Levels of Expenditure

New Clause 6 – in the House of Commons at 3:41 pm on 27th March 1984.

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'Where the Secretary of State has—

  1. (a) determined the grant related expenditure (as defined in section 56(8) of the local Government, Planning and Land Act 1980) for an authority pursuant to section 57(1) of the said Act of 1980.
  2. (b) issued guidance to an authority pursuant to section 59(6)(cc) of the said Act of 1980, and
  3. (c) determined a maximum expenditure level for an authority pursuant to this Act
then, notwithstanding the provisions of the said Act of 1980, for the purposes of the determination of an authority's grant related expenditure, the issuing of guidance to an authority and the determination of an authority's maximum expenditure as aforesaid, the higher or highest of those figures shall be used for all three purposes.'—[Dr. Cunningham.]

Brought up, and read the First time.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Secretary of State, Shadow Secretary of State for Environment 3:48 pm, 27th March 1984

I beg to move, That the clause be read a Second time.

I am afraid that the wording of the new clause is complicated, of necessity, but it seeks to prevent the Government from having three different systems, or three different amounts of money, under which they can control the budgets of local authorities which may be designated under the Bill.

It is clear from what the Under-Secretary, the hon. Member for Ealing, Acton (Sir G. Young), said in Committee on 23 February, that a rate-capped authority would have a grant-related expenditure assessment, a target or expenditure guidance, as the 1982 Act put it. and an expenditure limit determined in accordance with this Bill. That statement highlighted the complexity into which this Administration have driven local government finance. The proposed new clause seeks to ensure that the highest of the three figures should be used for all purposes.

It is important for us to discuss this issue for another reason, and that is to try to find out the Government's thinking about their intention to use three different spending norms for individual authorities. It is questionable whether a Government should set a norm for a local authority. It is doubtful whether two norms are sensible or practicable. To have three different norms for individual authorities is surely stupid in the extreme, but that is what will happen if the Bill goes ahead as it stands.

It is important at the beginning of this Report stage to make it clear that the local authority associations remain united in their total opposition to the Bill. They made that clear in a press notice. The Association of County Councils, which is Conservative-controlled, the Association of District Councils, which is Conservative-controlled, and the Association of Metropolitan Authorities, which is Labour-controlled, speak with one voice in the press notice: The Secretary of State has said nothing which would meet the criticisms of the Bill by the local authority associations. The position therefore remains unchanged from the Second Reading. The Bill represents a massive shift towards the centralisation of local decision making by giving the Secretary of State effective power to fix expenditure and rate levels for all councils in England and Wales. The Associations remain united in their opposition to these proposals. The associations also remain united in their opposition to the Government's intention, conceded in Committee, that grant-related expenditure should be the central test on which they base their decisions to apply the measures contained in the Bill. That test was rejected by both previous Secretaries of State for the Environment in this Administration, and the present Secretary of State has reneged on persistent and numerous assurances given to the House and to local government on that key issue.

Before the Local Government, Planning and Land Act 1980, Governments had not been in the business of telling individual local authorities what they should spend on services. That began to change with the introduction of the block grant system in the 1980 Act, because that required an explicit reference point for the purposes of grant distribution. Under the old needs element of RSG there was an implicit figure for a local authority's spending needs, but it was never used as a test for, or absolute norm of, what an authority should spend; nor was it used to judge its performance.

The Committee spent many hours, including some during the night, discussing the shortcomings of GRE. The most important aspect of that to which we wish to pay attention today is the way in which all the undertakings that were given at the time of the passage of the Act and subsequently have been reneged upon. For example, writing in the Local Government Chronicle in December 1980, the present Secretary of State for Employment said of GRE that it would allow for the "inevitable degree of approximation". In a Department of the Environment document published in February 1981, referring to GRE, he wrote: They are not, however, tailor-made to the circumstances of each authority. They do not set an expenditure target for authorities. There have been many similar references to the unsuitability of GRE for that purpose.

Photo of Mr Harry Cowans Mr Harry Cowans , Tyne Bridge

Is my hon. Friend aware that the same right hon. Gentleman said in that same Department of the Environment document that for the Government to cap the rates would represent a conflict with local democracy? Is it not remarkable that we should be discussing a Bill which does exactly what the right hon. Gentleman then opposed?

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Secretary of State, Shadow Secretary of State for Environment

I agree with my hon. Friend. Even worse, in a briefing document dated 8 December 1983 circulated to his Cabinet colleagues, the right hon. Gentleman said: The criteria by which we will select them"—— referring to authorities to be controlled—— will have particular regard to authorities' recent levels of spending and how they vary from the objective measure of need represented by the grant-related expenditure. Far from accepting the objectivity of GRE, the local authority associations have made it clear that they are totally opposed to its use in that way as part of the proposals in the Bill.

The Secretary of State went further in making it clear to the Committee that not only will GRE be the main test, at the heart of his approach, but the local authority expenditure, not rates, will concern him principally in the application of these measures, should they have the misfortune to become law.

The second part of the new clause deals with expenditure guidance issued by the Secretary of State under the Local Government Finance Act 1982. Expenditure guidance has been issued every year since block grant was introduced in 1981–82, although the then Secretary of. State anticipated its legality being conditional on the 1982 Act. Expenditure guidance has been enforced by massive grant penalties, and is clearly the Government's view of how much local authorities should be spending. The way of calculating the expenditure guidance has been different in each of the four years in which it has been issued. That is another measure of the uncertainty introduced into local government finance by the Government.

There has been some reference to GRE in the calculations, but only in the first two years did the guidance represent the GRE for some councils—those councils whose calculated guidance would have been lower than the grant-related expenditure total. According to the Government's logic, targets had to be obtainable, and so it would not make sense to the Government to set GREs as targets for those authorities which were spending well above them.

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The other side of the coin is that there is also pressure from those authorities whose guidance is below GRE. Some Tory-controlled local authorities were in that position. The Government have had to resolve that problem because it has implications for total local authority spending and is one reason why the total of GREs is. less than the total of targets.

Trying to work one's way through the tortuous logic which has led the Government to their present position shows one just how complicated the position must be for those in town halls and shire halls throughout the country. The Government have not only consistently reduced the resources available to councils for funding services, providing jobs and helping the most disadvantaged, but they have thoroughly confused and unsettled local government to the point where good working relations between the Government and local government are at the worst level in living memory. That is the reality embodied in the words of the ADC and the ACC as well as of the AMA.

In 1984–85, £660 million was unallocated, in 1985–86, the figure was £400 million and for 1986–87 the planned figure is £200 million. That represents the difference between what the Government would like to spend through GREs, in aggregate and individually, and the targets that they recognise may be attainable. However, in 1984–85 the targets set by the Government were described by Councillor John Lovill, the Conservative chairman of the ACC, and by others as unattainable for some authorities. Many authorities of various political complexions have endorsed that view. They are being asked to accept a 6 per cent. cash reduction. It is not fair, sensible or practicable for a Minister charged with responsibility for providing resources in a sensible working relationship with local authorities to have such a stranglehold over them, their budgets and their expenditure, or to have the option to employ three different targets to suit his own political purposes. That is what is being proposed, and it is for that reason that I have moved the new clause.

Photo of Mr Anthony Beaumont-Dark Mr Anthony Beaumont-Dark , Birmingham, Selly Oak

One great confusion was introduced with the Local Government, Planning and Land Act 1980, which some of us voted against. It abandoned the aggregate and the local policy in favour of a Government norm so rough and ready that some authorities find it easy to reach, some find it difficult to reach and some find it impossible. That is very unfair, and makes it impossible to plan.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Secretary of State, Shadow Secretary of State for Environment

I agree with the sentiments expressed by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). In seeking to impose their will centrally on local government, the Government are not concerned about the level of services. In reality, their principal concern is an overwhelming desire to cut local government expenditure for the sake of cutting it.

I do not object to the Secretary of State saying that the Government should be seeking efficiency and improved performance from local authorities. No hon. Member would dissent from that. However, this is no way in which to achieve that aim. Indiscriminate cuts are forced upon those who are entrusted with the responsibility of providing services as important as education, the police, the fire services, and services for the elderly and the chronically sick and disabled.

The Government's policies will lead not to great efficiency in local government but to an undermining of vital services and to further disadvantage in urban areas and the inner cities, especially of the black and ethnic communities and those who are already disadvantaged. That is not an improvement in efficiency. It will widen the gap between the haves and the have-nots.

It is clear that the provisions of part I of the Bill cannot make a significant saving in public expenditure.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Secretary of State, Shadow Secretary of State for Environment

I challenge the Under-Secretary to substantiate what he says. We took the Secretary of State's own figures, which were presented to the Committee, and his own hit list, and did the calculations. They show that in some cases there could barely be any net gain to the Treasury if a small number of authorities had their budgets controlled. The expenditure savings set out in the White Paper can be achieved only by the wide use of the general powers in the Bill.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

As usual, the hon. Gentleman is employing elision and sliding from one argument to another. He is deliberately confusing grants with public expenditure, and that makes it look as though he has an argument when in fact he has not.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Secretary of State, Shadow Secretary of State for Environment

The Under-Secretary and I will have to agree to differ.

The Bill is really an attempt to control local authority expenditure. It is not about fairness for the ratepayer, or improved efficiency in the provision of services. The use of the powers in part I of the Bill to control the budgets of a small number of authorities is unlikely to produce any significant net saving for the Treasury. I also believe that a reduction in local authority expenditure raised from the rates will make no significant difference to the management of the economy as a whole.

I do not want to bore the House——

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

The hon. Gentleman's argument about how the economy should be managed is a perfectly fair one to advance, but no serious commentator doubts that the Bill will reduce public expenditure, and that is one of its prime purposes.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Secretary of State, Shadow Secretary of State for Environment

The Under-Secretary of State says "no serious commentator". I assume that he is overlooking articles by the general secretary of the Chartered Institute of Public Finance and Accountancy, in the Financial Times and in a wide range of local government publications.

Photo of Mr Harry Cowans Mr Harry Cowans , Tyne Bridge

I am grateful to my hon. Friend for taking up the Under-Secretary of State's words. He is right only if part II is applied. Very little will be saved under part I, but there is a balance of £1·7 billion that can be saved only if part II is applied immediately. The Minister keeps telling his right hon. and hon. Friends that part II will never be applied. If that is so, he is incorrect to say that part I will make the savings that he claims.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Secretary of State, Shadow Secretary of State for Environment

Yes. There is obviously a fundamental difference of opinion among the Government, their Back Benchers and the Opposition on this issue. Whatever the difference is, the Government's argument about their aims and intentions for the Bill are now a long way from their expressed intentions at the time of the publication of the White Paper and of the Bill before Second Reading.

