Orders of the Day — Liverpool (Council Budget)

– in the House of Commons at 9:32 pm on 15th March 1984.

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Motion made, and Question proposed, That this House do now adjourn—[Mr. Major.]

10 pm

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

For the past one and a half days the House has debated the important issue of the nation's Budget. On 29 March, the city of Liverpool will be determining its budget for the next 12 months, and hon. Members will be aware that that has been shrouded in controversy.

I welcome the opportunity to raise that matter on the Adjournment tonight, and wish to divide my remarks into four parts. First, I shall give a brief description of the problems facing the city of Liverpool. Secondly, I shall say a few words about the Liberal record, and, thirdly, about the Labour record. Fourthly, I shall give the alternatives facing the city council on 29 March.

It would be fair to say that the city is becoming a latter-day Carthage, dying through lack of investment and commitment and badly damaged by mindless militancy, coupled with insufficient compassion or understanding from a Government who have become so alienated from the city and its problems that, for the first time in history, in common with the city of Glasgow, not a single Member of the House from the Government Benches represents a constituency in the city of Liverpool.

At the heart of the city's problems is chronic depopulation. During the last decade, Liverpool has been losing jobs and people hand over fist. Some 100,000 people have been lost in 10 years. It is, by and large, the employable and the mobile who have left. With their exodus, rates and valuable rate support grant have been lost.

In answer to a question on 5 March the Minister—I am grateful for his presence tonight—admitted that over successive years, beginning when the right hon. Member for Bethnal Green and Stepney (Mr. Shore) was the Secretary of State for the Environment, our RSG had been reduced in total by some £140 million. Rate support grant in the city in 1976 stood at £160 million, and this year it stands at about £124 million.

While we have been losing people, the rates that they pay and the rate support grant, the demand for services has never been greater. In particular, there is a great demand for services for the unemployed. Never have we had so many people on the dole queue. The so-called curse of Adam—the curse of work—has become for many in Liverpool a privilege. One in five of the population are out of work, with 92,780 people unemployed and only 2,221 vacancies listed as available. The debate on the national Budget in the House during the past one and a half days will be of no benefit to the unemployed people of Liverpool. Failure to increase the public sector borrowing requirement will ensure that the tide of unemployment will not be turned. In future, even the fish and chips that the unemployed eat will be taxed.

The second area of concern is the special problems of those who will be left in the city, many of whom will be unemployable or elderly. The fastest growing group in the city is the over-80s. One in four of our population is over retirement age. Clearly, that requires more home helps, meals-on-wheels and other services—all of which are being reduced because of the reduction in rate support grant.

There was an Adjournment debate on education on 9 February, to which I refer the Minister. I shall not bore him now with the arguments raised then. Nevertheless, the same special problems caused by depopulation apply in education too. No other local authority in Britain has had to contend with so many disadvantages, so many real and serious problems, at a time when Government funds have been massively cut.

I come now to the Liberal record, which has been attacked. The hon. Member for Blackburn (Mr. Straw), whom I am pleased to see in his place tonight, has attacked that record. The Labour party was the largest party in the city for many years, but it refused to govern. It fell to my party to do its best in those difficult circumstances.

Figures that I have obtained from the House of Commons statistical section demonstrate that the Liberal record is no better, and no worse, than any Labour-controlled authority in the country. There are 23 metropolitan districts controlled by Labour. Let us take manpower. In a decade, the Liberals never made a single employee compulsorily redundant. Of course, some Labour councils have sacked men to make savings, because of cuts in rate support grant. There has been natural wastage, but that it true everywhere.

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

The hon. Gentleman has been here long enough to know that in an Adjournment debate he can speak only with the permission of the hon. Member and if he seeks to do so in advance of the debate. I shall furnish him with the figures afterwards, if he wants the details.

Some Labour councils have sacked employees—

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

Newcastle and Wakefield, to name two. For the period September 1979 to September 1983, Liverpool reduced full-time staff by only 3·9 per cent., and increased part-time staff by 4·9 per cent. In the 23 Labour authorities, 11 had a better record than Liverpool, and 12 had a worse record in terms of full-time employees.

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

The hon. Member for Liverpool, Riverside (Mr. Parry) should know that he can speak only by agreement with the speaker who is introducing the Adjournment debate and the Minister.

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

Order. The hon. Gentleman can see that the hon. Member for Liverpool, Mossley Hill (Mr. Alton) is not giving way.

