Disregarded Expenditure

New clause 3 – in the House of Commons at 6:30 pm on 4th April 1984.

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'Local authorities by whom the cost incurred in granting concessionary travel falls to be reimbursed shall not be subject to any financial penalty in respect of expenditure incurred in the provision of concessionary travel under Section 48 of this Act.'. —[Mr. Prescott.]

Brought up, and read the First time.

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

With this it will be convenient to take amendment No. 33, in clause 48, page 45, line 43, at end insert— '(1A) Expenditure incurred by local authorities under this section shall be disregarded for the purposes of calculating local government overspending'.

Photo of John Prescott John Prescott Shadow Secretary of State, Shadow Secretary of State for Transport

The Opposition are in some confusion over the Minister's explanation of how the Government intend to deal with equalisation. The new clause seeks to elicit further information from the Government about how the disregard expenditure will be dealt with and how the principle of equalisation of the costs and penalties involved will be applied. We wish to understand exactly how the costs of the concessionary scheme will be set against local authority expenditure, bearing in mind the Government's plans for rate capping, penalties, and so on, which the GLC is already suffering in relation to other local authority activities. In this case the rate precepting authority will be the Government. They will determine the rate precept and come to the House with an order to levy a rate on the ratepayers of London for their contribution towards the transport costs of the concessionary travel scheme.

We are concerned here with the free pass principle and the expenditure for the provision of a concessionary scheme. The cost will fall upon the 32 boroughs involved. They will have to find money to be paid to London Regional Transport for the provision of a concessionary scheme. I always find the fast-changing principles of local authority financing difficult to understand. At the best of times the general principles of local authority financing cause me some confusion. I therefore hope that the Secretary of State will be able to tell us how the principle will work in this case.

I understand that the ratepayers will pay a proportion of the cost of the transport provided by London Regional Transport. In Committee and on Second Reading there was some argument about exactly what proportion the ratepayers should pay. The Secretary of State referred to some advertisements put out by the GLC according to which the ratepayers would be paying about 90 per cent. of the cost. Clearly there is a conflict of statistics here, but I believe that we have persuaded the Minister of State to recognise that the proportion paid by the ratepayers would be about 69 per cent. I hope that she will continue to bring the figure down, because the GLC itself seriously contests that figure. The figure may be closer to 50 per cent. One has to take into account the fact that moneys are denied to the GLC to the extent of £30 million for exceeding the expenditure level acceptable to the Government. The loss of that money is the penalty. In new clause 3 we are concerned with the effect of spending more than the limit set by the Government on local authority expenditure.

It is also relevant to the ratepayer—we will discuss this later in the debate—that that part of British Rail which is now normally financed by passenger service obligation resources may become a charge on the ratepayer. The Secretary of State said that the two-thirds limit mentioned in the Bill should not be a limit for the PSO contribution. He said that the ratepayer should pay only 40 per cent. If the figure is 40 per cent.—and the Secretary of State said that that was a cockshy figure—that will be considerably more than any other local authority contributes through the PSO to the maintenance of the railway system. However, there is another clause in the Bill which deals with the PSO.

7.45 pm

The local authorities are to have a statutory obligation in regard to concessionary passes. The Secretary of State and the Minister of State have proudly claimed it as one of the advances of the Tory Government that the Government have intervened to introduce a central scheme for concessionary fares. One Conservative Member has asked why, if the Government are proud of statutorily imposing a minimum fares scheme, they cannot make it a requirement for the rest of the transport system. The answer to that question was avoided, but I am sure that when we debate the metropolitan authorities, the joint councils and the proposals in "Streamlining the Cities", that proposal will be to the fore. The Government are proud of acting centrally to determine a minimum concessionary scheme.

Reference has been made to my party's policy on a minimum scheme. The aim was that every citizen in the land should benefit from a minimum scheme and a concessionary fare. We were not prepared to lay down maximums. If local authorities wished to devise better and more generous systems, we were happy to concede that they could do so. Nevertheless, especially for those who live under Tory councils, the great likelihood is that there is no concessionary fare system, and pensioners are penalised because they live in Tory areas.

New clause 3 seeks to ensure that the cost of concessionary fares to the boroughs shall not constitute expenditure that will be liable to penalty if it brings expenditure above the level imposed upon the local authorities by the Department of the Environment and which the local authority cannot exceed without incurring penalties. Clearly the extra cost of a concessionary scheme will be an extra burden on the boroughs, and there is no guarantee that that expenditure will be disregarded.

Many authorities are operating very near to the line, if not over it. They are now to be given another statutory responsibility, even though it is wrapped in the idea that this is something that they can do for themselves and that the Government are taking only unofficial powers to oblige them to do it. There is, to all intents and purposes, to be a statutorily enforced concessionary scheme, and the cost will not come out of the rate precept. It will be an extra cost to be carried by the local authority.

The Government argue that they are providing a state guaranteed minimum concessionary scheme. In reality, the Government are setting the conditions and the local authority must find the resources. Why should the authority be penalised and lose further grants and resources simply because it is carrying out its statutory obligation to provide a concessionary scheme? What we are worried about is that the cost of the concessionary scheme may render the council liable to penalties.

It is clear that payment by the boroughs for the provision of the passes will be based on how many passes are issued and not on the rateable value. The rate of 1p or 3p in the pound levied by the GLC for the concessionary system has at least some fair association with wealth, in the sense that it is related to rateable value. Under the new scheme the deciding factor will be how many people apply and pay for passes.

As we have heard in Committee, and as the Government are certainly aware, the needs of different areas vary considerably. From the various papers that were available to the Committee, and to other hon. Members who wished to see them, it is clear that the number of pensioners in different areas varies considerably. As I have pointed out before, the equalisation principle on which the existing GLC scheme is run means that the 3p rate is the cost to all the boroughs, irrespective of how many pensioners there are in each area.

8 pm

Bromley, that reactionary authority that started the trend—[HON. MEMBERS: "Hear, hear."] The pensioners are not saying, "Hear, hear", and I am not sure that ratepayers in Bromley will do so when they see the consequences of buying the GLC's concessionary scheme at 5·9p in the pound, when it used to be 3p in the pound. I hear no more, "Hear, hears". Ratepayers in Bromley will certainly not be saying, "Hear, hear", because they will have to pay twice as much for less than they received under the GLC. I do not know whether ratepayers in Bromley will be satisfied to learn that, their money having been used in a court case, a businesslike way in which to run transport is to have less for twice as much money. If that represents the fruits of Bromley's victory, I hope that ratepayers there will start asking about the people who put them in those circumstances.

Tory councillors on the GLC say that 28 out of the 32 boroughs will pay more than they now pay under the equalisation principle of 3p in the pound. Many Tory-controlled authorities will be seriously affected if equalisation is not applied. The Secretary of State tells us that the concessionary fares scheme costs nearly £60 million, but the GRE is only about £28 million to £30 million. The Government are now deciding how much money should be given for the provision of concessionary passes and are saying that they should cost about £28 million to £30 million. They concede that the present scheme costs about £60 million, so someone must find the difference to maintain it.

Presumably the Government have achieved a good deal by knocking off off-peak travel. The assessment of the cost of the concessionary scheme is based on how many people travel at a set time. We assume that the Tory concessionary fares scheme will cost less than the present one because it will not cost as much to travel during the extra hour between 12 midnight and 1 am as between 4.30 pm and 6.30 pm, as not many pensioners want to change their travelling habits and travel at 1 am rather than between 4.30 pm and 6.30 pm. We cannot be wrong about that latter judgment. However, boroughs paying £2·6 million under the present scheme will be assessed as receiving only £1·4 million under the GRE. Therefore, unless the cost of the scheme is cut they will receive only part of the necessary money.

If the Bill is intended — it is the Government's declared policy—to do away with artificially low fares which the Government believe appertain in metropolitan areas, and especially in London, every 1 per cent. increase in the fare will increase the cost of concessionary fares by £500,000. Leaving aside the extra cost resulting from fares increases, the boroughs will incur extra cost resulting from fares increases, the boroughs will incur extra cost because they will have to pay more if they have more pensioners, because they will have to purchase concessionary fares as they will no longer come out of the rate precept and because of the general level of price increases.

There should be some form of equalisation between poorer areas or those with greater need and, for example, the City which does not have to meet great need and is wealthy.

Photo of Mr Matthew Parris Mr Matthew Parris , West Derbyshire

Am I not right in thinking that, in assessing the figures for grant-related expenditure, the Department of the Environment takes account of whether an area is poor or rich, the number of pensioners in it and the needs of people there?