The new clause would prevent Ministers from having three means of taxing local authorities on their performance and saying that in every case the highest figures should be used. Under a general scheme, will the total of spending limits have any significance, and will it be cited in the Government's expenditure plans? If the general scheme under the Bill is to be employed, what will be the purpose of those spending limits? Will such a total be higher than the total of GREs or the total of target;? If the answer is yes, where will the extra money come from in the Government's expenditure plans? We should like an answer to that question, especially in the light of what the White Paper says.

How will the Under-Secretary of State deliver the promise that he made during our debate on the rate support grant to the effect that the Bill enables the Government to improve financial assistance to the shire counties? We cannot see how that promise cart be delivered. What is the logic in penalising an authority for overspending—the Government's pejorative description of what many local authorities do when they feel it necessary to support services—expenditure guidance when spending within their expenditure limit?

If the Government cannot answer those questions satisfactorily —I suspect that they cannot—it will be clear that they want to have the best of all possible worlds. That will be the reason for having three separate amounts by which they can tax the performance of local authorities. I believe that that is simply to suit their political purposes. It has become extremely clear in Committee that, with regard to fairness among ratepayers, those who use local authority services and control of local authority expenditure and the subsequent savings to the Exchequer, the Bill, as it stands, is fatally flawed.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

I hope that the Government will look favourably on new clause 6. When one examines legislation one asks whether it will work and, if so, whether it is desirable. I believe that the Bill fails on both counts, and will be proved to do so. Some of us, as my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said, warned about that in 1980 and 1982. This attempt to determine in Whitehall the needs of every local authority will not work. It is just as hopeless a task as when, during the last war, the Government attempted to introduce legislation to measure rhubarb leaves and the translucency of eggs.

4.15 pm

I have considerable experience in local government, in the House and in various Ministries connected with local government, and I believe that the Bill will not work efficiently or with justice and will not contribute one iota to the general good of the country. If I may say so, I believe that my hon. Friend the Under-Secretary of State was a little unwise to intervene quite so quickly to say that the Bill, as every reasonable commentator knows, will reduce public expenditure. Public expenditure is running at about £126 billion a year. On the best estimates of the Government themselves, the rate-capping provisions will save £300 million out £12 billion. Even that is doubtful, because although some of the commentators in the Financial Times and elsewhere might have exaggerated when they said that the Bill will end up costing the Treasury £1·5 billion—it might be only £500 million—there is no justification for saying, as the hon. Member for Tyne Bridge (Mr. Cowans) said, that it will have any effect on the total of public expenditure unless part II is introduced. I do not see how it is possible to get away from that. The nation will not be benefited, because the rate-capping provision will apply—if the Secretary of State is right, and we might get clarification later—to only 20 authorities.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I understand and respect my right hon. and learned Friend's long-standing and consistent objections of principle to the Bill. I do not agree with his argument about the totality of public expenditure, as opposed to savings on rate support grant to the Treasury, where a complicated case can be made. Opposition Members complain about the Bill leading to a reduction in services, but no one doubts that the Bill will diminish spending in that part of the public sector which falls to the rate-capped authorities.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

It is not possible to say that nobody says it, because I say it, and the Financial Times has said it. Acts of Parliament that are basically unworkable and so confused that hardly anyone can understand them do not end by producing a more efficient or cheaper system of government. That is my belief. I might be wrong, but time will tell. New clause 6 attempts to introduce some clarity. If Parliament is to give the Secretary of State such sweeping powers as are now envisaged to pick off one authority or other by whatever criteria he might ultimately have in mind, we should define those powers with much greater clarity. My right hon. Friend the Secretary of State said in Committee on 6 March that the implementation of part II would be "a major constitutional matter".

That applies to the Bill as a whole and even to those matters to which new clause 6 is directed. Unfettered discretion—I also say this from some experience—given to Ministers in matters of this type which affect hundreds of authorities is, in practice, given to permanent officials in Whitehall. Therefore, every time in a Bill such as this we read "Secretary of State for the Environment" we should substitute "principal" or "assistant principal". It is not good enough to give such wide powers to any Minister just on the basis that my right hon. Friend will use them wisely.

A future Secretary of State — let us call him, hypothetically, Ken Scargill — might not act so benevolently when using this Conservative measure. Nothing is more prejudicial to good legislation than the idea that Parliament can merely pursue ends without very careful consideration of the means.

No one is objecting to a limitation to the rate burden, to reduction, where appropriate, in the total percentage of Government grant, to measures that lead to greater efficiency, or to bringing pressure to bear on local authorities that are spending unwisely. That is also a matter for the local electorate to consider. However, it is absurd to make general sweeping observations that somehow a Bill of this kind will result in a dramatic reduction in public expenditure. Local authorities cannot print money, there will be no effect on the PSBR, and capital expenditure is already controlled. We should be extremely wary of so-called skeleton legislation of this kind.

Photo of Mr Anthony Beaumont-Dark Mr Anthony Beaumont-Dark , Birmingham, Selly Oak

Perhaps I can add fuel to what my right hon. and learned Friend has said. Is it not impossible nonsense to say that local government expenditure will fall when the target set for it over three years falls by 11 per cent., allowing for inflation, as a result of which more expenditure is being passed to ratepayers, given that the rate support grant has fallen from 66 per cent. of expenditure to about 50 per cent.? Surely it is impossible to ask local authorities to do what this or any other Government have been unable to do for central Government expenditure.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

I accept that part of the problem is that over a period of years—this applies to a number of Governments—we have shifted expenditure from taxes to rates and from voters to non-voters. There is no doubt in my mind that the only way to deal with these problems is to have a thorough-going restructuring of local government finance. I am all for restructuring the European Community budget, and there we are talking about a good deal less than £12 billion a year. Therefore, there is a good case for restructuring local government finance. Indeed, one of my objections to the Bill is that it dodges the whole issue of local government finance and the real necessity to reduce the rate burden on both domestic and non-domestic ratepayers.

Photo of Christopher Chope Christopher Chope , Southampton, Itchen

If my right hon. and learned Friend thinks that we should restructure rate revenue, would it not be preferable if we were able to take some effective measures against profligate authorities? What does he propose we should do with the undoubtedly profligate authorities which prosper in areas where there is no prospect of their being voted out of office?

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

My hon. Friend refers to a profligate authority. I have no objection in principle to rate-capping an authority that has abused its powers, nor have I any objection to sending in commissioners when a local authority manifestly behaves illegally. However, in those circumstances, the House should consider every case. That is quite different from giving a sweeping power to a Secretary of State to nominate all sorts of authorities which he thinks are profligate. He will never be able to acquire the evidence in relation to 19 or 20 authorities, much less for the whole country, without being guided almost entirely by permanent officials.

My objection to this type of skeleton legislation is that it does not clearly set out the criteria by which a profligate or overspending authority is defined. What is overspending is a political decision, not something that can be laid down automatically from Whitehall. After all, a skeleton is the very symbol of lifelessness, and a bony structure does not make an organism.

In his book "Law and Orders" published just after the war, Professor C. K. Allen said of skeleton legislation: It is a dangerous doctrine that the legislature is only concerned with that osseous framework and is incapable of understanding the organs and the flesh and the blood—not to mention the soul". We should not treat this simply as an exercise in controlling public expenditure, because we are undermining the entire historical relationship between Members of this House and members of local authorities, who in their own way are also trying to serve the country.

The new clause tries to introduce some sort of order into a disordered situation. The three factors that must be considered are the target, which is the expenditure guidance as defined in the 1982 Act, the expenditure limit in accordance with the Bill, and the GRE.

I have previously suggested that the 1980 and 1982 Acts would fail. That, presumably, is why we have the Bill. There have been two Acts, seven changes in the basis of grants and a system that is now operating under which people cannot be sure from month to month or from year to year whether they will be underspenders or overspenders according to whatever criteria may be chosen. This is a thoroughly unsatisfactory state of affairs, however we define it.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

Does my right hon. and learned Friend agree that among the authorities most worried by this legislation are ones such as my own in Staffordshire, South which have records of prudence, good sense and sound housekeeping and which are now in a state of jittery uncertainty?

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

That is true and has developed. As I also warned, people were quite happy when they thought that the 1980 and 1982 Acts would hit Socialist authorities and only a few of the so-called overspenders. In the event, they hit authorities which thought they had been acting prudently. We must also bear that in mind. What is the logic of trying to pursue an authority for overspending when it is within its expenditure limit? There are so many anomalies in the present legislation, and there is such a state of confusion, that it is totally incomprehensible that we should have another Bill which will merely make things even worse and more confused.

There has been much talk of a breach of some supposed convention between the local authorities and central Government. I do not recall any such convention. I do not know what has happened that is so very different. Normal practice has been the control of capital expenditure and a long negotiation with the local authority associations over the basis and total percentage of the Government's contribution to local government. It was always accepted that needs would vary from area to area.

In 1973, I recall asking the then Minister for Local Government and Development to discuss with individual local authorities whether their needs, unemployment position or availability of men and materials were so different that they could have an additional capital allowance. But once the Government had controlled the percentage of Government expenditure and adjusted domestic rate reliefs and so on, it was always accepted that the local authority had to define local needs. The local ratepayers had to pay the subsequent rate, and if they thought that the local authority was extravagant the remedy was in their own hands.

I do not believe that the question of how many rate catchers are needed in Liverpool should be turned into a sort of war of Jenkin's ear between the local authority and the Department of the Environment. We must ask whether Parliament exists simply to enumerate general principles and then to leave their application entirely to the central bureaucracy. Should not we be considering the working of the principles that we may be willing to approve and adopt? We have— and I speak as, perhaps, a rather Right-wing Conservative—come a long way from John Locke's requirement for liberty under the law: The laws must be known and certain and not subject to the unknown, unjust, arbitrary will of another man. The Bill concentrates Government power to an extent unparalleled since local' authorities were created. It seriously alters the whole relationship between central and local government.