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

These figures were given to me by the house of Commons Library, and, if they are wrong, the hon. Gentleman should take the matter up with the Library.

In respect of the number of part-time employees in Labour-controlled authorities, 20 authorities have a worse record than us, and three have a better record. The Labour party constantly says that we have built no municipal accommodation for rent. That is not true. Over the past decade, 7,311 local authority homes were built for rent, 3,274 housing association properties were built for rent, and thousands of low-cost homes were built for sale. From January to February last year, Liverpool built 388 public sector properties. Twenty-one Labour authorities had a worse record than Liverpool, and two had a better record. Some built none at all. In one area alone, we top the league—we have more empty properties in the public and private sector than any other local authority—8,162. That will not be helped by the Government's cuts in improvement grants. Nor will it be helped by the Chancellor's announcement about VAT charges on improvement grants.

The Government should not underestimate the scale of housing problems facing any local authority in Liverpool, because 7,517 homes lack basic amenities, 3,237 homes are unfit and 37,000 are in need of renovation, and the council's decision to put the brake on the improvement grant programme and switch £300 million of public sector resources instead over the next decade into one small area of publicly-owned property, will not help the problems of Liverpool. I suspect that that £300 million is a figment of the council's imagination. It will not be forthcoming. People's hopes are being raised unnecessarily.

Labour also say that the Liberals underbudgeted and did not put up the rates sufficiently. Indeed, the Secretary of State implied much the same. In fact, last year the local Conservatives wanted to bring in a smaller budget. That would have led to redundancies. The Liberals opposed that and broke the Government guidelines, putting up rates by about £3 million more than the Government wished to protect jobs and services. The rates went up by 7·1 per cent. The hon. Member for Blackburn, if he checks the figures, will see that of the Labour-controlled authorities, 14 brought in smaller increases and nine brought in higher increases.

I contend, therefore, that in difficult circumstances the Liberals did a good job. I contrast that with the record of the militant politicians in Liverpool since last May. Low-cost home schemes have been abandoned, co-operative schemes have been banned, and even Mother Theresa's hostel for the homeless was threatened with closure at one stage. Schools are to be closed, despite the wishes of 70,000 objectors. There have been irresponsible financial and fiscal policies. For instance, there have been handouts from the rates to one group of people. There has been propaganda on the rates. Councillors have been gallivanting around the country to Labour party conferences on the rates, and the money is then subject to penalty from the Government.

A bogus manifesto was produced which would have required a 200 per cent. rate increase to enact. The city is being used in a power struggle between Labour's militants and the Prime Minister, and in an internal battle between Labour's militants and the Labour party hierarchy.

That brings me to what the council and the Government can usefully do before the meeting on 29 March. The Government could respond by ensuring that regional resources, such as the central reference library in Liverpool which cost some £1 million this year and is used by people all over Merseyside, be excluded from the city's rate support grant in terms of penalties. The Government could also ensure that housing debt charges, some on properties which have already been demolished, but with over 40 years left to pay, could be written off by the Government. That would be of great practical help.

The Government should also respond to the bravery of the seven Labour councillors who have refused to break the law, and respond to those moderates from all parties in Liverpool who want to do their best for the city, by looking again at the way in which the city's rate support grant is calculated, and reviewing the upper limit on the city spending targets.

The council, too, could respond to the city's crisis—by repudiating the catalogue of threats, intimidation, bludgeoning and blackmail which has emanated from individuals, including the deputy leader of the city council. These can only damage the city's reputation and image, and lose for the city chance of further Government support, or private investment from people who believe that Liverpool is being given a bad name.

As to the effect on businesses, the chamber of commerce is concerned that the threats, and the prophecy of violence and riots will drive potential businesses away. Indeed, some firms are even taking the name "Liverpool" off their letterheads, such is the situation created by mindless militancy.

My call, therefore, is to the moderates on the council to work with one another to form a government of talent, putting the city's interest before narrow party interest. The cause of the city of Liverpool can only be damaged by aggression and militancy.

As the Liverpool Daily Post said this week, The time has now come for all people of moderate opinion to work together in the true interests of Liverpool, and to reject totally the immature and destructive Marxist policies which have brought the city to its present predicament. I am grateful for the allocation of time to debate this important matter. I thank my hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes), the Liberal spokesman on local government, who gave much of his time during his most recent visit to the city to help us work out an alternative strategy, and who is present tonight to support my case.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Environment, Food and Rural Affairs) 10:12 pm, 15th March 1984

The Liberal party accepts that the targets that the Government have set are unattainable, and the target this year of £216 million for the forthcoming 12 months, 2·5 per cent. above the previous year, is impossible for any local administration in Liverpool to fulfil, so it is the Government who are firstly responsible.

