To Liverpool and Mersey side, the rate support grant settlement will seem as irrelevant as an attempt to sell air conditioning to Eskimos. It bears no relation to the real needs of Mersey side. Liverpool — a microcosm of all our economic and social problems—has massive social problems. If we look at what we are being offered this year in conjunction with conditions in Liverpool, it can only be described—inadequately—as inadequate.
In Liverpool, 20 per cent. of the population is unemployed. In some districts 80 or 90 per cent. of the people are out of work. In one part of my constituency, 94 per cent. of young people are without any permanent employment. The six Liverpool constituencies are among the first 28 in the league table of constituency unemployment rates. Liverpool, Riverside is at the top of that unenviable league, and West Derby is ninth.
There are 29,000 people in need of housing or rehousing in Liverpool. Their housing needs should be met. Last Friday, the Liverpool Echo published a list of 87 separate cases of announced job losses during the last two years, many in firms that are well known both nationally and internationally. Against that background, Merseyside has responded much more positively than the Secretary of State.
The Merseyside county council has set its face against further redundancies. It is determined not to make any cuts in measures for the promotion of the local economy. Conservative Members are prone to looking for wild excursions in expenditure by metropolitan counties, but they should pay due regard to the services that are provided by county councils such as Merseyside.
Until all the bankruptcies last year, the Conservative party was supposed to be the party of the small business man. On Merseyside, an increasing part of our expenditure since Labour took control in 1981 has catered for small businesses in creating enterprises and new businesses. No fewer than 7,000 jobs have been generated as a result of the County Help for Active Small Enterprises scheme, otherwise known as the CHASE scheme. It was introduced by our Tory predecessors on the county council, and has been expanded under the Labour administration. Expenditure is being used to promote co-operatives and to create confidence among ordinary working people, who are establishing their own centres to provide education and training for the unemployed. The Merseyside county council is spending its money on projects such as Merseyside Training Ltd., which is now designated by the Government as one of their information technology centres.
The Merseyside county council has set its face against fare increases. Anyone who suggests that that is where one might find the means to combat the reduction in the rate support grant for Merseyside should bear in mind that, since the Labour party introduced fare reductions in 1981, there has been a 13 percent. increase in the numbers using the Merseyside passenger transport system. That compares with before 1981, when orthodox financial methods were used under the Conservatives on the county council, and when year after year, fares on the Merseyside buses were increased.
What has been the Government's response to Merseyside county council's valiant efforts not only to provide for the unemployed and to provide a bus service that caters for the disabled and for elderly people who live on the outskirts of the conurbation, but to spend £1·5 million next year to service the International Garden Festival promoted by the Government-appointed Merseyside development corporation and financed by the Government? Last week I asked the Secretary of State whether, if money is found by Merseyside county council to provide a ferry service between the Wirral and the International Garden Festival site, there will still be penalties, and the right hon. Gentleman gave me an oblique answer. As far as I know, that is not on his list of disregards, but it should be. I hope that he will address himself to that matter and to the other services mentioned in a letter from the leader of the Merseyside county council to the Government.
What are the Government doing about the rate support grant and targets? The target set for Merseyside next year is £165 million, which is a 6 per cent. cash cut. I hope that Conservative Members will remember the background against which that is set. My hon. Friend the Member for Wallsend (Mr. Garrett) acknowledged that many Conservative Members have problems in their constituencies. There are pockets of social distress. However, my hon. Friend was right to tell them that day in, day out, we face a much greater problem.
The Secretary of State for the Environment implied that the 6 per cent. cash cut is the maximum reduction that any local authority, other than the Greater London council, will be required to make. However, one cannot take the rate support grant settlement without taking into account the transport supplementary grant settlement, in which there is an arbitrary cut that requires the Merseyside county council to find an extra £5 million next year. That raises the cash reduction from 6 per cent. to 9 per cent. I am not taking into account inflation and commitments that have to be absorbed to comply with Government policy. If we comply and say that we accept the 9 per cent. reduction, £13 million will become rateborne expenditure, equal to a 7p rise in precept, which is a rise of 12 per cent.