4.30 pm

On Second Reading I suggested that my right hon. Friend the Secretary of State should read and that my right hon. and learned Friend the Lord Chancellor should reread his book on "The Dilemma of Democracy" and what he had to say about "elective dictatorship". In the light of the Government's White Paper, we are considering the so-called doctrine of the unitary state and the principles of parliamentary supremacy. There is one other document which I should like my right hon. Friends to look at—the book written by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), called "Freedom under the Law", published by the Conservative Political Centre in 1975. In it he said: The unbridled supremacy of Parliament is quite recent, historically speaking. Parliamentarians of the past believed that Parliament, though primus inter pares among the powers, should respect the independence of other institutions. They saw the 'liberties of Englishmen', as actually enjoyed, as the great barrier to despotism. Parliament was respected precisely because it rested on a great base of independent and separate institutions. By turning on them and subjecting them, it is eroding its own political base. I hope that before my right hon. and hon. Friends support this measure they will hear in mind that they will be doing so contrary to every precept and rule of law for which the Conservative party has ever stood.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

It is a pleasure to follow the right hon. and learned Member for Hexham (Mr. Rippon) because he articulates the true voice of local government Conservatism, with which some of us have grown up, on which we have cut our political teeth and from which we learnt a great deal. I agree with everything that he said.

One point that always puzzles me in debates about rate capping is the lack of confidence that most Conservative Members have in the electoral process. When they refer to the wicked, overspending authorities, one cannot help but remember that a number of those authorities have been Conservative-controlled at some time in the comparatively recent past. It is true that we must have a Labour Government to create that kind of Conservative control and that, faced with the problem of a local authority that seems to have forgotten the genuine priorities of its electors, Conservative politicians do not try to strengthen their local appeal so as to win an election and change that authority. Instead, they seek to bring into play higher forces — big brother in Whitehall — rather than to mobilise the forces of opinion at local level.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

Does the hon. Gentleman agree that, in particular, new Conservative Members show a curious lack of confidence in the democratic process, and that their presence here often confounds their hestitations about that process?

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

As ever, the hon. Gentleman puts things rather more elegantly than I. Perhaps my presence here shows that one can have greater faith in the electorate than Conservative Members seem to have when it comes to local government issues.

I operate in one of the boroughs that has been picked out for rate capping — the London borough of Greenwich. I live there and represent a large chunk of it. I have made it clear on a number of occasions that I do not support its spending priorities. Much of what it is doing is not in the best interests of my constituents, and I have said so on a number of occasions. I should prefer to take the problem back to the electorate on the next occasion, in 1986, than to bring into play civil servants and Ministers in Whitehall to sort it out.

It is not easy to help the London borough of Greenwich in these matters. Knowing that I was going to be on the Committee dealing with this Bill, I wrote to the chief executive of Greenwich on 10 January, asking him for the appropriate information about the effects of the Bill on the local authority. I have not had any information, a letter in reply, or even an acknowledgment. No doubt, the chief executive of Greenwich remembers that old story about the aged Member of Parliament in the Tea Room, giving advice to a new Member, who said, "Never answer letters, son. It only encourages them."

I was not deterred. When the Secretary of State introduced his famous fruit machine and produced 11 possible methods of qualification for rate capping, we discovered that Greenwich hit every one of those categories and therefore qualified 11 times for rate capping. I thought that that might concentrate a few minds in Greenwich, so I went to see the leader, the chief executive and the treasurer and brought them the glad tidings. I asked them whether they would like to respond to these facts. They looked worried and said that they would. So far, I have not heard a word from them.

I notice that the hon. Member for Copeland (Dr. Cunningham)—who has left us briefly—is apparently to visit my constituency on Thursday to lead the local population, in the great uprising called "Democracy Day", against the rate-capping legislation. The council has produced a leaflet that says that, with help, it can defeat the Rates Bill. I should have liked some help from the London borough of Greenwich to help me defeat the Rates Bill. I have not had very much.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

We have given the hon. Member for Woolwich (Mr. Cartwright) a great deal of help, and I hope that he will show his gratitude.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

The hon. Gentleman is again leading with his chin. I was seeking practical information as to how this legislation affects the London borough of Greenwich, but I have not even had the courtesy of a reply to my letter. If the hon. Gentleman is saying that it cannot be done, I point out that this week I had a letter with facts from the leader of the council in Lewisham, the neighbouring borough, which contained a great deal of critical information showing how the legislation would affect Lewisham, and giving Lewisham's answer to the Secretary of State's approach. If Lewisham can do it, I do not see why Greenwich cannot.

Photo of Mr John Powley Mr John Powley , Norwich South

Does the hon. Gentleman agree with my experience in local government — that when one asks officers for a report on how economies can be made in the local authority, they inevitably produce a report itemising the most emotional sectors with which the local authority deals as being subject to economies? They never say that they could do away with creating a nuclear-free zone or with the leaflets that are produced, or improving the efficiency of services so as to reduce the number of local authority staff. Such reports are never produced. Instead, officers report on the most emotional things that they can think of.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

The hon. Gentleman tempts me into interesting byways. All officers, when asked for suggestions about economies, make sure that those economies do not impinge on their responsibilities. That is a natural development in local government. I am saying that any answer, reaction or information from Greenwich would have been welcome. Instead, there was stone-wall silence.

Photo of Mr Harry Cowans Mr Harry Cowans , Tyne Bridge

Perhaps the hon. Gentleman is too hard on the London borough of Greenwich. I, too, received the correspondence from Lewisham, which was welcome. However, although most of the things in the document were valuable and interesting, they have already been used in Committee. Whether it be Greenwich or anywhere else, is it not the case that the vast majority of local authorities cannot react to the Bill because most of the things to which they want to react are not yet in the Bill and apply only after the Bill has become law?

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

The hon. Gentleman always makes an interesting case, but if his local authority had struck gold on every one of the qualifications that the Secretary of State suggested for rate capping, would it not have come up with some good answers as to why it was in that position, why its spending looked to be higher in relation to past records of comparatively low spending, and so on? I was asking only for some practical information.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

This is getting rather like a seminar.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

The hon. Gentleman seems to be providing the answer to his question, to the satisfaction of the House. In his speech on Second Reading, he told us that, despite Greenwich's high level of spending, an Audit Commission report showed clearly that expenditure per head in terms of services lagged behind comparable Tory boroughs. Surely that is the explanation.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

Unfortunately, that information turned out to be not entirely accurate. The Audit Commission's information, as related to me, turned out to be not quite as I presented it. That is why I wanted rather more firm information from the London borough of Greenwich than that which I quoted on an earlier occasion.

I support the new clause because it reminds us that the Bill has not appeared out of a vacuum. It comes to us from the same team that produced the Local Government, Planning and Land Act 1980 and the Local Government Finance Act 1982.

The 1980 measure gave us an extraordinary phrase that is referred to in shorthand as GREA — grant-related expenditure assessment. Many of us were suspicious of that form of assessment and disliked the idea that somebody could calculate a reasonable and rational level of spending for local authorities in various areas for a given service.

A phrase constantly used by Ministers in Committee when describing the grant-related expenditure assessment system was "rough justice". It was claimed that it was the only available test of an authority's need to spend. A number of those engaged in local government accepted it on that basis. They accepted it also on the understanding that it would be used as a means of allocating grant, not of controlling expenditure. However, as we often discover when dealing with these issues, the one slid inexorably into the other.

The 1982 Act regularised the complex business of expenditure guidance, as it was euphemistically called, which incorporates the target and penalty system. In this Bill we have the concept of a maximum expenditure limit. It provides a third weapon in the armoury with which Ministers can tax local authorities on their spending. Given their past record, I can understand why the Government feel that they need belt and braces, but to require belt and braces and a stout piece of string seems to be going rather far.

If the clause were accepted, it would serve two useful functions. First, it would go far towards simplifying local authority expenditure. It is a novel idea that it could be made a good deal simpler. Local government officers, councillors and ordinary members of the public would very much welcome that.

Secondly, it would go some way towards introducing an element of natural justice into the way in which local government operates. It seems extremely unfair that a local authority which is spending below its grant-related expenditure level should be penalised under the grant penalty arrangements or the rate-capping system. It seems monstrous that an authority that is spending below its maximum expenditure limit should be penalised under the preceding arrangement.

Opposition Members have constantly urged the Government to accept amendments and new clauses which would smooth the impact of the Bill and make it appear rather more fair and reasonable than it is. Our efforts have been thrown back in our faces. It is a reflection that hope triumphs over experience that we continue to make them. It is very much on that basis that I commend the clause to the House.

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry 4:45 pm, 27th March 1984

The new clause and the proposed amendments to part I should be regarded as a form of damage limitation. The Bill is an extremely bad measure and it will not become acceptable to many of us, irrespective of the amendments that are accepted and implemented. I wish that at this late stage the Government would listen to the vast amount of expert criticism of what they are doing, especially the criticism that is coming to them from Conservative councillors of long experience throughout the country. Assuming, reluctantly, that they will not take that advice, there are two realistic hopes that we must bear in mind.

The first hope is that the Bill will be seriously amended in another place. By that I mean removing the general powers and imposing some strict limitations on the way in which the Government will be able to use the powers in part I. When that has happened, I hope that the Government will not attempt to get this place to restore the Bill to its original form. Should they try to do so, I hope that they will not succeed.

The second realistic hope is that by prolonged discussion, including the present one on the practicalities of the powers in part I, the ongoing debate outside the House and the dialogue with the local authority associations, the Government will be strongly encouraged to make the minimum, rather than the maximum, use of the powers in part I.

Any use of the powers in part I would be profoundly damaging, because it would open a new chapter in the constitutional relationship between central and local government. For many years now Governments of both major parties have had some powers over the spending of local authorities. They have had direct powers over the capital expenditure of local authorities, but they have relied on persuasion in influencing local authorities' total expenditure. That persuasion has been reinforced with a carrot-and-stick apparatus. Sometimes there have been powerful carrots and sticks— for example, the present arrangement that bears on targets and penalties. The new step of the Government prescribing the maximum expenditure of a local authority will seriously change the constitutional relationship between central and local government. If that change were pursued widely and used more every year, it would be the beginning of the end of local democracy.

Others have said that the Government would make the minimum use of the powers in part I if they applied them to less than 20 authorities. If they took that course, they would not make a significant saving in public expenditure. I thought that that was undeniable. I took that view until I heard the intervention from my hon. Friend the Under-Secretary of State. Perhaps he will enlarge upon that later.

The figures that have been given, including those provided by the Secretary of State on Second Reading, suggest that the use of the powers in part I against a penal code would lead only to an insignificant part of public expenditure being saved.