With two weeks to go before the budget statement in Liverpool on 29 March, the local authority must first open up its books to the public and not delay the publication of the books — which would be highly unusual, and unprecedented in the history of Liverpool city council.

Photo of Mr Robert Parry Mr Robert Parry , Liverpool, Riverside

On a point of Order, Mr. Speaker. As I understand it, the debate concerns rates. I rose to ask a question, and the hon. Member for Liverpool, Mossley Hill (Mr. Alton) refused to allow me to intervene. Why is an hon. Member for a London constituency taking part in the debate?

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

As the hon. Member knows, the half-hour Adjournment at the end of the day is a matter for the Member who has been fortunate in the ballot. Other speakers are normally allowed, if arrangements have been made, with the consent of the Member concerned and of the Minister. I understand that that has been done.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Environment, Food and Rural Affairs)

I am grateful, Mr. Deputy Speaker. The Liberal party is as concerned for Liverpool as any other hon. Member and party in the House.

We do not suggest that any Liverpool city council employees should be sacked. That is not necessary. What is clearly necessary is that there should be no filling of vacancies, but that an equal number of jobs be provided under community development programmes in the coming year which would improve, rather than worsen, the position of employment on Merseyside.

It is also necessary for the city council to consider the land that is unnecessary for the city—woodland that is owned, recreational land, a golf course north of the city and land in north Wales—that could be sold to reduce the amount of budget deficit in the coming year. Perhaps overtime may have to be reduced for those fortunate enough to have jobs, so as to give those who are less fortunate the opportunity to have a city that is within budget as opposed to outside it. It is the responsibility of the city administration to consider the possibility of transferring from the accounts that attract Government penalty the moneys which it needs to spend on housing stock which is in great need of repair.

There are several possibilities for alleviating the enormous burden that the citizens of Liverpool are bearing and which are open to the city council. It has been urged by its natonal leadership to be responsible. It is in the interests of no one in Liverpool that there should be an illegal budget or no budget. The Liberal party is prepared, if the Labour party is not, to offer an alternative. I hope that the Government will realise that our pressure, and that of others, can still bring about a responsible option for the people of Liverpool. I hope that the Government will then themselves act and accept their responsibility to help Liverpool more, as they should have done over the past years, and especially the past few months.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West 10:17 pm, 15th March 1984

I can agree wholeheartedly with one sentiment expressed by the hon. Member for Southwark and Bermondsey (Mr. Hughes). It is that we all hope that a legal rate will be fixed, in the interests of all the citizens of Liverpool.

I have listened to the suggestions that have been offered by the hon. Members for Liverpool, Mossley Hill (Mr. Alton) and Southwark and Bermondsey and I shall report them to my right hon. Friend the Secretary of State. However, it must be my job tonight to make clear to the House the Government's view of what is happening in Liverpool and what the Government's role is.

The key issue is how Liverpool city council will act, not what the Government might do. Responsibility for running Liverpool rests with the elected city councillors, not with Ministers or my officials in Marsham street. I intend to concentrate, therefore, on the position of the council.

The hon. Member for Mossley Hill and other hon. Members are familiar with the city council's Labour group's line of argument. For those who have, perhaps, the good fortune not to have to listen to it quite so closely as the hon. Gentleman and the hon. Member for Blackburn (Mr. Straw), who I know is also an expert on these matters, and I am glad to see him in his place, I shall outline the argument. The Labour group claims that the Government have turned their back on the problems of Liverpool and withdrawn grant indiscriminately. It claims a mandate from the May 1983 elections to reduce rents, create jobs and increase expenditure. It claims also that the budget for 1983–84 which it inherited from the Liberals was impossible to balance.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I hope that those who have contributed to the debate will accept what I am about to say in the spirit in which it is offered. The problems of Liverpool are, and have been, great, but I do not believe that the situation is such that a party political broadcast by any party is in order. The problems are so severe that we should not try to make party political capital out of them.

The Labour group has concluded that the city must receive £30 million in extra grant from the Government, though without pointing to the tree on which the cash is grown. It says that if the money is not forthcoming there will have to be a 200 per cent. rate increase, or 5,000 job losses. It adds that it will not accept either of those options and that if the Government do not provide the money it is left only with the option of rating illegally.