Photo of John Prescott John Prescott Shadow Secretary of State, Shadow Secretary of State for Transport

That is a fair point. I am on dodgy ground when talking about grant-related expenditure, as I have no background in local authorities, especially local authority finance. Needs are assessed and often averaged out in the GRE. However, that argument is relevant to only half of the cost of the concessionary scheme. The Government's argument on new clause 7 was that they were keeping the same scheme and that it was only the scare stories put out by the Opposition that had made them give statutory force to the uniform scheme. The fact remains that the boroughs would have insisted that they would not spend their money, and therefore incur penalties, to provide a concessionary scheme if the choice was left to them. The whole point was to maintain the unity of the system and not have a 50 per cent. fares scheme here and a voucher scheme there. That is the real reason for the Government's new clauses.

Local authorities might tell the Government that, if the scheme is statutorily enforced, the Government should pay for it. Indeed, that is what local authorities, even Tory-controlled ones, are saying. We are making it clear that they must provide and pay for the scheme. They are being told that they must meet the cost and that if that leads to over-expenditure they will lose money and pay more. It will therefore be possible to have a concessionary scheme that costs £1 million and, with penalties, costs £2 million. That is a rather savage way in which to deal with local authorities. Moreover, it will be local authorities with a large number of pensioners in their areas which will bear the heaviest burden. It will not be the City, but the Bromleys that will carry the burden. In that regard, equalisation is crucial.

The Secretary of State has said that it will be possible to deal with all of these problems under the GRE. He referred us to schemes in "Streamlining the Cities" which concerned the GLC and the other metropolitan counties. The financial arrangements in chapter 5 of the White Paper say little about how to deal with local authorities with regard to the provision of concessionary schemes. It talks about the problem of what will be done for equalisation when we have joint boards and anxieties about rate precepts, but there is nothing about how to deal with the problem of transportation. Will the Department of the Environment determine the structure and cost? How will the system work? It will not be worked through the rate precept, because the Secretary of State will do that. Presumably it can be done only with the Department of the Environment through GRE. The Government measuring up to only half of the cost will not be much relief to local authorities, as the Government maintain that the scheme will be kept in its present form. I do not believe that the answers that we have been given are satisfactory, even to someone with my limited knowledge of local authority financing. We look forward to the Secretary of State elucidating the matter.

In voting for the new clause, hon. Members will vote for the principle that the expenditure will be disregarded and will not impose a further penalty on Londoners. This measure is not unprecedented. I understand that policemen's pay was seen as disregarded expenditure. Under this Government, the House has allowed for extra payments to the police to be considered as disregarded expenditure. Pensioners' payments, given the penalties and burdens that may be imposed by this unfair way of financing a concessionary fare system, must be considered in the same way as policemen's pay.

Photo of Edward Leigh Edward Leigh , Gainsborough and Horncastle

In opposing the amendment, I confess that I am sympathetic to the case made by the hon. Member for Kingston upon Hull, East (Mr. Prescott). He made out a case for boroughs to be given a choice in deciding whether to adopt a concessionary fares scheme.

Photo of Edward Leigh Edward Leigh , Gainsborough and Horncastle

That aspect was put to us by my right hon. Friend the Secretary of State. The inclusion of clause 48, requiring local authorities to have a concessionary fares scheme, means imposing on them, two years in advance, a considerable financial burden. On balance, I should have preferred the boroughs to be left to their own devices in deciding whether to impose the scheme. The scare campaign about this Bill, which was led by the Greater London council, meant that the Secretary of State thought it advisable and necessary to state in the original Bill a determination that, if necessary, the boroughs must have this scheme. The Secretary of State, in considering new clause 3, is under pressure to agree, two years in advance, to exempt the boroughs from that expenditure. We cannot force the boroughs to abide by that measure. That would be ridiculous.

I am sympathetic to the points made about grant-related expenditure and targets. As my hon. Friend the Member for Derbyshire, West (Mr. Parris) said, the number of elderly people in a borough is often considered in deciding grant-related expenditure, but that factor is often not reflected in the targets for the borough set by the Department. I hope that my right hon. Friend will explain to the House how the target figures set for boroughs will take account of the new burdens imposed on them by clause 48.

I hope that, by limiting the scheme and restricting it to off-peak travel, the burden placed on local authorities will be less than if the existing GLC scheme were allowed to continue. The continuation of the GLC scheme would impose a considerable burden. The boroughs should therefore be given an opportunity to impose a small administrative charge, and they can do so under clause 48. If that did not happen—this has been explained to us— boroughs such as Bromley and Richmond might be under considerable burden. I hope that those points are helpful to the House.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I am happy to respond now, if that is convenient to the House. I apologise to other hon. Members who may still wish to speak. It might be helpful if I answered the questions put by the hon. Member for Kingston upon Hull, East (Mr. Prescott) and amplified what my hon. Friend the Minister for State said earlier and what I said in Committee about the method of financing and the difficulty of giving precise answers about this matter. It is not easy to be precise, because we have not seen the abolition Bill or fully worked out our policy on this matter.

8.15 pm

As my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) said, it will be two years before we work out the sums. My hon. Friend said also that hon. Members representing London constituencies have felt that the concessionary fares scheme is so important it should be enshrined in the legislation. They said that we were right to give way to the demands for reassurance, and I am grateful to my hon. Friends for saying that. My hon. Friend said that one cannot then put the Government under pressure to exempt local authorities from the consequences. The consequences of writing a concession into the statute must lie where they fall, and most hon. Members have accepted that the financing of the concessionary fares scheme should be included in local authorities' responsibilities.

The rate precept for financing London Regional Transport is very different. It is a levy imposed by an order of the House on all London ratepayers, on top of what they may have to pay to their boroughs, to fund the subsidy to LRT. None of the complicated formulae for local government finance will apply to that finance. It is a separate and different type of finance.

It may be convenient to the House if I say how the system might be adapted.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

My raising this point will save time later and get it out of the way. In the right hon. Gentleman's last remark about the rate precept, is he saying that the precept on the boroughs imposed by Order in Council and by order of the Secretary of State will be outside the mechanisms of rate capping or GRE, whichever exists?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I do say that. The precept is outside any of the controls on local authority spending. The cost of the concessionary fares scheme will be within whichever mechanism is applicable.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood

My right hon. Friend is making an important distinction, which is central to the argument. In as much as the Government, in their wisdom, have heeded Londoners' advice and incorporated in statute the requirement that a reserve power should be available in case boroughs do not continue a free fare scheme, is it not true that the Government would be remiss if they did not also ensure that the local authorities, which must finance the concessionary fares scheme, are able to do so? It would be dangerous and wrong if they were subject to penalty for carrying out something the Government require.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I understand the principle that my hon. Friend is enunciating. I hope that he will let me take him through some complicated aspects, and then he can assess the position.

GREs are a nationwide indicator based on national criteria of what it is right for an authority to have as an aim in its expenditure. The sum of the GREs determines the amount of rate support grant for the authority. In London, the GREs are under half the cost of the concessionary fares scheme. That does not necessarily mean that the GREs are too low—it is evidence that the London concessionary fares scheme is both generous and expensive and, therefore, above the GREs. It would not be right to change the GREs simply because one authority is spending a great deal more than others. The GREs will be determined on the national levels, as they have been hitherto, bearing in mind the average performance by all authorities, including the shire and metropolitan counties.

The concessionary fares scheme will be cheaper in London, partly because we have made it off-peak —which will save £10 million—and partly because some —I hope many—boroughs will come back into grant and obtain rate support grant towards the cost of their contribution to the concessionary fares scheme. That cannot happen now because the GLC is way out beyond grant because of its overspending. But any boroughs within their targets will obtain some rate support grant towards offsetting the cost of the scheme.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

It is a ludicrous position when the GRE assessment is higher than the overall target set by the Department of the Environment. A number of the right hon. Gentleman's colleagues have been getting at the Secretary of State for the Environment because the GREs that have been assessed from Marsham street come out at a greater level than the targets set — which is the absurdity of GREs when trying to assess the level of service.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

The hon. Gentleman takes me not only outwith the careful analysis that I am trying to make of this problem, but outwith my departmental responsibility. He should address his remarks to my right hon. Friend the Secretary of State for the Environment.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood

This is an important point. Is it not a fact that the target that central Government sets for local government expenditure has been constantly declining in real terms? Have not even virtuous authorities, such as mine, been increasingly squeezed? That being so, how can my right hon. Friend — and I am trying to be as charitable as I can—say that matters are likely to be better and that there will be the leeway to find the £20 million difference for which we are looking?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I did not say that. I said that if any London borough brought its expenditure below target and, therefore, became in receipt of grant, its expenditure on concessionary fares would be grant-aided by RSG. However, if it cannot economise and bring itself within target, that will not apply. There is an added incentive for boroughs to be economical.