Photo of Mr Allan Roberts Mr Allan Roberts , Bootle

Is the right hon. Gentleman aware that in Committee the Secretary of State for the Environment suggested that there would be an increase in central Government expenditure as a result of rate capping under the restricted scheme, although that would mean lower rate increases, which might mean a reduction generally in public expenditure? However, there would be more rate support grant given to local authorities which were rate-capped because they had held down their rates and cut their services. The consequence of that policy would be to increase central Government expenditure. That contradicts the belief of many Conservative councillors that there would be more money for them from central Government if profligate Labour authorities were rate-capped.

Photo of Mr Reginald Prentice Mr Reginald Prentice , Daventry

I am grateful to the hon. Gentleman for his intervention. It bears out the argument that, if the powers in part I are used in the limited way that is so often prescribed, there would be no savings in public expenditure, or only very small savings. That has led some to suggest that the Government would have to implement part II. That is not necessarily so, because there is no limit in part I on the number of authorities to be rate-capped. An amendment directed to that argument will be discussed later.

The new clause is relevant to that point because it establishes the criterion of a higher threshold, so a smaller number of authorities would be less severely affected. I wish to concentrate on that aspect. After the Bill becomes law, many pressures will be put on the Government to use the power more each year. Pressure will come from disappointed ratepayers who, having expected the Bill to relieve their rate burden, find that it does nothing of the sort. Pressure will come from the CBI and other spokesmen of industry, as well as from the Treasury in the context of the annual discussions on public expenditure.

There will also be the knock-on effect that was so well described by the hon. Member for Blackburn (Mr. Straw) in his closing speech for the Opposition on Second Reading. If a dozen or 20 authorities were rate-capped in the first year, and it was found that another dozen authorities were spending more than the rate-capped authorities, it would be logical to add that second figure to the first in the second year, and perhaps to add a third group of authorities in the third year. Therefore, the unamended Bill would tempt the Government to use the power more each year. Indeed, the Government would be under pressure, as a general election approached, to do something about the rates and would perhaps use the powers in the Bill.

I support the new clause and, by implication, other new clauses and amendments before the House today. They would provide limits in different ways on the use of the powers in part I. The House could oppose these limits if it had the will to do so. Otherwise, they could be opposed in another place. If the Bill is passed unamended and if the Government made increasing use of those powers year by year, that would be the end of local democracy.

Photo of Mr Allan Roberts Mr Allan Roberts , Bootle

I shall speak briefly about new clause 6, relating it to the Government's general powers to cap the rates of many local authorities. The new clause refers to grant-related expenditure—the target used for expenditure guidance referred to in the Local Government Finance Act 1982 — and to an expenditure limit determined in accordance with the Bill. That should not be used by the Government as justification for and means of assessment of rate capping. The new clause provides that the highest figure produced in those three determinations of expenditure shall be used for all the purposes required under the legislation.

The new clause is important because the existing provisions enabling the Secretary of State to use any one of those three determinations, or any combination, bureaucratise the draconian powers taken by the Minister under clause 2. It enables the Secretary of State, his civil servants or his computer at the Department of the Environment at any time to alter the means by which rate capping is introduced. It enables the Secretary of State to alter the criteria in an arbitrary and unjust way, so that he can put chosen local authorities into the penalty box. That would affect only Labour-controlled local authorities. Based on the simple, party political argument, a Conservative Secretary of State could use the GRE, the target or the expenditure limit as he chose, or any combination, so that Labour-controlled local authorities, or those not controlled by the Conservative party, fell into the penalty box.

The Bill is not simply that of the Secretary of State for the Environment. The truth came out when the Secretary of State, in Committee in the middle of the night, said that the general powers would not be used. We have been told that that infuriated the Chancellor of the Exchequer, and it certainly infuriated the Treasury. This legislation is as much that of the Treasury as it is of the Department of the Environment. If the public sector borrowing requirement begins to get out of hand and the burden of expenditure by local authorities is high, the Treasury might urge the Cabinet — not necessarily the Department of the Environment or the Secretary of State—to require that the general powers should be applied. If the general powers could not be applied, the GRE, the target figure and the expenditure limit might be used to bring many more local authorities into the penalty box in order to reduce public expenditure, which is what this legislation is about.

In Committee, we challenged the Secretary of State to tell us in what circumstances the general powers would be used and how the Government could allay the anxieties of local authorities belonging to the Association of County Councils or the Association of District Councils and representatives of Conservative-controlled local authorities. The Secretary of State put forward two arguments. He said that the general powers would be used only in exceptional circumstances, if at all. He developed a scenario in which as many as 100 local authorities which were acting reasonably one day suddenly started to act unreasonably and to overspend.

The Secretary of State was asked to say what circumstances would bring about such a change: whether the electorate would return councils of a different political persuasion or whether the local democratic process would be overridden by the Government's general rate-capping powers. The Secretary of State said that that would not happen, but he could envisage a moderate Labour leadership of a local authority suddenly being overthrown by a loony Left leadership, which happened at the GLC when Ken Livingstone took power. The Secretary of State speculated that that could happen in 100 local authorities all at once, as if there were 100 Ken Livingstones poised in the wings waiting to take over. The country and local authorities are not fortunate enough to be in that position. The Secretary of State's first argument was ludicrous. His second was that the power would not be used, but, once on the statute book, it would act as a deterrent—a sort of independent nuclear local authority deterrent—which would never be used but was needed, just in case, to deter those who might be tempted to spend more than the Government wanted. That was one of the reasons for introducing the power.

We challenged the Secretary of State to tell us what criteria would be used and how they would be applied, and to give detailed information about determining the authorities to be rate-capped. The Government produced lists and ideas. Based on differing criteria—using the GRE, the target and the expenditure limit—different local authorities fell into the penalty box, or "scored the lemons" as the hon. Member for Woolwich (Mr. Cartwright) said. The combination of criteria to be used would depend on which local authorities were in line for rate-capping. The criteria—the Government's intentions —are arbitrary and are not enshrined in legislation. The Government are merely handing on a plate to the Secretary of State for the Environment—or, as some Conservative Members have said, civil servants—the right to decide.

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In Committee the Secretary of State said that he objected to Opposition Members claiming that civil servants in the Department of the Environment would take policy decisions. I am sure that the Secretary of State was sincere, believing that the situation is such that the decisions about penalties, clawback and holdback are taken by Ministers, not by civil servants. However, if the legislation goes on the statute book, it will be impossible for any Minister to determine the levels of services and expenditure for the purpose of assessing who should or should not be rate-capped without handing the job over to computers or the Civil Service, because it will be too big for any group of Ministers.

I support the new clause. I hope that the Government will look at it favourably, as the right hon. Member for Daventry (Mr. Prentice) did. If they do, it will be the first time that any reasonable, logical or sensible amendment or new clause has been looked on favourably by the Government. In Committee, they would not accept one suggestion, amendment or new clause that came directly from the two Conservative local authority associations. They did not even accept amendments that required more consultation, more parliamentary scrutiny or the establishment of the principles on which rate capping will be based.

We were trying to help. We said to the Government, "These are your Conservative councillors who are suggesting these amendments, which you need to accept to make the Bill acceptable to some of your own Back Benchers and people in the local authority association." The Government would not listen. They did not accept one amendment. I hope that they will accept the new clause. If they run true to form, that is unlikely. It is in the spirit of trying to assist the Government to improve their legislation, particularly in the eyes of their own supporters, that the new clause is moved.

Photo of Mr Anthony Beaumont-Dark Mr Anthony Beaumont-Dark , Birmingham, Selly Oak

For about four years, in one piece of legislation after another, we have endeavoured to think that we can do the impossible. I said on 8 July 1980 that in a wretched package, which is what I called the Local Government, Planning and Land Bill, We shall reap a bitter harvest, and we shall not get the cooperation that we desperately need between the great spenders of Whitehall and of town halls." —[Official Report, 8 July 1980; Vol. 988, c. 269–70.] That has proved to be true.

The way in which we decide what local authorities get is unjust. It is so easy for some and so difficult for others to comply with it that there is no sense of natural justice. Whether it is right or wrong, the Government have decided to switch from the rate support grant to the ratepayer a considerable burden of extra expenditure. If the system was bad all those years ago, which was the reason why we introduced new Bills, how much worse and more unfair it is today.

On Saturday, at a certain party's central council, the Secretary of State once again put forward what in my view is the most misleading case and promise of all and accused those of us who disagree with him of being fractious. Why is it fractious to stick by principles that one has held and that one was told one's party held? A certain person has done terribly well since she rightly said on 28 August 1974 that within the normal lifetime of a Parliament we shall abolish the domestic rating system and replace it by taxes more broadly based and related to people's ability to pay. Local authorities must continue to have some independent source of finance. As I said in Committee, I agreed with that then, and I agree with it today.

In 1978 the present Secretary of State for Defence was concerned with local government. He said: We are committed to a root and branch appraisal of the powers of Whitehall over local government. We shall in government department after department, reduce and eliminate many of the controls that currently tie Britain's cities to Whitehall departments. I believe that that will speed decisions, save money and restore a sense of competitive independence to local democracy. My right hon. Friend was right then, and he is right today.

It is not those of us who oppose the Bill who have shifted our proper ground on changing to a fairer system. but other people have moved on. They have left the principle behind that one cannot expect the rating system to bear the burdens that it does. If the people of Italy. France, Germany, Switzerland and America have a better system, why do we have to lie back supinely and say that this country alone, with all its inventiveness and its lead in the world, cannot find a better way for local taxation to be raised? We are the only country—it grieves me that a Conservative Government should do it — that needs these draconian powers, yet we are the very cradle of democracy. Disraeli is one of the people whom our party likes to quote. I like to quote him because he was sound then and is sound today. He said that Centralisation is the death blow of public freedom. Centralisation is the death blow of freedom. One good thing that came out of the Committee was the wonderful publicity that was given to the Under-Secretary's book on Leviathan and the future of the Conservative party. What he said in his book followed the drift of my view. I agree with what he wrote now that I have read his book. I hope that when we have got this squalid little Bill out of the way we shall not lie back and say that we cannot do what our continental friends and the Americans can do. That would pain any of us in the Conservative party who loyally believe in the principles on which we were elected. I agree with most of the things that we do. However, it is bad for the Conservative Government to throw in their hand as they have done in this problem. One cannot expect local authorities to play the game if we do not play the game with them.

