Rating

Part of Opposition Day – in the House of Commons at 10:55 pm on 21 February 1989.

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Photo of David Blunkett David Blunkett Opposition Spokesperson (Local Government & Poll Tax), Member, Labour Party National Executive Committee 10:55, 21 February 1989

I feel a sense of nostalgia this evening, on the fifth occasion of rate orders being laid against authorities. If it were not so late, there would be a great deal that I could say, but I want to put on record that I do not think that this House should sit, except in very unique circumstances, after 10 pm, and, given that the weight of numbers overrides the weight of reason on these occasions, there is little point in trying to persuade Government Members that the rate capping that they have imposed over the last five years has been both futile and unsuccessful.

It has been futile because each action that they have taken has led them inexorably into another turn of the screw and another piece of legislation, and there is no question whatsoever that what has been imposed through rate capping has distorted the making of budgets, the planning of the financial management of authorities, the use of capital resources, and the stretching of ingenuity in a quite unhelpful way in terms of delivering services and improving the lot of those whom we seek to serve.

If I might just go over the history of rate capping, with which I am all too familiar, it was, of course, way back in the early 1980s that the suggestion was made that local authorities' expenditure and rates should be fixed from the centre, a suggestion which is unmatched anywhere else in the world, and which is unjustified financially and politically. We went through with the right hon. Member for Henley (Mr. Heseltine) the performance of putting forward proposals for a referendum, which were then withdrawn on the ground that the electorate might actually vote to spend money and provide services rather than agree with the Government.

We then came to the rate capping issues of 1984–85 and promises that authorities, if they behaved responsibly and responded to Government demands that services should be reduced and the rates lowered, would actually be treated in a responsible fashion. Tonight we see the results of that: five years of rate capping. The four authorities that we are dealing with tonight find that each Government budget and rate set for them determine that they will be rate capped the following year, because the Government set the criteria. The Government have set the rate for five years, rigged the criteria in the first place, then adjusted it. That is what they did. That resulted in the inevitable. The authorities being debated tonight could not escape from rate capping, whatever they did. Their spending and their rate levels were fixed by the Government and they could not free themselves from that yoke.

Ironically, those authorities which used ingenuity in the first year of rate capping and used means that have since been condemned and outlawed by the Government actually escaped from the second and subsequent years of rate capping. For instance, deferred purchase deals, which have been abused so roundly by the Government, not only ensured that the accepted spending levels were lower because of the recognition of income for that criteria to be applied, and that those authorities which used it effectively escaped from rate capping, but maximised their grant income. A more stupid system one could never have imagined.

Of course, when we changed Secretaries of State, and the present Secretary of State for Education temporarily assumed the mantle of the Department of the Environment, he pronounced, in May 1986, that he found rate capping intellectually indefensible. He did not last more than two months after that. He was moved on to pastures new where he could perform more readily in relation to his prospects.

None of us could intellectually accept, justify or defend rate capping, because it cannot be defended. Only the authorities whose budgets were already above a certain level were eligible for rate capping anyway—a neat way of ensuring that very high-rating authorities with a lower spending level would automatically escape. That is why the authority in the Minister's constituency has not been rate capped. Since 1981 Suffolk, Coastal has increased its rate by 218 per cent. and its budget by 132 per cent. Small authorities such as Selby have almost equalled it. Selby has increased its rate by 177 per cent. The City of London, of course, has exceeded the expectations of everyone except those who would have a vote in the area, but do not, with a rate increase of 79 per cent. but an expenditure increase of 180 per cent. Brentwood's expenditure has risen by 322 per cent., which I do not think can be matched anywhere.

Hon. Members may say, "It is not the expenditure level but the amount over grant-related expenditure assessment that determines the rate cap." The present Secretary of State for Northern Ireland had something to say about that when he was Minister of State at the Department of the Environment. On 1 April 1980—a very appropriate date to pronounce on the matter—he said that it was not suggested that grant-related assessment prescribed a specific level of spending for any particular authority. He said that he wanted to make it clear that that was not the intention and that he was seeking to find the fairest way to distribute public money to local authorities. It did not take four years to denounce that. In July 1984 the Secretary of State—now Lord Jenkin—summed it up by saying that that was then, and that now was now. In other words, whatever Conservative Members may say, it may not last 24 hours if they feel that the circumstances have changed sufficiently.

Now that we have reached the fifth year, let us examine what is happening to local authorities. Let us take the district of Thamesdown, which has been so roundly abused by the Minister tonight. If its expenditure had been slightly lower in 1984 it would never have been rate capped in the first place, and could have joined the authorities that can spend as much as they like above grant-related expenditure because they do not already fall within the criteria. It could join authorities such as the City of London which have constantly exceeded grant-related expenditure levels—in the case of Brentwood by the enormous figure of 276·7 per cent. The City of London has done so by 99·6 per cent.

I got on to the wrong train on Friday. Instead of going to Southampton I made my way towards Guildford. Luckily I got off at the wonderful junction of Surbiton, but had I gone to Guildford I would have found that its expenditure over GREA was 98 per cent. That seems a peculiar justification for treating certain Labour authorities in hard-pressed urban areas in the way in which they have been treated.

When Thamesdown councillors met the Minister on 24 November they put a reasonable case to him, suggesting that the amount allowed to them for poll tax preparation—£164,000—had fallen short by £500,000, their real expenditure for next year being £658,000 on implementation. The Minister listened carefully and acknowledged that that was a reasonable point. He also acknowledged that it was reasonable to take into account the historic debt of a town that had developed rapidly in the 1960s and 1970s, but when the rate-capping order was laid the case of Thamesdown was ignored.

I do not consider that any of the authorities had a fair and reasonable hearing because they were condemned to rate capping from the beginning as they were unable to avoid meeting the criteria. Given their existing expenditure, the extent of their problems and the fact that those in London have to cope with the preparations for the transfer of ILEA and taking over education, and taking into account the fact that, using the GDP deflator, there has been a cut of more than 17 per cent. in their expenditure, it would not have been unreasonable for the Government to have lifted rate capping completely in the final year before the poll tax and to have allowed local authorities to budget sensibly.

Poll tax was suggested as the antidote to rate capping. The Green Paper "Paying for Local Government" contained no suggestion that there would be poll tax capping. Only when the hon. Member for Sheffield, Hallam (Mr. Patnick) asked a planted question on 28 October 1987 did the Government reveal that they had changed their mind, that the poll tax was not so accountable, responsive and democratic after all and that poll tax capping would have to be introduced.

The hon. Member for Hallam is not here tonight because he has one of the occasional days off that Conservative Members get under their rota system.