Once a target has been set, when the expenditure of any given authority goes over that target holdback begins and becomes quite savage. It would be wrong for the Government to set targets for local authorities that are unrealistic in relation to the new functions and responsibilities that will be put on them by the abolition of the GLC. As is well known, many functions will be transferred to the boroughs on the abolition of the GLC, of which concessionary fares is just one. Others will be housing, roads, waste disposal and sewerage responsibilities. We need not go into the totality of them other than to say that a whole range of new functions will be transferred to the boroughs.

It is right that the new targets for the boroughs in two years hence should be calculated to take account of any change in their responsibilities. That is what my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) seeks. I cannot be more specific because we do not remotely know what will be the state of the finances of the 33 London boroughs in two years hence, what will be contained in the abolition Bill, what the House will do to amend it or what my right hon. Friend will have for rate support grant in two years hence. Indeed, there are so many uncertainties that I cannot do more than give the undertaking that the new targets will be calculated to take into account the change in responsibilities.

The next item is disregard, which means that if an authority spends money on an item that is disregarded, and would otherwise have taken that authority above target, that is disregarded for the purposes of the target. There would be no holdback because of spending on a disregard item. However, there could be loss of rate support grant in certain circumstances, but that is not the same as holdback.

The only disregards so far are a few matters to do with the increases during the past year in the urban programme, civil defence and police pay and costs. Those are special matters that the Government feel are in a different category from the subject we are discussing. I doubt whether it is likely that my right hon. Friend will feel that concessionary fares should be disregarded.

There are two ways of not hitting targets—one is to increase the target and the other is to disregard the expenditure for target purposes. Therefore, what I have said about targets is not entirely different from what is sought in the new clause. There is a profound difference in the sense that the treatment is different, although in both cases the particular obligation on the boroughs would be recognised.

The London equalisation scheme is peculiar to London, and has always been with us in one form or another. The GLC, because it has a rate precept over the whole of the boroughs, performs the equalisation function. When the GLC ceases and the responsibilities are shouldered again by the boroughs, it will be necessary to have some similar form of equalisation.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

I want to make a small correction. The GLC's powers will not be given back to the boroughs —the boroughs have never had the powers that they are about to receive from the GLC. If the Secretary of State does not understand that, he does not understand what led to the creation of the GLC. If the hon. Member for Woolwich (Mr. Cartwright), who keeps muttering, thinks that I have it wrong, he should intervene.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

At one stage there was the London county council and then there was the GLC. The only point that I am making is that by one means or another the fact that there are three rich London boroughs and 30 poor ones has been acknowledged in the system by treating the income of London as a whole and redistributing it to a certain extent.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich 8:30 pm, 4th April 1984

What the Secretary of State was indicating was that the powers to operate concessionary fares were going back to the London boroughs. If the hon. Member for Newham, North-West (Mr. Banks) was disputing that, there is no question but that the boroughs had those powers.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

That was what I understood him to be suggesting. If he was not suggesting that, I withdraw the comments I made.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I do not think I was suggesting that. My history is not good enough, but I doubt whether there were concessionary fares anywhere before the GLC was set up. I think they were introduced in 1973.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I said that my history might be faulty. We are being drawn into an argument which is not necessary from the point of view of the debate.

In implementing our commitment to avoid any major shift in the relative burden on ratepayers in different parts of London we do not envisage any change in the present machinery or the principles on which it works. We shall, however, be considering in the London boroughs whether the present scale and incidence of the scheme will have to be altered. We cannot be dogmatic now about what this will mean in terms of shifting resources from one borough to another. The calculation is very complex and depends on a thorough examination by the boroughs and by central Government.

The details of the calculation do not matter. It is the effect of the calculation that is the key thing. Here I can assure the House, as I said, that we want to avoid any major shift in expenditure. There is no question whatsoever of hiding anything about this. As I have already explained, many decisions will have to be taken before it will be possible to put it more clearly. I think the hon. Gentleman will accept that one could not give a forthright undertaking. In the difficult circumstances, that is probably as far as he would expect me to go.

I hope that explains the situation. The London equalisation scheme and the targets are the parts of the spectrum to which my right hon. Friend the Secretary of State for the Environment will be looking to accommodate as far as possible the cost of the scheme. It would be wrong to leave the House with any feeling that because London has chosen as one of its priorities to have a generous scheme of concessionary fares in some way it will be compensated specifically because of that. Clearly my hon. Friend the Member for Gainsborough and Horncastle would not wish Lincolnshire to be penalised because it had a particularly cheap scheme.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

If Lincolnshire and London have different priorities, those priorities should be allowed to have their own consequences on the whole financial position of the authorities.

I hope the House will accept that that is the best endeavour I can make to give a fairly clear guideline. I hope that the hon. Gentleman will not press his new clause because I am not sure that the drafting is perfect for such a complicated problem.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

The House is grateful to the Secretary of State for taking us through the complexities of local government finance in Greater London, but he has not done much to reassure those of us who are concerned about the future financing of the concessionary fares scheme. In passing, may I say that I am sad that we are going backwards. The reason why I intervened in the comment of the hon. Member for Newham, North-West (Mr. Banks) was that I was deeply involved in the negotiations of the original overall London concessionary fares scheme negotiated by the London Boroughs Association and paid for by the London boroughs. It was a heavy responsibility on some London boroughs.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

I do not want to make a meal of this, but I intervened in the speech of the Secretary of State because he was talking about services and mentioned housing, sewerage and so on. Of course I knew very well —in fact, better than the Secretary of State—that the individual boroughs were operating these schemes and that it was not until 1973 that the GLC introduced a London-wide scheme. I was referring to the Secretary of State's reference to the boroughs getting back other powers which they never had.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

I am grateful to the hon. Gentleman for clarifying that.

The problem which many London boroughs faced in financing schemes of their own was that the burdens were very heavy. As an active member of the London Boroughs Association at the time, I must point out that it was not easy to get agreement among all the boroughs. Some were more enthusiastic about concessionary fares than others. For that reason it was a great relief when, after 1973, the GLC took over the funding of a scheme. It was also a much fairer system, as the hon. Member for Kingston upon Hull, East (Mr. Prescott) pointed out.

The financing through the GLC meant that the costs were shared out on the basis of rateable value and that the wealthier boroughs took a larger share than the poorer boroughs. That was a fair arrangement, particularly since, by and large, the poorer boroughs had larger numbers of elderly residents who depended on the bus service as a means of getting about. Therefore, I am sad that the overall London approach is disappearing and that we have to go back to the arrangement of the boroughs collectively having to fund the continuation of the scheme.

The Secretary of State did not grasp the traditional grievance in local government that Ministers are very good at laying new duties and responsibilities on local authorities and taking credit for them, but they are not quite so good at providing the resources that are necessary to carry them through. When it comes to accepting that duties and responsibilities have to be paid for, we find that Ministers are apt to complain that local authorities are spending more so that they may carry out the duties that have been laid upon them. That is an aggravating attitude to the traditional financing of local government. It is much worse when we have the current stick or carrot target and penalty system. Some local authorities will move into the penalty area as a result of the extra burden of paying for the concessionary fares scheme.

It will be even worse under the rate-capping system, because local authorities that are driven into the rate-capping area because of the extra expenditure on concessionary fares will suffer considerably in the sense of losing control over their own right to spend at the level they feel appropriate and their own right to levy a certain rate.

Photo of Mr Matthew Parris Mr Matthew Parris , West Derbyshire

I do not pretend to understand local government financing; very few hon. Members do, but that is another debate. As I understand it, both the rate-capping powers and the financial penalty powers relate to circumstances in which an authority has exceeded its target. I think my right hon. Friend the Secretary of State has said that targets will take account of extra spending on concessionary fares.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

He has, but I shall come to that later. Obviously a great deal depends on the view of the target. My experience is that it is like looking through the opposite end of a telescope. A target that seems to be fair and reasonable when viewed from Marsham street sometimes becomes difficult to achieve when viewed by the local authority.