The logic of that argument escapes everyone—I think that it escapes the hon. Member for Mossley Hill—but I imagine that Labour councillors believe that if they repeat their story often enough someone will believe it. If the argument is examined closely, I believe that it becomes clear that it does not stand up.

I do not want to exacerbate the position, so I shall run through the argument point by point and let the facts speak for themselves.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I shall let the facts speak for themselves. If the hon. Member for Liverpool, Riverside (Mr. Parry) had approached me earlier, we might have arranged to share the time.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

The Government have most definitely not turned their back on Liverpool. The evidence of our considerable efforts to ease the social and economic problems of the city is there for all to see. Over the past three years—1981–82 to 1983–84—capital expenditure on Merseyside under the Department of the Environment's main programmes has reached £650 million. This includes about £140 million specifically for Liverpool through the urban programme and the Merseyside Development Corporation.

The Department of Trade and Industry has given an average of £110 million a year in the last three years to companies within the Merseyside special development area. The Mersey Docks and Harbour Company has received a total of £134 million in financial assistance and the Manpower Services Commission is expected to spend £90 million in Merseyside this financial year. On top of all this, Merseyside is the only area of the country which has a special departmental task force assigned to it. Other major initiatives in the area are relevant to the city, such as the huge clean-up-the-Mersey campaign, on which, in the end hundreds of millions of pounds will have been spent.

Secondly, Liverpool has not been singled out for specially tough treatment under the rate support grant system. Distribution of grant is made on principles which apply to all authorities. For 1984–85 Liverpool's expenditure target implies a relatively small reduction in spending. Other authorities face a much higher reduction.

Liverpool city council has been asked to make savings since 1979, like every other council. However, unlike other local authorities, it has had huge resources that have not been available to others rightly directed to Merseyside.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I have not given way to others, and, although I hate not giving way to the hon. Gentleman, I shall not do so.

Thirdly, there is the mandate argument. There is a Kipling story about a village that voted that the earth was flat, but the earth remained round. Whatever Councillor Hatton may have said before the election, he has no mandate to alter the rules of arithmetic.

Fourthly, the Labour group may have inherited a tight budget position which required savings to balance the books, but it is by no means unique in facing tough political choices in 1984–85. It was elected to take such decisions. During 1983–84, the council has done nothing to help itself. It has not only failed to find savings, but admits to having increased expenditure. The hon. Member for Mossley Hill referred to some of this. Over £1 million—£16 per council tenant—went as a decoration allowance, a veiled method of reducing rents.

Fifthly, the Labour group certainly does not need to increase its rates by 200 per cent. or make 5,000 people redundant to balance its books in 1984–85. The deputation from Liverpool which recently met my right hon. Friend the Secretary of State for the Environment admitted that a 60 per cent. increase would cover what it described as a standstill budget. Combined with the Merseyside county council precept increase, which we understand will be 9·4 per cent., that would make a total rate increase for Liverpool residents of 46 per cent.—bad enough. I should stress that that is without any cuts in the real level of expenditure in 1983–84.

If the council chooses to make cuts, for each £5 million it saves, it will gain an extra £10 million in rate support grant, bringing a total benefit to ratepayers of £15 million, which is equivalent to 20p in the pound. As the hon. Member has pointed out, the Liberal group on the council believes that next year's rate increase could be as low as 8 per cent. I make no comment on that. It is for locally elected councillors to decide what can be achieved. It does suggest, however, that there is an alternative to what the Labour group proposes.

I should add that the deputation which my right hon. Friend met on 22 February promised to provide figures substantiating the claim that a 200 per cent. rate increase was required. We are still waiting for these figures.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I hope that I have now made it clear to the House that Liverpool councillors have no shred of justification for the wild statements that they have been making. The council faces tough decisions, and the larger group of Labour councillors may have to eat some of their ill-chosen words. There is no doubt, however, that it is well within the council's scope to make a responsible and properly balanced budget and rate for next year.

Labour councillors are coy about the consequences of failure to make such a properly balanced budget and rate. In Militant of 3 February this year Councillor Hatton is reported as saying that he does not expect Liverpool to go bankrupt as the result of any action that he might take. He expects to be taken to court before the money runs out. That statement is remarkable enough in itself—a councillor finding reassurance in the prospect of ending up in court. Mr. Hatton is not willing to spell out the real consequences of illegal rating action—understandably so, perhaps.