As has been said by more than one hon. Member, there is a kind of Russian roulette in local government finance, so that no local authority knows from year to year or week to week on what real criteria it should base expenditure. To have a system where the needs of the old people of Bournemouth are judged the same as those of the old people of Aston, in the city of Birmingham, must lead to all the iniquities and the sense of unfairness that people hate.

It sounds odd that we should depend on an undemocratic House to keep democratic rights for people. I hope that the Government will have the sense to think again. The basis of local accountability for local expenditure decisions will be destroyed if the Bill is passed; the basis of accountability will be with the Secretary of State. It is not the audience that one has to please, but the managers. The most important thing about local democracy, which is a thread through life in this country and is just as important as the rights and spirit of the House, is local accountability for local decisions on local needs.

Every now and then we hear of ravings by idiot people in Liverpool and of some strange people in the GLC who support groups such as "Black Babies against the Bomb", peace groups, or "Troops out of Northern Ireland". The Government believe that because of some of those things one must destroy the basis of local government legislation and damage the name of Conservatism, which stands for freedom for all. In my view that is foolish, as is the Bill. It may be too late to make a change here, but I hope that the other place will restore the Conservative party to itself again.

It grieves me genuinely that I have had to fight the Bill for some months, together with other people. We are not fractious or being just disagreeable. We are not the disappointed—whether we are in office, out of office or will never have office. We are elected to the Chamber to support the principles of Conservatism and what we said when we were in opposition when we had time to think.

People will feel harried and under pressure. The Bill will not save expenditure. It will not even work, so it will be bad politically as well as constitutionally. People will believe anything if they believe Government statements at Conservative and other conferences that all will be well when the Bill is passed. If any Government have kept expenditure under control, it is this Government. They have done so against great odds and with great credit. Nevertheless, expenditure has rolled on, although at a lower level. We have set down that, in the next three years, local authorities will need to reduce expenditure in real terms to minus 7 per cent., minus 2 per cent. and then by minus 2 per cent. Therefore, Robin Pauley's figures in the Financial Times are likely to be proved true.

The Conservative party will reap all the unpopularity that should rightly belong to local decision-makers. As Members of Parliament, we shall be harried and hounded about this Bill, which will not work.

Photo of Mr Allan Roberts Mr Allan Roberts , Bootle

Will the hon. Gentleman give way?

Photo of Mr Anthony Beaumont-Dark Mr Anthony Beaumont-Dark , Birmingham, Selly Oak

I shall just finish my speech. I hope that even at this late stage the Government will, even if they cannot concede the Bill, agree to stand by their 1974 principle. If other people can find a better way, so can we. Our Government must have the courage and tenacity to do that. That is why I support the new clause and will vote against the Bill.

Photo of Mr Chris Smith Mr Chris Smith , Islington South and Finsbury

The new clause goes straight to the heart of the absurdity and difficulty faced by Whitehall in attempting to set any target figure for expenditure and services in local authority areas. It seeks to highlight the inappropriateness of the present system of grant-related expenditure assessment figures, penalties and guidance figures. It seeks to highlight also the absurdity of expenditure limits, which the Government are seeking to impose in this Bill.

My hon. Friend the Member for Copeland (Dr. Cunningham) amply demonstrated the absurdity of having three different target figures, all of them supposedly to be met by local authorities. I hope that the Government will give an interesting response about exactly which of the guidelines that the Government seek to impose on local authorities represent a genuine attempt to assess the needs and the services that should be provided in a particular area.

The grant-related expenditure figures are especially absurd. To date, the Government have based their assessment of what will happen when the legislation becomes law on the GRE figures. We know that the Government are seriously considering using a guideline of GRE plus 20 per cent. as the base line for bringing in the selective powers. The GRE is to act as an objective measure of what should happen in local authorities. We need look only at how the GRE works in practice to recognise that that is far from the case.

The GRE for social services is an example I used in Committee. It bears repetition because it is a graphic demonstration of where the GRE assessment figures go wrong. The GRE figures for social services in inner London show that each inner London borough, including Conservative and Labour-controlled and supposedly profligate and supposedly prudent authorities, is spending more than 16 per cent. above its GRE assessment figure for social services. I refuse to believe that each of those local authorities is wrong and the Department of the Environment is right. It is clear that the Department of the Environment has its figures wrong and that local authorities' figures more closely reflect the real needs of people in their areas.

My borough, like the borough represented by the hon. Member for Woolwich (Mr. Cartwright), is one of only five authorities that can be hit under each of the 11 different criteria given by the Secretary of State. According to the Department of the Environment, my borough is spending 33 per cent. above its GRE figure on social services.

5.15 pm

I shall examine one example, because it demonstrates the validity of the new clause and the network of different figures and the penalty system introduced and established by the Government. One of the Government's laudable aims is to ensure that in future years care for the mentally ill and mentally handicapped will occur more in the community and less in institutions. As part of that aim, the Government seek to close the large-scale institutions which presently house large numbers of mentally handicapped people. The Friern Barnet hospital serves many boroughs in north London, and its closure, which is scheduled in five years' time, will mean that a number of people will be returning to the communities from which they originally came. About 500 people will probably return to the borough of Islington. They will depend on the borough's social services provision for support. The local authority's cost of providing the services can conservatively be estimated at £2 million or £3 million in any one year.

The block grant penalty on that extra expenditure—this operates for each £1 of new expenditure the borough seeks to provide—to cope with people coming from Friern Barnet hospital will amount probably to about £6 million. The increase in expenditure, which includes the original expenditure and the penalty incurred, will add between £8 million and £9 million to the borough's expenditure to accord with Government policy. Islington people will therefore face about an 18 per cent. increase in rates.

That is a simple example of what happens under the present expenditure system. The operation of the GRE figures, which are totally inadequate, and the penalties imposed when expenditure rises about above the GRE figures mean that genuine services, which the Government say local authorities should provide, will be dangerously harmed or the ratepayers must foot an enormous bill. That demonstrates that the present system of targets and penalties is haywire. Given the different amounts that the Government say local authorities should be spending on people, who often are in desperate need, the least the Government can say, if and when the Bill becomes law, is that the highest of the figures should apply. The penalty system should not come into operation merely because the Government have imposed spending limits on local authorities. The least that we should ask the Government to accept is that some people desperately require geniune services provided by their local authority in areas such as the one that I represent.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

We have heard some eloquent speeches this afternoon, in particular from my right hon. and learned Friend the Member for Hexham (Mr. Rippon), my right hon. Friend the Member for Daventry (Mr. Prentice) and my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). I do not always agree with my hon. Friend the Member for Selly Oak, but he was in sparkling form this afternoon. I am sad to have to agree with them, because it is not comfortable to find oneself at odds with one's party and Government. I know that my hon. Friend the Member for Selly Oak endorses that feeling entirely.

Here we have a classic case of the old adage, "hard cases make bad law." This is bad law in the making, and I sincerely hope that it can be somewhat improved before it leaves the House, although that I doubt. I devoutly hope that their lordships will do something to tidy it up. Even then, we shall be left, almost whatever they do, with an undesirable and profoundly un-Conservative piece of legislation.

With many of my right hon. and hon. Friends, I went this morning to the memorial service for Maurice Macmillan. It is not without tragic irony that the Second Reading of this Bill was the last occasion on which, I believe, he cast a vote in the House, and he voted against the Government. He was a man who, in every sense, was not just a true servant of the House, and a notable politician, but a Tory of impeccable credentials. It was because of people such as Maurice Macmillan and his father that many of my generation aspired to the House of Commons. We came here and embraced the Tory creed because we believed in certain simple items of Tory philosophy. We did not believe that it was right for the Government to interfere in every minute particular of people's lives. Less government, not more, was the slogan under which I frequently campaigned. We came here because we did not believe in excessive centralisation. That was the way towards the Socialist state. Opposition Members, for the best and most honourable reasons, may wish to tread that path, but I do not wish to follow them and, most of all, I do not wish my Government to lead the people there.

We came here, too, because we believed that some of the most misguided words ever uttered in post-war Britain were the infamous words of Sir Hartley Shawcross, as he then was: The gentleman in Whitehall really does know better

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

I stand corrected. Sir Hartley Shawcross said: We are the masters at the moment."—[Official Report, 2 April 1946; Vol. 421, c. 1213] Those quotations could be hung around the necks of the Secretary of State and his colleagues.

We also came here because we believed in another old Tory truism of trusting the people. Whichever of those items of philosophy or slogan one takes, this legislation flies directly in the face of Tory tradition and practice.

It also seems to me that it is not without its sadness that the Minister, who has borne so much of the brunt of taking the legislation through the House, wrote a notable work, "The Binding of Leviathan". I had the honour to review that book when it was first published. I gave it a good review, because I thought that it was an excellent book. I thought that it was a fascinating outline of Tory philosophy. Yet, here he is, poor man, having to take through the House of Commons a Bill which, at that stage in his political development — he seems to have regressed—he would hardly have thought desirable.

One of my most unhappy recent experiences was to talk to the elected councillors of south Staffordshire. They are Tories almost to a man and woman. The Tories and independents have an overwhelming majority. Some people may say that it is too large a majority, but I would not agree with that. South Staffordshire has a record of prudent housekeeping and of doing all the things that Conservative Members have advocated. We did not have to be coerced, cajoled or persuaded into selling council houses or balancing budgets. I have never seen those elected councillors more sadly united than they are at the moment against the Government and their approach to local government.

Things have reached a pretty pass when one has elected representatives from all parties, including those who have in many cases given decades of service to the Conservative party and local communities, saying to the Government —if, with my hon. Friend the Member for Huntingdon (Mr. Major) on the Benches, one can slightly distort the words of Cromwell — conceive that you may be mistaken. The Government have not been prepared to concede that they are mistaken, but profoundly mistaken they are.

There are two factions that could persuade my lion Friend the Member for Selly Oak and myself to support a measure like this one in times of difficulty and crisis. although, thanks to the skilful leadership of the Government in other spheres, I do not believe the crisis is so great or the difficulties so many as they once were. The two matters that might persuade us to support such a measure are, first, whether we will make a sizeable cut in expenditure as a result of this measure. I do not believe that anyone has put the matter more eloquently or with more devastating logic than my right hon and learned Friend the Member for Hexham. He made it clear that, however one might deal with the figures and examine the books, there is no chance of our achieving more than the tiniest saving, and there is a danger that there will be an increase in expenditure. By that test, in common parlance, is the game worth the candle? The answer must be no.