I want to deal first with grant-related expenditure, because in a sense it is suggested from the Conservative side that grant-related expenditure assessments are scientific assessments of what should be spent by individual local authorities. I find that hard to accept. Indeed, during the long Committee stage of the Rates Bill even Ministers did not argue that. Ministers from the Department of the Environment accepted that the GREAs were what they called rough justice in assessing the need to spend in individual local authorities. Every inner London local authority, Labour-controlled and Tory-controlled, spends a great deal in excess of its grant-related expenditure assessment on social services.

That is a clear sign that the figures do not take account of what needs to be spent. The hon. Member for Kingston upon Hull, East reminded us, and the Secretary of State accepted, that the GRE figures for concessionary fares were less than half the actual spending level. The London Boroughs Association—a Conservative-controlled local authority body—pointed out earlier this year that if the GRE figures were not raised there would be considerable difficulties for individual local authorities.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

The hon. Gentleman was not in his place earlier when I also gave the GRE and concessionary fares spending figures for the shire counties, where the GRE is exactly twice the spending level. Therefore, we have one set of authorities, the shire counties, spending half the GRE, and London spending twice the same GRE. That shows that London is spending four times more per pensioner than the shire counties. In other words, it does not work in quite so straightforward a way as the hon. Gentleman is suggesting.

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

That demonstrates the stupidity of the whole GRE system — that where the need for concessionary fares is clear and established and is being met, the GRE is far too low, and where a local authority, for good reasons, does not think that it is an important service, the GRE figure is much higher than is needed to meet the perceived need by that local authority. That demonstrates that the system does not work.

I was arguing in relation to the GRE situation in Greater London—the Secretary of State clearly accepted this—that if the London boroughs continue with a scheme as good as the existing one, that will involve a number of boroughs risking going into the penalty area for the operation of the target system; indeed, a number of them are already in that area.

The same is true when it comes to rate capping, because a number of authorities already earmarked under the criteria for rate capping by the Secretary of State for the Environment are in inner London. For example, my local authority in Greenwich qualified under every one of the 11 possible criteria for rate capping, so it is already over the top. The additional expenditure on concessionary fares will not ease its problems.

The Secretary of State has given an undertaking that when we come through this extremely uncertain period and the problem must be faced, at that point, when targets are being fixed, he will take into account the additional spending that local authorities must undertake on concessionary fares. I welcome that assurance as far as it goes, but I hope the Secretary of State will not think me ungracious when I say that we have had assurances of that sort before from Ministers in this Government.

Photo of Mr Matthew Parris Mr Matthew Parris , West Derbyshire

What about previous Governments?

Photo of Mr John Cartwright Mr John Cartwright , Woolwich

Perhaps that can be said of all Governments. It can certainly be said of the present Administration, who have introduced a complex system of central Government control of local government expenditure. For example, we were told by the Government that GRE would never be used as a means of controlling local authority expenditure, but merely as a means of allocating grant. That assurance has gone out of the window. I am, therefore, somewhat dubious about the Secretary of State's assurance. In any event, as I said earlier, it depends at which end of the target one is when one decides whether it is reasonable to meet it.

I agreed with the Secretary of State when he referred to the considerable uncertainties that surround this whole area. Although I would not go along with everything that the present adminstration at county hall says, I can understand the GLC leadership saying that this is an important issue for millions of London pensioners and that, therefore, it is not unreasonable to try to unravel some of the uncertainty that surrounds it.

We have not succeeded in doing that tonight. I hope, therefore, that the new clause will be pressed to a Division as a means of encouraging the Government to come clean in future and as a means of making it clear to local authorities that some of us understand the problem that they face in continuing a decent concessionary fares scheme for London's pensioners.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood 8:45 pm, 4th April 1984

This is an important debate which exemplifies, as has been exemplified during previous stages of the Bill, the difficulty of what I would describe as legislating in vacuo. Because we do not know the future form and structure of London's government, we are in the present predicament.

Indeed, the predicament of the transport ministerial team reminds me of that magnificent Greek sculpture of Laocoon and his two sons in the constricting embrace of a mighty python and unable to release themselves. I was about to say that my right hon. Friend is rather like a ram in the thicket, but he is too elegant and artful a politician to be so described.

The problem is that the system of local government finance is fundamentally flawed. The Secretary of State faces many uncertainties in getting the Bill on to the statute book, and no debate has brought home to us more fully than the one in which we are now engaged the importance of recognising that if we will the end—as we have in voting for a uniform and statutory concessionary fares system—we must also vote the means.

The Secretary of State was as generous as ever, in spirit, in saying that he felt sure that the grant-related expenditures would be looked at carefully to take account of the extra costs of providing for the concesssionary fares scheme that would fall on the boroughs. However, we have heard that many times before. It is always jam tomorrow. But even that is not what we are asking for. We are simply asking that local authorities should not be penalised in the exercise of their other duties by having to carry out responsibilities that are being placed on them by the Bill. It is as simple as that.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I did not say that grant-related expenditures would be looked at carefully. I referred to the targets. It is important that there should be no mistake about that.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood

I am grateful to my right hon. Friend for correcting what was a clear mistake. That shows how careful one must be when dealing with this esoteric terminology. The trouble is that when we talk about targets, nobody comprehends how they are computed. It is some arcane formula; we do not know where it comes from or how it is worked out. We hope that a few high-powered officials at the Department of the Environment comprehend it and we are reasonably certain that borough treasurers comprehend it, because they must work to it.

However, at a practical level we understand the effect. In my part of London, the effect has been that the good Conservative local authority in my area, which for some years had as its leader my hon. Friend the Member for Slough (Mr. Watts), has done everything that the Government want but finds itself exceeding its target and being penalised. The penalisation system is rotten because we say that grant will be withdrawn because an authority has overspent, and the last state of that authority after the penalty is worse than the first, which makes it a perverse system.

I would not wish the House to leave this debate without understanding that, by abolishing the GLC, we are taking away an efficient and useful system of financing concessionary fares. It is uniform and equitable, it works, it requires no particularly complicated machinery, and it has much to recommend it. That is why Cyril Taylor, the GLC member for my constituency who is the Tory transport spokesman on the GLC, in his admirable Bow Group paper on the reform of London's government, pointed out that the system of the GLC for financing concessionary fares is much easier to implement than the one that will have to be worked out which will have the deficiency, as the hon. Member for Kingston upon Hull, East (Mr. Prescott) explained, that the charges will be based not upon rateable value, but upon the number of passes issued.

To take my constituency as an example, one populous ward, Northwood Hills, has a very high population of old-age pensioners, and they will need to use these free passes. In outer London, one has to use the tube, if one wishes to see one's relatives and so on. As things stand, an authority such as mine, that has already exceeded the target, will have compounded the problem of getting within the target of expenditure set by Government, unless Government can in truth translate the assurance that my right hon. Friend has given into reality in a couple of years' time.

I do not know whether you were in the Chair, Mr. Deputy Speaker, at the conclusion of the interesting rate support grant settlement debate. The Under-Secretary of State for the Environment, my hon. Friend the Member for Bristol, West (Mr. Waldegrave), gave the verbal assurance to my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym), the former Foreign Secretary, that next year there will be no problem for virtuous authorities such as Cambridgeshire or Hillingdon, because the Government will be more generous. We are not asking for assurances of generosity but that, by a clause such as this, or some other clause that the Government may come up with in another place, we do not put responsibilities upon local authorities without establishing the means to carry them out.

