Orders of the Day — Rates Bill

Part of the debate – in the House of Commons at 7:18 pm on 17th January 1984.

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Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarfon 7:18 pm, 17th January 1984

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.