I would remind my right hon. Friend the Prime Minister of a fine and famous speech that she made about the arts — in which I am particularly interested, as hon. Members know. She talked about "candle-end economies". Before we were elected in 1979, she said: We would never advocate candle-end economies. If this legislation is not the most high-falutin way of advocating candle-end economies, I do not know what is.

There is another test, but it follows from the first. Are we delivering what the people expect? This is a classic case of exciting expectations that we cannot fulfil. People believe that we are doing something about the rates. In fact, we are fudging the central issue of rates. If my right hon. Friend and his colleagues had come to Parliament with a Bill that would transfer to central Government, and central control therefore, the cost of teachers' salaries and police pay, and had said to local authorities, "You deal with the rest," they would have come with a logical and coherent case that could have been debated on its merits. Some Conservative Members might not have liked it and some Opposition Members might have liked it because it is not a matter of ordinary party doctrine. The proposal would have been logical and coherent and there would have been a chance of doing something. This legislation is not doing anything about the rates. It is fudging the main issue.

The Government must not be deluded by the size of their parliamentary majority. I came to the House 14 years ago and within a couple of years found myself in Committee considering the Local Government Bill 1972, which resulted in the changes of 1974. In retrospect, I wish that I had rebelled on one or two occasions during the Bill's passage. However, I did not, partly because I had been put on to the second Bench as a parliamentary private secretary—doubtless the highest form of parliamentary life to which I shall ever aspire. I was summarily acquiescent about that legislation because the pleas not to rock the boat and to support the side seemed to carry with them a degree of moral persuasion, especially when the manifesto was quoted. However, a manifesto is a broad, general statement of intent, to which no single hon. Member is bound in every particular. I do not consider myself bound to support this wretched piece of legislation simply because there was a reference to it, although not a detailed one, in the manifesto, and I wish that I had had the courage to rebel and reject one or two of the previous Bill's clauses.

5.30 pm

The Government have a large parliamentary majority and, as in 1970, there are many new hon. Members, many of whom, for the best possible reasons, are reluctant to vote against their own side and rock the boat. I hear a voice muttering "Ambition", but ambition should be made of sterner stuff. They should have the courage of their Tory convictions, of which they tell me in the Smoking Room and Tea Room, and demonstrate them on the Floor of the House.

Unless the measure is significantly amended during the next two days, there will be no point in voting for it on Third Reading. Our hope is in the Lords.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

Our hope is always in the Lord.

The Lords have recently shown themselves to be enlightened, progressive and robust. It would be wonderful if the most recent member of the hereditary peerage were able to make a maiden speech about the Bill in the Lords. He would doubtless be able to develop the views that prompted his son to vote against the Government on Second Reading.

Any true Tory who considers himself to be a member of the party of Disraeli, which in an extraordinary way formed Joseph Chamberlain in the Midlands, is against centralisation and excessive Government interference and is in favour of the freedom of the individual and a balanced relationship between central and local government, must pause and ask himself whether this mass of technical nonsense—which will, at most, save only a tiny sum—is worth supporting or whether it should be consigned to the dustbin, where so much of the legislation which has occupied our time in recent years should have gone.

Photo of George Young George Young Parliamentary Under-Secretary (Department of Environment)

We have had a wide-ranging debate on new clause 6. I shall deal in passing with some of the broader points made during the debate, but it will be convenient to deal with them more comprehensively when we consider the new clauses and amendments.

There is a fundamental conflict between the arguments of Conservative Members and those of the Opposition against the Bill. Some of my right hon. and hon. Friends do not think that the Bill will work. My hon. Friend the Member for Staffordshire, South (Mr. Cormack) said that the Bill would increase public expenditure. My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said that it would not save public expenditure. My right hon. and learned Friend the Member for Hexham (Mr. Rippon) also said that it would not save public expenditure. My right hon. Friend the Member for Daventry (Mr. Prentice) thought that savings would be marginal.

The Opposition's case is that the Bill will work and that there will be a substantial saving in public expenditure as a result of which local authorities will have to cut their services. That has been the thrust of their arguments in Committee and of the speech made by the hon. Member for Copeland (Dr. Cunningham), who said that the Bill would enable the Secretary of State to reduce local government expenditure below the level which elected councillors would fix. There is a fundamental conflict between those two arguments against the Bill — both cannot be true. There is a conflict between my right hon. and hon. Friends and the Opposition about the impact of the Bill.

The Opposition enjoy this new clause because they have introduced it several times. They have asked why it is necessary to have three separate expenditure figures. I agree that life would be simpler if there were only one target or expenditure level, but for reasons which I shall explain that would not be fair. I shall outline briefly why it is necessary to have three different figures.

First, grant-related expenditure is a yardstick for use in the distribution by the Government of the block grant. It is an assessment of the cost to an authority of providing in its area services to a typical standard in the light of its statutory functions and its objectively recorded circumsances. It is those attributes of GRE which, we have argued, make it suitable as a yardstick for high levels of spending in relation to local needs.

We have always accepted that GREs are not expenditure targets. When it became necessary to introduce individual targets, it was on a different basis and we confirmed the new arrangements in a statute. As the Local Government Finance Act 1982 makes clear, the purpose of the targets is to achieve the reduction in the level of local authority expenditure which the Secretary of State thinks necessary, having regard to general economic conditions. As that is their purpose, it follows that targets must be based more on an authority's historic spending levels. In that sense they are different from the GREs, which are based on a notional assessment and are not affected by the authority's historic level of spending.

The targets have been set by a formula, which has been changed over the years and has included a variety of constraints on authorities' year-on-year increases. Bigger increases have been implied by targets for low-spending authorities than for authorities which have exceeded the GREs and the targets in previous years. The targets are, in the Secretary of State's judgment, the amounts at which he could reasonably ask each authority to aim in order to meet the Government's overall expenditure plans.

Authorities have the ability to overspend the target figure at the cost of grant holdback and, therefore, higher rate bills. The targets and GREs are two different figures. GREs are determined for the purpose of a fair distribution of block grant, and targets in an attempt to ensure that overall spending plans are achieved.

The House should note that to substitute the higher of the two—the target or GRE—would have significant effects on the distribution of the block grant. That is the impact of new clause 6. If we were to accept it, it would significantly reduce the rates of authorities with targets most above their GREs by increasing their grant at the expense of other authorities. My hon. Friends who spoke in favour of the new clause should know that it would give more money to extravagant authorities and, as a consequence, less money to those which have been spendng more responsibly.

The GREs and the targets therefore perform quite different functions, as do the targets and the expenditure levels set under the Bill for rate limitation purposes.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

The Minister may have misunderstood the purpose of the new clause. It is to ascertain the relationship not just between target and GRE but between target, GRE and the maximum expenditure levels that can be prescribed under both the selective and the general scheme. Will the Minister come on to that part of his brief if he has been briefed on that? In any event, will he say whether it is possible for the expenditure level on which the authority will be rate-capped to be less than its GRE or its target?

Photo of George Young George Young Parliamentary Under-Secretary (Department of Environment)

The hon. Member for Copeland asked those questions earlier and I was about to deal with them. I note, however, that the hon. Member for Blackburn (Mr. Straw) has not disagreed with what I have said so far.

The expenditure levels set under the Bill, unlike the targets, feed straight into the rate limit so that effectively authorities cannot exceed them. Whereas the targets can at present be exceeded, albeit at the cost of higher rates, the expenditure levels set under the Bill cannot. Precisely because they cannot be exceeded, the Bill provides for a redetermination procedure allowing the Secretary of State to take account of particular local circumstances of individual authorities. In setting targets, however, he cannot do that but must calculate them on principles applicable to all authorities. Thus, a local authority's target must be based on a general principle and can be exceeded, but the expenditure level under the Bill may take account of particular circumstances and cannot be exceeded. Those important differences may well result in different targets and expenditure levels being set with good reason for a particular authority.

The first specific question put to me was whether the total expenditure levels would be given in the Government public expenditure plan. The totals will be included in the total of relevant expenditure for the rate support grant settlements, which in turn will be included in the public expenditure White Papers.

Secondly, I was asked whether the total of the expenditure levels set was likely to be higher than the total of the GREs or of the targets. I think that that was the point to which the hon. Member for Blackburn referred. It depends on how expenditure levels are eventually set under the Bill, after redetermination if necessary. If they are higher than the GREs or the targets — and there could be good reasons for that — the total published expenditure levels in the White Paper would also be higher. I remind the House, however, that the actual expenditure of the highest spenders will be reduced as a result of the Bill.

Photo of George Young George Young Parliamentary Under-Secretary (Department of Environment)

Perhaps I may just deal with the last question that was put to me.

I was asked what was the logic of penalising, expenditure above targets but below the expenditure levels set under the Bill. The answer is that it would be most unfair not to do so. The question presupposes the continuation of targets after the introduction of the general rate limitation scheme, but the scheme applies only to authorities whose expenditure is above target.

If grant holdback is not applied to expenditure above target, albeit below the expenditure level set, the authority would be treated exceptionally favourably and would not suffer the penalties suffered by those not selected. As both the targets and the holdback must be calculated in accordance with general principles, it would be unreasonable to treat expenditure levels for rate-capping purposes under the Bill in a different way as the expenditure targets must be fixed on general principles and it would be wrong to exempt from holdback those authorities which were selected under the scheme.

I have tried to deal in the time at my disposal with the rather technical questions that have been put to me. Given the consequences of the new clause for authorities which have budgeted responsibly, I ask the House to reject it.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs) 5:45 pm, 27th March 1984

First, we do not accept that the new clause will have the consequences claimed by the Minister. It certainly does not lie in the Government's mouth to complain about the way in which the rate support grant system, GRE and target may capriciously affect individual authorities which have in no way overspent, because that is the fault of the present system. We do not intend to be damned by a system which we wholly reject and wish to see entirely reformed, as do many Conservative Members who are true to their manifesto.

I hope that Conservative Members will weigh with care what the Minister has said, and also what he has not said. He has admitted today for the first time that it is possible for the Government, under part II of the Bill—the new clause affects the general power as much as the specific power—to set the maximum expenditure level for every authority in which the total expenditure level in aggregate is less than the target expenditure which the Government say the authority should spend and less than the GRE, which is the Government's assessment of what the authority actually needs.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

With great respect, he did. He said that if the expenditure levels were higher than the GRE and target certain things would follow, but he refused to give a categorical guarantee that in every case the expenditure levels would in fact be higher than target or the GRE. If the hon. Gentleman wishes to intervene, I shall be delighted to give way.