Having heard the arguments, I shall not oppose the Government in this matter. As my right hon. Friend has said, there are many uncertainties, and we are dealing with the future. In the current state of the argument, however, I shall not vote against the new clause.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

The debate has been remarkable for its quality in that it has seen the House working at its best in respect of very bad quality legislation. Courteous exchanges have taken place between Members of different parties on technical matters. There has been mild dissent from the Government Benches, which is always a healthy sign, but this is the most impenetrable—I was going to say dog's breakfast—legislation and local and central Government financial machinery. The amendment paper contains about two pages of impenetrable prose. We have been discussing GREAs, targets and equalisation schemes. I am sure that most people who use the tubes and buses in London will have no chance of understanding what we have been discussing. This comes from a Government who do not believe, or so they say, in large-scale legislation or in bureaucracy. That is the present state, and this high quality debate has illustrated it only too well.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Perhaps the hon. Gentleman will accept that we are discussing something that is not in the Bill, and which the Government are resisting putting into the Bill. It will be in a Bill in a year's time, but it is hardly fair for him to make those allegations when I am trying to stop the House pre-empting other legislation.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

The right hon. Gentleman forgets that it is his Bill, and it is his policy to change the status quo. As illustrated by the hon. Member for Ruislip and Northwood (Mr. Wilkinson), the status quo relating to travel for the elderly in London is pretty good, and local government, with the two-tier GLC and boroughs, is not all that bad either. The Government are disturbing both those to a large degree. Despite the right hon. Gentleman's statement that he is trying to meet requests, he is having to meet them in a structure that is very complex, and is brought about by the Government's ill thought-out policies. I can illustrate that by the right hon. Gentleman's response to the speech of my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). The right hon. Gentleman gave a necessarily complex exposition. He said that he hoped he had explained the matter, whereas in fact he had not. In summary, he said that we cannot tell whether this would be appropriate, because we do not know quite what will happen, and he asked us not to press the clause because it has not yet been worked out. That was the burden of the Secretary of State's speech. I am not at all sure that he understands the importance of public transport in London to elderly people. If he did, it would have been included in the Bill in a much simpler way when he introduced it, or the Government would not have introduced the legislation at all.

In the borough of Newham, only one tube line serves the people who are passing through the borough, with a criss-cross of bus routes. To get from one part of the borough to the other for shopping, hospital, doctor or such like, most elderly people relying on the bus—because car ownership in the borough is very low—have to use two, or maybe three, buses on a single journey. The old-age pensioner pass is a godsend. Conservative Members might say that they are playing God and that, after public pressure, they are extending the facility. There will be many problems, not exposed in the debate so far, particularly in relation to local government clawback, rate capping or whatever the Government have in store. Many sums that have been worked out by county hall, which have been bandied around in the debate, are based on what London Transport is currently charging the GLC for passes. There is no guarantee that that will be the charge in future, or that the charge will go up with the cost of living, if, indeed, the charge goes up at all. Judging from the Bill, there are suggestions that the charge might well increase. We know the Government's general attitude to making charges. Under clause 2 of the Bill the Secretary of State has dictatorial powers. The clause states: It shall be the general duty of London Regional Transport, in accordance with principles from time to time approved by the Secretary of State The right hon. Gentleman will have carte blanche to tell LRT what to do in respect of commercial policy and the policies that it will use to cost old-age pensioners' passes.

9 pm

I was even more worried by new clause 10, which states that LRT must provide information about plans which it considers, appropriate for presenting their proposals in the context of past and current performance and policies of themselves and their subsidiaries. What does the Secretary of State mean by "performance"? To judge from the Government's past use of the word, it will mean incomes, costs, profits and efficiency. Therefore, LRT might be under pressure to increase the cost of the passes above what it might do under the present system.

Even if that does not apply—although I fear that it will—the next problem for the boroughs is that they will have a statutory duty to supply the demand. Anyone who applies who is eligible for a pass must be supplied with one, and the boroughs must pay. That would be fine were it not for the arbitrary limits on GREAs and targets. The boroughs will have no choice. The Government's clawback will represent a 50 per cent. tax to the borough of Newham, since if it spends £15 million more than the Government believe that it should it must charge ratepayers £30 million for the privilege of issuing passes. That will be the effect of the Government's attitude to local government expenditure. Unlike the position that would apply even with rate support grant, let alone percentage grants, where the boroughs cannot be disadvantaged by the rate-capping proposals, if enough people apply for concessionary passes the boroughs will be faced with the unenviable choice of doubling the rates for that service or cutting other services.

All those problems would be relieved if the Government accepted the new clause. There would be no dilemma and no unfair tax on the ratepayers in respect of those passes. Alas, for reasons that the Secretary of State explained at great length, he cannot accept the new clause tonight. Nor has he given a guarantee that he will do so in future. Indeed, he is paving the way for saying that the Government cannot accept that proposal. That is entirely illogical, given the fact that he gave the House the welcome news that the precept that LRT can make on the boroughs directly in respect of services will not be subject to GREA and target limits. If that is so, why does he not add expenditure on concessionary fares? If he did that, our fears would be set at rest, the hon. Member for Ruislip-Northwood would be happy, and the Government would be more popular than they are at present.

Photo of Mr Matthew Parris Mr Matthew Parris , West Derbyshire

"Concessionary fares" is a phrase for the compulsory sale of bus tickets. Money is confiscated from taxpayers and ratepayers, whether or not they wish to pay it, and bus passes are given to them whether or not they wish to use them. It might have occurred to Opposition Members that we also have concessionary Tridents. They are free at the point of use, but they are paid for by the taxpayer.

Nevertheless, there is an element of redistribution of wealth in granting concessionary fares, and for that reason it is right to provide them. However, if my right hon. Friend the Secretary of State could take all the money which I hope he will manage to secure from the Chancellor of the Exchequer to pay for concessionary fares and give it in cash to old-age pensioners in London each year to spend as they please, that would be a better way of doing it than giving them bus passes. The way in which we approach matters under our constitution is such that the money can be spent only on concessionary fares. They are all that we can offer and, for the reasons given by many of my hon. Friends and by Opposition Members, we are right to offer them.

When I look at the wording of the Opposition amendment, it is not quite clear to me what they mean by financial penalties. To the extent that a local authority exceeds its target and is penalised, in that sense it clearly has been penalised. To the extent that a local authority is within its target but has exceeded its grant-related expenditure and, therefore, has to fund all the extra spending out of its own rates and has none of it supported by central Government, one may say that that authority is in penalty in one sense. Although it is not actually being fined for every extra pound that it spends, it is having to find that money itself.

My right hon. Friend the Secretary of State's suggestion probably strikes the right balance. He has suggested that it is right is that we take the extra spending on concessionary fares into account when adjusting targets, but that we do not, and cannot, take it into account when setting grant-related expenditure. That means that no local authority can be fined or penalised for extra spending on concessionary fares because the ceiling on its target will be raised, or ought to be raised, by that amount. As my right hon. Friend says, if someone does not want to hit his head against the ceiling he can either raise the ceiling or disregard certain cubits of his stature for the purposes of ceilings. He has chosen the first of the alternatives, and, to the extent that he is able to persuade my right hon. Friend the Secretary of State to adjust targets to take account of spending on concessionary fares, he is probably right.

Where such a person would go too far—certainly too far for my constituents in West Derbyshire— is if he were to disregard spending on concessionary fares for the purposes of grant related expenditure. That would mean that every pound spent on concessionary fares, and as much as local authorities in London wanted to spend on concessionary fares, would have to be matched by a pound from central Government, more or less. That is roughly the proportion. That would not be right.

Many local authorities, many shire counties, many district councils, my own among them, do not feel that the right way to spend their money is through free off-peak travel for pensioners. Some give half-price off-peak travel for pensioners, others give no help with travel for pensioners at all. Each local authority makes up its own mind. It would probably feel that it had been made rather a mug of if it found that those authorities that were giving free off-peak travel to pensioners were having all that money matched by central Government, regardless of how much they wanted to spend. I should find myself facing a certain amount of criticism in my own constituency for voting that the taxpayers' money be spent in that way. I think that it is the ratepayers' money that should be spent in that way, but the ratepayer should not be punished for spending it in that way.

For that reason, the sort of compromise that my right hon. Friend has spoken about strikes the right balance.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

It has become painfully clear to Members on both sides of the House—it has probably come as a worse shock to the Members on the Government Benches than those on the Opposition Benches—that the concessionary fares scheme that the Government are now going to enshrine in statute will cost the boroughs a lot more than the present scheme costs them. I have heard nothing to gainsay that.

I want to ask the Minister, when she is summing up, to—[Interruption.] I understand that the Minister is not going to sum up, which is probably to her advantage, because it is clear that something that she said, before she left at the end of her shift and the Secretary of State came in for his, was a little difficult to follow. On reflection — I shall have to wait until I read Hansard— it is perhaps not altogether correct. The Minister can no doubt intervene to put my mind at rest.

As I understand it, there will be no question of equalisation being applied to concessionary fares. My hon.

Friend the Member for Newham, South (Mr. Spearing) gave the Government the formula and said that if London Regional Transport is going to precept—we know that it will — included in the precept should be the cost of concessionary fares. If that were to be the formula, it would answer the point made by the hon. Member for Ruislip-Northwood (Mr. Wilkinson), because the House would be determining the scheme and providing the resources. As he correctly pointed out, there is no such provision at the moment, so we will be imposing a responsibility on the boroughs which we are not giving them adequate funds to discharge. We must look carefully to see how that will work. The Minister seemed to say that equalisation would apply, but the Secretary of State has made it clear that it will not.

