Restrictions on Rating and Precepting

Part of Orders of the Day — Local Government Finance Bill – in the House of Commons at 7:15 pm on 26th January 1987.

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Photo of Mr Bowen Wells Mr Bowen Wells , Hertford and Stortford 7:15 pm, 26th January 1987

The hon. Gentleman is advancing arguments that I shall not take up, if he will excuse me. I want to make a limited contribution on GREA and the unfairness that the system inflicts on Newham, Vauxhall and Hertfordshire.

Hertfordshire has had a continuous reduction in its rate support grant settlement. That is because the system equates rateable value with low needs or high needs, whatever the case may be. Hertfordshire has seen a series of new towns and other developments, and these have come mainly since 1945. Thus it has a high rateable value and is assumed to have low needs. The system is so distorted that, although Hertfordshire is considered to have low needs—its income over the national average is only 13 per cent. —the way in which the RSG system and GREA work mean that it is considered to have an income that is 45 per cent. over the national needs calculation.

In this year's settlement my right hon. Friend the Secretary of State and my hon. Friend the Minister of State inserted certain safeguards such as rate caps and safety nets. My right hon. Friend and my hon. Friend did not want to do that, but they did so because they recognised the unfairness that was being inflicted upon Hertfordshire, which was reflected in the services given to Hertfordshire people.

Like my hon. Friend the Member for Hertfordshire, South-West (Mr. Page), who made his plea on Second Reading, as I did, I have urged that an end should be brought to the current argument, which if not interrupted will continue indefinitely, as the hon. Member for Newham, South has illustrated. Let us freeze the present system so that it is not changed next year or the year after that, until we inyroduce a new system that will not have the serious implications that the GREA formula has for Newham, South and the new town of Basildon, for example. The hon. Member for Newham, South will know that the new towns have a particular problem when it comes to GREA because they are more expensive to run than other towns. For example, Stevenage has no rate support grant because of the way in which it impacts upon that town and Hertfordshire generally. Basildon is a similar example.

The GREA and the entire system of calculating RSG is thoroughly unfair to Newham, South and Hertfordshire. Having arrived at a settlement this year, my hon. Friend the Minister of State has striven over this issue and I am deeply grateful to him for taking into account my complaints and those of others, courteously, if not productively, including those of the hon. Member for Newham, South. I ask him for an assurance that he will leave the system alone. Let us freeze it with the rate caps and the safety nets that have been introduced this year. That means that it will be equally unfair next year as this to Newham, South and Hertfordshire, but at least we shall not have the appalling arguments and tensions that we have had this year and for the past 15 years. We have argued picayune points about the way in which the system impacts upon various factors in the RSG formula.

I earnestly ask my hon. Friend the Minister to give serious consideration to my plea. Let us leave the grant in Hertfordshire as it is so that people can predict what will happen. We may have a system that is unfair, but let us make it clear that that system will not change and that people must live with it until we introduce something better. If things continue to change Hertfordshire will probably not receive any RSG assistance, especially if the Minister listens to the arguments advanced by the hon. Member for Newham, South.