Photo of George Young George Young Parliamentary Under-Secretary (Department of Environment)

I can only repeat what I said. They could indeed be higher. I never said anything about them being lower. The circumstances would have to be rather unusual for them to be lower.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

As we all understand the English language, I assume that if they could be higher they could also be lower. If the Minister is saying that there are no circumstances in which the expenditure levels would be lower than target or the GRE, I should be delighted to allow him the opportunity to correct the record. Until he does so, hon. Members on both sides must assume, as he has just admitted, that this could occur — albeit in unusual circumstances. We have heard the word "unusual" many times in the past four years. We were told only two years ago not just that it was unusual but that it would never happen that individual authorities' expenditure levels and rate levels would be cut—and yet here we are. My hon. Friend the Member for Copeland (Dr. Cunningham) reminds me that we were also told that the counties would not be penalised, but all the Tory counties as well as the Labour counties are now screaming.

The right hon. and learned Member for Hexham (Mr. Rippon) discussed whether setting expenditure levels—in other words, rate-capping — for a handful of authorities would allow the Government to achieve the savings that they want. There is no divergence of view between us on that. We are certain that if 20 or so authorities are rate-capped their services will suffer very badly—no doubt Conservative Members in the main would agree with that — depending on the extent to which they were rate-capped. Conservative Members are saying that, despite all that suffering by the authorities concerned, the Government will not obtain the saving that they wish. That is the key point. There is a confluence, not a divergence, of opinion between the two sides on that. We agree that the Bill will do great damage to at least 20 authorities but that if only 20 authorities are rate-capped the savings sought by the Government cannot be achieved.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

Is the hon. Gentleman saying that if 20 authorities are capped and their expenditure is reduced total public expenditure will not fall?

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

The key question in terms of the PSBR is what happens to the Government's grant. We can all do the arithmetic, and the Treasury has benefited from penalty and from target. It has made money out of these items. The Secretary of State admitted that if rate-capping operated there would be more rate support grant and therefore a lower rate increase than would otherwise be the case for the authorities that were rate-capped.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

The hon. Gentleman makes my point for me. We would be delighted if the Treasury had to pay out more grant than it ends up paying each year, for that would mean that the total of public expenditure was met because there was no holdback.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

I am delighted to accept the hon. Gentleman's flattery, but I was making a different point. The central point that we are making, and which Conservative Members are making, is that only 20 authorities are rate-capped and that, accepting that they are not proposing to abolish all services in Islington, Manchester and Sheffield, the most by which even this Government could contemplate effective cuts in any one year would be about 5 per cent. There is no way in which the Government, by making cuts of that size for the hit-list authorities, could achieve the £1·5 billion reductions which the public expenditure White Paper postulates. If my arithmetic is wrong, I shall be happy to hear what the Under-Secretary has to say. He knows this to be the case. The Government cannot possibly achieve their savings, and the Secretary of State has accepted that.

To reply to the right hon. and learned Member for Hexham, I asked the Secretary of State—and he was kind enough to acknowledge that I asked him on notice, so he had time to consider it—whether, in determining the operation of selective rate-capping, he would start from having been given a target for savings by the Treasury or from his own assessment of the individual authorities' level of spending. He said: There is no question of criteria being chosen which would produce the right list of authorities, whether in political terms or in relation to a pre-determined requirement for savings. Those considerations would be irrelevant." — [Official Report, Standing Committee G, 21 February 1984; c. 591.] The Secretary of State himself is saying that the bottom line that the Treasury is demanding is irrelevant to how individual authorities are to be rate-capped. If that is the case—and I take the Secretary of State's words as he said them—again I say that there is no way in the world in which rate-capping 20 authorities will lead to the savings which the Secretary of State demands. It will be interesting, when we come to discuss amendment No. 25, which would limit rate-capping to 20 authorities, to see whether the Secretary of State accepts that amendment or whether, as in Committee, he is implacably opposed to any limit on the number of authorities to be rate-capped under the selective scheme.

We have heard some eloquent and courageous speeches from Conservative Members who wish to be true to the principles of Conservatism and to the deeper and older principles of Toryism. We have heard references to Disraeli and to the former Prime Minister, the late Earl Macmillan of Stockton. One hon. Gentleman quoted Disraeli's comments against the centralisation of power. That has been a continuum within the Conservative party. It was the present Leader of the House of Commons who, after the 1979 election, told a newspaper: Once you centralise power, a bad decision becomes disastrous. There is no better way of illustrating the wisdom of the opposition of the present Leader of the House to the centralisation of power than by considering the interrelationship between the GRE, target and expenditure levels. Given the failure of the Under-Secretary to promise that expenditure levels will in every circumstance be above the GRE and target, it is conceivable that what we have had this year and last year, whereby good Conservative authorities, which by no measure have been overspending, have found that they have been penalised even though on target, even though their level of spending is below what the Government say they need under the GRE, will be compounded by circumstances in which the expenditure levels, the rate-capping levels, are themselves set below either or both the GRE — what the Government say those authorities need — and target — what the Government say they should spend. What a mess that would be.

Photo of Mr William Benyon Mr William Benyon , Milton Keynes

It would be impossible to get the savings which have been postulated in statements by the Government if the expenditure level were not below those two levels.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

I am very glad that the hon. Gentleman has made that point. That is indeed the case, so even under a wider selective scheme many authorities which are by no stretch of the imagination overspending on the Government's own criteria will be penalised in order to achieve those savings.

We have had some references to the Under-Secretary's excellent little work, "The Binding of Leviathan", in which he complained about Ministers brandishing the theory of the detailed mandate in the face of reasoned argument. The Under-Secretary is a prolific author and, of course, he also edited the pamphlet "Changing Gear", which began with a quotation from an address by the then right hon. Harold Macmillan to the Primrose League in 1981—on the anniversary of Disraeli's death. The right hon. Gentleman said: People can be governed in only two ways, either by tyranny, autocracy (whether it be of a King or of a Communist regime), or they can be governed by persuasion, by appeal to their good sense, their nature, their tradition, their inherent patriotism". In an earlier speech on local government, which bears re-reading by every true Tory, the same speaker, addressing a Conservative party rally on 7 March 1961, said: As Tories … we believe in vigorous and effective local institutions….For the Government, it means transferring and diffusing authority from the centre outwards. That is the true Tory principle. What the Bill does is to bring power from the periphery into the centre, to centralise power. Not only is it a bad principle, but it is bad Government, and I urge every right hon. and hon. Member to vote in favour of new clause 6.

Question put, That the clause be read a Second time:—

The House divided: Ayes 193, Noes 301.