The Minister quoted from the White Paper "Streamlining the Cities". As hon. Members on both sides have said, it is difficult for us to consider this legislation in a vacuum, knowing that it is predating the abolition of the GLC, which is something that might never reach the statute book. A nice mess that will leave us with.

It is clear in Cmnd. 9063 that equalisation will not apply to anything other than services which are transferred from the GLC to the boroughs. The concessionary fares scheme will already have been written into the London Regional Transport Bill and it will therefore not be the responsibility of the GLC. It will have gone from the GLC before the appointed day for its abolition.

There is no provision in the White Paper for equalisation for concessionary fares or transport services. A precepting authority is being set up to run London's transport—London Regional Transport. Block grant and grant-related expenditure assessment cause a great deal of anxiety to the Opposition because it is plain that London local authorities will attract block grant penalty by virtue of the concessionary fares scheme. It is difficult to know exactly when they will move into penalty. What is "at the margin"? It could be argued that this scheme or another form of service is at the margin. As all services are taken together for penalty purposes, it is difficult, if not impossible, to work out which service is attracting penalties.

If one studies the present provisions, one sees that the grant-related expenditure assessment for the GLC area in terms of concessionary fares is about half the money that the GLC currently spends on concessionary fares. We have had to juggle with peculiar acronyms such as GREAs, and with targets for so long that I hope that sooner or later we will be given the identity, rank and number of the civil servants who devised them.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

It must be civil servants. Even I would not suppose that politicians could be responsible for that type of mess, because GREAs pay no attention to any particular local authority problem. That is true of concessionary fares also.

The example of Bromley has been quoted. At the moment, Bromley's payment for the scheme proposed by the Government will be about £2·6 million. Under GREA it is only supposed to spend about £1·2 million. Bromley will have to find about £1·4 million in addition, which is not taken into account in its current GREA. That is poetic justice. I have no reason to feel much warmth and affection for Bromley.

9.15 pm

Unfortunately, not only Bromley will be caught up, but most of the other boroughs. Only four boroughs, if one takes the City as a borough, are making a net payment for the existing concessionary fares scheme. All the rest are net beneficiaries, although none of them will be net beneficiaries in future. The 28 or 29 remaining London boroughs will have to find additional money to pay for the scheme. The Bill does not provide for exemption from penalties. There is nothing within the precepting powers of LRT to allow them to escape from being penalised for operating a scheme that the House of Commons will have imposed upon them.

The Secretary of State, when I asked him about GREAs and targets, told me that the scheme relates to other areas of responsibility, such as those of the Secretary of State for the Environment. I hope that the Ministers are talking among themselves. I know that there are divisions of opinion within the best ordered political parties, but unless the Secretary of State talks very closely to his right hon. Friend the Secretary of State for the Environment, I am afraid that we shall accept his good intentions but doubt his ability to deliver the goods. That is all that the House is interested in under the Bill.

Both sides of the House have expressed concern that the proposed scheme will cost the boroughs far more, and that they will attract penalties for operating it.

Photo of Harry Cohen Harry Cohen , Leyton

I support the new clause which says that local authorities should not be afflicted with penalties for meeting the cost of the concessionary travel scheme. We hear that the GLC pays about £60 million to London Transport to finance the existing scheme and that its GREA is £28 million to £30 million. The figures will presumably be roughly similar when the scheme is transferred to the boroughs, so the boroughs will be penalised under these proposals.

We know that the statutory scheme will mean that local authorities must pay, but it should not mean that they also have to pay over the odds. That will happen in this case because the proposed scheme will inevitably impose penalties on authorities.

The Secretary of State referred to the concessionary fares scheme as London's choice, and said that the people should not be compensated for their choice. However, they are not being compensated; they are being penalised. That is what the whole debate is about.

The Secretary of State compared London with the shires. He said that Lincolnshire does not choose to spend its GREA on the transport needs of the people, and the benefit of that is that they get lower rates. It is the old lower rates versus provision of services argument. That is fair enough—it is what local electors decide all over the place — but the Secretary of State is distorting that process. If the services are provided as the GLC does with London Transport, and as the boroughs will do, they are penalised for it.

Many local authorities are already on the penalties borderline. Under the statutory scheme, if they are not disregarded for penalty purposes, they will be pushed over the edge and will have to make cuts in other services they provide, such as social services, housing and education.

We must also consider the effect of rises in fares. The decision to raise fares will be made not by the local councils but by LRT. If they rise, the cost of the concessionary travel scheme will go up as well. The gap between that cost and what the boroughs get in their GREAs will also widen. As a result, there will be more penalties on the local authorities. Therefore, if LRT decides to raise fares, there will be an increase in the penalties on local councils, which cannot be fair.

Hon. Members have referred to equalisation. Conservative Members argued for it in Committee. It is not provided for in the Government's proposals. I hope that they will put their votes where their mouths are. There is not a proper equalisation scheme. A greater burden will be placed on the poor areas. The 10 poorest boroughs are on the Government's hit list in the Rates Bill. They are the ones that will be hit. That is especially unfair to them if there are many pensioners in the borough.

The Secretary of State said that one could either alter the target or disregard the expenditure for penalty purposes. He hinted that he would do the former. If he does so, the truth will be out. He is prepared to fiddle the targets for Conservative councils so that a penalty is not imposed upon them. The Secretary of State should do it the honest way and not penalise local authorities for doing their proper financial and statutory duty under the scheme.

Photo of Mr Stuart Holland Mr Stuart Holland , Vauxhall

Several representations have been made to me on this matter by pensioners in my constituency. Among other things, they have brought to my attention the movement of population over the years, especially in the post-war years. It has meant that the children of many of those born in inner city areas now live in outer London. Mobility is important for family contact. We do not have the extended family communities that we once had in the 1930s, and even the 1940s or the early 1950s. Travel is important to pensioners.

If one looks at the proposals, it is clear that the boroughs with the least resources and a higher than average proportion of pensioners because of the aging nature of the population in the inner city areas will be those least able to meet the costs. There is the dual phenomenon of a relatively high share of the elderly and the very young. In my borough of Lambeth, it is part of a syndrome of multiple deprivation. We have one of the highest unemployment rates in London, the highest youth unemployment, the highest unemployment of black school leavers and the highest proportion of single-parent families. Those factors are a heavy drain on resources in the London area, where we are penalised by the Government's present system.

It used to be thought by many concerned with transport — I recognise that the Secretary of State made his professional reputation by contesting this — that principles of costs and benefits should be assessed in transport policy. It is clear that for a considerable time it has been accepted not only by London but by metropolitan authorities elsewhere that the right to either subsidised or free travel for pensioners, like the right to a pension. was a basic social right.

This was broadly accepted by a generation of Conservatives of whom we see very little now. It was broadly accepted in the 1950s and the 1960s. It was broadly accepted in the period of Butler and Macmillan, when there was a consensus both that working people had a right to decent housing, health and education and that they had a right to a decent pension and decent travel facilities. Clearly this is now denied by the Government.

Photo of Mr Stuart Holland Mr Stuart Holland , Vauxhall

The Minister says "Rubbish." I hope that, if she accepts that, she will amend the legislation now before the House.

This is not just boot-strap finance — the kind of finance to which the Government are very much addicted. They are going to knock down the boroughs that most need to be able to meet the cost of a provision of this kind. The Prime Minister once, going into No. 10 Downing street, quoted St. Francis of Assisi. In this case it would be more appropriate to quote loosely St. Matthew: to him or her that hath shall be given by those on the Benches opposite; from him or her that hath not shall be taken away.

It is a mean little provision, a wretched piece of legislation, and I therefore support the new clause.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Does the hon. Gentleman seek the leave of the House to speak again?

Photo of John Prescott John Prescott Shadow Secretary of State, Shadow Secretary of State for Transport

With the leave of the House, I should like to speak again.

The Secretary of State, in his intervention on this clause, made it a little clearer why the message is not very acceptable to this side of the House. The argument that he has put against the new clause is that there are a number of reasons why he cannot accept our case that the expenditure incurred by the borough authorities in paying for the concessionary schemes should not lead to a penalty arising out of the Government's other legislation and targets set for local authorities and the penalties that they incur if they exceed those targets.