There are anomalies in the Government's general policy on the transport supplementary grant. The TSG is to be reduced by 11 per cent. Next year, the shire counties are to have an increase of 18 per cent. The Secretary of State for the Environment and the Secretary of State for Transport, in their combined policies, overlook the legal requirement for metropolitan counties to subsidise local rail services. In the shire counties, that responsibility falls on the national Exchequer. I hope that the Under-Secretary of State will refer to my point about the TSG in relation to the RSG.
We are often told on Merseyside, particularly the Liverpool city council, that we must not break the law. There was no consultation about the arbitrary cut in the TSG with the Merseyside county council under section 60 of the Local Government, Planning and Land Act 1980. I sometimes wonder who the lawbreakers are.
Merseyside is told that it is one of the major overspenders. Hon. Members will have seen the list of overspenders. Merseyside was No. 4 or No. 5. However, the fact remains that of our overspend at least 25 per cent. is expenditure on the police, the fire service and the arts —17 per cent. on the police, 3 per cent. on the fire service and at least 5 per cent. on the arts. In Merseyside we take pride in our special responsibility for catering for nationally known institutions, such as the Walker art gallery and the Royal Liverpool philharmonic hall.
If we accept money from the European Economic Community, indeed, it costs us money in terms of penalty. For every £1 million that Merseyside accepts from the European social fund, it has to spend an extra £1·2 million of its own funds because of the penalty imposed.
I ask the Secretary of State to look very carefully at the disregards that are being asked for by the Merseyside county council. In the case of police services, for example, surely nobody — not even the Government — would advocate that we should cut the Merseyside police force, where the problem is difficult enough already with the increase in the crime wave.
In answer to a supplementary question put by me to the Prime Minister on 5 July 1983 she said:
the record of this Government in putting extra money into Merseyside is a good one".
She went on:
Somehow, the people themselves there have not been involved sufficiently in trying to rejuvenate the centre of their own city."—[Official Report, 5 July 1983; Vol. 45, c. 154.]
That is precisely what the elected city council of Liverpool has been trying to do on behalf of its citizens. It aims to provide 1,000 new jobs by using MSC schemes and, I might say, by topping up the pitifully low wages that are being allowed under those schemes. Nevertheless, it is using a Government scheme to provide more houses for the people I mentioned who are in a monstrous plight, and to deal with the necessary repairs.
While on that subject, I say this to the Secretary of State through you, Mr. Speaker. When he comes to Merseyside, let him allow the Members of Parliament representing Merseyside to make up his itinerary because, if he listens only to civil servants who may be better acquainted with the Oxford and Cambridge club than they are with the problems of Toxteth or Croxteth in my constituency, he will get a very false idea of the great "prosperity" that is Merseyside under the most marvellous economic policies for which we are told the Government have been responsible. Let him go round Liverpool, escorted: I am afraid that he will need an escort, but we shall be glad to provide it. Let him go round some of the working class estates and talk to the people who count, and not the higher echelons, even of the Merseyside task force.
Any compassionate or rational Government would want to assist in a true partnership with Liverpool and with the Merseyside county council, but, since the Government came to power, that is far from being the case. Indeed, since 1981 there have been reductions in Liverpool's block grant. In 1981–82 there was a reduction of 11 per cent. A slight concession was made in 1982–83 when it increased by 0·5 per cent. In 1983–84 there was a further reduction in block grant of 1·5 per cent. It may well be said, and rightly, that Liverpool did well out of the rate support grant during the seventies. It is true that there was an increase every year under the Labour Government. In 1974–75 the rate support grant stood at £62 million. By 1979–80 it had risen to nearly £110 million.
The hon. Member for Devizes (Mr. Morrison) was correct when he said we should ask ourselves what went before. I shall tell the House what went before in Liverpool. during the years when rate support grant was increasing year after year under a Labour Government, Liverpool had the misfortune to be dominated by the Liberals. These were Liberals who owed more to the memory of the late Horatio Bottomley than to the late William Gladstone. [HON. MEMBERS: "Where are they?"] Hon. Members might well ask where they are. They are certainly not here; they have probably gone on a six-month holiday, taking a leaf out of their leader's book.
