Ribble)||Brinton, Tim|
|Atkinson, David (B'm'th E)||Brittan, Rt Hon Leon|
|Baker, Kenneth (Mole Valley)||Brooke, Hon Peter|
|Baker, Nicholas (N Dorset)||Brown, M. (Brigg & Cl'thpes)|
|Baldry, Anthony||Browne, John|
|Banks, Robert (Harrogate)||Bruinvels, Peter|
|Batiste, Spencer||Bryan, Sir Paul|
|Bellingham, Henry||Buchanan-Smith, Rt Hon A.|
|Bendall, Vivian||Buck, Sir Antony|
|Bennett, Sir Frederic (T'bay)||Budgen, Nick|
|Berry, Sir Anthony||Bulmer, Esmond|
|Best, Keith||Burt, Alistair|
|Bevan, David Gilroy||Butcher, John|
|Biffen, Rt Hon John||Butler, Hon Adam|
|Butterfill, John||Haselhurst, Alan|
|Carlisle, John (N Luton)||Havers, Rt Hon Sir Michael|
|Carlisle, Kenneth (Lincoln)||Hawkins, C. (High Peak)|
|Carttiss, Michael||Hawkins, Sir Paul (SW N'folk)|
|Chalker, Mrs Lynda||Hawksley, Warren|
|Channon, Rt Hon Paul||Hayes, J.|
|Chapman, Sydney||Hayhoe, Barney|
|Chope, Christopher||Hayward, Robert|
|Churchill, W. S.||Heathcoat-Amory, David|
|Clark, Hon A. (Plym'th S'n)||Heddle, John|
|Clark, Dr Michael (Rochford)||Henderson, Barry|
|Clark, Sir W. (Croydon S)||Heseltine, Rt Hon Michael|
|Clarke Kenneth (Rushcliffe)||Hickmet, Richard|
|Clegg, Sir Walter||Higgins, Rt Hon Terence L.|
|Cockeram, Eric||Hill, James|
|Colvin, Michael||Hind, Kenneth|
|Conway, Derek||Hirst, Michael|
|Coombs, Simon||Hogg, Hon Douglas (Gr'th'm)|
|Cope, John||Holland, Sir Philip (Gedling)|
|Corrie, John||Holt, Richard|
|Couchman, James||Hooson, Tom|
|Crouch, David||Hordern, Peter|
|Currie, Mrs Edwina||Howard, Michael|
|Dickens, Geoffrey||Howarth, Alan (Stratf'd-on-A)|
|Dicks, T.||Howarth, Gerald (Cannock)|
|Dorrell, Stephen||Howe, Rt Hon Sir Geoffrey|
|Douglas-Hamilton, Lord J.||Howell, Ralph (N Norfolk)|
|Dover, Denshore||Hubbard-Miles, Peter|
|du Cann, Rt Hon Edward||Hunt, David (Wirral)|
|Dunn, Robert||Hunt, John (Ravensbourne)|
|Durant, Tony||Hunter, Andrew|
|Edwards, Rt Hon N. (P'broke)||Hurd, Rt Hon Douglas|
|Eggar, Tim||Irving, Charles|
|Emery, Sir Peter||Jackson, Robert|
|Evennett, David||Jenkin, Rt Hon Patrick|
|Eyre, Reginald||Jessel, Toby|
|Fallon, Michael||Johnson-Smith, Sir Geoffrey|
|Farr, John||Jones, Gwilym (Cardiff N)|
|Favell, Anthony||Jones, Robert (W Herts)|
|Fenner, Mrs Peggy||Jopling, Rt Hon Michael|
|Finsberg, Geoffrey||Joseph, Rt Hon Sir Keith|
|Fletcher, Alexander||Kellett-Bowman, Mrs Elaine|
|Fookes, Miss Janet||Key, Robert|
|Forman, Nigel||King, Roger (B'ham N'field)|
|Forsyth, Michael (Stirling)||King, Rt Hon Tom|
|Forth, Eric||Knight, Gregory (Derby N)|
|Fowler, Rt Hon Norman||Knight, Mrs Jill (Edgbaston)|
|Franks, Cecil||Knowles, Michael|
|Fraser, Rt Hon Sir Hugh||Lamont, Norman|
|Fraser, Peter (Angus East)||Lang, Ian|
|Freeman, Roger||Latham, Michael|
|Fry, Peter||Lawler, Geoffrey|
|Gale, Roger||Lawrence, Ivan|
|Galley, Roy||Lawson, Rt Hon Nigel|
|Gardiner, George (Reigate)||Lee, John (Pendle)|
|Gardner, Sir Edward (Fylde)||Leigh, Edward (Gainsbor'gh)|
|Garel-Jones, Tristan||Lennox-Boyd, Hon Mark|
|Glyn, Dr Alan||Lilley, Peter|
|Goodhart, Sir Philip||Lloyd, Ian (Havant)|
|Goodlad, Alastair||Lloyd, Peter, (Fareham)|
|Gorst, John||Lord, Michael|
|Gow, Ian||Luce, Richard|
|Gower, Sir Raymond||Lyell, Nicholas|
|Grant, Sir Anthony||McCrindle, Robert|
|Greenway, Harry||McCurley, Mrs Anna|
|Gregory, Conal||Macfarlane, Neil|
|Griffiths, E. (B'y St Edm'ds)||MacGregor, John|
|Griffiths, Peter (Portsm'th N)||MacKay, Andrew (Berkshire)|