I should like to outline why we cannot accept the reasons given by the Secretary of State. For example, he has made it clear that the concessionary scheme, because it is now statutory, since enforcing powers have been put into the Bill, is a concession to those forces that wanted to make sure that the powers were there to enforce a uniform scheme. Therefore, since the Secretary of State is giving this as a concession, he does not feel it right that he should have to pay for it, but rather that the boroughs should pay for it. That is at the heart of the argument about locally provided services, paid for by local resources and determined in local democracy and the election of local councillors.

There is a great difference between the two sides of the House about that expression "in local democracy". It is the Government's position that in this case they are taking over the local services, and the argument is put forward, not only by Labour boroughs but by Tory boroughs, that if the Government are taking upon themselves the responsibility for providing transport in the London area, they should finance it. Clearly the Government do not accept that argument, but it is one that stretches across both Labour and Tory authorities. Therefore, the argument that it is a concession to put these statutory uniform powers in the Bill is not acceptable to us, because local authority services should be determined in a local democratic manner.

Secondly, the argument that the rate precept will pay for the transport and should not be used to pay for the concessionary scheme is contrary to the present system and to what applies in the rest of the United Kingdom. Any concessionary scheme at present provided by the metropolitan authorities is paid for out of the rate precept. This is true at present also for the GLC. The Secretary of State is proposing that the concessionary fare should be paid for by the boroughs, and general transport will be paid for by a combination of ratepayers' and taxpayers' money in the two-thirds/one-third relationship to which the Secretary of State so often refers.

We do not accept the argument that it is normal for the cost of concessionary fares to be found by local authorities. They should be financed out of the rate precept, as they are in the metropolitan authorities and other areas. The Government should have made their quality comparisons with the metropolitan authority schemes. Instead, however, the Secretary of State chose the shire schemes, which are very poor indeed. To the extent that they exist at all they are certainly very thin on the ground, and far inferior to those provided by the metropolitan authorities.

9.30 pm

The Secretary of State said that the rate expenditure consideration for the concessionary scheme was £30 million, but that the cost to the GLC was £60 million, arguing from that that the scheme was more generous than necessary and that the cost should therefore be reduced. He said that £10 million could be saved on the afternoon peak from 4.30 pm to 6.30 pm and that further savings could be made if the authority met the expenditure limit acceptable to the Government and thus avoided penalty. He actually said that he hoped that the money now withheld from the GLC as the penalty for excess expenditure would not be a problem for the Government because the limits acceptable to the Government would be met. I hope that that is indeed the Government's position, as it means that at least they are not institutionalising the penalties currently incurred by the GLC through providing what the Secretary of State describes as a more generous system.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I said that if a borough did not exceed its target and was drawing block grant the cost of the concessionary fares scheme would be reduced by virtue of its coming back into grant. That is not to say that every borough will do that, but it represents a possibility for a borough to reduce the cost by coming back into grant.

Photo of John Prescott John Prescott Shadow Secretary of State, Shadow Secretary of State for Transport

That may be so, though few authorities will be able to permit themselves the luxury of such adjustments when they already have great difficulty in adjusting to meet the Government's present targets. Nevertheless, we shall wait and see what happens. It is clear, however, that the Government are sticking to their argument that, whatever the cost of the concessionary scheme, it is for the boroughs to find the resources.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

Does my hon. Friend accept that under provisions elsewhere in the Bill fares will undoubtedly increase, that every 1 per cent. increase in fares will add £500,000 to the cost of the current scheme and that that cost, too, will have to be borne by the boroughs? Does he agree that in those circumstances the way round the problem offered by the Secretary of State is unlikely to apply?

Photo of John Prescott John Prescott Shadow Secretary of State, Shadow Secretary of State for Transport

I am grateful to my hon. Friend for his comments. That was precisely our earlier point about the cost to local authorities if fares are increased, as the Government clearly intend. That would certainly add to the difficulties, even within the present expenditure limits.

We welcome the Government's recognition that there are richer and poorer authorities. I believe the Secretary of State said that there were three rich ones and 30 poorer ones. That being so, there is a role for equalisation. The right hon. Gentleman talked about increasing the targets of the GRE because of the extra duties to be imposed upon authorities. That may or may not be achieved, but there is also the argument about what other changes will be made by other measures which have yet to come before the House. Of course we accept that the Bill must be consistent with existing legislation, but it is a different matter to say that it must be consistent with legislation which may be introduced in the future. The Government say that they cannot accept equalisation in connection with the new clause because other legislation which may be introduced may lead to much more complex assessments of how equalisation is to be achieved.

The Bill makes it clear that concessionary passes must be provided and paid for, but it provides no means for equalisation of the payment. I have no hesitation in advising my hon. Friends to support the new clause.

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

The House divided: Ayes 168, Noes 248.