Division No. 205][5.55 pm
AYES
Adams, Allen (Paisley N)George, Bruce
Alton, DavidGilmour, Rt Hon Sir Ian
Anderson, DonaldGodman, Dr Norman
Archer, Rt Hon PeterHardy, Peter
Ashley, Rt Hon JackHarman, Ms Harriet
Atkinson, N. (Tottenham)Harrison, Rt Hon Walter
Bagier, Gordon A. T.Hart, Rt Hon Dame Judith
Banks, Tony (Newham NW)Haynes, Frank
Barnett, GuyHealey, Rt Hon Denis
Beaumont-Dark, AnthonyHogg, N. (C'nauld & Kilsyth)
Beckett, Mrs MargaretHolland, Stuart (Vauxhall)
Beith, A. J.Home Robertson, John
Bell, StuartHowells, Geraint
Benn, TonyHoyle, Douglas
Bennett, A. (Dent'n & Red'sh)Hughes, Robert (Aberdeen N)
Benyon, WilliamHughes, Roy (Newport East)
Bidwell, SydneyHughes, Sean (Knowsley S)
Blair, AnthonyHughes, Simon (Southwark)
Boothroyd, Miss BettyJenkins, Rt Hon Roy (Hillh'd)
Bray, Dr JeremyJohn, Brynmor
Brown, Gordon (D'f'mline E)Johnston, Russell
Brown, Hugh D. (Provan)Jones, Barry (Alyn & Deeside)
Brown, N. (N'c'tle-u-Tyne E)Kaufman, Rt Hon Gerald
Brown, Ron (E'burgh, Leith)Kennedy, Charles
Bruce, MalcolmKirkwood, Archibald
Buchan, NormanLambie, David
Callaghan, Jim (Heyw'd & M)Lamond, James
Campbell-Savours, DaleLewis, Ron (Carlisle)
Canavan, DennisLewis, Terence (Worsley)
Carlile, Alexander (Montg'y)Litherland, Robert
Carter-Jones, LewisLloyd, Tony (Stretford)
Cartwright, JohnLoyden, Edward
Clark, Dr David (S Shields)McCartney, Hugh
Clarke, ThomasMcDonald, Dr Oonagh
Clay, RobertMcGuire, Michael
Cocks, Rt Hon M. (Bristol S.)McKay, Allen (Penistone)
Cohen, HarryMcKelvey, William
Coleman, DonaldMackenzie, Rt Hon Gregor
Concannon, Rt Hon J. D.Maclennan, Robert
Conlan, BernardMcNamara, Kevin
Cook, Frank (Stockton North)McTaggart, Robert
Cook, Robin F. (Livingston)McWilliam, John
Corbett, RobinMadden, Max
Corbyn, JeremyMarek, Dr John
Cormack, PatrickMarshall, David (Shettleston)
Cowans, HarryMartin, Michael
Crowther, StanMason, Rt Hon Roy
Cunningham, Dr JohnMaxton, John
Dalyell, TamMaynard, Miss Joan
Davies, Rt Hon Denzil (L'lli)Meadowcroft, Michael
Davies, Ronald (Caerphilly)Meyer, Sir Anthony
Davis, Terry (B'ham, H'ge H'l)Michie, William
Deakins, EricMikardo, Ian
Dewar, DonaldMillan, Rt Hon Bruce
Dixon, DonaldMiller, Dr M. S. (E Kilbride)
Dubs, AlfredMitchell, Austin (G't Grimsby)
Dunwoody, Hon Mrs G.Morris, Rt Hon J. (Aberavon)
Eadie, AlexMorrison, Hon C. (Devizes)
Eastham, KenNellist, David
Edwards, Bob (Wh'mpt'n SE)O'Neill, Martin
Ellis, RaymondOrme, Rt Hon Stanley
Evans, John (St. Helens N)Park, George
Ewing, HarryParry, Robert
Fatchett, DerekPatchett, Terry
Field, Frank (Birkenhead)Pavitt, Laurie
Fields, T. (L'pool Broad Gn)Pendry, Tom
Fisher, MarkPenhaligon, David
Flannery, MartinPike, Peter
Foot, Rt Hon MichaelPowell, Raymond (Ogmore)
Forrester, JohnPrentice, Rt Hon Reg
Foster, DerekPrescott, John
Foulkes, GeorgeRadice, Giles
Fraser, J. (Norwood)Randall, Stuart
Freeson, Rt Hon ReginaldRedmond, M.
Freud, ClementRees, Rt Hon M. (Leeds S)
Garrett, W. E.Richardson, Ms Jo
Rippon, Rt Hon GeoffreyStott, Roger
Roberts, Allan (Bootle)Strang, Gavin
Roberts, Ernest (Hackney N)Straw, Jack
Robertson, GeorgeThomas, Dafydd (Merioneth)
Robinson, G. (Coventry NW)Thomas, Dr R. (Carmarthen)
Rogers, AllanThompson, J. (Wansbeck)
Rooker, J. W.Thorne, Stan (Preston)
Ross, Ernest (Dundee W)Tinn, James
Rowlands, TedTorney, Tom
Ryman, JohnWardell, Gareth (Gower)
Sedgemore, BrianWareing, Robert
Sheerman, BarryWeetch, Ken
Sheldon, Rt Hon R.Welsh, Michael
Shore, Rt Hon PeterWhite, James
Short, Ms Clare (Ladywood)Williams, Rt Hon A.
Short, Mrs H.(W'hampt'n NE)Winnick, David
Silkin, Rt Hon J.Woodall, Alec
Skinner, DennisYoung, David (Bolton SE)
Smith, C.(Isl'ton S & F'bury)
Smith, Rt Hon J. (M'kl'ds E)Tellers for the Ayes:
Soley, CliveMr. James Hamilton and Mr. Lawrence Cunliffe.
Spearing, Nigel
Steel, Rt Hon David
NOES
Adley, RobertCorrie, John
Aitken, JonathanCouchman, James
Alexander, RichardCranborne, Viscount
Alison, Rt Hon MichaelCurrie, Mrs Edwina
Amery, Rt Hon JulianDickens, Geoffrey
Ancram, MichaelDicks, Terry
Arnold, TomDorrell, Stephen
Ashby, DavidDouglas-Hamilton, Lord J.
Aspinwall, JackDover, Den
Atkins, Robert (South Ribble)du Cann, Rt Hon Edward
Atkinson, David (B'm'th E)Dunn, Robert
Baker, Rt Hon K. (Mole Vall'y}i Durant, Tony
Baker, Nicholas (N Dorset)Eggar, Tim
Baldry, AnthonyEmery, Sir Peter
Banks, Robert (Harrogate)Evennett, David
Bellingham, HenryEyre, Sir Reginald
Bendall, VivianFallon, Michael
Bennett, Sir Frederic (T'bay)Farr, John
Best, KeithFavell, Anthony
Bevan, David GilroyFenner, Mrs Peggy
Biffen, Rt Hon JohnFinsberg, Sir Geoffrey
Biggs-Davison, Sir JohnFletcher, Alexander
Blaker, Rt Hon Sir PeterFookes, Miss Janet
Bonsor, Sir NicholasForman, Nigel
Boscawen, Hon RobertForsyth, Michael (Stirling)
Bottomley, PeterFowler, Rt Hon Norman
Bowden, Gerald (Dulwich)Fox, Marcus
Boyson, Dr RhodesFraser, Peter (Angus East)
Braine, Sir BernardFreeman, Roger
Brandon-Bravo, MartinFry, Peter
Bright, GrahamGale, Roger
Brittan, Rt Hon LeonGalley, Roy
Brown, M. (Brigg & Cl'thpes)Gardiner, George (Reigate)
Browne, JohnGardner, Sir Edward (Fylde)
Bruinvels, PeterGlyn, Dr Alan
Bryan, Sir PaulGoodhart, Sir Philip
Buck, Sir AntonyGoodlad, Alastair
Budgen, NickGorst, John
Burt, AlistairGow, Ian
Butcher, JohnGower, Sir Raymond
Butterfill, JohnGrant, Sir Anthony
Carlisle, John (N Luton)Greenway, Harry
Cariisle, Kenneth (Lincoln)Gregory, Conal
Carttiss, MichaelGriffiths, E. (B'y St Edm'ds)
Chalker, Mrs LyndaGriffiths, Peter (Portsm'th N)
Chapman, SydneyGrist, Ian
Chope, ChristopherGround, Patrick
Churchill, W. S.Grylls, Michael
Clark, Dr Michael (Rochford)Gummer, John Selwyn
Clark, Sir W. (Croydon S)Hamilton, Neil (Tatton)
Clarke, Rt Hon K. (Rushcliffe)Hampson, Dr Keith
Clegg, Sir WalterHanley, Jeremy
Cockeram, EricHannam, John
Colvin, MichaelHarvey, Robert
Cope, JohnHaselhurst, Alan
Havers, Rt Hon Sir MichaelMoore, John
Hawkins, Sir Paul (SW N'folk)Morris, M. (N'hampton, S)
Hawksley, WarrenMorrison, Hon P. (Chester)
Hayes, J.Moynihan, Hon C.
Hayhoe, BarneyMudd, David
Hayward, RobertMurphy, Christopher
Heathcoat-Amory, DavidNeale, Gerrard
Heddle, JohnNelson, Anthony
Henderson, BarryNeubert, Michael
Higgins, Rt Hon Terence LNewton, Tony
Hill, JamesNicholls, Patrick
Hind, KennethNorris, Steven
Hirst, MichaelOnslow, Cranley
Hogg, Hon Douglas (Gr'th'm)Oppenheim, Philip
Holland, Sir Philip (Gedling)Oppenheim, Rt Hon Mrs S.
Holt, RichardOttaway, Richard
Hooson, TomPage, John (Harrow W)
Hordern, PeterPage, Richard (Herts SW)
Howard, MichaelParris, Matthew
Howarth, Gerald (Cannock)Patten, John (Oxford)
Howell, Rt Hon D. (G'ldford)Pattie, Geoffrey
Howell, Ralph (N Norfolk)Pawsey, James
Hubbard-Miles, PeterPeacock, Mrs Elizabeth
Hunt, David (Wirral)Pink, R. Bonner
Hunt, John (Ravensbourne)Pollock, Alexander
Hunter, AndrewPorter, Barry
Hurd, Rt Hon DouglasPowell, William (Corby)
Irving, CharlesPowley, John
Jenkin, Rt Hon PatrickPrice, Sir David
Jessel, TobyProctor, K. Harvey
Johnson-Smith, Sir GeoffreyRathbone, Tim
Jones, Gwilym (Cardiff N)Rees, Rt Hon Peter (Dover)
Jones, Robert (W Herts)Renton, Tim
Kershaw, Sir AnthonyRhodes James, Robert
King, Roger (B'ham N'field)Ridsdale, Sir Julian
King, Rt Hon TomRoberts, Wyn (Conwy)
Knight, Gregory (Derby N)Robinson, Mark (N'port W)
Knight, Mrs Jill (Edgbaston)Roe, Mrs Marion
Knowles, MichaelRossi, Sir Hugh
Lamont, NormanRost, Peter
Lang, IanRowe, Andrew
Latham, MichaelRumbold, Mrs Angela
Lawler, GeoffreyRyder, Richard
Lawrence, IvanSackville, Hon Thomas
Lawson, Rt Hon NigelSainsbury, Hon Timothy
Leigh, Edward (Gainsbor'gh)St. John-Stevas, Rt Hon N.
Lennox-Boyd, Hon MarkSayeed, Jonathan
Lester, JimShaw, Sir Michael (Scarb')
Lilley, PeterShelton, William (Streatham)
Lloyd, Ian (Havant)Shepherd, Colin (Hereford)
Lloyd, Peter, (Fareham)Shepherd, Richard (Aldridge)
Lord, MichaelSilvester, Fred
Lyell, NicholasSims, Roger
McCrindle, RobertSkeet, T. H. H.
McCurley, Mrs AnnaSmith, Sir Dudley (Warwick)
Macfarlane, NeilSmith, Tim (Beaconsfield)
MacKay, Andrew (Berkshire)Soames, Hon Nicholas
MacKay, John (Argyll & Bute)Spencer, Derek
Maclean, David John.Spicer, Michael (S Worcs)
McQuarrie, AlbertStanbrook, Ivor
Major, JohnStanley, John
Malins, HumfreySteen, Anthony
Malone, GeraldStern, Michael
Maples, JohnStevens, Lewis (Nuneaton)
Marland, PaulStevens, Martin (Fulham)
Marlow, AntonyStewart, Allan (Eastwood)
Maude, Hon FrancisStewart, Andrew (Sherwood)
Mawhinney, Dr BrianStewart, Ian (N Hertf'dshire)
Maxwell-Hyslop, RobinStokes, John
Mayhew, Sir PatrickStradling Thomas, J.
Mellor, DavidSumberg, David
Merchant, PiersTapsell, Peter
Miller, Hal (B'grove)Taylor, Teddy (S'end E)
Mills, lain (Meriden)Temple-Morris, Peter
Mills, Sir Peter (West Devon)Terlezki, Stefan
Miscampbell, NormanThomas, Rt Hon Peter
Mitchell, David (NW Hants)Thompson, Donald (Calder V)
Moate, RogerThompson, Patrick (N'ich N)
Monro, Sir HectorThornton, Malcolm
Montgomery, FergusTownend, John (Bridlington)
Townsend, Cyril D. (B'heath)Wells, Bowen (Hertford)
Tracey, RichardWells, John (Maidstone)
Trotter, NevilleWheeler, John
van Straubenzee, Sir W.Whitney, Raymond
Vaughan, Sir GerardWilkinson, John
Waddington, DavidWinterton, Mrs Ann
Wakeham, Rt Hon JohnWinterton, Nicholas
Waldegrave, Hon WilliamWolfson, Mark
Walker, Bill (T'side N)Wood, Timothy
Walker, Rt Hon P. (W'cester)Woodcock, Michael
Waller, GaryYeo, Tim
Walters, DennisYoung, Sir George (Acton)
Ward, JohnYounger, Rt Hon George
Wardle, C. (Bexhill)
Warren, KennethTellers for the Noes:
Watson, JohnMr. Carol Mather and Mr. Tristan Garel-Jones.
Watts, John

Question accordingly negatived.