What did the Liberals do with the rate support grant increases? They used the rate support grant to cut the rates and to cut essential expenditure. In 1975–76 when inflation stood at 24 per cent. the rates in Liverpool were cut by 6 per cent. In 1976–77 when inflation stood at 16–17 per cent. the rates went up by only 2 per cent. How did the Liberals balance their budget in those circumstances? They did it by cutting 4,000 jobs. They did it by building no more corporation houses in an area of real need for rented property. They did it by freezing, and then cutting, student grants. They did it by every means that they could discover. They even suggested at one time that pensioners should pay £4 for concessionary bus passes. That is what the Liberals did, or threatened to do, in Liverpool. Only after tremendous demonstrations did they pull back.
We are told that local authorities are the creatures of statute and are bound by the law. That did not bother the Liberals too much. Indeed, although there are obligations to local authorities under the Chronically Sick and Disabled Persons Act 1970, they went so far as to freeze the allocation of telephones to the handicapped. They were criticised at the time by RADAR, the disabled persons' organisation. I wonder what RADAR will say when this rate support grant results in further cuts if the Government can get away with it.
We have to ask ourselves who the real law-breakers are. I suggest that ratepayers should look very carefully at what the Government now propose. I believe that, because they failed to consult properly under the 1980 Act, there may be a case through litigation against this Conservative Government. In looking for the background and what went before, one has to look at the legacy of Liberal—Tory neglect on the local council, and all of this against a background of distress and factory after factory closure in the area. It does not call for threats against Liverpool to cut the rate support grant.
I believe there is a case for a royal commission to examine what has happened in Liverpool over the last 10 years, during which time Sir Trevor Jones, the leader of the Liberal city council, was able to say:
We have cut our services to the bone, we can cut no further.
And that was three years ago.
It would be bad enough if it could be argued that all this is in aid of promoting the needs of the national economy, but the total overspend in the entire country is equivalent to no more than 0·02 per cent. of gross domestic product. The Government tell local authorities—this is an irony — that they will encourage capital expenditure, but capital expenditure enters into the public sector borrowing requirement and affects the target of the Chancellor, whereas current expenditure does not.
My hon. Friend the Member for Copeland (Dr. Cunningham) at the beginning of the debate indicated correctly that for local authorities to carry out the Government's desires would mean 12,000 fewer teachers, 11,600 fewer places in residential accommodation in the social services, 8,300 fewer day care places and 46,200 fewer home helps. I hope that this is registering with the Secretary of State. There would be 7,100 fewer police officers—unless the Government intend to protect the police. I hope that they will do so, but not at the expense of social workers, teachers, firemen and those in other essential services.
The former Secretary of State for the Environment, the right hon. Member for Henley (Mr. Heseltine), visited Merseyside just after the Toxteth riots and told the Conservative party conference that the problems there could be tackled only by public expenditure. He was converted from the views of Milton Friedman. I suggest that the right hon. Gentleman is glad to have been moved to another post and is pleased that the present Secretary of State has to carry the burdens. I believe that the previous Secretary of State could not get his way in the Cabinet.
If the present Secretary of State is not man enough to stand up to the harsh leadership in the Government, he will be prescribing a recipe for chronic disaster in areas such as Merseyside. I do not forecast that it will come next week or next year, but there will be social catastrophe unless the Government turn away from the course that they have set themselves.
People in Liverpool are asking what the Prime Minister is afraid of. She has made only one visit to the city since the Toxteth riots and it was as if General Ustinov had arranged to visit the Gdansk shipyards. The Prime Minister came in the early hours of the morning under close police protection. The people of Merseyside believe that she and the Government have caused more devastation than any squadron of Junkers-88s or Heinkel-111s during the blitz in May 1941.
I hope that the Secretary of State will consider carefully the points that have been put to him, will consult the Merseyside and Liverpool councils and will withdraw the report. If he will not, the House should certainly reject it.