I can tell the House what those consequences would be. The services which the city council provides to local residents would be threatened with collapse, council employees could go unpaid and there could be serious personal consequences for the councillors concerned. The overall result of failing to make a proper rate would be far worse for Liverpool than anything that might flow from the action necessary to achieve a balanced budget and rate. Liverpool's ratepayers and council staff would have to carry the can. The Labour group has made much play with the 5,000 redundancies it claims are necessary to keep rates down next year. I hope that I have shown already that claim is unfounded. Councillor Hatton should be telling us how many redundancies would follow from the action, that he is threatening.

The Labour group claims to be concerned about the loss of jobs in the city. I can think of nothing more calculated to reduce industry's confidence in Liverpool than the kind of statements, that we are now hearing. The hon. Gentleman referred to people taking the name of Liverpool off the letterheads of their notepaper. One business man is quoted as saying: We have spent a great deal of time telling people how hard working our craftsmen are —I have no doubt they are— but these extremists are ruining all that. I don't want to abandon the name of Liverpool until I have to, but when it starts to threaten the jobs of my employees then I will have to give in. The Merseyside chamber of commerce and industry has written to the city council as follows: This —the budget-making process— is now affecting the stability of local trade and industry and, consequently, the well-being of all those who live and work in Liverpool. Whilst the Chamber recognises the democratic process and that political decisions must be allowed to frame the City's finance and policies, the Chamber is appalled at the prospect of no budget or of an illegal budget being constructed and an unsound rate resulting therefore. In short, the statements of the Labour group will do nothing to put the new life into the city which the Government, and I am sure all hon. Members, want to see. They will do quite the reverse.

I am pleased to see from the press that the message is beginning to get through. I understand that local representatives of NUPE and the NUT have voted against joining in a day of strikes in the city on 29 March to support the council's case. Seven Labour councillors—I believe all hon. Members would wish to pay tribute to them—in Liverpool have said that they will not support illegal action. The national leadership of the Labour party—one of its representatives, the hon. Member for Blackburn, is in the Chamber—has voiced concern about the course the Labour group has said it will follow. The national leadership has taken a close interest in the matter and given the benefit of its experience and advice. We can hope only that the process of isolation will continue and that Mr. Hatton and his colleagues will see the error of their ways. It is hard not to believe that part of their object is to cause damage to the democratic process.

Photo of Mr Robert Parry Mr Robert Parry , Liverpool, Riverside

Mr. Hatton is not the leader of the Labour party in Liverpool. Councillor Hamilton is its leader.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

Councillor Hamilton is indeed formally the leader of the Labour party in Liverpool.

The hon. Member for Mossley Hill asked about the Government's policy towards Liverpool city council's 1984–85 budget. It is simple and is the same as our policy towards any local authority. The city council has been elected to take responsibility for running its city. The council has a duty to raise sufficient revenue to cover its budget. Like all other authorities, it undoubtedly has scope to produce a properly balanced budget and rate. and the Government expects it to do so. In the circumstances, it would be out of place for me to speculate about what will happen if the council does something which is clearly illegal and is against the interests of all the people of Liverpool—the ratepayers, the council employees and the councillors themselves.

Against that background, this debate and the debate in the other place should send a signal to all people of good will in Liverpool. There are people of good will in Liverpool, in all parties. As I have said to the hon. Gentleman—I hope he will accept the rebuke in the way it was meant—I do not believe that any one of us has much pride in the circumstances that arose in Liverpool. The position of the lengthy minority government has shown some of us the weaknesses of that former government, which might be thought to follow from proportional representation. That is an argument to strengthen us in our basic belief about the faults of a system which, on the whole, makes coalitions form and write their manifesto programmes before an election rather than fight after the election in the council. It is similar to putting forward a proposal in council and then lobbying in the streets against it the next day. The long period of minority government made some of us open our eyes about the weaknesses of some of the arguments advanced.

The position is more serious than the knockabout of the normal party political battle. That is why I have tried to avoid scoring party points, even against the Liberal party. It is always difficult for members of either of the large parties to avoid making a shot or two at the Liberal party, because it makes itself an easy target. It is difficult to miss hitting its members on every occasion, however bad one's shooting. The House should send out a more serious message—that there are people who have the opportunity of ocasting one of our great cities into chaos. I hope that they will draw back from the brink.

Question put and agreed to.

Adjourned accordingly at half past Ten o'clock.