Orders of the Day — Local Government Bill

Part of the debate – in the House of Commons at 8:05 pm on 3rd March 1987.

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Photo of Mr Lewis Stevens Mr Lewis Stevens , Nuneaton 8:05 pm, 3rd March 1987

I was surprised at some of the comments by the hon. Member for Leeds, West (Mr. Meadowcroft). I never thought of politics as being as logical as the laws of physics. He spoke about his general approach to local government spending relative to central Government's ideas. That is all very well as a theoretical aspect, but, following his argument, at the end we come to the point where some action has to be taken by central Government when local government does not fit in. This Bill, like other local government Bills, would not be necessary if councils and local organisations worked in an acceptable manner. However, when there are abuses of the system, action is necessary.

The Bill is concerned with the provision of rented properties. There is heavy regulation of such properties, which restricts their provision. We know that the restrictions are there to ensure that the abuses that we sought to get rid of in the early 1960s are not permitted to return. So often, our legislation is concerned with the prevention of abuses of the system. Often, those who abuse the system think that they have a good reason for so doing.

This is not just a matter of political colour. Some councils dominated by the Opposition party do not come into the category of high spenders, so do not need to find ways to fiddle the books. They carry on much more reasonably. Others take all the advantages that they can find in any system to get the maximum. I accept that they are not acting illegally. I have heard Opposition Members argue about what happens in business and how people look for ways around this, that or the other. Over the years, Labour Governments have attempted to bring in restrictions to close what they call the loopholes on that.

The important thing about the first part of the Bill is that it has undoubtedly been put in to answer a system of borrowing money that definitely increases the amount of the PSBR, puts forward, although not too far, the repayment problem, and creates a false impression. That is legal but it must be stopped if local government accounting is to fall properly within what is accountable in the short term and in the best way for total local government expenditure. It is only as a result of such abuses that the Bill has become necessary. The hon. Member for Leeds, West made an important point when he said that when we squeeze local government in one place, something else breaks out somewhere else. That is always a possibility with any system, whether it be local government or some other part of the law.

Within the general attitude to creative accounting, I believe that there has been a deliberate practice of finding ways round the restriction on capital expenditure. Some authorities have greatly exaggerated that practice, with the result that it has impaired their financial management. I have always questioned how far local government should go in its borrowing to finance particular projects. I have always held the view that local government finance should he considered within shorter-term borrowing. I do not believe that some local authority expenditure in the past 40 years—including over and above borrowing—has represented the most economical way of running local government finance.

Times have changed and we no longer have the expanding economy of the 1960s, which some local authorities thought could continue for ever. The escalation of costs and spending was, on occasions, out of control.

The Bill is concerned with the borrowing practices of local authorities. Many people in the financial world have thought that, if they were lending to local government, there was absolute security. They believed that, no matter what happened, Government would fork out for the local authority debts. They believed that there was no way in which Government would not step in—Government of any colour — and pay the debts of local government. Despite the absence of such a commitment, it is understandable for many people in the financial institutions and others outside this House to believe that if local government borrowed money it was as safe as central Exchequer borrowing. It is certainly not as safe.

The Bill also seeks to deal with the combined efforts of the private sector and local authorities with regard to the provision of housing. The provisions in the Bill are not as black or as preventive as has been claimed tonight. The Government are trying to encourage co-operation between the housing authorities and the private sector in financing projects. A local government contribution of 30 per cent. would help towards the prospect of a better return than present on the private sector money invested especially in the rented sector.

I am not suggesting that if one got rid of rent controls, a mass of private rented accommodation would become available at a reasonable rate. Some believe that total deregulation would provide satisfactory and quality accommodation. I do not believe that it is as simple as that. I do not believe that there should be total deregulation; we need some controls and regulations. However, present regulations deter private investment in the housing stock.

One thing that disappoints me about the Bill is that, unlike previous announcements, it contains no provisions relating to restrictions on contracts. Such restrictions would have been a most important area covered in the legislation. It must be in the interests of ratepayers and people in the community to know that their councils act in a responsible financial manner. I do not believe that local councils should allow their prejudices to influence, unwarrantedly, the placing of contracts for whatever purpose—for roads, equipment or anything else. I do not believe that it is reasonable for local councils to take that attitude.

It is certainly true that local authorities express their views on central Government and on what the Foreign Office or any other Department has done. Local authorities express their views on many things regarding privatisation and all the rest of it. I believe that it is to the detriment of ratepayers if such prejudice is incorporated in the placing of contracts. Perhaps when my hon. Friend replies he will be able to say whether there is a possibility of discussing this in Committee.

I appreciate that other items that have been omitted should also be considered, such as the use of rates for propaganda purposes and competitive tendering. I appreciate that, with regard to competitive tendering, there may be difficulties in providing satisfactory legislation—that is satisfactory from a legal rather than a principled viewpoint. I can understand why competitive tendering is not incorporated in the Bill.

Competitive tendering is extremely important. I do not believe that it would represent a threat to a local council's direct labour organisations. Some direct labour organisations are very efficient. Indeed, the report of the auditors in my local authority is very favourable about some of the services provided by such bodies. It is important that competitive tendering becomes more common and results in a much more practical and democratic process within an authority to the benefit of that authority. It would not mean that, automatically, private firms would be brought in to do the work.

The Bill also deals with land held by local authorities. It is wrong that local authorities hold land for which there is no immediate or anticipated purpose within a reasonable future. This difficulty is especially acute in city and urban areas, but it also applies to some rural areas. Some local authorities hold land for no particular purpose—land that is needed for all sorts of projects. I believe that local councils should be encouraged—if they do not do so, action should be taken — to make such land available.

I do not believe that some of our schools—primary, middle or senior—need all the land that is designated for them. However, I am not suggesting that we should chop off an acre just because it is there. Often that land is a useful local amenity. I believe it is important to introduce legislation that puts at the forefront the need for local authorities to declare the purpose they have in holding land and to make possible the action needed to release that land deemed to be unnecessary to the local authority. A decision on unnecessary land would be an important qualification in the legislation.

I believe that this Bill introduces positive restrictions on local authorities. Essentially, it imposes those restrictions on those authorities which have deliberately taken advantage of the existing system to the detriment of their ratepayers and of local government in general.