|Grist, Ian||MacKay, John (Argyll & Bute)|
|Ground, Patrick||Maclean, David John.|
|Grylls, Michael||McQuarrie, Albert|
|Gummer, John Selwyn||Madel, David|
|Hamilton, Hon A. (Epsom)||Major, John|
|Hamilton, Neil (Tatton)||Malone, Gerald|
|Hampson, Dr Keith||Maples, John|
|Hanley, Jeremy||Marland, Paul|
|Hannam, John||Marlow, Antony|
|Hargreaves, Kenneth||Marshall, Michael (Arundel)|
|Harris, David||Mates, Michael|
|Harvey, Robert||Maude, Francis|
|Mawhinney, Dr Brian||Sims, Roger|
|Mayhew, Sir Patrick||Skeet, T. H. H.|
|Mellor, David||Smith, Sir Dudley (Warwick)|
|Merchant, Piers||Smith, Tim (Beaconsfield)|
|Miller, Hal (B'grove)||Soames, Hon Nicholas|
|Mills, Iain (Meriden)||Speller, Tony|
|Mills, Sir Peter (West Devon)||Spence, John|
|Mitchell, David (NW Hants)||Spencer, D.|
|Moate, Roger||Spicer, Jim (W Dorset)|
|Monro, Sir Hector||Spicer, Michael (S Worcs)|
|Montgomery, Fergus||Squire, Robin|
|Moore, John||Stanbrook, Ivor|
|Morrison, Hon P. (Chester)||Stanley, John|
|Moynihan, Hon C.||Stern, Michael|
|Mudd, David||Stevens, Lewis (Nuneaton)|
|Murphy, Christopher||Stevens, Martin (Fulham)|
|Neale, Gerrard||Stewart, Allan (Eastwood)|
|Needham, Richard||Stewart, Andrew (Sherwood)|
|Nelson, Anthony||Stewart, Ian (N Hertf'dshire)|
|Neubert, Michael||Stokes, John|
|Newton, Tony||Stradling Thomas, J.|
|Nicholls, Patrick||Sumberg, David|
|Normanton, Tom||Taylor, John (Solihull)|
|Norris, Steven||Taylor, Teddy (S'end E)|
|Onslow, Cranley||Tebbit, Rt Hon Norman|
|Oppenheim, Philip||Temple-Morris, Peter|
|Osborn, Sir John||Terlezki, Stefan|
|Ottaway, Richard||Thatcher, Rt Hon Mrs M.|
|Page, John (Harrow W)||Thompson, Donald (Calder V)|
|Page, Richard (Herts SW)||Thompson, Patrick (N'ich N)|
|Parkinson, Rt Hon Cecil||Thorne, Neil (Ilford S)|
|Parris, Matthew||Thornton, Malcolm|
|Patten, Christopher (Bath)||Thurnham, Peter|
|Patten, John (Oxford)||Townend, John (Bridlington)|
|Pattie, Geoffrey||Townsend, Cyril D. (B'heath)|
|Pawsey, James||Tracey, Richard|
|Peacock, Mrs Elizabeth||Trippier, David|
|Percival, Rt Hon Sir Ian||Trotter, Neville|
|Pink, R. Bonner||Twinn, Dr Ian|
|Pollock, Alexander||van Straubenzee, Sir W.|
|Porter, Barry||Vaughan, Dr Gerard|
|Powell, William (Corby)||Viggers, Peter|
|Powley, John||Waddington, David|
|Prior, Rt Hon James||Wakeham, Rt Hon John|
|Proctor, K. Harvey||Waldegrave, Hon William|
|Raffan, Keith||Walden, George|
|Raison, Rt Hon Timothy||Walker, Bill (T'side N)|
|Rees, Rt Hon Peter (Dover)||Walker, Rt Hon P. (W'cester)|
|Rhodes James, Robert||Waller, Gary|
|Rhys Williams, Sir Brandon||Walters, Dennis|
|Ridley, Rt Hon Nicholas||Ward, John|
|Rifkind, Malcolm||Wardle, C. (Bexhill)|
|Roberts, Wyn (Conwy)||Warren, Kenneth|
|Robinson, Mark (N'port W)||Watson, John|
|Roe, Mrs Marion||Watts, John|
|Rossi, Sir Hugh||Wells, John (Maidstone)|
|Rost, Peter||Wheeler, John|
|Rowe, Andrew||Whitfield, John|
|Rumbold, Mrs Angela||Whitney, Raymond|
|Ryder, Richard||Wiggin, Jerry|
|Sackville, Hon Thomas||Wilkinson, John|
|Sainsbury, Hon Timothy||Wolfson, Mark|
|Sayeed, Jonathan||Wood, Timothy|
|Scott, Nicholas||Woodcock, Michael|
|Shaw, Giles (Pudsey)||Yeo, Tim|
|Shaw, Sir Michael (Scarb')||Young, Sir George (Acton)|
|Shelton, William (Streatham)||Younger, Rt Hon George|
|Shepherd, Colin (Hereford)|
|Shepherd, Richard (Aldridge)||Tellers for the Noes:|
|Shersby, Michael||Mr. Carol Mather and|
|Silvester, Fred||Mr. Robert Boscawen.|