Division No. 228][9.35 pm
Adams, Allen (Paisley N)Duffy, A. E. P.
Ashley, Rt Hon JackDunwoody, Hon Mrs G.
Ashton, JoeEadie, Alex
Atkinson, N. (Tottenham)Eastham, Ken
Banks, Tony (Newham NW)Edwards, Bob (W'h'mpt'n SE)
Barnett, GuyEllis, Raymond
Barron, KevinEvans, John (St. Helens N)
Beckett, Mrs MargaretEwing, Harry
Beith, A. J.Fatchett, Derek
Benn, TonyField, Frank (Birkenhead)
Bennett, A. (Dent'n & Red'sh)Fields, T. (L'pool Broad Gn)
Bermingham, GeraldFisher, Mark
Blair, AnthonyFlannery, Martin
Boothroyd, Miss BettyFoster, Derek
Boyes, RolandFraser, J. (Norwood)
Bray, Dr JeremyFreeson, Rt Hon Reginald
Brown, Gordon (D'f'mline E)Freud, Clement
Brown, Hugh D. (Provan)George, Bruce
Brown, N. (N'c'tle-u-Tyne E)Gilbert, Rt Hon Dr John
Brown, R. (N'c'tle-u-Tyne N)Gould, Bryan
Brown, Ron (E'burgh, Leith)Hamilton, James (M'well N)
Buchan, NormanHamilton, W. W. (Central Fife)
Caborn, RichardHardy, Peter
Callaghan, Jim (Heyw'd & M)Harman, Ms Harriet
Campbell IanHarrison, Rt Hon Walter
Campbell-Savours, DaleHealey, Rt Hon Denis
Carlile, Alexander (Montg'y)Heffer, Eric S.
Carter-Jones, LewisHogg, N. (C'nauld & Kilsyth)
Cartwright, JohnHolland, Stuart (Vauxhall)
Clark, Dr David (S Shields)Howells, Geraint
Clarke, ThomasHoyle, Douglas
Clay, RobertHughes, Robert (Aberdeen N)
Cocks, Rt Hon M. (Bristol S.)Hughes, Roy (Newport East)
Cohen, HarryHughes, Sean (Knowsley S)
Coleman, DonaldJohn, Brynmor
Conlan, BernardJones, Barry (Alyn & Deeside)
Cook, Robin F. (Livingston)Kaufman, Rt Hon Gerald
Corbett, RobinKennedy, Charles
Corbyn, JeremyKilroy-Silk, Robert
Cox, Thomas (Tooting)Kirkwood, Archibald
Craigen, J. M.Lambie, David
Crowther, StanLeadbitter, Ted
Davies, Rt Hon Denzil (L'lli)Leighton, Ronald
Davies, Ronald (Caerphilly)Lewis, Ron (Carlisle)
Davis, Terry (B'ham, H'ge H'l)Lewis, Terence (Worsley)
Deakins, EricLitherland, Robert
Dewar, DonaldLloyd, Tony (Stretford)
Dixon, DonaldLofthouse, Geoffrey
Dobson, FrankLoyden, Edward
Dormand, JackMcCartney, Hugh
Dubs, AlfredMcDonald, Dr Oonagh
McKay, Allen (Penistone)Rogers, Allan
McKelvey, WilliamRooker, J. W.
McNamara, KevinRoss, Ernest (Dundee W)
McTaggart, RobertRoss, Stephen (Isle of Wight)
McWilliam, JohnSedgemore, Brian
Madden, MaxSheerman, Barry
Marek, Dr JohnShore, Rt Hon Peter
Marshall, David (Shettleston)Short, Ms Clare (Ladywood)
Mason, Rt Hon RoySilkin, Rt Hon J.
Maxton, JohnSkinner, Dennis
Maynard, Miss JoanSmith, C.(Isl'ton S & F'bury)
Meadowcroft, MichaelSnape, Peter
Michie, WilliamSpearing, Nigel
Mikardo, IanSteel, Rt Hon David
Millan, Rt Hon BruceStott, Roger
Mitchell, Austin (G't Grimsby)Strang, Gavin
Morris, Rt Hon A. (W'shawe)Straw, Jack
Morris, Rt Hon J. (Aberavon)Thomas, Dafydd (Merioneth)
Nellist, DavidThomas, Dr R. (Carmarthen)
O'Brien, WilliamThompson, J. (Wansbeck)
O'Neill, MartinTinn, James
Parry, RobertTorney, Tom
Patchett, TerryWardell, Gareth (Gower)
Pendry, TomWareing, Robert
Penhaligon, DavidWeetch, Ken
Pike, PeterWelsh, Michael
Powell, Raymond (Ogmore)White, James
Prescott, JohnWilliams, Rt Hon A.
Radice, GilesWinnick, David
Randall, StuartYoung, David (Bolton SE)
Redmond, M.
Rees, Rt Hon M. (Leeds S)Tellers for the Ayes:
Richardson, Ms JoMr. Frank Haynes and Mr. Lawrence Cunliffe.
Robertson, George
Robinson, G. (Coventry NW)
Adley, RobertChalker, Mrs Lynda
Aitken, JonathanChapman, Sydney
Alexander, RichardChope, Christopher
Alison, Rt Hon MichaelClark, Hon A. (Plym'th S'n)
Amess, DavidClark, Dr Michael (Rochford)
Ancram, MichaelClark, Sir W. (Croydon S)
Arnold, TomClarke, Rt Hon K. (Rushcliffe)
Ashby, DavidCockeram, Eric
Aspinwall, JackColvin, Michael
Atkins, Robert (South Ribble)Conway, Derek
Atkinson, David (B'm'th E)Coombs, Simon
Baker, Rt Hon K. (Mole Vall'y)Cormack, Patrick
Baker, Nicholas (N Dorset)Couchman, James
Baldry, AnthonyCrouch, David
Banks, Robert (Harrogate)Currie, Mrs Edwina
Beaumont-Dark, AnthonyDorrell, Stephen
Beggs, RoyDouglas-Hamilton, Lord J.
Bellingham, Henrydu Cann, Rt Hon Edward
Bendall, VivianDurant, Tony
Bennett, Sir Frederic (T'bay)Dykes, Hugh
Benyon, WilliamEdwards, Rt Hon N. (P'broke)
Berry, Sir AnthonyEmery, Sir Peter
Biffen, Rt Hon JohnEvennett, David
Biggs-Davison, Sir JohnEyre, Sir Reginald
Body, RichardFairbairn, Nicholas
Bonsor, Sir NicholasFallon, Michael
Boscawen, Hon RobertFarr, John
Bottomley, PeterFavell, Anthony
Bowden, Gerald (Dulwich)Fenner, Mrs Peggy
Braine, Sir BernardFookes, Miss Janet
Brandon-Bravo, MartinForman, Nigel
Bright, GrahamForth, Eric
Brinton, TimFowler, Rt Hon Norman
Brown, M. (Brigg & Cl'thpes)Fox, Marcus
Bruinvels, PeterFranks, Cecil
Bryan, Sir PaulFreeman, Roger
Buck, Sir AntonyGale, Roger
Budgen, NickGardiner, George (Reigate)
Burt, AlistairGardner, Sir Edward (Fylde)
Butcher, JohnGarel-Jones, Tristan
Butler, Hon AdamGlyn, Dr Alan
Butterfill, JohnGoodhart, Sir Philip
Carlisle, Kenneth (Lincoln)Gorst, John
Grant, Sir AnthonyNicholson, J.
Greenway, HarryOnslow, Cranley
Gregory, ConalPage, Richard (Herts SW)
Griffiths, E. (B'y St Edm'ds)Patten, John (Oxford)
Griffiths, Peter (Portsm'th N)Percival, Rt Hon Sir Ian
Ground, PatrickPink, R. Bonner
Gummer, John SelwynPollock, Alexander
Hamilton, Hon A. (Epsom)Powell, Rt Hon J. E. (S Down)
Hamilton, Neil (Tatton)Powley, John
Hampson, Dr KeithRaison, Rt Hon Timothy
Hanley, JeremyRenton, Tim
Harris, DavidRhodes James, Robert
Harvey, RobertRidley, Rt Hon Nicholas
Havers, Rt Hon Sir MiohaelRidsdale, Sir Julian
Hawkins, C. (High Peak)Roberts, Wyn (Conwy)
Hawkins, Sir Paul (SW N'folk)Robinson, Mark (N'port W)
Hawksley, WarrenRoe, Mrs Marion
Hayes, J.Ross, Wm. (Londonderry)
Hayward, RobertRossi, Sir Hugh
Heathcoat-Amory, DavidRost, Peter
Heddle, JohnRowe, Andrew
Henderson, BarryRumbold, Mrs Angela
Hickmet, RichardRyder, Richard
Hicks, RobertSackville, Hon Thomas
Higgins, Rt Hon Terence L.Sayeed, Jonathan
Hind, KennethShaw, Giles (Pudsey)
Hirst, MichaelShepherd, Richard (Aldridge)
Hogg, Hon Douglas (Gr'th'm)Shersby, Michael
Holland, Sir Philip (Gedling)Silvester, Fred
Holt, RichardSkeet, T. H. H.
Hooson, TomSoames, Hon Nicholas
Hordern, PeterSpeed, Keith
Howarth, Alan (Stratf'd-on-A)Speller, Tony
Howarth, Gerald (Cannock)Spencer, Derek
Howell, Rt Hon D. (G'ldford)Spicer, Jim (W Dorset)
Hubbard-Miles, PeterSpicer, Michael (S Worcs)
Hunt, John (Ravensbourne)Squire, Robin
Hunter, AndrewStanbrook, Ivor
Jackson, RobertSteen, Anthony
Jenkin, Rt Hon PatrickStevens, Lewis (Nuneaton)
Jessel, TobyStevens, Martin (Fulham)
Johnson-Smith, Sir GeoffreyStewart, Allan (Eastwood)
Jones, Robert (W Herts)Stewart, Andrew (Sherwood)
Joseph, Rt Hon Sir KeithStewart, Ian (N Hertf'dshire)
Kellett-Bowman, Mrs ElaineStokes, John
Key, RobertStradling Thomas, J.
King, Rt Hon TomSumberg, David
Knight, Gregory (Derby N)Taylor, John (Solihull)
Knight, Mrs Jill (Edgbaston)Taylor, Teddy (S'end E)
Lang, IanTerlezki, Stefan
Lawler, GeoffreyThomas, Rt Hon Peter
Lawrence, IvanThompson, Donald (Calder V)
Lawson, Rt Hon NigelThompson, Patrick (N'ich N)
Leigh, Edward (Gainsbor'gh)Thorne, Neil (Ilford S)
Lennox-Boyd, Hon MarkThornton, Malcolm
Lester, JimTownsend, Cyril D. (B'heath)
Lewis, Sir Kenneth (Stamf'd)Twinn, Dr Ian
Lilley, Petervan Straubenzee, Sir W.
Lloyd, Peter, (Fareham)Vaughan, Sir Gerard
Lord, MichaelViggers, Peter
Lyell, NicholasWaddington, David
McCurley, Mrs AnnaWaldegrave, Hon William
Maples, JohnWalden, George
Marland, PaulWalker, Cecil (Belfast N)
Mather, CarolWalker, Bill (T'side N)
Mawhinney, Dr BrianWalker, Rt Hon P. (W'cester)
Merchant, PiersWall, Sir Patrick
Meyer, Sir AnthonyWaller, Gary
Mills, lain (Meriden)Wardle, C. (Bexhill)
Mills, Sir Peter (West Devon)Watson, John
Miscampbell, NormanWells, John (Maidstone)
Moate, RogerWheeler, John
Molyneaux, Rt Hon JamesWhitfield, John
Monro, Sir HectorWiggin, Jerry
Morrison, Hon C. (Devizes)Winterton, Mrs Ann
Moynihan, Hon C.Winterton, Nicholas
Mudd, DavidWolfson, Mark
Murphy, ChristopherWood, Timothy
Neubert, MichaelWoodcock, Michael
Newton, TonyYeo, Tim
Young, Sir George (Acton)Tellers for the Noes:
Younger, Rt Hon GeorgeMr. John Major and Mr. David Hunt.

Question accordingly negatived.